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https://www.courtlistener.com/api/rest/v3/opinions/2540871/
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724 F. Supp. 2d 243 (2010)
Carlos M. ENCARNACIÓN, Plaintiff,
v.
Michael J. ASTRUE, Commissioner of Social Security, Defendant.
Civil No. 09-1282 (BJM).
United States District Court, D. Puerto Rico.
March 26, 2010.
Salvador Medina-De-La-Cruz, Salvador Medina De La Cruz Law Office, San Juan, PR, for Plaintiff.
*244 Ginette L. Milanes, U.S. Attorney's Office, San Juan, PR, for Defendant.
ORDER
BRUCE J. McGIVERIN, United States Magistrate Judge.
Plaintiff Carlos M. Encarnación ("Encarnación") brings this action seeking judicial review of the final decision of the Commissioner of Social Security ("Commissioner") that plaintiff was not disabled under sections 216(i) and 223 of the Social Security Act (the "Act"), 42 U.S.C. § 416(i) and 423. (Docket No. 14). Encarnación's complaint asks that the Commissioner's decision be reversed and that he be awarded disability insurance benefits ("DIB") under the Act. (Docket No. 1, p. 2). Encarnación consented to have the case heard before me (Dockets No. 6, 7) and filed a memorandum of law requesting reversal of the Commissioner's decision or, alternatively, remand for further proceedings. (Docket No. 12). After answering the complaint (Docket No. 11), in lieu of filing a response to plaintiffs memorandum of law, the Commissioner moved for reversal and remand to the Social Security Appeals Council (Docket No. 15), and plaintiff opposed. (Docket No. 16).
Encarnación first applied for disability insurance benefits ("DIB") in August 2004, alleging a disability onset date of June 19, 2004. (Transcript ["Tr."] 40-59). After a hearing, the administrative law judge ("ALJ") determined that plaintiff was not disabled and denied the application on April 16, 2007. (Tr. 7-16; Docket No. 12, p. 12). The ALJ's decision became the final decision of the Commissioner subject to judicial review on January 14, 2009, when the Appeals Council denied plaintiffs request for review. (Tr. 2-4). While plaintiffs request for review of the ALJ's unfavorable decision was pending (Tr. 5-6), Encarnación filed a second application for DIB in June 2007, which an ALJ approved on May 12, 2009, finding a disability onset date of June 19, 2004, the same date alleged in the first application. (Docket No. 15, p. 2). Because an application's retroactivity is limited to 12 months, see 20 C.F.R. § 404.622, plaintiff has been receiving DIB effective July 2006. (Dockets No. 15, p. 2; 16, p. 1).
Plaintiff appealed the unfavorable first decision before this court. (Docket No. 1). Encarnación argues that the ALJ's decision was not based upon substantial evidence and that the ALJ improperly relied on the Medical-Vocational Guidelines ("Grid"), 20 C.F.R. Part 404, Subpart P, Appendix 2, to determine whether Encarnación was able to perform work that existed in the national economy at step five in the sequential evaluation process for determining disability.[1] (Docket No. 12, p. 2, 8-12). It is well-established that the Grid "can only be applied when claimant's non-exertional limitations do not significantly impair claimant's ability to perform at a given exertional level." Rose v. Shalala, 34 F.3d 13, 19 (1st Cir.1994) (internal citation omitted). Otherwise, the Commissioner must carry his burden at step five by other means, "typically through the use of a vocational expert." Ortiz, 890 F.2d at *245 524. Plaintiff argues that his significant nonexertional impairments shown in the medical evidence of record, including a recurrent pineal gland tumor, hemiparesis, imbalance, and dizziness, preclude reliance on the Grid and thus the ALJ erred in not taking vocational expert testimony. (Docket No. 12, p. 8-12). Defendant has made no argument against plaintiffs contentions. (See Docket No. 15, p. 3).
Under sentence four of 42 U.S.C. § 405(g), "a district court may remand in conjunction with a judgment affirming, modifying, or reversing the [Commissioner's] decision." Melkonyan v. Sullivan, 501 U.S. 89, 99-100, 111 S. Ct. 2157, 115 L. Ed. 2d 78 (1991). Due to the inconsistent ALJ decisions, the Commissioner requests a sentence four remand to the Appeals Council to determine whether the requirements for reopening the second case are met. See 20 C.F.R. §§ 404.987-404.989. If so, the two cases will be consolidated and remanded to an ALJ for a new decision. (Docket No. 15, p. 2-3). As reopening the second case would jeopardize his receipt of benefits, Encarnación opposes the Commissioner's remand request and instead requests a remand to reconsider the merits of the first application, since a favorable determination would entitle him to benefits pre-dating July 2006. (Docket No. 16, p. 2).
As the Commissioner himself remarks, the second decision is not before this court. (Docket No. 15, p. 2). The court lacks jurisdiction over the subsequent award of benefits because no appeal from that claim has been taken to the district court. Gay v. Astrue, 2008 WL 2004228, at * 1 n. 1 (D.R.I. May 8, 2008) (citing Baker v. Sullivan, 880 F.2d 319, 321 (11th Cir.1989)). Defendant also points out that the Social Security Administration ("SSA") "may reopen a final determination or decision on [its] own initiative," 20 C.F.R. § 404.987(b), provided the conditions to reopen are met. (Docket No. 15, p. 2). The availability of an agency procedure for the SSA to reopen a case further convinces the court that even if it had jurisdiction, it need not issue defendant's requested order.
In light of the lack of opposition to plaintiffs allegations, the court finds that the ALJ's exclusive reliance on the Grid was error. The case is hereby REVERSED and REMANDED to the Commissioner. Plaintiffs motion to remand for further development and consideration of the record, including the taking of vocational expert testimony at step five in the evaluation process, is GRANTED. Defendant's motion to remand is DENIED. Judgment shall be entered accordingly.
IT IS SO ORDERED.
NOTES
[1] A five-step sequential evaluation process must be applied to every case in making a final determination as to whether a claimant is disabled. 20 C.F.R. § 404.1520; Goodermote v. Sec'y of Health and Human Servs., 690 F.2d 5, 6-7 (1st Cir.1982). The claimant has the burden, under steps one through four, of proving that he cannot return to his former employment because of the alleged disability. Santiago v. Sec'y of Health and Human Servs., 944 F.2d 1, 5 (1st Cir.1991). At step five, the burden shifts to the Commissioner to prove the existence of other jobs in the national economy that the claimant can perform. Ortiz v. Sec'y of Health and Human Servs., 890 F.2d 520, 524 (1st Cir.1989).
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10-30-2013
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https://www.courtlistener.com/api/rest/v3/opinions/2540868/
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721 F. Supp. 2d 1261 (2010)
Kemp A. KNIGHTEN, individually, Plaintiff,
v.
PALISADES COLLECTIONS, LLC, a foreign limited liability company, et al., Defendants.
Case No. 09-CIV-20051.
United States District Court, S.D. Florida.
July 6, 2010.
*1263 Scott David Owens, Cohen & Owens PA, Hollywood, FL, for Plaintiff.
George M. Vinci, Jr., Brooke Caroline Madonna, Spector Gadon & Rosen, St. Petersburg, FL, Justin Daniel Jacobson, Jacobson Sobo & Moselle, Plantation, FL, for Defendants.
OMNIBUS ORDER
BARRY L. GARBER, United States Magistrate Judge.
THIS CAUSE is before the Court upon Defendant Palisades Collection, LLC's Motion for Sanctions [DE 43], Plaintiff Kemp A. Knighten's Cross Motion for Summary Judgment Against Palisades [DE 110], Plaintiff's Motion for Summary Judgment Against James Cary Jacobson, P.A. and Justin D. Jacobson [DE 50], and Palisades Collection's Motion for Summary Judgment [DE 57]. The Court has received the concomitant Responses and Replies, and held a hearing on the matters on June 24, 2010.
This lawsuit arises out of a state court action filed on January 10, 2008. [DE 48-2]. The plaintiff in the state court action was Palisades Collection, LLC ("Palisades"). Id. The law firm that represented Palisades was Jacobson, Sobo, & Moselle ("JSM"), or James Cary Jacobson, P.A., and Justin D. Jacobson. Id. Palisades sued Kemp A. Knighten ("Knighten") in state court to collect an alleged credit card debt of $4,074.63. Id. Knighten hired counsel to defend him in the state court suit, for which he has incurred attorney's fees. [DE 45-1 at ¶ 8]. It was eventually discovered that Palisades did not own the debt at issue, rather an associated company that JSM also represented, Unifund, was the true owner of the account. [DE 51-4 at 2]. JSM filed the suit under Palisades's name because it mistakenly believed that Knighten's account was one of many that had been transferred from Unifund to Palisades. [DE 55 at 7]. Palisades admitted that it learned that a lawsuit had been filed in its name against Knighten on May 5, 2009, when it was served with the first Complaint in the instant action. [DE 51-3 at 6]. On September 16, 2009, the day before trial in state court, JSM filed a Motion to Correct Clerical Error in order to correct the name of the plaintiff. [DE 51-4 at 2]. The state court denied that motion and eventually dismissed the case in February, 2010. [DE 46].
Knighten filed the instant lawsuit for various violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. (the "FDCPA") including the filing of a time-barred lawsuit and the use of false or misleading representations for filing a lawsuit in which it had no standing to sue. Specifically, Count I contains the following allegations: 1) use of deceptive means (§ 1692e); 2) engaging in conduct the natural consequence of which is to harass, oppress or abuse (§ 1692d); and 3) engaging in an unfair and deceptive practice by filing a suit against Plaintiff which Defendants knew was time-barred and also by continuing to litigate the matter even after becoming aware that the state court lawsuit was in fact time-barred (§ 1692f). Count II relates to false and deceptive representations based on the fact that Palisades did not even own the debt at issue, and included the following alleged violations: 1) use of false, deceptive, or misleading representations in connection with the collection of any debt (§ 1692e); 2) making a false representation of the character, amount or legal status of any debt (§ 1692e(2)(A)); 3) making a false representation of the compensation which may *1264 be lawfully received by any debt collector of a debt (§ 1692e(2)(B)); 4) making a threat to take an action that cannot legally be taken or is not intended to be taken (§ 1692e(5)); 5) using false representations or deceptive means to collect or attempt to collect a debt (§ 1692e(10)); 6) using unfair and unconscionable means to collect or attempt to collect a debt (§ 1692f); and 7) attempting to collect an amount unless such amount is expressly authorized by the agreement creating the debt or permitted by law (§ 1592f(l)). Defendants denied the allegations in the Amended Complaint and included an affirmative defense of bona fide error, pursuant to 15 U.S.C. § 1692k(c).
Palisades filed a Motion for Sanctions to which Knighten filed a Cross-Motion for Summary Judgement. Palisades also filed a Motion for Summary Judgment and Knighten filed a Motion for Summary Judgment against James Cary Jacobson, P.A. and Justin D. Jacobson. Each motion will be discussed in turn.
I. Palisades Collection's Motion for Sanctions
Palisades filed a motion for Rule 11(b) sanctions against Knighten for refusing to withdraw this lawsuit despite having the knowledge that Palisades never owned the underlying debt. Rather than file a response in opposition to the Motion for Sanctions, Knighten filed a Cross-Motion for Summary Judgment. The Court will consider the Motion for Sanctions when it has been fully briefed. Accordingly, Knighten shall file a Response in Opposition to the Motion for Sanctions within ten (10) days from the date of this Order.
II. Knighten's Cross Motion for Summary Judgment and Palisades's Motion for Summary Judgment
In response to Palisades's Motion for Sanctions, Knighten moved for summary judgment claiming that Palisades filed and maintained an unauthorized debt collection lawsuit and thereafter refused to dismiss it, even after it became apparent that it had no standing to sue. Palisades filed its Motion for Summary Judgment arguing that Knighten's claims under the FDCPA are inapplicable to Palisades and that the state court action was not time-barred.
Standard
Summary judgment is proper where the nonmoving party has failed to make a sufficient showing on an essential element of its case which it has the burden of proving. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). In making this determination, the Court views all facts in the light most favorable to the nonmoving party. Sierminski v. Transouth Financial Corp., 216 F.3d 945, 949 (11th Cir.2000). Summary judgment can be entered on a claim only if it is shown "that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED.R.CIV.P. 56(c).
Analysis
Knighten's central theme to his case against Palisades is that Palisades attempted to collect a debt that it did not own by filing a suit against Knighten in a state court action that was time-barred. Palisades contends that it was never assigned the account reflected in the complaint in the state court action, nor did it ever attempt to collect the debt which was at issue in state court. Therefore, Palisades argues, the FDCPA is not applicable in this instance as Palisades was not a debt collector as defined by the Act.
The Fair Debt Collection Practices Act is part of a comprehensive federal legislation aimed at preventing third-party debt collectors from using abusive and unfair tactics in collecting consumer debts. See 15 U.S.C. § 1692 (setting out the purpose of the FDCPA). "Debt collectors" are defined *1265 under the FDCPA as "any person who uses the instrumentality of interstate commerce or the mails in any business, the principle purpose of which is debt collection, or who regularly collects or attempts to collect debts owed to another." 15 U.S.C. § 1692a(6).
Knighten alleges that Palisades violated the following sections of the FDCPA: § 1692d, § 1692e(2)(A), § 1692e(2)(B), § 1692e(5), § 1692e(10), and § 1692f. In such circumstances, courts have applied the "least sophisticated consumer" standard, where the Court examines whether the statement made by the debt collector would mislead the least sophisticated consumer. Jeter v. Credit Bureau, Inc., 760 F.2d 1168, 1172-75 (11th Cir.1985).
The provisions of 15 U.S.C. § 1692d of the FDCPA contain general prohibitions on false and misleading statements. The specific text within § 1692d of the FDCPA states that "a debt collector may not engage in any-conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with a debt." 15 U.S.C. § 1692d. In Fox v. Citicorp Credit Services, Inc., the Ninth Circuit found that an agent of the defendant's intimidating and threatening phone calls to the plaintiff at work after repeated requests not to call her at her place of employment was an example of harassing conduct under § 1692d. 15 F.3d 1507, 1516 (9th Cir.1994).
No evidence has been set forth showing that Palisades engaged in any conduct directed towards Knighten in the state court action, as Palisades was completely unaware that it was ever identified as a plaintiff in that action. Because Palisades did not engage in any conduct towards Knighten, it cannot be liable to him for a violation under 15 U.S.C. § 1692d.
The allegations which fall under 15 U.S.C. § 1692e are in a category entitled "False or misleading representations." The critical language in this section states that "a debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt." 15 U.S.C. § 1692e. In Royal Financial Group, LLC v. George, the plaintiff alleged a violation of § 1692e(2)(a). Case No. ED 92972, 2010 WL 1223791 (Mo.App. E.D.2010). The plaintiff sued the defendant to collect a credit card debt that she had owed to Chase Manhattan Bank. Id. at *1. The defendant denied owing any money and made a counter-claim under § 1692e(2)(a). The defendant had the burden to provide sufficient evidence to this effect, and the court found that she did so by showing that she had only possessed one credit card in her lifetime, which had not been used since she had begun living in her retirement home nine years prior. Id. at *3. This evidence was enough for the court to find that Royal Financial's conduct violated § 1692e(2)(a). Id.
In Gilmore v. Account Management, Inc., the plaintiff contended that the defendant corporation used deceptive means to collect a debt in violation of 15 U.S.C. § 1692e(5). Case No. 08-cv-01388-JOF, 2009 WL 2848278 (N.D.Ga.2009). The defendant threatened legal action if the plaintiff did not pay the debt, however, the defendant never provided verification of the debt when requested to do so. Id. at *6. Under § 1692e(5), a debt collector violates the FDCPA when it threatens "to take any action that cannot legally be taken or that is not intended to be taken." 15 U.S.C. § 1692e(5). The court found that threatening the lawsuit was the type of action that this section of the FDCPA was meant to protect against, and thus found that the plaintiff stated a claim under this provision of the FDCPA. Id. at *6.
*1266 Violations under 15 U.S.C. § 1692e(10) are discussed in Fuller v. Becker & Poliakoff, P.A., 192 F. Supp. 2d 1361 (M.D.Fla. 2002). There, plaintiffs received a letter in February of 1999 from the defendants regarding delinquent maintenance assessments. Id. at 1364. In the letter, the "Defendants assert that, if Plaintiffs fail to respond to the letter on or before thirty days of the date of the letter, Plaintiffs will incur `a substantial amount of attorney's fees and costs, which [Plaintiffs] are personally liable for and which can also constitute a judgment against any property [Plaintiffs] own.'" Id. at 1369. The plaintiffs argued that this was a misrepresentation under § 1692e(10) of the FDCPA and the court in that case agreed. Id.
In the instant case, for each allegation under § 1692e of the FDCPA, Palisades had no proactive conduct with reference to Knighten or the alleged debt at issue. Palisades never used any conduct, false or misleading at that, in an attempt to collect a debt from Knighten. Though the lawsuit was filed under Palisades's name, this was due to JSM, rather than any actions that Palisades took.
Last, Knighten alleges that Palisades violated 15 U.S.C. § 1692f. That section, entitled "Unfair Practices" states that "a debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt." 15 U.S.C. § 1692f. A violation of this statute is seen in Sandlin v. Shapiro & Fishman, 919 F. Supp. 1564 (M.D.Fla.1996). The plaintiffs had obtained a mortgage loan on which ITT Residential had been given the authority to collect payments. Id. at 1566. ITT Residential hired the defendant to collect the mortgage note and payment through correspondence with the plaintiffs. Id. The plaintiffs alleged that the defendant violated the FDCPA through the inclusion of a payoff fee added to the mortgage owed. Id. A collection of an unauthorized fee violates § 1692f of the FDCPA, and the court found that the plaintiffs did have a cause of action under the FDCPA. Id. at 1568.
Unlike in Sandlin, Palisades did not collect or attempt to collect a debt by any means. The purpose of the "Unfair Practices" section of the FDCPA is to prohibit collectors from using various unfair or unconscionable means to attempt to collect a debt from a consumer. 15 U.S.C. § 1692f. In the instant case, Palisades was unaware of the state court action and could not have possibly engaged in any conduct which could be viewed as either as an unfair or unconscionable way to collect or attempt to collect the debt. The FDCPA was simply not promulgated to penalize debt collectors under these circumstances. Therefore, Palisades could not have violated the FDCPA.
Knighten argues, however, that under the least sophisticated consumer standard, Palisades is subject to the FDCPA because the least sophisticated consumer would have no way of knowing whether Palisades authorized the state court action. See Jeter, 760 F.2d at 1172-75. Knighten also argues that Palisades's failure to act after having become aware that an unauthorized debt collection lawsuit was filed on its behalf ratified the earlier conduct of JSM under the concept of apparent authority.
First, the least sophisticated consumer standard does not apply in this instance. In formulating the least sophisticated consumer standard, the Eleventh Circuit looked at claims made under § 1692e(5) and (10). Id. The court adopted language from the Northern District of Georgia, stating, "[t]he FDCPA's purpose of protecting [consumers] . . . is best served by a definition of `deceive' that looks to the tendency of language to mislead the least sophisticated recipients of a *1267 debt collector's letters and telephone calls," Id. at 1175 (quoting Wright v. Credit Bureau of Georgia, Inc., 548 F. Supp. 591, 599 (N.D.Ga.1982)). Under the standard, the Court "analyzes whether a hypothetical least sophisticated consumer would be deceived or misled by the debt collectors's practices." Fuller v. Becker & Poliakoff, P.A., 192 F. Supp. 2d 1361, 1369 (M.D.Fla.2002). Here, Palisades, the debt collector, did not deceive Knighten as Palisades was involved in name only, and, as previously stated, did not engage in any conduct directed toward Knighten. Punishing Palisades for the actions of the law firm would not fulfil the purpose of the FDCPA, which is to "prevent third-party debt collectors from using abusive and unfair tactics in collecting consumer debts," where, as here, a debt collector did not actually engage in the alleged debt collecting violations. 15 U.S.C. § 1692. Palisades could not have deceived Knighten because Palisades itself did not take any prohibited action.
Next Knighten argues, that through the doctrine of apparent authority, Palisades is responsible for the actions of JSM. Knighten contends that all three elements to show apparent authority are present: (1) a representation was made on behalf of a purported principal, i.e., a lawsuit alleging that Knighten owed a debt to Palisades; (2) reliance on that representation by a third party, i.e., Knighten located an attorney to defend a lawsuit filed by Palisades; and (3) a change of position by the third party based upon said representation, i.e. Knighten hired the undersigned counsel to defend a lawsuit filed by Palisades Collection, LLC. See Lensa Corp. v. Poinciana Gardens Ass'n, 765 So. 2d 296, 298 (Fla. 4th DCA 2000) (stating the required elements for apparent authority). Knighten relies on Seventh Circuit case law for the proposition that ignorance is no excuse as 15 U.S.C. § 1692e applies "even when a false representation was unintentional." Turner v. J.V.D.B. & Assocs., 330 F.3d 991, 995 (7th Cir.2003) (quoting Gearing v. Check Brokerage Corp., 233 F.3d 469, 472 (7th Cir.2000)); Randolph v. IMBS, Inc., 368 F.3d 726, 728 (7th Cir. 2004). However, the cases that Knighten relies on fail to correspond to the circumstances present in the instant lawsuit because, here, Palisades never made any representations to Knighten.
Furthermore, apparent authority is not determined by the subjective understanding of the person who is dealing with the agent. MeterLogic, Inc. v. Copier Solutions, Inc., 126 F. Supp. 2d 1346, 1355 (S.D.Fla.2000) (citing Ja Dan, Inc. v. L-J, Inc., 898 F. Supp. 894, 900 (S.D.Fla.1995)). Rather, the principal must create the appearance of the relationship. Id. According to the affidavit of Steven Braun, Assistant Vice President of Operations and Director of Litigation at Palisades, Palisades was never assigned the debt at issue in the state court action. [DE 58-4 at ¶ 4]. Palisades made no representations to Knighten with reference to the debt at issue in the instant Amended Complaint, nor did they attempt to collect the debt at issue in the Amended Complaint. Justin D. Jacobson testified at his videotaped deposition that his law firm's client in the state court lawsuit was Unifund and that Palisades was not the correct party. [DE 58-5 at 3-4].
As stated at the hearing on June 24, 2010, this case is best compared to a scenario involving a stolen credit card. The card holder is not responsible for the purchases made by whomever stole the card in question, nor is Palisades responsible for the actions of JSM. Accordingly, apparent authority is not applicable here.
Regarding Knighten's argument that Palisades somehow acquiesced to the litigation in state court because it did not immediately move to dismiss the case, the *1268 Court is not convinced. Though Palisades could have done something, this does not amount to any authorization of JSM's actions. Thus, Palisades cannot be held liable to Knighten for violations under the FDCPA and the Court does not need to address whether the act action was time-barred. Accordingly, Palisades's Motion for Summary Judgment is GRANTED and Knighten's Cross Motion for Summary Judgment is DENIED.
III. Plaintiff Kemp A. Knighten's Motion for Summary Judgment Against James Cary Jacobson, P.A., and Justin D. Jacobson
Knighten moves for summary judgment against Defendants James Cary Jacobson, P.A. and Justin D. Jacobson (collectively as "Jacobson") claiming that Jacobson violated the FDCPA in two ways: (1) filing a time-barred lawsuit, and (2) filing the suit for a party that lacked standing to sue. Jacobson contends that the lawsuit was not time-barred and the application of the bona fide error defense shields him from responsibility.
Time-Barred Lawsuit
Knighten argues that filing a time-barred lawsuit constitutes a violation of the FDCPA. Kimber v. Federal Financial Corp., 668 F. Supp. 1480 (M.D.Ala.1987). The parties, however, each contend that a different statute of limitations applies. As an initial matter, Jacobson does not contest the application of the FDCPA against him.
Knighten claims that Florida's four year statute of limitations applies. Fla. Stat. § 95.11. He claims that his alleged debt was last paid in 2000 [DE 51-1 at ¶ 10], and "[e]ven under the most conservative analysis of Florida's statute of limitations, the applicable time to file the state court lawsuit had passed long ago." [DE 51 at 7]. Knighten next alleges that Jacobson cannot claim the bona fide affirmative defense because litigating a time-barred suit is an intentional act and therefore cannot be a bona fide error. Thompson v. D.A.N. Joint Venture III, L.P., Case No. 05-938, 2007 WL 1625926 (M.D.Ala. Jun. 5, 2007).
Jacobson responds that Knighten uses an incorrect statute of limitations, as well as the wrong starting date from which to measure the period of time. Jacobson contends that the cardmember agreement, which is associated with the credit card account at issue in the state court action, expressly stated that North Dakota law governed the agreement. Jacobson explains that under North Dakota law, the limitations period should be measured from the date "the claim for relief has accrued," and that the applicable limitation period is six years. N.D. Cent.Code § 28-01-16. According to Jacobson, a claim on an unpaid credit card account accrues on the due date of the last unpaid statement, not when the last payment was made. Consequently, Jacobson argues, the limitations period cannot be measured from a date before June 13, 2003, which is the due date of the last unpaid statement. See [DE 55-1 at 14].
Jacobson, however, offers no evidence to support the use of this date. First, the cardmember agreement that Jacobson references states that it is effective on January 1, 2006. Knighten explains that both the alleged starting dates of either 2000 or 2003 occurred before this agreement became effective, and an agreement must be effective before it can be breached. Therefore, the choice of law provision in the 2006 agreement is inapplicable. Furthermore, Knighten argues that the bank records that Jacobson uses constitute inadmissible hearsay because they were not part of Knighten's cardmember agreement and were never signed by Knighten. See McCaskill v. Ray, 279 Fed.Appx. 913 (11th Cir.2008) (holding that exhibits containing *1269 logos of another entity that are not authenticated by a records custodian are inadmissible hearsay).
At the hearing Jacobson represented that the 2004 agreement that was in effect was illegible, and therefore he attached an identical 2006 agreement instead. Although there is currently a pending motion to hold a deposition to authenticate the attached agreement and account statement, [DE 108], the only evidence before the Court is that a payment was last made in 2000 [DE 51-1 at ¶ 10]. Therefore, even a 2004 agreement would not be effective at the time the contract was made and authenticating the documents would make no difference in the Court's findings. Accordingly, pursuant to Fla. Stat. § 95.11, an action that is not based on a written document must commence within four years.
Having determined that the Florida statute of limitation applies, the Court must next examine the evidence concerning when the cause of action accrued. In a sworn affidavit, Knighten stated that he made his last payment on the account in 2000. [DE 51-1 at ¶ 10]. Jacobson does not present any evidence to the contrary. Since Knighten did not make any subsequent payments, the account must have gone into default in 2000, or at the latest 2001. The filing of the state court action in 2008 was beyond the limitations period of four years.[1] Jacobson mistakenly argues that
[t]he account statement on which the state-court claim was based reflects a payment due date of June 13, 2003 and. . . a default occurs if the cardmember does not make the minimum payment. However, a default . . . does not by itself give rise to a right to sue. [Rather,] a default authorizes but does not automatically result in cancellation of the account, allowing the issuer to seek the full balance due. Thus, the limitations period could not have commenced prior to the statement due date, June 13, 2003.
[DE 55 at 5]. This claim that the unpaid bill from 2003 constitutes the accrual of the lawsuit is nonsensical, given that there is no evidence to contradict that Knighten made his last payment in 2000. By Jacobson's logic, a company could bill a customer for years after the customer defaulted on his payments in order to delay the running of the statute of limitations. Consequently, the Court finds that the state court suit was time-barred.
Lack of Standing
Though Jacobson admits to mistakenly filing a suit in Palisades's name against Knighten and that the "state court complaint contained false statements by virtue of the misnomer," he argues that the bona fide error defense precludes summary judgment. [DE 55 at 6]. A violator of the FDCPA may claim a bona fide affirmative defense if he can prove by a preponderance of the evidence that his error was bona fide and unintentional, and that he made reasonable attempts to prevent errors from occurring. Johnson v. Riddle, 443 F.3d 723, 727 (10th Cir.2006). Jacobson cites the following reasons for application of the bona fide error defense: 1) soon after realizing the mistake, he moved to correct it; 2) the mistake was unintentional and no benefit was conferred on any party because of the mistake; and 3) procedures were in place to prevent this type of error.
Knighten contends that even after Jacobson realized that Palisades was the improper plaintiff, Jacobson refused to dismiss the suit. The bona fide error affirmative *1270 defense allowed under the FDCPA is not available to debt collectors who were on notice as to the unlawfulness of their lawsuits, but still continued to litigate. Thompson, 2007 WL 1625926. Because Jacobson was on notice as to their lack of standing but nonetheless continued to litigate, Knighten argues that Jacobson cannot claim the bona fide affirmative defense.
Jacobson litigated the suit for one and a half years until realizing that Palisades was an improper plaintiff. However, Jacobson points out that as soon as he recognized the mistake, he raised the issue with Knighten and the trial judge by filing a Motion to Correct Clerical Error. Jacobson explains that his immediate attempt to correct the error invalidates Knighten's claim that Jacobson continued to litigate an unlawful suit. Jacobson distinguishes Thompson v. D.A.N. Joint Venture III, L.P., the case that Knighten cites to support his argument, from the case at bar. Id. In Thompson, the plaintiff sued the defendant creditor for filing a civil suit after the statute of limitations had passed, in violation of the FDCPA. Id. The offending party admitted that it made no attempt to correct the error. Id. Even though this case presents a different scenario and Jacobson did attempt to correct the error, Jacobson also admits that he "had documents reflecting the account was owned by Unifund [the proper plaintiff in the state court action]." [DE 55 at 7]. There were no documents indicating that the account was transferred from Unifund to Palisades. The fact that Jacobson had documents reflecting that Unifund owned the debt shows that he was on notice of the lack of standing.
Jacobson also argues that the mistake was unintentional, and consequently, bona fide, because Jacobson accidentally marked the credit card account as one that was transferred to Palisades from Unifund. This mistake, Jacobson alleges, must have been unintentional and bona fide because it conferred no advantage upon Jacobson, nor a disadvantage upon Knighten, in the state court action. In fact, the mistake caused Unifund to be unable to pursue its claim because the statute of limitations period had passed by the time the mistake was recognized. Jacobson cites Katz v. Asset Acceptance, LLC to support this proposition, because there, the court granted a law firm's motion for summary judgment, despite the firm's having accidentally sued the debtor in the wrong venue, in part because "it is hard to imagine what interest of [the firm] would be served by filing the underlying suit in New York [County] rather than Kings County." Case No. 05-2783, 2006 WL 3483921, at *3 (E.D.N.Y. Nov. 30, 2006).
However, Katz is distinguishable from the present case because here, Jacobson had documentation reflecting that Unifund, rather than Palisades, owned the account. [DE 55 at 7]. Even though the documents predated the purported transfer to Palisades, this should have made Jacobson aware that the state court action was filed under the wrong party name. Furthermore, in Katz the clerical error occurred because the firm's paralegal accidentally entered the incorrect venue code on the client's file, whereas here, Jacobson actually (though mistakenly) believed that Palisades was the proper plaintiff.
Knighten also claims that Jacobson fails to offer proof of the specific procedures his firm followed to prevent filing a lawsuit under an incorrect party name. Without specific evidence of the preventive procedures, the bona fide error affirmative defense cannot be raised. Reichert v. Nat'l Credit Sys., Inc., 531 F.3d 1002, 1006 (9th Cir.2008). Knighten alleges that Jacobson merely states that he utilized preventive procedures, but a mistake nonetheless *1271 occurred. Without more, Knighten argues, Jacobson cannot claim the bona fide affirmative defense.
Jacobson contends that he made reasonable attempts to prevent this kind of mistake from occurring, because both attorneys and legal assistants review exhibits when putting together the documents in a suit, and both Unifund and Palisades reviewed the affidavits. Here, Jacobson argues, no one noticed the error "because Unifund services all of Palisades (sic) accounts." [DE 55 at 7].
While Jacobson claims that the affidavit explains the procedures used to avoid the error that occurred, the affidavit does not explain the procedures used for cases such as this one, where there are documents reflecting that the account was in the name of another entity. See [DE 55-1]. Though Unifund and Palisades have a relationship, this does not excuse the actions of Jacobson. Given that Jacobson "had documents reflecting the account was owned by Unifund, [but] predated the purported transfer to Palisades," Jacobson should have conducted adequate research to ascertain the correct owner of the account before filing and maintaining the lawsuit. [DE 55 at 7]. Even though attorneys, legal assistants, and the clients themselves reviewed the documents of the lawsuit to confirm their accuracy, Jacobson states that "[n]either the attorney nor the legal assistant noticed the error as it would not be obvious from the pleadings and exhibits themselves." Id. If the error would not be obvious to those checking it, it cannot follow that the procedures in place were reasonable, nor sufficient to prevent this error from occurring.
The Court therefore finds that Jacobson violated the FDCPA by filing a time-barred lawsuit for a party that lacked standing, and Jacobson cannot raise the bona fide error defense. Without ability to claim the defense, "a single violation of [the FDCPA] is sufficient to establish civil liability." Ferguson v. Credit Mgmt. Control, Inc., 140 F. Supp. 2d 1293, 1297 (M.D.Fla.2001). Because there is no question of fact that Jacobson filed and maintained a time-barred lawsuit for a party that lacked standing, the Court finds that Jacobson committed the following FDCPA violations: 1) using false, deceptive, or misleading representations in connection with the collection of any debt (§ 1692e); 2) making a false representation of the character, amount or legal status of any debt (§ 1692e(2)(A)); 3) making a false representation of the compensation which may be lawfully received by any debt collector of a debt (§ 1692e(2)(B)); 4) making a threat to take an action that cannot legally be taken or is not intended to be taken (§ 1692e(5)); 5) using false representations or deceptive means to collect or attempt to collect a debt (§ 1692e(10)); 6) using unfair and unconscionable means to collect or attempt to collect a debt (§ 1692f); and 7) attempting to collect an amount unless such amount is expressly authorized by the agreement creating the debt or permitted by law (§ 1592f(l)). Accordingly, Knighten's Motion for Summary Judgment Against James Cary Jacobson, P.A. and Justin D. Jacobson is GRANTED. The Court hereby
ORDERS the following:
1) Plaintiff shall file a Response in Opposition to Defendant Palisades Collection, LLC's Motion for Sanctions within ten (10) days from the date of this Order.
2) Defendant Palisades Collection, LLC's Motion for Summary Judgment is GRANTED
3) Plaintiff's Cross Motion for Summary Judgment is DENIED.
4) Plaintiff's Motion for Summary Judgment Against Defendants James Cary *1272 Jacobson, P.A. and Justin D. Jacobson is GRANTED.
5) All pending motions, except for the Motion for Sanctions, are DENIED AS MOOT.
NOTES
[1] Even if the North Dakota statute of limitations applied, the filing of the state court action in 2008 was beyond the limitations period of six years.
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709 F. Supp. 2d 510 (2010)
Irby FITCH, Brittany Fitch, Dorothy Stewart, et al.
v.
WELLS FARGO BANK, N.A. f/k/a Wells Fargo Home Mortgage, Inc.
Civil Action No. 08-1639, 09-3466.
United States District Court, E.D. Louisiana.
April 29, 2010.
*511 Marguerite Kern Kingsmill, Charles Bruce Colvin, Michael R.C. Riess, Kingsmill Riess, LLC, New Orleans, LA, David Allen Parsiola, Michael R.C. Riess, Philip Francis Cossich, Jr., Cossich, Sumich, Parsiola & Taylor, LLC, Belle Chasse, LA, Kirk L. Myers, Harrington & Myers, Metairie, LA, for Irby Fitch, Brittany Fitch, Dorothy Stewart.
Eric J. Simonson, Anthony Rollo, Heather A. Lasalle, Lauren Elizabeth Campisi, Stephen Winthrop Rider, McGlinchey Stafford, PLLC, New Orleans, LA, Anthony Rollo, Eric J. Simonson, Lauren Elizabeth Campisi, Rudy J. Cerone, Stephen Winthrop Rider, McGlinchey Stafford, PLLC, New Orleans, LA, for Wells Fargo Bank, N.A.
ORDER AND REASONS
SARAH S. VANCE, District Judge.
Before the Court is defendant Wells Fargo Bank, N.A.'s motion for partial judgment on the pleadings.[1] For the following reasons, Wells Fargo's motion is GRANTED.
I. BACKGROUND
On August 31, 1998, Lydia Kennedy received a mortgage loan from Norwest Mortgage, Inc. The loan was secured by property owned by Kennedy at 835 Lawrence Drive in Gretna, Louisiana. After the mortgage agreement was executed, Norwest merged into Wells Fargo, Kennedy passed away, and Morrison became the owner of Kennedy's property and assumed her mortgage.
Morrison fell behind on her mortgage payments in approximately May 2003. On March 4, 2004, Wells Fargo ordered a Broker Price Opinion (BPO) to appraise the market value of the mortgaged property. A BPO was conducted by a Wells Fargo division or affiliate, Premier Asset Services (PAS), on March 9, 2004. On March *512 12, 2004, Wells Fargo posted a fee for this BPO to Morrison's mortgage account in the amount of $125.[2] Morrison has submitted an affidavit asserting that she was not notified or informed that the BPO was posted at this time.[3]
On April 1, 2004, Morrison filed a voluntary petition for Chapter 13 bankruptcy relief.[4] Morrison's mortgage payment obligations were modified several times over the course of her bankruptcy. On April 23, 2008, after lifting Morrison's bankruptcy stay, Wells Fargo collected sums held in Morrison's mortgage "suspense account" to pay certain assessed fees and costs, including the BPO fee.[5] Morrison asserts that she was not notified that the BPO fee was collected.[6]
On May 6, 2009, Morrison filed this putative class action alleging that the BPO fee charged to her account was improperly inflated. Morrison claims that the BPO fee violates the Real Estate Settlement Procedures Act (RESPA)[7] and various state laws, including unjust enrichment, breach of fiduciary duty, misrepresentation, detrimental reliance, conversion, fraud, conspiracy, unfair and deceptive trade practices, breach of contract, bad faith, and negligence.[8] Wells Fargo now moves for partial judgment on the pleadings that the BPO fee does not violate RESPA, the Louisiana Unfair Trade Practices Act (LUTPA)[9] or Wells Fargo's fiduciary duties.
II. JUDGMENT ON THE PLEADINGS
A motion for judgment on the pleadings under Rule 12(c) is subject to the same standard as a motion to dismiss under Rule 12(b)(6).[10] To survive a Rule 12(b)(6) motion to dismiss after the Supreme Court's decisions in Twombly and Iqbal, a plaintiff must plead enough facts "to state a claim to relief that is plausible on its face."[11] A claim is facially plausible when the plaintiff pleads facts that allow the court to "draw the reasonable inference that the defendant is liable for the misconduct alleged."[12] The factual allegations must "raise a reasonable expectation that discovery will reveal evidence" of liability.[13] "A court must accept all well-pleaded facts as true and must draw all reasonable inferences in favor of the plaintiff."[14] The court is not, however, bound to accept as true legal conclusions couched as factual *513 allegations.[15] Although pro se plaintiffs are held to less stringent standards than those drafted by lawyers, "conclusory allegations or legal conclusions masquerading as factual conclusions will not suffice to prevent a motion to dismiss."[16]
In determining whether to grant a motion to dismiss, a district court generally may not "go outside the complaint."[17] When ruling on a motion to dismiss a pro se complaint, however, a district court is "required to look beyond the [plaintiff's] formal complaint and to consider as amendments to the complaint those materials subsequently filed."[18] Furthermore, a district court may consider documents attached to a motion to dismiss if they are referred to in the plaintiff's complaint and are central to the plaintiff's claim.[19]
III. DISCUSSION
A. RESPA, Section 2607(b)
Congress enacted RESPA to ensure that real estate consumers "are provided with greater and more timely information on the nature and costs of the settlement process and are protected from unnecessarily high settlement charges caused by certain abusive practices."[20] To this end, RESPA, 12 U.S.C. § 2607(b), provides that "[n]o person shall give and no person shall accept any portion, split, or percentage of any charge made or received for the rendering of a real estate settlement service in connection with a transaction involving a federally related mortgage loan other than for services actually performed."[21] According to Morrison, the actual cost of the BPO conducted by PAS was approximately $50, and therefore the $125 BPO fee collected by Wells Fargo unlawfully included a portion, split, or percentage other than for services actually performed. Wells Fargo contends that the BPO conducted by PAS was not a settlement service, and therefore the $125 BPO fee is not subject to RESPA. The issue is whether a mortgagee performs a real estate settlement service within the meaning of RESPA when it conducts a BPO in anticipation of foreclosure proceedings. On the facts of this case, the Court finds that it does not.
By its terms, § 2607 applies only to charges for real estate "settlement service[s]." RESPA defines "settlement services" as "any service provided in connection with a real estate settlement," including, but not limited to:
title searches, title examinations, the provision of title certificates, title insurance, services rendered by an attorney, the preparation of documents, property surveys, the rendering of credit reports or appraisals, pest and fungus inspections, services rendered by a real estate agent or broker, the origination of a federally related mortgage loan (including, but not limited to, the taking of loan applications, loan processing, and the underwriting and funding of loans), and the handling of the processing, and closing *514 or settlement.[22]
According to Department of Housing and Urban Development (HUD) regulations, a real estate "settlement" means:
the process of executing legally binding documents regarding a lien on property that is subject to a federally related mortgage loan. This process may also be called `closing' or `escrow' in different jurisdictions.[23]
The Court affords deference to HUD's definition as long as it is not arbitrary, capricious, or manifestly contrary to the statute.[24]
The Court finds that HUD's definition of a real estate settlement is entitled to deference to the extent it is temporally limited to the period surrounding the closing of a mortgage transaction. An unlimited definitioni.e., that the settlement process includes the execution of any and all "legally binding documents regarding a lien on property"would be manifestly contrary to the statutory language of § 2607 because it would make Congress's use of the word "settlement" superfluous.[25] If Congress intended § 2607 to apply to all real estate services regardless of when they occur, it would not have limited § 2607 to only real estate settlement services.
Limiting the settlement process to the period surrounding the closing of a mortgage transaction is suggested by RESPA's non-exhaustive list of settlement services.[26] All of the listed services arise at or before closing, and none arises only after closing.[27] Limiting the settlement process to the period surrounding closing also accords with the common understanding of the term. Black's Law Dictionary equates a real estate settlement with a real estate closing and defines a closing as "the final transaction between the buyer and seller, whereby the conveyancing documents are concluded and the money and property transferred."[28] Once the parties close the mortgage transaction, further transactions between them no longer involve "settlement" services.
The Court finds that the BPO was not a real estate settlement service because it was conducted nearly five years after the closing of the mortgage agreement between Lydia Kennedy and Norwest Mortgage. Because the BPO was not a real estate settlement service, the BPO fee is not a "charge made or received for the *515 rendering of a real estate settlement service,"[29] and it is not subject to § 2607.
The Court's conclusion is supported by the Fifth Circuit's decision in Snow v. First American Title Insurance Company.[30] Although Snow did not directly address the scope of § 2607, it did observe that "Congress directed RESPA toward the closing. The primary ill that § 2607 is designed to remedy is the potential for `unnecessarily high settlement charges' caused by kickbacks, fee-splitting, and other practices that suppress price competition for settlement services."[31]Snow thus confirms the "statutory emphasis on the closing" in § 2607[32] and acknowledges that § 2607 was a targeted attempt to increase price competition for settlement services and not an overhaul of the entire mortgage servicing industry.
Other courts have expressly held that § 2607 is limited to the period surrounding the closing of a mortgage. In Bloom v. Martin,[33] the Ninth Circuit held that § 2607 did not apply to demand and reconveyance fees charged in connection with a borrower's prepayment of the balance of a loan.[34] The court found that "the structure of RESPA ... does not focus on post-settlement fees paid by mortgagors after they have purchased their houses."[35] In McAnaney v. Astoria Financial Corporation,[36] the Eastern District of New York held that § 2607 did not apply to attorney, fascimile and recording fees charged when mortgagors attempted to pay off their loan balances.[37] The court equated settlement with closing, and adopted a "bright-line rule, limiting the scope of RESPA to practices at or before settlement."[38] The court observed that "nothing in the relevant portion of RESPA, its implementing regulations, or the plain meaning of the statute indicates a reason to extend the coverage of `settlement services' to the satisfaction, prepayment, or release of a mortgage."[39] In Molosky v. Wash. Mut. Bank,[40] the Eastern District of Michigan similarly held that fees assessed when plaintiffs paid off the remaining balance of their mortgage loans were not subject to § 2607. Lastly, in Greenwald v. First Federal Savings & Loan Association, the First Circuit upheld a district court's determination that interest payments on a tax escrow account were not settlement services because they "can continue long after the closing of the mortgage transaction and ... can continue to occur during the entire life of the mortgage."[41] In this case, the BPO was not a settlement service because it was ordered long after Lydia Kennedy closed her mortgage agreement with Norwest Mortgage.
Morrison cites a line of cases observing that RESPA applies not only to the actual settlement process but also to later mortgage *516 servicing.[42] This may be true with respect to some provisions of RESPA,[43] but it is not true with respect to § 2607. Congress knew how to impose obligations on mortgage servicers when it enacted RESPA, and it chose to do so in § 2605 but not § 2607.
The Court recognizes that a real estate settlement may include certain transactions occurring after an initial closing, such as a refinancing.[44] The Court need not resolve which of these transactions constitutes a real estate settlement, however, because Morrison has not alleged that the BPO at issue in this case was rendered in connection with a refinancing or other similar transaction. Morrison asserts that various consent orders, plan modifications and proofs of claim in her bankruptcy case rise to the level of real estate settlements. Even if a bankruptcy filing could constitute a real estate settlement within the meaning of § 2607,[45] the BPO in this case was not a service rendered in connection with any bankruptcy filing. Indeed, the BPO was conducted and the BPO fee assessed before Morrison even filed for bankruptcy. It may be true that Wells Fargo repeatedly failed to disclose the assessment and collection of the BPO fee in its bankruptcy fillings,[46] but this does not transform the BPO itself into a settlement service subject to § 2607. Moreover, although the BPO fee was actually collected while Morrison's bankruptcy case was pending, it was not collected in connection with any bankruptcy filing. The BPO fee was deducted from Morrison's suspense account outside the bankruptcy process after Wells Fargo successfully lifted the bankruptcy stay.
Public policy does not, as Morrison contends, support a temporally unrestrained application of § 2607. As suggested by the Fifth Circuit in Snow, § 2607 was a targeted attempt to increase price competition for settlement services. It is the language and structure of RESPA, and not this Court's assessment of public policy, that must determine the obligations imposed by RESPA. A BPO that is not ordered, assessed or collected in connection with the closing of a mortgage transaction is not a settlement service, and it thus falls "outside the scope of RESPA."[47]
For the reasons stated, Morrison has failed to state a claim for relief under § 2607, and her RESPA claim must be DISMISSED.
*517 B. LUTPA
Morrison acknowledges that she "has not alleged the applicability of LUTPA."[48] Even if Morrison did allege a LUTPA violation, Wells Fargo is exempt from LUTPA because Wells Fargo is a federally insured financial institution.[49] Accordingly, Morrison's LUTPA claim against Wells Fargo, if any, must be DISMISSED.
C. BREACH OF FIDUCIARY DUTY
Louisiana statute provides that "[n]o financial institution ... shall be deemed or implied to be acting as a fiduciary, or have a fiduciary obligation or responsibility to its customers or to third parties ... unless there is a written agency or trust agreement under which the financial institution specifically agrees to act and perform in the capacity of a fiduciary."[50] Thus, "dealings between lending institutions and borrowers are generally considered to be arm's length transactions which do not impose any independent duty of care on the part of the lender."[51] Morrison has not alleged the existence of any written agency or trust agreement under which Wells Fargo specifically agreed to act and perform in the capacity of a fiduciary, nor has she alleged any special circumstances in which a fiduciary relationship is "manifest."[52] Accordingly, Morrison's fiduciary duty claim must be DISMISSED.
D. Other Claims
Morrison asserts that she may be able to raise additional claims after conducting discovery. These claims are not before the Court, and accordingly the Court does not address them.
IV. CONCLUSION
For the reasons stated, Wells Fargo's motion for partial judgment on the pleadings is GRANTED.
NOTES
[1] (R. 132.) Unless otherwise indicated, all record citations in this opinion refer to the docket in civil action number 08-1639.
[2] (R. Doc. 87, Ex. A ¶ 4.)
[3] (R. Doc. 94, Ex. A ¶ 8.)
[4] See In re Morrison, Bankr.No. 04-12313.
[5] (R. Doc. 87, Ex. A ¶ 10.)
[6] (R. Doc. 94, Ex. A ¶ 13.)
[7] See 12 U.S.C. §§ 2601, et seq.
[8] Morrison's putative class action complaint against Wells Fargo was filed under civil action number 09-3466. On August 18, 2009, Morrison's action was consolidated in this Court with a similar putative class action complaint filed by Irby Fitch, Brittany Fitch and Dorothy Stewart. See Irby Fitch, et al. v. Wells Fargo Bank, N.A., Civ. A. No. 08-1639. The Fitch action has since been dismissed.
[9] See La.Rev.Stat. Ann. §§ 51:1401, et seq.
[10] Doe v. MySpace, Inc., 528 F.3d 413, 418 (5th Cir.2008).
[11] Ashcroft v. Iqbal, ___ U.S. ___, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 547, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)).
[12] Iqbal, 129 S.Ct. at 1949.
[13] Twombly, 550 U.S. at 556, 127 S. Ct. 1955.
[14] Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 232-33 (5th Cir.2009); Baker v. Putnal, 75 F.3d 190, 196 (5th Cir.1996).
[15] Iqbal, 129 S.Ct. at 1949-50.
[16] Taylor v. Books A Million, Inc., 296 F.3d 376, 378 (5th Cir.2002).
[17] Scanlan v. Tex. A & M Univ., 343 F.3d 533, 536 (5th Cir.2003).
[18] Howard v. King, 707 F.2d 215, 220 (5th Cir.1983); Clark v. Huntleigh Corp., 119 Fed. Appx. 666, 667 (5th Cir.2005) (finding that because of plaintiff's pro se status, "precedent compels us to examine all of his complaint, including the attachments"); cf. Red. R. Civ. P. 8(d) ("Pleadings must be construed so as to do justice.").
[19] Scanlan, 343 F.3d at 536.
[20] 12 U.S.C. § 2601(a).
[21] 12 U.S.C. § 2607(b).
[22] 12 U.S.C. § 2602(3).
[23] 24 C.F.R. § 3500.2(b).
[24] O'Sullivan v. Countrywide Home Loans, Inc., 319 F.3d 732, 740-41 (5th Cir.2003) (deferring to HUD regulation interpreting § 2607 because agency regulations promulgated under express congressional authority "are given controlling weight unless they are arbitrary, capricious, or manifestly contrary to the statute.").
[25] Wheeler v. Pilgrim's Pride Corp., 591 F.3d 355, 375 (5th Cir.2009) (It is a "basic precept" of statutory interpretation that the Court must "give effect to every clause and word of a statute where possible and should not construe statutes in a way that renders words or clauses superfluous.").
[26] See 12 U.S.C. § 2602(3) (providing examples of settlement services); see also 24 C.F.R. § 3500.2(b) (same).
[27] See Bloom v. Martin, 77 F.3d 318, 321 (9th Cir.1996).
[28] Black's Law Dictionary (8th ed. 2004) ("closing": "The final meeting between the parties to a transaction, at which the transaction is consummated; esp., in real estate, the final transaction between the buyer and seller, whereby the conveyancing documents are concluded and the money and property transferred.Also termed settlement."); see also id. ("settlement": "CLOSING ").
[29] 12 U.S.C. § 2607(b).
[30] Snow v. First Am. Title ins. Co., 332 F.3d 356 (5th Cir.2003).
[31] Id. at 359-60.
[32] Id.
[33] 77 F.3d 318, 320 (9th Cir. 1996).
[34] Id. at 320-21.
[35] Id. at 321.
[36] 357 F. Supp. 2d 578 (E.D.N.Y.2005).
[37] Id. at 581-82.
[38] Id. at 589.
[39] Id. at 590.
[40] Civ. A. No. 07-11247, 2008 WL 183634 (E.D.Mich. Jan. 18, 2008).
[41] 446 F. Supp. 620, 625 (D.Mass.1978), aff'd, 591 F.2d 417 (1st Cir. 1979).
[42] See, e.g., In re Fitch, 390 B.R. 834, 837-38 (Bankr.E.D.La.2008) (applying 12 U.S.C. § 2605(e)); In re Thompson, 350 B.R. 842, 851 (Bankr.E.D.Wis.2006) (same); MorEquity, Inc. v. Naeem, 118 F. Supp. 2d 885, 900 (N.D.Ill.2000) (same); Cortez v. Keystone Bank, 2000 WL 536666 (E.D.Pa. May 3, 2000) (same).
[43] See, e.g., 12 U.S.C. § 2605(e) (imposing obligation on loan servicers to respond to borrower inquiries).
[44] See 24 C.F.R. § 3500.2(b) (providing that "[f]ederally related mortgage loan" includes "a refinancing of any secured loan on residential real property"); Cohen v. JP Morgan Chase & Co., 498 F.3d 111, 113-14 (2d Cir. 2007) (assuming that § 2607 could apply to fee charged in connection with refinancing).
[45] See 24 C.F.R. § 3500.2(b) (providing that "refinancing" does not include a workout agreement or an agreement involving a court proceeding); cf. 24 C.F.R. § 3500.5(b)(6) (providing that RESPA does not apply to "any conversion of federally related mortgage loan to different terms that are consistent with provisions of the original mortgage instrument, as long as a new note is not required....").
[46] See, e.g., Fitch v. Wells Fargo Bank, N.A., 423 B.R. 630, 632-35 (E.D.La.2010).
[47] See McAnaney, 357 F.Supp.2d at 590.
[48] (R. 150.)
[49] La.Rev.Stat. Ann. § 51:1406(1); see also Hayes v. Wells Fargo Home Mortg., Civ. A. No. 06-1791, 2006 WL 3193743, at *6 (E.D.La. Oct. 31, 2006); Bank of N.Y. v. Parnell, 32 So. 3d 877, 883 (La.App.Ct.2010).
[50] La.Rev.Stat. Ann. § 6:1124; see also Whitfield v. Countrywide Home Loans, Inc., 252 Fed.Appx. 654, 656 (5th Cir.2007) (upholding dismissal because of fiduciary duty claim because plaintiff failed to identify writing imposing fiduciary obligations); Westside-Marrero Jeep Eagle, Inc. v. Chrysler Corp., Inc., 56 F. Supp. 2d 694, 702-03 (E.D.La. 1999) (finding no implied fiduciary duty between financial institution and borrower); Landreneau v. Fleet Fin. Group., 197 F. Supp. 2d 551, 557-58 (M.D.La.2002) (same); Oliver v. Central Bank, 658 So. 2d 1316, 1324 (La.Ct.App.1995) (same); Bespress, Inc. v. Capital Bank of Delhi, 616 So. 2d 795, 798 (La.App.Ct.1993) (same).
[51] Guimmo v. Albarado, 739 So. 2d 973, 975 (La.App.Ct.1999).
[52] Id.
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352 S.W.3d 378 (2011)
STATE of Missouri, Respondent,
v.
Cheryl J. CALDWELL, Appellant.
No. WD 73194.
Missouri Court of Appeals, Western District.
November 8, 2011.
*379 Margaret M. Johnston, Assistant State Public Defender, Columbia, MO, for Appellant.
*380 Thomas K. Hendrix, Jr., Assistant Prosecuting Attorney, Warrensburg, MO, for Respondent.
Before Division II: MARK D. PFEIFFER, Presiding Judge, and VICTOR C. HOWARD and JAMES EDWARD WELSH, Judges.
MARK D. PFEIFFER, Presiding Judge.
Cheryl J. Caldwell ("Caldwell") appeals the Judgment of the Circuit Court of Johnson County ("trial court"), after having been found guilty by a jury of the class B misdemeanor of trespass in the first degree, § 569.140, RSMo 2000, and the class A misdemeanor of resisting arrest, § 575.150, RSMo Cum.Supp.2007. On appeal, Caldwell asserts that the State did not present sufficient evidence to convict her of either offense. We agree and reverse the Judgment of conviction.
Facts and Procedural History[1]
Caldwell was charged by Information with trespass in the first degree for knowingly remaining unlawfully upon real property located at 160 N.W. 251, Warrensburg, Johnson County, Missouri,[2] and possessed by the University of Central Missouri ("University"), after being given actual notice of such trespass; and with resisting arrest by refusing to exit her vehicle at the request of an officer. A jury trial was held on September 20, 2010. The uncontested evidence at trial was as follows:
The State's charges derived from an incident occurring on May 13, 2008. Caldwell was a new student at the University studying for a master's degree in aviation and had a class on that date at the Central Missouri Skyhaven Airport a/k/a the Max B. Swisher Airport ("Airport"). Airport hours of operation were 7:00 a.m. to 9:00 p.m., and the only vehicles that were allowed on the property after 9:00 p.m. were those of people in the airplanes served by the Airport or otherwise serving those flights at the Airport. Adam Freeman, a dispatcher at the Airport, called the University Public Safety Department to report that an occupied vehicle had been parked in the Airport parking lot for over three hours and that he had not been notified that anyone was taking flight training and was cleared to be on the Airport premises.
Officer Gary Schmidt, a uniformed police officer with the University Public Safety Department, responded to Freeman's call about 7:34 p.m. It was dusk but still light out when Schmidt approached Caldwell's vehicle. Her window was rolled halfway down; Schmidt asked Caldwell what she was doing. She mumbled something; Schmidt told her he couldn't understand her and asked her to roll down her window further so they could communicate. She took out a university planner calendar and wrote on the back, "I'm studying." Schmidt told her he did not mind if she was studying but that she could not study at the Airport after the Airport was closed. Caldwell responded, "This isn't university property. This isn't campus." Schmidt told her it was University property.[3] After receiving little further *381 verbal communication from Caldwell, Schmidt left to return to his normal patrol in the city around the University. He informed Freeman that he would return after the terminal closed to see if Caldwell was still there.
After the Airport closed, Schmidt came back with another officer at 10:16 p.m. Schmidt shined his vehicle lights and spotlight on Caldwell's car. Caldwell's vehicle was still parked at the Airport with all the windows rolled up. She refused to communicate with the officers. The officers informed her approximately forty times that she needed to leave the Airport and that if she needed to stay in her car, she needed to find someplace else to park.
The officers asked her to exit her vehicle five times before arresting her. Caldwell continued to refuse to exit her locked vehicle. The officers called the Warrensburg Police Department to the scene to use a tool to unlock Caldwell's car so she could be taken into custody. Corporal Dustin Mayden, evening shift supervisor of the Warrensburg Police Department, arrived about 11:25 p.m. He used a "Slim Jim" lockout tool to unlock Caldwell's car and Caldwell was taken into custody. Noticeably absent from the State's case in chief is any further evidence about how Caldwell was taken into custody. There was no evidence that Caldwell was violent or threatened violence to the officers before being taken into custody. There was no evidence that Caldwell used physical force or threatened the use of physical force to remain in her car and refuse to be taken into custody. There was no evidence that Caldwell attempted to flee from the officers. Instead, there is simply no evidence whatsoever about the circumstances surrounding Caldwell's custodial arrest after her car door was unlocked with the use of the lockout tool.
Caldwell orally moved for judgment of acquittal at the close of the State's evidence and at the close of all the evidence. Both motions were denied. The jury found Caldwell guilty of trespass in the first degree and resisting arrest. After trial, Caldwell filed a motion for judgment of acquittal notwithstanding the verdict of the jury or, in the alternative, for a new trial, assigning as error the trial court's failure to grant Caldwell's motions for acquittal, thereby preserving the issue for appellate review. The trial court entered its Judgment on the jury's guilty verdicts, sentencing Caldwell to thirty days in jail on each count, with the sentences to run concurrently. Caldwell appeals.
Standard of Review
In Points I and II, Caldwell challenges the sufficiency of the evidence to support her convictions for trespass and resisting arrest. She argues that the trial court erred in overruling her motion for judgment of acquittal on both charges. Rule 27.07(a) provides that "[t]he court on motion of a defendant . . . shall order the entry of judgment of acquittal of one or more offenses charged in the indictment or information after the evidence on either side is closed if the evidence is insufficient to sustain a conviction of such offense or *382 offenses." In reviewing a claim of insufficient evidence to support a criminal conviction, we are limited to determining whether there was sufficient evidence from which a reasonable juror could have found the defendant guilty beyond a reasonable doubt. State v. Belton, 108 S.W.3d 171, 173 (Mo.App. W.D.2003). We accept all evidence and inferences favorable to the State and disregard all evidence and inferences to the contrary. Id.[4]
Trespass
In Caldwell's first point on appeal, she asserts that the trial court erred in overruling her motion for judgment of acquittal at the close of all the evidence and in imposing judgment and sentence for trespass in the first degree because there was no evidence that the University owned or possessed property located at 160 N.W. 251, Warrensburg, Missouri, as charged in the Information and verdict director, or what property was located at that address. "A person commits the crime of trespass in the first degree if he knowingly enters unlawfully or knowingly remains unlawfully in a building or inhabitable structure or upon real property." § 569.140.1. A person does not commit the crime of trespass in the first degree by entering or remaining upon real property unless notice against trespass is given to the person either by actual communication or by posting. § 569.140.2. By charging Caldwell with knowingly remaining on address-identified real property possessed by the University, after notice against trespass by actual communication, the State assumed the burden of proving those facts.
"The essence of an action for trespass is violation of possession. Accordingly, to support an action for trespass, the party making the claim must have the legal right to possession." Int'l Bhd. of Elec. Workers v. Monsees, 335 S.W.3d 105, 108 (Mo.App. W.D.2011) (internal quotations and footnote omitted). When Officer Schmidt told Caldwell that she would have to leave the Airport premises when the Airport closed, she disputed that the Airport was in the possession of the University, saying, "This isn't university property. This isn't campus." Officer Schmidt specifically told her that it was University property. Therefore, the State proved that the University owned the Airport premises and thus had the legal right to the possession of the Airport premises where Caldwell was parked.
However, there was no evidence presented that identified the address in the Information and verdict-directing instruction as the Airport or that clarified whether Skyhaven Airport and Max B. Swisher Airport were names identifying the physical location represented by that address. In fact, there was no evidence presented tying "160 N.W. 251" to the Airport or any "University property."[5]*383 While the prosecutor told the jurors during closing argument that the real property located at "160 Northwest 251" was owned by the University and was the Skyhaven Airport or Max B. Swisher Airport, such evidence was not adduced at trial.
Although prosecutors may comment on the evidence and the reasonable inferences to be drawn from the evidence, they may not imply knowledge of facts not before the jury. State v. Ferguson, 20 S.W.3d 485, 501 (Mo. banc 2000). Furthermore, "[a]rguments and statements of counsel are not evidence of the facts presented." State v. Dowell, 25 S.W.3d 594, 609 (Mo.App. W.D.2000) (internal quotation omitted). See MAI-CR 3d 302.06 (1-1-87) (stating that the arguments of counsel "are intended to help you in understanding the evidence and applying the law, but they are not evidence" (given as Instruction No. 9 in this case)).
Simply put, the prosecutor argued a fact not in evidence, and we do not believe that this is a case where the testimonial evidence allowed for a reasonable inference that the property address (i.e., as charged in the Information and used in the verdict-directing instruction) was that of the Airport (i.e., the real property identified in the evidence at trial). See State v. Black, 50 S.W.3d 778, 787 (Mo. banc 2001). Thus, there was not sufficient evidence to support her conviction for trespassing in the first degree on the basis of the charge against her.
Point I is granted.
Resisting Arrest
In Caldwell's second point on appeal, she asserts that the trial court erred in overruling her motion for judgment of acquittal at the close of all the evidence and in imposing judgment and sentence for resisting arrest because there was insufficient evidence to prove that she resisted arrest by using or threatening the use of violence or physical force or by fleeing from Officer Schmidt or any other law enforcement personnel at the scene of her arrest.
"A person resists arrest when: (1) [s]he knows or reasonably should know a law enforcement officer is making an arrest and (2) [s]he resists the arrest by using or threatening violence or physical force (3) for the purpose of preventing the officer from effecting the arrest." State v. Orton, 178 S.W.3d 589, 592 (Mo.App. E.D. 2005). Caldwell was charged in the Information with resisting arrest in that she "knew or reasonably should have known that the officer was making an arrest, and, for the purpose of preventing the officer from effecting the arrest, resisted the arrest . . . by refusing to exit her vehicle at the request of the officer." (Emphasis added.) Under section 575.150.1,[6] resisting *384 arrest is a crime if the person being arrested resists by one of five separate means: "using violence, threatening to use violence, using physical force, threatening to use physical force, or by fleeing." Belton, 108 S.W.3d at 175. The issue Caldwell poses is whether, by refusing to exit her vehicle at Officer Schmidt's request, she was using or threatening the use of violence or physical force or was fleeing from the officer.
To answer this question, the case of State v. Belton is instructive. 108 S.W.3d at 171. Belton was a passenger in a vehicle that was stopped by a highway patrolman for traffic violations. Id. at 172-73. The officer saw Belton throw plastic bags out the car window before the car stopped; the officer told Belton that he was under arrest for littering and ordered him to get out of the car. Id. at 173. Belton initially complied but later got back into the car and refused to get back out. Id. The officer tried to pull Belton from the car but could not. Id. at 175. Belton was convicted of resisting arrest. Id. at 173. On appeal, we held that "[t]he jury could have reasonably concluded that Belton used physical force in resisting [the officer's] arrest by exerting the strength and power of his bodily muscles to overcome [the officer's] attempts to pull him from the car." Id. at 175. "This was sufficient evidence from which the jury could have concluded reasonably that Belton was guilty of violating § 575.150.1." Id.
Likewise, in State v. Miller, 172 S.W.3d 838 (Mo.App. S.D.2005), the driver was convicted of resisting arrest. Miller was stopped by a deputy sheriff for speeding and refused to roll down her window and produce her driver's license and refused to exit the vehicle. Id. at 842. The deputy called for assistance; when assistance arrived, the officers used a "Slim Jim" lockout tool to attempt to open the passenger side door. Id. Miller grabbed the tool, preventing the officer from unlocking the door. Id. at 843. After giving Miller another opportunity to get out of the vehicle, the officer broke the window, unlocked the door, opened it, told Miller that she was under arrest, and asked her to step out of the vehicle. Id. Miller refused and grabbed the steering wheel with both hands, trying to pull herself back into the vehicle while the officer was forcibly removing her. Id. The Miller court commented on the Belton decision, noting that Belton did not expand the definition of "physical force" to "include virtually any action or inaction that subjectively offends an officer." Id. at 846. Rather, the Miller court agreed with the Belton court's interpretation that the "physical force" necessary for a conviction under section 575.150.1(1) included nonviolent force in the form of the defendant's physical resistance to the officer's attempts to pull the defendant from the car. Id. (citing Belton, 108 S.W.3d at 174).
Thus, mere proof of a defendant's refusal to exit a locked vehicle when instructed to do so by a law enforcement officer, though ostensibly offensive to the arresting officer, is not sufficient to establish the "physical force" necessary for a conviction under section 575.150.1(1). The State presented no evidence that Caldwell exerted any physical force, violent or non-violent, in resisting Officer Schmidt's arrest. *385 In fact, there was no evidence whatsoever as to Caldwell's actions after the officers unlocked the doors to her vehicle.
Point II is granted.
Conclusion
The Judgment of conviction is reversed, and Caldwell is discharged.
VICTOR C. HOWARD, Judge, and JAMES EDWARD WELSH, Judge, concur.
NOTES
[1] We view the facts in the light most favorable to the verdict. State v. Simmons, 955 S.W.2d 752, 758 (Mo. banc 1997).
[2] Prior to closing argument by the prosecuting attorney, the Information is the last time this address was mentioned in this caseforming the basis of Caldwell's argument that the State failed to present sufficient evidence to convict her of the offense she was charged with.
[3] While this testimony is sufficient evidence to satisfy the State's burden that the property where Caldwell's car was parked was owned by the University and, thus, the reasonable inference is that the Airport is owned by the UniversityCaldwell was not charged with trespassing at "the Airport" or on any property identified in the Information as "University property." She was charged with trespassing upon "real property located at 160 N.W. 251." There was no testimony or evidence in the trial that the Airport was located at 160 N.W. 251 nor any testimony or evidence that 160 N.W. 251 was "University property." The first time that 160 N.W. 251 was mentioned in the trial was when the prosecutor mentioned the address and its connection as the address of the Airport in closing argument.
[4] In Point III, Caldwell requests Rule 30.20 plain error review of the verdict-directing instruction for resisting arrest. Given our rulings on Points I and II in favor of Caldwell, we need not and do not address the merits of Caldwell's claim of instructional error in Point III.
[5] Our ruling today is not to suggest that an address must be used in the Information. For example, in burglary cases, a "dwelling house" identified in a burglary Information is sufficiently charged and proven without an address as long as the "dwelling house" is sufficiently identified in the Information and proven through evidence at trial. See State v. Sallee, 436 S.W.2d 246, 251 (Mo. 1969); State v. Bussard, 494 S.W.2d 401, 408 (Mo.App. 1973). Furthermore, as a general matter, "a variance between the charge and proof does not require a reversal unless it is material to the merits of the case and prejudicial to the defense." State v. Harrell, 342 S.W.3d 908, 920 (Mo.App. S.D.2011) (Information referring to armed criminal action by use of "dangerous instrument" was not a variance fatal to a verdict-directing instruction referencing armed criminal action by use of "a deadly weapon."). However, in this case, the Information did not charge Caldwell with trespass upon property sufficiently identified as the Airport or even "University property." Instead, it specifically charged her with trespass upon a specific physical address and that address was also used in the verdict-directing instruction, making the address a "material" element of the case that simply was not proven by the State in this case.
[6] Section 575.150, RSMo Cum.Supp.2007, provides:
1. A person commits the crime of resisting or interfering with arrest, detention, or stop if, knowing that a law enforcement officer is making an arrest, or attempting to lawfully detain or stop an individual or vehicle, or the person reasonably should know that a law enforcement officer is making an arrest or attempting to lawfully detain or lawfully stop an individual or vehicle, for the purpose of preventing the officer from effecting the arrest, stop or detention, the person:
(1) Resists the arrest, stop or detention of such person by using or threatening the use of violence or physical force or by fleeing from such officer; or
(2) Interferes with the arrest, stop or detention of another person by using or threatening the use of violence, physical force or physical interference.
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720 F. Supp. 2d 639 (2010)
William EINHORN, Administrator of the Teamsters Pension Trust Fund of Philadelphia and Vicinity and the Teamsters Health and Welfare Trust Fund of Philadelphia and Vicinity, Plaintiff,
v.
M.L. RUBERTON CONSTRUCTION COMPANY, Defendant/Third Party Plaintiff,
v.
Ronald Tobia, Esq.; Tobia & Sorger Esquires, LLC; and David DeClement, Esq., Third Party Defendants.
Civil Action No. 06-2511.
United States District Court, D. New Jersey.
June 28, 2010.
*640 Stevens & Lee, by: Frank C. Sabatino, Esq., Jo Bennett, Esq., John C. Kilgannon, Esq., Philadelphia, PA, for Plaintiff.
Cohen, Seglias, Pallas, Greenhall, & Furman PC, by: Melissa C. Angeline, Esq., Jonathan Landesman, Esq., Haddon Heights, NJ, for Defendant/Third Party Plaintiff.
Carroll, McNulty, & Kull, LLC, by: David M. Kupfer, Esq., Baskin Ridge, NJ, for Third Party Defendants Tobia and Tobia & Sorger.
Harry R. Blackburn & Associates P.C., by: John Edward Shields, Jr., Esq., Medford, NJ, for Third Party Defendant DeClement.
OPINION
IRENAS, Senior District Judge:
Presently before the Court is Defendant M.L. Ruberton Construction Co.'s (Ruberton) Motion for Attorneys' Fees and Costs (Motion). The Motion follows a prior opinion and order, which granted Defendant Ruberton's motion for summary judgment.[1] For the following reasons, the Motion will be denied.
I.
This case has a long and complex factual and procedural history that, for the most part, is not relevant to the present Motion.
*641 The Court will briefly summarize the relevant background.[2] Over the past four years, three related cases have been brought before this Court. In the first suit, Teamster's Local Union No. 676 v. Statewide Hi-Way Safety, Inc., (05-4652) (JEI) (the Injunction Suit), Local 676, who had collective bargaining agreements (CBA) with Statewide, sought to enjoin Statewide from selling its assets to Ruberton. The Injunction Suit was quickly settled, and Statewide sold its assets to Ruberton shortly thereafter.
In the second suit, Einhorn v. Statewide, George R. Smith Jr., and Ruberton, (05-5774) (JEI) (the Delinquency Suit), Einhorn sought to recover allegedly delinquent payments to the Funds[3], which Statewide was obligated to make pursuant to its CBA with Local 676.[4] While Einhorn alleged that the delinquencies arose prior to the asset sale, he also alleged that Ruberton was liable for the delinquencies as Statewide's successor. Like the previous Injunction Suit, the Delinquency Suit settled. In the agreement settling the Delinquency Suit, Statewide agreed to pay the delinquencies in exchange for Einhorn waiving a portion of the liquidated damages.[5]
Statewide never paid the full amount due under the Settlement Agreement, leading to the third suit, where Einhorn sued only Ruberton, attempting to recover what Statewide failed to pay under a theory of successor liability (the Successor Suit). In that suit, the parties filed cross motions for summary judgment. This Court rejected Einhorn's theory of successor liability, granted summary judgment in favor of Ruberton and denied Einhorn's motion for summary judgment. See Ruberton, 665 F.Supp.2d at 476-77.[6]
Presently before the Court is Ruberton's Motion for Attorneys' Fees and Costs in connection with the defense of the Successor Suit pursuant to Section 502(g)(1) of ERISA, 29 U.S.C. § 1132(g)(1).[7]
II.
Section 1132(g)(1) provides, "[i]n any action under this subchapter . . . by a participant, beneficiary, or fiduciary, the court in its discretion may allow a reasonable attorney's fee and costs of action to either party." In exercising its discretion, the Court considers:
(1) the offending parties' culpability or bad faith;
(2) the ability of the offending parties to satisfy an award of attorneys' fees;
(3) the deterrent effect of an award of attorneys' fees against the offending parties;
*642 (4) the benefit conferred on members of the pension plan as a whole; and
(5) the relative merits of the parties' position.
Ursic v. Bethlehem Mines, 719 F.2d 670, 673 (3d Cir.1983). The Court must weigh the totality of the factors; the absence of any one factor is not dispositive. Fields v. Thompson Printing Co., Inc., 363 F.3d 259, 275-76 (3d Cir.2004).
In response, Plaintiff Einhorn contends that Ruberton has moved for attorneys' fees pursuant to the wrong provision of ERISA. Instead, Einhorn argues that the Court must apply 29 U.S.C. § 1451(e), the fee-shifting provision of the Multiemployer Pension Plan Amendments Act (MPPAA), 29 U.S.C. § 1381 et seq., which modified ERISA. Section 1451(e) provides "[i]n any action under this section, the court may award all or a portion of the costs and expenses incurred in connection with such action, including reasonable attorneys' fees, to the prevailing party."
Although the language of the two provisions are similar, Einhorn asserts the Third Circuit has established different tests for prevailing employers under §§ 1132(g)(1) and 1451(e); therefore, the five factor Ursic test does not apply to the present Motion. Instead, "[a] multiemployer plan that has lost a collection action may only be held liable for a prevailing employer's attorneys fees when the plan's claim was `frivolous, unreasonable or without foundation.'" Pl. Br. Opp'n Def.'s Mot. at 1, ¶12 (quoting Dorn's Transportation, Inc. v. Teamsters Pension Trust Fund of Philadelphia and Vicinity, 799 F.2d 45, 50 (3d Cir.1986) (emphasis in original)). Thus, Einhorn insists that the Court must apply § 1451(e) and Dorn's frivolity test to the present Motion. The Court disagrees.[8]
Einhorn's Successor Suit alleged Ruberton acquired liability for Statewide's delinquent contributions to the Funds under a theory of successor liability. Ruberton, 665 F.Supp.2d at 465. Einhorn initially sued Statewide pursuant to 29 U.S.C. §§ 1132 and 1145. (Delinquency Suit Compl. at 1, ¶ 1) At no time did Einhorn allege a violation under § 1451.[9] Because Einhorn never asserted a claim under § 1451, the statute does not permit a claim for attorneys' fees pursuant to § 1451(e). "In any action under this section, the court may award ... reasonable attorney's fees." 29 U.S.C. § 1451(e) (emphasis added). In order to bring a motion for attorneys' fees under § 1451(e), the moving party must have been successful in a suit brought pursuant to § 1451.
Ruberton moves for attorneys' fees pursuant to § 1132(g)(1), which contains similar language: "In any action under this subchapter . . . the court in its discretion may allow a reasonable attorney's fee." 29 U.S.C. § 1132(g)(1) (emphasis added). Initially, Einhorn brought suit against Statewide pursuant to §§ 1132 and 1145, and subsequently against Ruberton under a theory of successor liability. Upon prevailing, Ruberton has properly moved for attorneys' fees under § 1132(g)(1).
III.
The Court must now weighs the five Ursic factors. As noted previously, the *643 Court considers the totality of the factors; no one factor is dispositive. Fields, 363 F.3d at 275-76.
A.
The second and fourth Ursic factors are undisputed. The second factor considers whether Einhorn can satisfy an award of attorneys' fees. The Funds control assets totaling approximately $1.4 billion. (Br. Supp. Def.'s Mot. 7) Einhorn does not dispute that the Funds would be able to satisfy an award of attorneys' fees.
As for the fourth factor, Ruberton concedes that an award of attorneys' fees would not bestow a benefit on pension plan members. (Br. Supp. Def.'s Mot. 8) Thus, the second factor weighs in favor of an award of attorneys' fees and the fourth factor weighs against an award of attorneys' fees.
B.
The Court now turns to the first factor, which requires a showing of bad faith or culpability.[10] Culpable conduct encompasses action that is "reprehensible or wrong." McPherson v. Employees' Pension Plan of American Re-Insurance Co., Inc., 33 F.3d 253, 257 (3d Cir.1994) (quoting Black's Law Dictionary (6th ed.1990)). Although the Third Circuit does not require an "ulterior or sinister purpose" to satisfy the first factor, "a party is not culpable merely because it has taken a position that did not prevail in litigation." Id. at 257.
Ruberton strenuously argues that Einhorn acted culpably by "aggressively pursu[ing] this litigation." (Br. Supp. Def.'s Mot. at 5) Specifically, Ruberton argues that 1) Einhorn brought this litigation with the underlying purpose of establishing favorable successor liability precedent (Id. at 5-8); 2) Einhorn immediately appealed this Court's decision before even obtaining certification pursuant to Fed.R.Civ.P. 54 (Id. at 6), and; 3) Einhorn refused to engage in settlement negotiations before filing a notice of appeal. (Id.)
With regard to Einhorn's alleged motivation for pursuing this suit,[11] there is certainly nothing reprehensible or wrong (in the undisputed absence of bad faith) in vigorously advocating a legally supportablealbeit ultimately unsuccessfulposition that would benefit the Funds. Indeed, Ruberton cites no authority for its position.
Next, Ruberton argues Einhorn acted culpably by immediately appealing the Court's summary judgment decision, which was not a final order. However, it was Ruberton, not Einhorn, that ultimately filed the Motion to Certify the decision as final, which expedited the appeal. Seeking to immediately appeal the summary judgment decision was not culpable, but even if it were, by its own logic, Ruberton itself would be culpable.
Finally, Einhorn was and is under no duty to engage in settlement negotiations. The mere fact that Ruberton will expend additional attorneys' fees to defend this suit at the appellate level does not establish that Einhorn acted culpably.
Accordingly, the first factor does not support an award of attorney's fees.
C.
The third factor, the deterrent effect on the offending parties, also does not favor an award of attorneys' fees.[12] This factor *644 considers "whether it would serve the objectives of ERISA to award counsel fees in an effort to deter conduct of the kind in which the [non-moving party] engaged." McPherson, 33 F.3d at 258. Here, an award of attorneys' fees would frustrate ERISA's objectives. Indeed, Einhorn might have had a fiduciary duty to bring the suit if there was a reasonable prospect of success. See 29 U.S.C. § 1104(a); see also Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 151-54, 105 S. Ct. 3085, 87 L. Ed. 2d 96 (1985); Glaziers and Glassworkers Union Local No. 252 Annuity Fund v. Newbridge Securities Inc., 93 F.3d 1171, 1180 (3d Cir.1996). If an award of attorneys' fees deters fund managers from pursuing potentially meritorious claims pursuant to their fiduciary duties, ERISA objectives could be undermined.
D.
Although Ruberton prevailed on summary judgment, the fifth factorthe relative merits of the parties' positionsdoes not automatically weigh in Ruberton's favor. "The fact that the [losing party's] position has not been sustained, does not alone put the fifth factor in the column favoring an award." McPherson, 33 F.3d at 258. Nor must the moving party prove that their adversary's position was so meritless as to evidence bad faith litigating. Id.
Einhorn argued his theory of successor liability in reliance on the only clear authority addressing successor liability in the asset purchase context, Upholsterers' Intern. Union Pension Fund v. Artistic Furniture of Pontiac, 920 F.2d 1323 (7th Cir. 1990).[13] While this Court believes that its analysis of successor liability comports with both established principles of corporate law and Third Circuit precedent, this cases involves a complex legal question of first impression in the Third Circuit. The Court cannot conclude that the merits of Ruberton's position so outweighed the relative merits of Einhorn's position that the fifth factor favors an award of attorneys' fees.
IV.
The Court must now balance the factors: 1) Einhorn did not act culpably or in bad faith; 2) Einhorn can afford an award of attorneys' fees; 3) there would be no deterrent effect against the offending parties (in part because there is not conduct warranting deterrence); 4) there would be no benefit to plan members; and, 5) the relative merits of the parties' position does not weigh in favor of an award of attorneys' fees. After taking into account all the factors, and finding that only the second factor favors an award of attorneys' fees; Ruberton has not satisfied the five factor Ursic test. Therefore, Ruberton's Motion for Attorneys' Fees and Costs will be denied. The Court will issue an appropriate Order.
ORDER DENYING DEFENDANT'S MOTION FOR ATTORNEYS' FEES AND COSTS (Docket No. 171)
This matter having appeared before the Court on Defendant's Motion for Attorneys' Fees and Costs (Docket No. 171), and the Court having considered the parties' submissions, for the reasons set forth in an Opinion by this Court issued on even date herewith, and for good cause appearing;
IT IS on this 28th day of June, 2010,
ORDERED THAT:
Defendant's Motion for Attorneys' Fees and Costs is hereby DENIED.
NOTES
[1] The Court has federal question subject matter jurisdiction pursuant to 28 U.S.C. § 1331. See Einhorn v. M.L. Ruberton Constr. Co., 665 F. Supp. 2d 463, 465 (D.N.J.2009). Although the Court certified the summary judgment order for appeal pursuant to Fed.R.Civ.P. 54(b), and Einhorn has filed his notice of appeal, the Court retains jurisdiction to decide the instant Motion for Attorneys' Fees. See West v. Keve, 721 F.2d 91, 95 n. 5 (3d Cir. 1983) ("the district court is not divested of jurisdiction to determine the [attorneys' fee] application" "during a pending appeal on the predicate case.")
[2] For a more thorough recitation of the factual and procedural history of this case see Ruberton, 665 F.Supp.2d at 465-72.
[3] The "Funds," managed by Plaintiff Einhorn, refer to the Teamsters' Pension Trust Fund of Philadelphia and Vicinity, an ERISA "employee pension benefit plan," 29 U.S.C. § 1002(2)(A); and the Teamsters' Health & Welfare Fund of Philadelphia and Vicinity, an "employee welfare benefit plan," 29 U.S.C. § 1002(1). Both funds are "multiemployer plans." 29 U.S.C. § 1002(37).
[4] Einhorn sued Statewide pursuant to Sections 502 and 515 of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§1132 and 1145, Section 301(a) of the Labor Management Relations Act, 29 U.S.C. § 185(a), and federal common law. (Delinquency Suit Compl. at 1, ¶ 1)
[5] Einhorn also agreed to dismiss without prejudice the claim against Ruberton.
[6] Ruberton's third party action alleging legal malpractice claims against Third Party Defendants Ronald Tobia, Esq.; Tobia & Sorger Esquires, LLC; and David DeClement, Esq. has been stayed pending appeal of the Successor Suit.
[7] Ruberton seeks $259,571.77 for attorneys' fees and an additional $2,297.49 in costs.
[8] Although the Court finds that § 1132(g)(1) is the proper section, and the Ursic factors the proper test; Ruberton would also fail Dorn's frivolity test. See infra Part III.D.
[9] Although Einhorn correctly notes in his reply brief that in an action to compel an employer to pay withdrawal liability, § 1451(b) provides that the suit shall be treated as a delinquent contribution within the meaning of § 1145; Einhorn incorrectly concludes that the reverse is also true: a delinquent contribution claim under § 1145 incorporates § 1451. (Pl. Br. Opp'n Def.'s Mot. at 4, ¶ 1)
[10] Ruberton concedes that Einhorn did not act in bad faith.(Br. Supp. Def.'s Mot. at 5)
[11] Einhorn has not stated what his motivations were or are.
[12] It is difficult to imagine a situation in which a prevailing employer could satisfy the third factor, deterrence, absent a finding of culpability or bad faith.
[13] Indeed, Ruberton itself briefed the issue as if the Artistic Furniture standard applied.
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711 F. Supp. 2d 440 (2010)
Daniel T. GALENA, individually and on behalf of the Citizens of Erie County, Plaintiffs,
v.
Fiore LEONE, Defendant.
Case No. 1:07-CV-89-SJM.
United States District Court, W.D. Pennsylvania.
March 5, 2010.
*442 Lawrence M. Otter, Esq., Doylestown, PA, for Plaintiff.
James T. Marnen, Esq., Marnen Mioduszewski Bordonaro Wagner, & Sinnott, LLC, Erie, PA, Thomas S. Talarico, Esq., Talarico & Niebauer, Erie, PA, for Defendant.
*443 MEMORANDUM OPINION
SEAN J. McLAUGHLIN, District Judge.
Plaintiff Daniel T. Galena commenced this action under 42 U.S.C. § 1983,[1] claiming that his rights under the First Amendment were infringed when the Defendant Fiore Leone, then Chairman of the Erie County Council, ejected him from a public meeting of the Council held on March 20, 2007. Following trial, the jury returned a verdict in favor of the Plaintiff in the amount of $5,000.00. Presently pending before the Court is the Defendant's motion for judgment as a matter of law. For the reasons that follow, the Defendant's motion will be granted.
I. STANDARD OF REVIEW
Rule 50(a)(1) of the Federal Rules of Civil Procedure authorizes the entry of judgment as a matter of law according to the following standard:
(1) In General. If a party has been fully heard on an issue during a jury trial and the court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue, the court may:
(A) resolve the issue against the party; and
(B) grant a motion for judgment as a matter of law against the party on a claim or defense that, under the controlling law, can be maintained or defeated only with a favorable finding on that issue.
Fed.R.Civ.P. 50(a)(1). A motion for relief under Rule 50(a) may be made at any time before the case is submitted to the jury. Fed.R.Civ.P. 50(a)(2). Where, as here, the court does not grant the motion, "the court is considered to have submitted the action to the jury subject to the court's later deciding the legal questions raised by the motion." Fed.R.Civ.P. 50(b). Such a motion may be renewed within 28 days following entry of judgment. Here, judgment [65] was entered in favor of the Plaintiff on August 4, 2009. Defendant filed a timely renewed motion for judgment as a matter of law [74] on August 13, 2009.
In deciding the Defendant's Rule 50 motion, the Court must view the evidence in the light most favorable to the prevailing, non-moving partyto wit, the Plaintiff, giving him the benefit of every fair and reasonable inference. Toledo Mack Sales & Service, Inc. v. Mack Trucks, Inc., 530 F.3d 204, 209 (3d Cir.2008). Generally, a Rule 50 motion should be granted only if the evidence is not sufficient for a jury reasonably to find liability. Brown v. Daniels, 290 Fed.Appx. 467, 470 (3d Cir. 2008) (citing Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1166 (3d Cir.1993) and Fed.R.Civ.P. 50(a)). See also Walter v. Holiday Inns, Inc., 985 F.2d 1232, 1238 (3d Cir.1993) (A Rule 50(a) motion should only be granted if, viewing all the evidence in the light most favorable to the party opposing the motion, no jury could decide in that party's favor).
II. BACKGROUND
Galena is a resident of Erie County, Pennsylvania. In early-to-mid 2006 he began *444 attending meetings of the Erie County Council out of an interest in observing how public tax dollars were being spent. (N.T. 3-4, 23.)[2] County Council meetings were held every two weeks on Tuesday evenings. (N.T. 23.) Galena was one of a group of three or four individuals who regularly attended Council meetings. (N.T. 5.) Though he did not make every one, he averaged at least one per month and spoke on about 14 or 15 occasions, addressing a variety of subjects. (N.T. 23-24, 26.) He primarily spoke about the tax and spending policies of county government. (N.T. 5.)
Typically, Galena would begin his presentations by providing his name and address on the request of Council, after which he would turn to the audience and greet them by stating, "[G]ood evening taxpayers." He would then usually turn to Council and "pan the seven members ... with [his] arm," and say, "[G]ood evening tax spenders," emphasizing the "spender portion." (N.T. 6.) This would "more than likely" induce Defendant Leone, who was Chairman of the Council, to "grimace and scowl." (N.T. 6.) During his comments to Council, certain members were "almost indifferent," while "maybe two or three others would be listening intently." (N.T. 6-7.) According to Galena, Leone would "more often than not ... grin, and almost laugh" at what he (Galena) was saying. (N.T. 7.) Galena testified that, when other people would speak publically, Leone did not seem to laugh or grin at them in the same way. (Id.)
This lawsuit arose from events which occurred during a meeting of the Erie County Council held on March 20, 2007. The general order of business for that and every Council meeting, as set forth in Article V, Section 6.B of the Erie County Administrative Code, was as follows:
1. Pledge of Allegiance
2. Optional Prayer or Invocation
3. Roll Call
4. Hearing of the Public
5. Approval of the Minutes of Previous Meetings
6. Reports of County Officials, Committees, or Special Advisory Groups
7. Unfinished Business
8. New Business
9. Adjournment
(N.T. 7-8, 15, 81-83, Pl.'s Ex. 1, p. 164.)
Members of the public were permitted to comment on any subject they wished to address during the "Hearing of the Public" portion of the meeting. (N.T. 4, 80-81, 94.) A speaker who provided advance written notice of his desire to speak was allotted five minutes to address Council; those who provided no advance written notice were allotted three minutes. (N.T. 81, Pl.'s Ex. 1, at §§ 8.A and 8.B, p. 166.) Members of the public were not permitted to speak in any portion of County Council meetings other than the "Hearing of the Public" portion. (N.T. 15, 42-43, 69, 81-83, 92; Pl.'s Ex. 1, [68] at §§ 6.B, 8.A and 8.B.)[3] The adoption of ordinances was *445 commonly taken up by the Council as "New Business" during the latter portion of the meeting. (N.T. 15, 59, 83.)
On the evening in question, to wit, March 20, 2007, four citizens addressed Council during the Hearing of the Public portion of the meeting. The minutes of the meeting reflect the following occurrences:
Gil Rocco, ... approached Council to speak regarding the Smoking Ban. He noted that [the] Council solicitor [had] stated this ban was not legal, but Council went forward despite that opinion. He appreciated Mr. Leone's appearance at the court hearing, and believes the county was trounced at that hearing, and there are no grounds for appeal. Mr. Rocco feels there is a flawed decision making process going on, and Council cannot break the law simply because they think they know better or have a better idea. He also asks where the silent majority is; they do not show up to speak. He cannot find anyone in favor of this ban.
Renee Vendetti, Erie, stated that over one year ago, she asked Mr. Mitchell for the indicated status to be pushed so it was out of Pennsylvania. Nothing has been done. She asked why the County is paying $60,000 a year for lobbyists when Mr. DiVecchio and Mr. Wiley go to Washington, DC and Harrisburg to lobby for money. This is a waste of taxpayer money. The smoking ban was an improper motion according to Roberts Rules of Order. There are no specifics regarding the minutes in the Home Rule Charter, so Roberts Rules must be followed, and the minutes should be verbatim.
Kenneth Francis Simon Przepierski ... stated that Mr. Rocco does not realize that the whole smoking ban was dredged up to be a big smoke screen so that Council can fly through agendas bumping first readings to second readings. He referred to Ordinance 31 on the agenda regarding the creation of gaming fund budget bureaus, and asked who would be on all these bureaus. The monopoly of properties that went through tax exoneration at the last meeting was a lot of money just exonerated. He also asked about the expenses at Pleasant Ridge Manor, and feels the budget should be trimmed.
Maria Foster, ... stated this Council's agenda has been to break the law. Council continues to allow the Office of Children and Youth to violate the law even though this agency is under Council's and the County Executive's jurisdiction. She referred to the administration's trip to Washington, DC as a pleasure trip. Council violates Constitutional rights, the Pennsylvania Constitution, the Administrative Code, and Roberts Rules of Order. Politicians have forgotten many things, except when it comes to getting an extra perk, a business ally, or maybe a little cash in their pocket. She stated Council does not take the people before them seriously. Council can be held accountable when violating the law. She warned Council to stop breaking the law.
(Pl.'s Ex. 4[71] at p. 2.)
Following the Hearing of the Public, the Council took up approval of the minutes from its prior meeting and received a number of reports from various committees and council members. Thereafter, Leone, as Chairman of County Council, addressed the attending public. The minutes from the March 20, 2007 meeting describe his comments as follows:
*446 Mr. Leone then addressed Ms. Vendetti, Ms. Foster and Mr. Przepierski. Mr. Leone keeps hearing that Council breaks the law. He cautioned these individuals to be careful when they tell Council they want to be taken seriously, because Council should be taken seriously as well. It seems that no matter what, some people cannot be pleased. He recalled a story his father told him if you pass out ten dollar bills, people will complain that they're not twenties, and he feels his father was probably right. This seems to be the situation here; no matter what Council does, it just isn't enough. People think Council Members should be available 24 hours a day, doing everything they possibly can. Although he probably puts in more time than other members, it is because Mr. Leone has the time. He reminded the audience that this is a part-time job. Council Members are legislators, and Council is getting tired of some of the issues being brought up. He again cautioned people to be careful, because, if necessary, Council will take the matter to court.
(N.T. 16; Pl.'s Ex. 4, pp. 5-6.)
Thereafter, Council took up consideration of several ordinances. (Pl.'s Ex. 4[71] at p. 6.) During this time, a motion was made by one Council member to immediately move a newly introduced ordinance from the initial First Reading to a Second Reading. (N.T. 17.) The motion was approved by the requisite number of Council members and Leone asked the Erie County Clerk to begin reading the ordinance under consideration. (N.T. 83-84; Pl.'s Ex. 1, § 4.D, p. 163.) At that point, the following exchange occurred:
Mr. Leone: Next item, second reading of Ordinance 28, in its entirety, please.
Mr. Smith: Second reading of Ordinance Number 28, 2007, "Fifth 2007 Public Health Fund Budget Supplemental Appropriation for public health Preparedness Grant." (Mr. Smith reads ordinance body)
Mrs. Loll: So moved.
Mr. Mitchell: Second.
Mr. Leone: Moved by Mrs. Loll, seconded by Mr. Mitchell. Comments?
Mr. Galena: Mr. Chairman, I have an objection.
Mr. Leone: (uses gavel)
Mr. Galena: Mr. Chairman, I have an objection.
Mr. Leone: You're out of order.
Mr. Galena: You are in violation ...
Mr. Leone: I said you're out of order, if you keep it up I'll have you taken out.
Mr. Galena: I object. You are in violation of [the] Pennsylvania Sunshine Act.
Mr. Leone: Deputy, I want him taken out of here.
Mr. Galena: And Erie County's Administrative Code.
Mr. Leone: And I want him charged.
Mr. Galena: You are in violation of the Pennsylvania Sunshine Act.
Mr. Leone: I want him charged. Do you hear, that's harassment. You're not going to get away....
Mr. Galena: I'm part of the assembly, I object to your proceedings.
Mr. Leone: We'll file charges against you.
Mr. Galena: You're welcome to do so.
(N.T. 22, 30, 84; Pl.'s Ex. 7[72].) This portion of the meeting was partially captured on a video recording (Pl.'s Ex. 6) and was captured in its entirety on an audio CD recording (Pl.'s Ex. 5), both of which were played for the jury. (N.T. 20.) The audio and video recordings show that, as Galena was being escorted out, Leone remarked *447 to the audience, "Anyone else want to go?" (Pl.'s Ex. 5 and 6.)
According to one councilman present during the exchange, Galena's demeanor was boisterous, but his comments were not insulting, threatening, insolent, slanderous or obscene. (N.T. 40, 43.) Galena testified that Leone's initial verbal response to his objectionto wit, "You're out of order"was stated in a "loud, angry tone." (N.T. 18.) A deputy sheriff present during the incident described Leone as "pretty animated, ... pounding the gavel." (N.T. 36.) In a report authored the same evening as the incident in question, the deputy sheriff indicated that Galena had repeated his objections to Leone in a "calm manner," while Leone kept demanding in an "elevated voice" that Galena be removed from the meeting and charged. (Pl.'s Ex. 8.) Leone admitted at trial that he "certainly wasn't pleased" and was indeed "a little angry over the fact that [Galena] interrupted the meeting," as he felt "[i]t would be difficult for anybody to hold any kind of a meeting if people get up and start objecting." (N.T. 66.)
Leone testified that his earlier comments as described in the minutes had been directed at Ms. Vendetti, Ms. Foster and Mr. Przepierski, all of whom regularly attended Council meetings and participated in the Hearing of the Public portion of those meetings. (N.T. 54.) Leone stated that the final reference to "taking the matter to court" was a reference to action for defamation, as certain individuals who spoke during the public hearing portion would accuse Council of breaking the law and call them names. (N.T. 55, 57, 67.) According to Leone, Galena had never defamed him or called him names prior to the March 20, 2007 meeting, except to say (as Leone described it), "that I was illegal, as far as some of the issues were concerned, he said that a few times when he addressed Council." (N.T. 55, 57-58.) Leone testified that, while council members had indicated they were a little "fed up" with accusations of illegal conduct, Galena's name had never been specifically mentioned as someone with whom council members were "fed up." (N.T. 67-68.)
Despite Leone's threat to file charges against Galena following the March 20, 2007 incident, no charges were ever filed. Leone had originally intended to press charges for disorderly conduct or disturbing the peace but, after consulting with the county solicitor, he decided against filing charges and opted instead to send Galena a letter. (N.T. 70.)
Leone testified that his comment to Galena about filing harassment charges came as a result of the fact that this was the second occasion on which Galena had interrupted Leone's speech during the non-public portion of a Council meeting, the prior interruption having occurred during the January 2, 2007 meeting of County Council. (N.T. 90; Def.'s Ex. B[67].) The trial record includes a partial transcript of that event, which reflects the following exchange between Leone and Galena:
Mr. Leone: Every time something comes up, it seems like this Council is blamed for everything. We're probably to blame for the deficit that the Country's in right now. I'm sure that must be our responsibility too. We're talking about burglary and vandalism in Fairview. I don't know who here has a badge that's going to go out there and resolve that issue, and I'm certainly not interested in ...
Mr. Galena: The Sheriff, the sheriff.
Mr. Leone: No, the Sheriff ...
Mr. Galena: The Sheriff.
Mr. Leone: (uses gavel) The Sheriff does not ...
*448 Mr. Galena: You want to ban smoking, but you don't want to do anything out there.
Mr. Leone: You keep that up, I'm going to have you taken out. You had your chance to speak.
Mr. Galena: Yeah, I had a real chance.
Mr. Leone: Yes, you did, and I'm telling you for the last time. If I have any more comments from you, I'm having you removed from here. I've listened to you, now it's your turn to listen to me. The Sheriff doesn't have that responsibility. I'm a city taxpayer. We have a police force here. I don't intend to spend city tax dollars to send a sheriff out there. That's the state police responsibility if you don't have a police force.
(Def.'s Ex. B[67].)[4]
Galena's objection on March 20, 2007, although not fully articulated at the time, concerned his interpretation of the Erie County Administrative Code and the Pennsylvania Sunshine Act. According to Galena's interpretation of the Administrative Code, proposed ordinances had to be introduced to the public on a Council meeting agenda and made available to the public 72 hours before the meeting at which the first reading would be made. (N.T. 8.) Council could not vote on any ordinance until at least seven days after the first reading, unless the ordinance in question concerned a matter of emergency. (N.T. 8-9, 12.) Often, during 2006 and 2007, Erie County Council did not follow this procedure and instead waived the first reading of a particular ordinance and voted on the ordinance all at the same meeting. Galena researched the matter and believed that, in the years leading up to the March 20, 2007 meeting, Council had followed this truncated procedure 64 times in 2006 and 14-15 times in 2007. (N.T. 7-12; Pl.'s Ex. 2 and 3.) Galena considered this practice to be a violation of the Pennsylvania Sunshine Act because, in his view, the public was being deprived of its right to review the ordinancesand thus, expenditures of county tax dollarsbefore Council voted on them. (N.T. 9-10.)
Leone maintains that he did not recognize or understand the basis of Galena's objection at the time it was raised. (N.T. 59-63, 69-70.) Indeed, Leone testified that, at the time he ruled Galena out of order, he did not know what Galena intended to say. (N.T. 72.) Galena admits that he did not fully express the content of his objection because Leone refused to recognize the objection. (N.T. 32.) In fact, at no time prior to the March 20, 2007 meeting had Galena discussed the matter that was the subject of his objection at the March 20 meeting. (N.T. 26.) However, another individual who regularly attended County Council meetings had addressed the issue to Council at that same evening. (N.T. 14; Pl.'s Ex. 4[71] at p. 2.)
Galena admits that, on all of the prior occasions when he had addressed County Council during the Hearing of the Public portion of the meetings, he had been permitted to speak without incident. (N.T. 29.) He further admits that, during the March 20, 2007 meeting, he had not chosen *449 to speak during the time designated for "Hearing of the Public" and instead attempted to voice his objection only during the business portion of the meeting. (N.T. 14, 22, 30.) He maintains this is because did not have a "crystal ball" and could not predict with certainty what would occur during the business portion of the meeting; nonetheless, he acknowledged at trial that, based on Council's prior history, "there was a good chance that they would move first readings to second readings" during the March 20 meeting. (N.T. 14.)
Leone testified that he has served on County Council for 32 years and has had approximately eight separate year-long tenures as Chairman. (N.T. 58, 79-80.) During his 32 years on Council, Leone had never experienced an occasion, aside from the March 20, 2007 incident, where he had had to have someone removed from a meeting. (N.T. 58-59.)
Leone testified that he was not personally acquainted with Galena but knew him through Galena's attendance at County Council meetings. (N.T. 52-53, 86, 92-93.) Leone's only contact with Galena was at those meetings, with the possible exception that Leone may have, on one occasion outside of a meeting, discussed with Galena a matter that was pending before Council. (N.T. 52-53, 86-87.) Leone testified that he bore no personal animosity toward anyone because of the opinions they expressed, but he believed that citizens were required to speak during the part of Council meetings designated for public comment. (N.T. 57, 94-95.) Leone stated that, "quite a few times" on prior occasions, he had found Galena's comments to be "on the mark," although there were also "a few times that he wasn't." (N.T. 53-54.) Leone testified in particular to an objection which Galena had lodged to the county sheriff acquiring a boatan issue as to which Leone and Galena agreed. (N.T. 87-88.)
III. DISCUSSION
It is well established in this circuit that, when a public official excludes a citizen from a public meeting, the official must confirm his conduct to the requirements of the First Amendment. Monteiro v. City of Elizabeth, 436 F.3d 397, 404 (3d Cir.2006) (citation omitted). The First Amendment, of course, protects against laws which abridge "the freedom of speech, ... or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances." U.S. CONST. amend. I.[5] The Amendment's speech-related protections extend not only to the content of a person's speech, but also to the speaker himself. Wilkinson v. Bensalem Township, 822 F. Supp. 1154 (E.D.Pa.1993).
Where restrictions on free speech rights are concerned, the type of forum dictates the nature of the permissible restriction. In a quintessential public forum, typically described as public streets and parks, "members of the public retain strong free speech rights." Pleasant Grove City, Utah v. Summum, ___ U.S. ___, 129 S. Ct. 1125, 1132, 172 L. Ed. 2d 853 (2009). Content-based restrictions in such forums may be imposed only if the restrictions are necessary to serve a compelling government interest. Id. (citing Perry Educ. Ass'n v. Perry Local Educators' Ass'n, 460 U.S. 37, 45, 103 S. Ct. 948, 74 L. Ed. 2d 794 (1983)). In addition, the government may enforce reasonable time, place, and manner restrictions which (1) *450 are unrelated to speech content; (2) are narrowly tailored to serve a significant governmental interest; and (3) allow alternative ways of communicating the same information. Eichenlaub v. Twp. of Indiana, 385 F.3d 274, 280 (3d Cir.2004). The government may create designated public forums by deliberately opening government property to the public for that purpose, in which case such forums are subject to the same restrictions as the quintessential public forum. Pleasant Grove, 129 S.Ct. at 1125, 1132 (citation omitted).
Alternatively, the government may create a limited forum, which is "limited to use by certain groups or dedicated solely to the discussion of certain subjects." Pleasant Grove, 129 S.Ct. at 1132, 129 S. Ct. 1125 (citation omitted). The government may impose restrictions on speech in a limited public forum, as long as the restrictions are reasonable and viewpoint neutral. Id. (citing Good News Club v. Milford Cent. Sch., 533 U.S. 98, 106-07, 121 S. Ct. 2093, 150 L. Ed. 2d 151 (2001)). Our court of appeals has stated that, in a limited public forum, "content-based restraints are permitted, so long as they are designed to confine the `forum to the limited and legitimate purposes for which it was created.'" Eichenlaub, 385 F.3d at 280 (quoting Rosenberger v. Rector & Visitors of the Univ. of Va., 515 U.S. 819, 829, 115 S. Ct. 2510, 132 L. Ed. 2d 700 (1995)). Thus, "under contemporary public forum jurisprudence, a designated (as opposed to traditional) forum is reviewed under a sliding standard that allows for content-related regulation so long as the content is tied to the limitations that frame the scope of the designation, and so long as the regulation is neutral as to viewpoint within the subject matter of that content." Eichenlaub v. Township of Indiana, 385 F.3d 274, 281 (3d Cir.2004). Viewpoint-based restrictions, however, "violate the First Amendment regardless of whether they also serve some valid time, place, manner interest." Monteiro, 436 F.3d at 404.
The case law from this circuit suggests that the forum at issue herei.e., the portion of the Erie County Council meeting which was reserved solely for the discussion of business by Council memberswas a limited public forum. See Eichenlaub v. Township of Indiana, 385 F.3d 274, 281 (3d Cir.2004) (holding that a "citizen's forum" at a public meeting is a limited public forum because "public bodies may confine their meetings to specific subject matter") (citation omitted); Mobley v. Tarlini, 641 F. Supp. 2d 430, 438-39 (E.D.Pa.2009) (portion of town council meeting which was dedicated to Council member (as opposed to public) speech was a limited public forum, since the forum was limited to certain groupsi.e., Council members and Township administrators, and certain topics i.e., motions and other Township matters); Liberty & Prosperity 1776, Inc. v. Corzine, 2009 WL 537049 at *6 n. 12 (D.N.J.2009) (town hall meeting at issue was a limited public forum); Thompson v. Lehman, No. 4:06-cv-518, 2007 WL 2688691 (M.D.Pa. Sept. 10, 2007) (borough meetings were a designated public forum).
The upshot of the case law, as it pertains to this case, is that the government could, consistent with the First Amendment, confine citizens' speech at meetings of County Council to matters on the agenda at hand, see Eichenlaub, 385 F.3d at 281, and could impose reasonable content-neutral time, place, and manner restrictions on speech at the meeting, so long as those restrictions were narrowly tailored to serve a significant governmental interest and left open ample alternative channels for communication of the information. Ward v. Rock Against Racism, 491 U.S. 781, 791, 109 S. Ct. 2746, 105 *451 L.Ed.2d 661 (1989). However, no government official could impose limitations on citizens' speech based upon the speaker's identity or disfavor with a particular viewpoint on matters under discussion. Monteiro v. City of Elizabeth, 436 F.3d 397, 405 (3d Cir.2006); Wilkinson v. Bensalem Township, 822 F. Supp. 1154 (E.D.Pa. 1993).
The present dispute implicates, at least in theory, two questions. The first is whether the regulation at issuei.e., the rule that citizen speakers confine their comments to the part of the meeting devoted to the Hearing of the Publicconstitutes a facially valid time, place, and manner restriction under the foregoing standards. The second is whether the regulation, if facially valid, was nevertheless applied in a manner that discriminated based upon the identity or viewpoint of the speaker.
A.
Turning initially to the first inquiry, we recall that a time-place-manner restriction is valid if it (1) is unrelated to speech content; (2) is narrowly tailored to serve a significant governmental interest; and (3) allows alternative ways of communicating the same information. Eichenlaub v. Twp. of Indiana, 385 F.3d 274, 280 (3d Cir.2004). Our Circuit Court of Appeals has recognized that "whether a restriction on the time, place, or manner of speech is reasonable presents a question of law. However, the reasonableness of a restriction involves an underlying factual inquiry" including, among other things, the question whether the restriction leaves open ample alternatives for communication of information. McTernan v. City of York, Pennsylvania, 564 F.3d 636, 646 (3d Cir. 2009). "These elements involve subsidiary fact questions that must be submitted to a jury, except where the evidence applicable to a particular element entitles a party to judgment as a matter of law." Id. (citing Pouillon v. City of Owosso, 206 F.3d 711, 717-18 (6th Cir.2000); Ovadal v. City of Madison, 416 F.3d 531, 537-38 (7th Cir. 2005); Colacurcio v. City of Kent, 163 F.3d 545, 558 (9th Cir.1998) (Reinhardt, J. dissenting)). See also Marcavage v. City of Philadelphia, 271 Fed.Appx. 272, 275 (3d Cir.2008) (No. 07-1049) (sufficiency of any alternate channels for communication is a component that must be submitted to the jury) (citing Pouillon, supra).
However, the issue whether a rule is a facially valid time-place-manner restriction is conceptually distinct from the issue whether the restriction was applied in a pretextual or discriminatory manner. See, e.g., Mobley v. Tarlini, 641 F. Supp. 2d 430, 439 (E.D.Pa.2009) (recognizing that, although a defendant's mere use of Robert's Rules of Order at a township council meeting is a permissible time, place, and manner restriction and permissible under the First Amendment, the defendant's particular application of Robert's Rules may amount to impermissible viewpoint discrimination which offends the First Amendment). Significantly, the latter issue, which I will address infra in part B., is the only issue which was submitted to the jury, as the Court's final instructions to the jury indicate:
When a public official, such as the defendant, excludes a citizen from a public meeting, he must conform his conduct to the requirements of the First Amendment. Under applicable First Amendment law, a meeting of the Erie County Council is considered a limited public forum, and speech occurring there may be restricted within certain limitations. The Erie County Council, and the defendant, as Chairman of the Council, are entitled to impose reasonable restrictions *452 on the time, place and manner of speech by citizens at a meeting in order to preserve order and decorum.
On the other hand, the defendant, acting as Chairman of County Council, is not entitled to suppress speech occurring during a meeting because of the identity of the speaker or because of any disagreement the defendant may have with the viewpoint that is being expressed. Suppressing speech for either of these purposes in the context of this case is a violation of the First Amendment.
Accordingly, if you find that, in ruling the plaintiff out of order and ordering his removal from the March 20, 2007 meeting of County Council, the defendant acted with the intention of imposing reasonable restrictions on the time, place, and manner of the plaintiff's speech to preserve order and decorum at the meeting at the meeting, you should enter your verdict for the defendant, Mr. Leone.
If, on the other hand, you find that, in ruling the plaintiff out of order and having him removed from the March 20, 2007 meeting, the defendant acted with the intention of suppressing the plaintiff's speech based on its message or based on the identity of the speaker, then you should enter your verdict on liability for the plaintiff, Mr. Galena.
(N.T. 8/4/09 [85] at pp. 9-10.) The Special Interrogatories submitted to the jury required them to determine, with respect to liability, only whether they found, "by a preponderance of the evidence that the Defendant violated the Plaintiff's First Amendment rights by having him removed from the March 20, 2007 meeting of Erie County Council." (Jury Verdict [63], Special Interrogatory # 1.)
Consequently, the jury was never called upon to decide whether, as a factual matter, the regulation requiring citizens at Council meetings to restrict their comments to the Hearing of the Public: (a) was content neutral; (b) was narrowly drawn so as to advance an important governmental interest; and (c) left open alternative means of communicating the Plaintiff's message. Instead, those issues were properly removed from the jury's consideration without any objection from Plaintiff, and any challenges along those lines have therefore been waived.
Nevertheless, even if the Plaintiff had not implicitly conceded the facial validity of the subject time-place-manner restriction, any factual challenges as to its validity are foreclosed by the record here. A law regulating speech is considered content neutral if it applies to all speech irrespective of the ideas or views expressed. See Turner Broad. Sys., Inc. v. FCC, 512 U.S. 622, 643, 114 S. Ct. 2445, 129 L. Ed. 2d 497 (1994). Here, there is no real dispute that the restriction which Leone was purporting to enforceto wit, the rule that citizen speakers confine their remarks to the portion of the meeting designated for the Hearing of the Publicwas facially content-neutral. The only significant limitations which the Administrative Code places on citizens' speech are the requirements: (1) that speakers adhere to certain time limitations (3 or 5 minutes, depending on whether the speaker provided prior notice of his intent to speak, Admin. Code § 8(A) and (B)); (2) that speakers not be unduly repetitive of one another (Admin. Code § 8(C)); and (3) that speakers refrain from comments or conduct that is insulting, threatening, slanderous, obscene, boisterous, etc. (Admin. Code § 8(D)). Such limitations regulate only the time and manner of speech, not the specific content *453 or message.[6]
The second time-place-manner prong requires that the restriction be narrowly tailored to serve a significant governmental interest. The proffered governmental interest at stake here is the preservation of order and decorum during meetings of County Council such that the Council can conduct its business efficiently, fairly, and effectively. This is certainly an important governmental interest and Plaintiff has not contended otherwise. See, e.g., Collinson v. Gott, 895 F.2d 994, 1000 (4th Cir.1990) (Phillips, J., concurring) ("Because of government's substantial interest in having such meetings conducted with relative orderliness and fairness to all, officials presiding over such meetings must have discretion, under the `reasonable time, place and manner' constitutional principle, to set subject matter agendas, and to cut off speech which they reasonably perceive to be, or imminently to threaten, a disruption of the orderly and fair progress of the discussion, whether by virtue of its irrelevance, its duration, or its very tone and manner.") The requirement that the restriction on speech be "narrowly tailored" does not mean that it must be the "least-restrictive or least-intrusive means," of furthering the government's interest. Kreimer v. Bureau of Police for Town of Morristown, 958 F.2d 1242, 1264 (3d Cir.1992) (citing Ward v. Rock Against Racism, 491 U.S. at 798, 109 S. Ct. 2746). "Rather, the requirement of narrow tailoring is satisfied `so long as the ... regulation promotes a substantial government interest that would be achieved less effectively absent the regulation.'" Id. (citing Ward, 491 U.S. at 799, 109 S. Ct. 2746). The preservation of order and decorum at meetings of Council would be difficult, if not impossible, to achieve without the restrictions limiting the time and manner of comments from members of the public, a fact which Galena has not disputed.
The third prong of the time-place-manner analysis requires that the regulation leave open alternative means of communicating the same information. Galena appears to dispute the validity of the regulation insofar as it relates to this particular prong, In effect, Galena contends that the rule requiring him to speak only during the Hearing of the Public precluded him from raising his specific objection because the time for the Hearing of the Public always precedes the portion of Council meetings devoted to new business. Thus, Galena reasons, he could never be certain on any given occasion whether the Council would attempt to move ordinances from a first reading to a second reading and, by the time this perceived violation occurred, his time for speaking would have passed. Assuming for the moment that this issue *454 had not been waived, I find this line of argument unavailing.
Specifically, I conclude that the record here cannot support a finding that the regulation at issue failed to allow for alternative means of communicating the essence of Galena's message. While it is true that the Hearing of the Public occurred prior to the time when Council undertook new business, it is also undisputed that the perceived violationthe moving of ordinances from first to second readings all in the same meetingwas a practice commonly employed by Council. Galena in fact estimated that in the fifteen months prior to the March 20, 2007 meeting, County Council had employed this practice almost 80 times. As Galena admitted at trial, history suggested there was a "good chance," based on the agenda for the March 20, 2007 meeting, that Council would move ordinances from the first to second readings on that occasion as well. (N.T. 14.) Moreover, Galena's assertion that he could not have meaningfully voiced his objection during the time allotted for public comment is belied by evidence that another member of the public addressed this very issue that same night during the Hearing of the Public. Although Galena may not have been able to predict with exact certainty that, at any given meeting, the perceived violation would occur with respect to a particular ordinance, the general practice was common enough that it could have been anticipated and the general substance of Galena's objection could have been meaningfully aired during the public hearing portion of the meeting. Alternatively, Galena could have voiced his objection to this longstanding procedure at any subsequent meeting of Council during the Hearing of the Public.
Galena has also argued that the asserted time, place and manner regulation was invalid because its application in this case violated the terms of the Pennsylvania Sunshine Act, 65 Pa.C.S.A. §§ 701 et seq. In fact, Galena argues that the Sunshine Act legally and factually distinguishes this case from decisions in other non-Pennsylvania federal courts. Substantively, Galena relies on a provision of the Act which states that "[a]ny person has the right to raise an objection at any time to a perceived violation of this chapter at any meeting of a board or council of a political subdivision or an authority created by a political subdivision." 65 Pa.C.S.A. § 710.1(c). According to Galena, this provision of the Sunshine Act trumped the provisions of the Erie County Administrative Code and thereby gave him an unfettered right to speak when he did. Galena makes much of Leone's admission that he was unaware of this particular provision of the Sunshine Act, and he argues that Leone's "[i]gnorance of the law is no excuse to justify the suppression of protected speech." (Pl.'s Reply Mem. of Law in Opp. to Def.'s Mot. for Judg. as a Matter of Law [86] at p. 6.)
The problem with this argument is that it bears no legal relevance to the Defendant's potential liability under federal law. Although Plaintiff's complaint originally included a claim for an alleged violation of the Pennsylvania Sunshine Act, that claim was withdrawn prior to trial. (See Tr. of Oral Arg. held 8/15/08 [42] at pp. 25-29; Tr. of Hrg. held 3/31/09 [47] at p. 5.) Thus, for purposes of this case as it was tried, the lawfulness of the Administrative Code regulation, which restricts the time and manner in which public citizens could address County Council, is defined in terms of whether it complies with the mandates of the First Amendment to the U.S. Constitution, not in terms of whether it complies with the mandates of the Pennsylvania Sunshine Act. At trial, this Court allowed some testimony as to the *455 parties' differing interpretations of the Pennsylvania Sunshine Act only insofar as it provided a background explanation for why the Plaintiff believed he had a right to speak when he did. However, whether in fact Galena had a right under state law to speak during the business portion of Council's meeting simply was not an issue of any legal consequence in this case, as the only legal claim prosecuted at trial was the alleged violation of Plaintiff's federal First Amendment rights.
To summarize, Leone argued at trial that, in ejecting Galena from the March 20, 2007 meeting of County Council, he was merely attempting to preserve order and decorum by enforcing a content-neutral time, place and manner regulation on speechnamely, the rule that citizen speakers must confine their comments to the portion of Council meetings designated for the Hearing of the Public. The issue as to whether this rule in fact meets the demands of the First Amendment and therefore qualifies as a lawful time, place, and manner regulation was properly removed from the jury, and the case was submitted to the jury only with respect to the secondary issueLeone's actual, subjective intent. Thus, Galena's present challenges to the stated time-place-manner regulationthat it is trumped by the Pennsylvania Sunshine Act and/or that it fails to satisfy the requirements of the First Amendment because it does not leave open alternative means of communicating the Plaintiffs messagehave been waived by virtue of the manner in which the case was submitted to the jury.
Even had they not been waived, however, I find as a matter of law that the evidence cannot support a finding that the regulation in question failed to leave open adequate alternative means of communicating the Plaintiff's message. Moreover, I conclude that the viability of Plaintiff's claim pursuant to the Pennsylvania Sunshine Act (i.e., his claim that his substantive rights under that Act were violated by the manner in which the Administrative Code was enforced) is legally irrelevant to the issues now before the Court. Accordingly Galena's present challenges to the subject time, place and manner regulation have no merit in light of the record now before the Court.
B.
The core factual issue which was decided by the jury in this case was whether Leone, in ejecting Galena from the May 20, 2007 meeting of County Council, acted with the intent to suppress Galena's speech based upon either the identity of the speaker or Leone's disagreement with the speaker's message. In the context of applying summary judgment standards, our circuit court of appeals has stated that, "[w]hen a constitutional violation depends on evidence of improper intent, it is sufficient for the plaintiff to `identify affirmative evidence from which a jury could find... the pertinent motive,' in order to survive summary judgment on that issue." Monteiro, 436 F.3d at 406 (quoting Crawford-El v. Britton, 523 U.S. 574, 600, 118 S. Ct. 1584, 140 L. Ed. 2d 759 (1998)). See also Crawford-El v. Britton, 523 U.S. 574, 600, 118 S. Ct. 1584, 140 L. Ed. 2d 759 (1998) (when improper motive is an element of the plaintiff's claim, the plaintiff may not withstand summary judgment simply by lodging general attacks on the defendant's credibility but must instead identify "affirmative evidence from which a jury could find that the plaintiff carried his or her burden of proving the pertinent motive.") (plaintiff inmate alleged that prison official violated his constitutional rights by intentionally mis-delivering boxes containing inmate's legal materials and personal belongings). If the jury returns a verdict for the plaintiff, "judgment as a matter of law *456 will be granted to the defendant only if that verdict is not based on sufficient evidence." Monteiro, 436 F.3d at 406 (citing Fed.R.Civ.P. 50(a)(1)).
In this case, I find that the record is insufficient to support the jury's finding that Leone acted with the intent to suppress Galena's speech when he ejected him from the March 20, 2007 meeting of Council. Galena points to evidence that he had been a frequent attendee at Council meetings and had been critical of Council in the past relative to Council's expenditure of county tax dollars. On prior occasions, Leone had reportedly scowled, grimaced, grinned or laughed during his comments. Moreover, Galena testified that he did not notice similar reactions to other speakers' comments. He points to evidence suggesting that he had voiced his objections during the March 20 meeting in a "calm" manner and that it was Leone who was angry. Plaintiff also points to evidence that, earlier in the same meeting, Leone had chastised certain individuals who had spoken during the Hearing of the Public and had threatened them with legal action.
All of this evidence, however, must be viewed in the context of the entire trial record which established, as undisputed fact, that: Leone had served on Council for 32 years; he had been involved in drafting the version of the Administrative Code which governed the March 20, 2007 proceedings; he understood the Code as allowing citizens to speak only during the Hearing of the Public; he was unaware of any provision of the Pennsylvania Sunshine Act which required otherwise; and Council meetings had been run for 32 years consistent with this interpretation. The record further established that: Plaintiff had spoken at Council meetings on more than a dozen occasions prior to the night in question; on every one of those occasions, save two, he had addressed Council during the Hearing of the Public without any attempt having been made by the Defendant or anyone else on Council to suppress his speech; on the first occasion when he had spoken out of turn (January 2, 2007), he was gaveled down by Leone, warned that continued disruption of the proceedings would result in his removal, and at that point voluntarily left the meeting on his own; on the second occasion when he spoke out of turn (March 20, 2007), he was ejected only after he kept speaking, despite having been gaveled down and warned that he was out of order and would be removed if he kept talking. As Chairman of the Council, Leone was the presiding officer and thus responsible not only for conducting Council's business in an orderly fashion; he was also responsible for maintaining order and decorum. Significantly, there is nothing in the record to suggest that Leone ever engaged in disparate treatment relative to the manner in which he ran Council meetings; for example, there is no evidence indicating that other citizens who spoke out of turn, but whose message differed from the Plaintiff's, were permitted to speak outside of the Hearing of the Public. Indeed, Leone testified without contradiction that this was the first occasion in his 32 years on Council that he had ever had to have a member of the public removed from a meeting. There is likewise no evidence of Leone preventing the Plaintiff or any other individual from speaking during those numerous occasions when citizens addressed Council during the Hearing of the Public. Despite evidence that certain individuals frequently spoke out at meetings in a manner critical of Council, there is no evidence suggesting that their speech was suppressed.
Galena has argued that, in effect, Leone's conduct amounted to a content-based restriction of speech or, worse, view-point-based *457 restriction. This Court is cognizant that viewpoint-based restrictions are never permissible, even in a limited public forum. See Rosenberger v. Rector and Visitors of University of Virginia, 515 U.S. 819, 829, 115 S. Ct. 2510, 132 L. Ed. 2d 700 (1995) (states are forbidden from exercising viewpoint discrimination, even when the limited public forum is one of its own creation). Content-based restrictions are generally permissible only in extremely limited circumstances,[7]i.e., where the restriction is "necessary to serve a compelling state interest and ... [is] narrowly drawn to achieve that end." Kreimer v. Bureau of Police for Town of Morristown, 958 F.2d 1242, 1255 (3d Cir.1992) (citation omitted). As the Supreme Court has said, "... freedom of speech, though not absolute,... is nevertheless protected against censorship or punishment, unless shown likely to produce a clear and present danger of a serious substantive evil that rises far above public inconvenience, annoyance, or unrest." Terminiello v. Chicago, 337 U.S. 1, 4, 69 S. Ct. 894, 93 L. Ed. 1131 (1949) (internal and ending citations omitted). Here, Plaintiff insists, there was no public inconvenience or unrest to justify Leone's conduct.
This line of argument, however, begs the very factual question at issuei.e., whether, in giving effect to an otherwise legitimate time-place-manner regulation, Leone acted with the subjective intent of suppressing speech. Galena's argument that, in effect, no compelling governmental interest existed to justify a content-based restriction on speechhas relevance only to the extent that the jury would be justified in finding a content-based restriction in the first place.
I conclude that the record here cannot support such a finding. Viewing the evidence of record most favorably to Galena and giving him the benefit of every reasonable inference, it is undisputed that he violated the terms of the Administrative Code when he spoke during the business portion of Council's March 20, 2007 meeting. Before the substance of his objection was articulated, he was ruled out of order by Leone and warned that he would be removed from the meeting if he persisted in speaking out of turn. Galena nevertheless persisted in voicing his objection and was then ejected. Galena had a history of speaking during Council meetings on matters critical of Council but without any attempts from Leone or other members of Council to limit the expression of his message, so long as he spoke during the Hearing of the Public. On one other occasion when he spoke out of turn, he was gaveled down by Leone, advised that he was out of order, and warned that he would be removed from the meeting if he continued to interrupt Leone's comments. There is no evidence to suggest that Leone discriminated among members of the public in terms of how he enforced administrative rules of order at meetings of Council. Although Leone chastised three citizens at the March 20, 2007 meeting for what he considered baseless accusations of unlawful activity on the part of Council, Leone did not rule these individuals out of order or remove them from the meeting, as they had properly spoken during the portion of the meeting reserved for public comment. It is undisputed that, as Chairman of County Council, Leone was charged with maintaining order and decorum at Council's *458 meetings. When Galena voiced his objection out of turn on March 20, 2007, Leone took action consistent with that responsibility. Given all of the circumstances, the evidence here was insufficient to support a finding that Leone acted with the intent to suppress Galena's speech based on either an animus toward Galena or disagreement with his message.
IV. CONCLUSION
For all of the foregoing reasons, I conclude that the jury's verdict of liability against Leone is unsupported by a legally sufficient evidentiary basis. Accordingly, Defendant's motion for judgment as a matter of law will be granted. An appropriate order follows.
ORDER OF JUDGMENT
AND NOW, to wit, this 5th day of March, 2010, for the reasons set forth in the accompanying Memorandum Opinion,
IT IS ORDERED that the Court's previous Judgment Order [65] entered on August 4, 2009 be, and hereby is, VACATED.
IT IS FURTHER ORDERED that the Defendant's Motion for Judgment as a Matter of Law [74] be, and hereby is, GRANTED. JUDGMENT is hereby entered in favor of the Defendant, Fiore Leone, and against the Plaintiff, Daniel T. Galena.
NOTES
[1] Section 1983 provides a private right of action as against:
[e]very person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory or the District of Columbia, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws ...
42 U.S.C.A. § 1983. This Court's jurisdiction is premised on 28 U.S.C. §§ 1331 and 1343.
[2] Except as otherwise indicated, all citations to the trial record relate to the Notes of Testimony from August 8, 2009 (Doc. No. [80] and [80-1]).
[3] The Administrative Code does not expressly state that public comments must be limited to the portion of meetings designated for the Hearing of the Public, but such an interpretation is entirely consistent with the language and structure of the Administrative Code, and Plaintiff has not contended otherwise. Moreover, the trial record establishes as a matter of uncontroverted fact that: Leone had been involved in drafting the version of the Administrative Code at issue here; he interpreted the Code as imposing such a restriction; he had served on County Council for 32 years; and for the past 32 years, Council meetings had been conducted consistent with that interpretation. (N.T. 51, 57, 66, 92, 100.)
[4] Leone testified that this interruption occurred during the business portion of the January 2, 2007 meeting. (N.T. 90-92.) While Galena denied any recollection that he had previously spoken during the business portion of the meeting (N.T. 28-29), a comparison of the transcript of the January 2, 2007 incident (Def.'s Ex. B[67]) with the meeting minutes from that same date (Ex. A[68]) establishes that the interruption occurred after the Hearing of the Public had closed, after various reports had been received by Council, and during a time when Leone was making comments. Plaintiff has not challenged the accuracy of either the transcript or the minutes from the January 2, 2007 meeting.
[5] The First Amendment guarantee of free speech is incorporated into the Fourteenth Amendment's due process clause and is therefore applicable against the states. See Phillips v. Keyport, 107 F.3d 164, 183 (3d Cir. 1997).
[6] In his brief in opposition to the pending Rule 50 motion, Galena portrays Leone's conduct as a content-related restriction on speech. I interpret this line of argument as being directed to the actual subjective intent of Leone rather than the facial validity of the administrative rule; accordingly, this argument is addressed in part B, infra.
To the extent Galena does challenge the time-place-manner regulation as facially content-based, however, I find his argument unavailing. As a designated limited forum, County Council meetings could legitimately be restricted in their content to that which conforms with the purpose of the forumi.e., the discussion of matters of Council governance. See n. 5, supra. Thus, even if the timeplace-manner regulation is considered content based because, e.g., its application depends on a particular message being unduly repetitious, such a restriction is permissible since it merely "confines the forum to the legitimate purpose for which it was created, discussing [Council] business." Mobley v. Tarlini, 641 F. Supp. 2d 430, 439 (E.D.Pa. 2009).
[7] An exception exists with respect to limited public forums where, as we have noted, the government may restrict speech content to the extent necessary in order to confine the forum to the limited and legitimate purpose for which it was created. See Eichenlaub v. Twp. of Indiana, 385 F.3d 274, 280 (3d Cir. 2004) (citation omitted). This type of permissible content-based restriction is not at issue here.
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719 F.Supp.2d 388 (2010)
In re ROSUVASTATIN CALCIUM PATENT LITIGATION.
AstraZeneca Pharmaceuticals LP, AstraZeneca UK Limited, IPR Pharmaceuticals Inc., and Shionogi Seiyaku Kabushiki Kaisha, Plaintiffs,
v.
Mylan Pharmaceuticals Inc., Defendant.
AstraZeneca Pharmaceuticals LP, AstraZeneca UK Limited, IPR Pharmaceuticals Inc., and Shionogi Seiyaku Kabushiki Kaisha, Plaintiffs,
v.
Sun Pharmaceutical Industries Ltd., Defendant.
AstraZeneca Pharmaceuticals LP, AstraZeneca UK Limited, IPR Pharmaceuticals Inc., and Shionogi Seiyaku Kabushiki Kaisha, Plaintiffs,
v.
Sandoz Inc., Defendant.
AstraZeneca Pharmaceuticals LP, AstraZeneca UK Limited, IPR Pharmaceuticals Inc., and Shionogi Seiyaku Kabushiki Kaisha, Plaintiffs,
v.
Par Pharmaceuticals Inc., Defendant.
AstraZeneca Pharmaceuticals LP, AstraZeneca UK Limited, IPR Pharmaceuticals Inc., and Shionogi Seiyaku Kabushiki Kaisha, Plaintiffs,
v.
Apotex Corp., Defendants.
AstraZeneca Pharmaceuticals LP, AstraZeneca UK Limited, IPR Pharmaceuticals Inc., and Shionogi Seiyaku Kabushiki Kaisha, Plaintiffs,
v.
Aurobindo Pharma Ltd. and Aurobindo Pharma USA Inc., Defendants. *389
AstraZeneca Pharmaceuticals LP, AstraZeneca UK Limited, IPR Pharmaceuticals Inc., and Shionogi Seiyaku Kabushiki Kaisha, Plaintiffs,
v.
Cobalt Pharmaceuticals Inc. and Cobalt Laboratories Inc., Defendants.
AstraZeneca Pharmaceuticals LP, AstraZeneca UK Limited, IPR Pharmaceuticals Inc., and Shionogi Seiyaku Kabushiki Kaisha, Plaintiffs,
v.
Aurobindo Pharma Ltd. and Aurobindo Pharma USA Inc., Defendants.
AstraZeneca Pharmaceuticals LP, AstraZeneca UK Limited, IPR Pharmaceuticals Inc., and Shionogi Seiyaku Kabushiki Kaisha, Plaintiffs,
v.
Teva Pharmaceuticals USA, Defendant.
MDL No. 08-1949-JJF. Civil Action Nos. 07-805-JJF-LPS, 07-806-JJF-LPS, 07-807-JJF-LPS, 07-808-JJF-LPS, 07-809-JJF-LPS, 07-810-JJF-LPS, 07-811-JJF-LPS, 08-359-JJF-LPS, 08-426-JJF-LPS.
United States District Court, D. Delaware.
June 29, 2010.
As Revised July 1, 2010.
*392 Ford F. Farabow, Esquire; Charles E. Lipsey, Esquire; Kenneth M. Frankel, Esquire and York M. Faulkner, Esquire of Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P., Washington, D.C. Richard D. Kirk, Esquire and Stephen B. Brauerman, Esquire of Bayard, P.A., Wilmington, DE, for Defendant Aurobindo Pharma Ltd.
Richard A. Kaplan, Esquire; Ralph J. Gabric, Esquire; Jeffry M. Nichols, Esquire and Jason W. Schigelone, Esquire of Brinks Hofer Gilson & Lione, Chicago, IL, Joseph H. Huston, Jr., Esquire of Stevens & Lee, APC, Wilmington, DE, for Defendant Teva Pharmaceutials USA, Inc.
William A. Rakoczy, Esquire; Paul J. Molino, Esquire; Deanne M. Mazzochi, Esquire; Joseph T. Jaros, Esquire; Tara M. Raghavan, Esquire and Eric R. Hunt, Esquire of Rakoczy Molino Mazzochi Siwik LLP, Chicago, IL, Mary B. Matterer, Esquire of Morris James LLP, Wilmington, DE, for Defendant Mylan Pharmaceuticals, Inc.
Henry J. Renk, Esquire of Fitzpatrick, Cella, Harper & Scinto, New York, NY, Mary W. Bourke, Esquire of Connolly Bove Lodge & Hutz LLP, Wilmington, DE, for Plaintiffs.
Thomas A. Stevens, Esquire of AstraZeneca Pharmaceuticals LP, Wilmington, DE, for Plaintiffs, AstraZeneca Pharmaceuticals LP, AstraZeneca UK Limited, and IPR Pharmaceuticals.
William R. Zimmerman, Esquire and Steven A. Maddox, Esquire of Knobbe, Martens, Olson & Bear, LLP, Washington, D.C. Payson Le Meilleur, Esquire of Knobbe, Martens, Olson & Bear, LLP, Irvine, CA, for Defendants, Cobalt Pharmaceuticals, Inc. and Cobalt Laboratories, Inc.
Charles B. Klein, Esquire; John K. Hsu, Esquire; Adam S. Nadelhaft, Esquire and Mark A. Smith, Esquire of Winston & Strawn LLP, Washinton, D.C. Kevin G. Abrams, Esquire and John M. Seaman, Esquire of Abrams & Bayliss LLP, Wilmington, DE, for Defendant Sun Pharmaceutical Industries, Ltd.
Daniel G. Brown, Esquire of Wilson, Sonsini, Goodrich & Rosati, New York, NY, Dutch D. Chung, Esquire of Wilson, Sonsini, Goodrich & Rosati, Washington, D.C., Frederick L. Cottrell, III, Esquire and Steven J. Fineman, Esquire of Richards, Layton & Finger, P.A., Wilmington, DE, for Defendant Par Pharmaceuticals, Inc.
Robert B. Breisblatt, Esquire; Craig M. Kuchii, Esquire; Jeremy C. Daniel, Esquire; Stephen P. Benson, Esquire and Brian J. Sodikoff, Esquire of Katten Muchin Roseman LLP, Chicago, IL, Richard L. Horwitz, Esquire and David E. Moore, Esquire of Potter Anderson & Corroon LLP, Wilmington, DE, for Defendant Apotex Corp.
Thomas P. Heneghan, Esquire; Jeffrey S. Ward, Esquire; Edward J. Pardon, Esquire and Shane A. Brunner, Esquire of Merchant & Gould, Madison, WI.
MEMORANDUM OPINION
FARNAN, District Judge.
AstraZeneca Pharmaceuticals LP, AstraZeneca UK Limited, IPR Pharmaceuticals *393 Inc. and Shionogi Seiyaku Kabushiki Kaisha (collectively, "Plaintiffs") brought this action against several different generic drug manufacturers, Mylan Pharmaceuticals Inc., Sun Pharmaceutical Industries, Ltd., Par Pharmaceutical, Inc., Apotex Corp., Aurobindo Pharma Ltd., Cobalt Pharmaceuticals Inc., Cobalt Laboratories Inc., Teva Pharmaceuticals USA, Inc. (collectively, "Defendants")[1] alleging infringement of U.S. Patent No. RE 37,314 (the "'314 patent"), covering rosuvastatin and its salts, based on Defendants' submission of an Abbreviated New Drug Application ("ANDA") to the Food and Drug Administration ("FDA") for approval to engage in the commercial manufacture, use, or sale in the United States of rosuvastatin calcium tablets. With the exception of Apotex Corp., Defendants admit that they have infringed claims 6 and 8 of the '314 patent by submitting its ANDA under 35 U.S.C. § 271(e)(2)(A). However, Defendants contend that claims 6 and 8 of the '314 patent are invalid and unenforceable. In addition, Defendants have challenged the standing of Plaintiff AstraZeneca Pharmaceuticals LP to sue for infringement and have filed motions to dismiss based on this issue. As for Defendant Apotex Corp., Apotex Corp. contends that it did not engage in an infringing act in the first instance, because it did not "submit" the ANDA within the meaning of Section 271(e)(2)(A).
With the exception of Defendant Apotex Corp., no Defendant contests that the Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. §§ 1331 and 1338, as arising under the patent laws of the United States, Title 35 of the United States Code and the Abbreviated New Drug Application provisions of the Hatch-Waxman Amendments to the Federal Food, Drug and Cosmetic Act, 21 U.S.C. § 355(j). Personal jurisdiction and venue are also uncontested.
The Court held a Bench Trial on the issues of invalidity and unenforceability from February 22, 2010, through March 3, 2010, and reserved decision on the standing issue for resolution post-trial. Briefing on the various post-trial issues was not completed until June 4, 2010.[2] This Memorandum Opinion constitutes the Court's findings of fact and conclusions of law on the issues of standing, invalidity and unenforceability.
BACKGROUND
I. The Parties
Plaintiff AstraZeneca Pharmaceuticals LP is a Delaware corporation with its principal *394 place of business in Wilmington, Delaware. Plaintiff AstraZeneca UK Limited is a corporation existing under the laws of the United Kingdom with its principal place of business in London, England. Plaintiff IPR Pharmaceuticals Inc. is a wholly owned subsidiary of AstraZeneca UK, existing under the laws of the Commonwealth of Puerto Rico with a principal place of business in Canovanas, Puerto Rico. Plaintiff Shionogi Seiyaku Kabushiki Kaisha is a Japanese corporation with a principal place of business in Osaka Japan. Plaintiffs are engaged in the business of research, development, manufacturing and/or selling pharmaceutical products world-wide.
Defendant Apotex Corp. is a Delaware corporation with its principal place of business in Weston, Florida. Defendant Aurobindo Pharma Limited is a corporation existing under the laws of India with its principal place of business in Andhra Pradesh, India. Defendant Cobalt Pharmaceuticals Inc. is a Canadian corporation with its principal place of business in Ontario, Canada. Defendant Cobalt Laboratories Inc. is a Delaware corporation with its principal place of business in Bonita Springs, Florida. Defendant Mylan Pharmaceuticals Inc. is a West Virginia corporation with its principal place of business in Morgantown, West Virginia. Defendant Par Pharmaceutical, Inc. is a Delaware corporation with its principal place of business in Woodcliff Lake, New Jersey. Defendant Sun Pharmaceutical Industries Ltd. is a corporation existing under the laws of India with its principal place of business in Maharashtra, India. Defendant Teva Pharmaceuticals USA, Inc. is a Delaware corporation with its principal place of business in North Wales, Pennsylvania. Defendants are engaged in the business of making, selling and/or distributing generic drugs in the United States.
II. The Patent Generally
The '314 patent is a reissue of U.S. Patent No. 5,260,440 (the "'440 patent"), which pertains to rosuvastatin and its salts, which are compounds useful in the treatment of hypercholesterolemia, hyperlipoproteinemia and atherosclerosis. (PTX-682 at 1:26-28; PTX-1054 at 1:32-34.) The invention secured in the '440 patent was made by co-inventors Kentaro Hirai, Teruyuki Ishiba, Haruo Koike and Masamichi Watanabe. Plaintiff Shionogi Seiyaku Kabushiki Kaisha is the owner of the '440 patent, and after consummation of a license agreement with the AstraZeneca-affiliated Plaintiffs, an application was made to reissue the '440 patent. The drug covered by the reissued '314 patent is known as rosuvastatin calcium and marketed and sold by the AstraZeneca-affiliated Plaintiffs under the name CRESTOR® as a result of a licensing agreement between Shionogi and the AstraZeneca-affiliated Plaintiffs.
Claims 6 and 8 of the '314 patent are at issue in this litigation. Claim 6 is an independent claim directed to
the compound 7-(4-(4-fluorophenyl) -6-isopropyl-2-(Nmethyl-N-methylsulfonylamino)pyrimidin-5-yl)-(3R, 5S)dihydroxy-(E)6-heptenoic acid (rosuvastatin) in the form of a non-toxic pharmaceutically acceptable salt thereof.
(PTX-1054 at 16:30-33.) Claim 8 is a dependent claim directed to the compound of claim 6 in the form of a calcium salt, which is rosuvastatin calcium, the active ingredient in CRESTOR®. (PTX1054 at 16:35.)
The claims at issue were construed by Magistrate Judge Stark, and his recommendations concerning claim construction were adopted by the Court. (D.I. 348 in 08-md-1949.) Claim 6 is construed as "[a] *395 non-toxic pharmaceutically acceptable salt of the compound 7-(4-(4-fluorophenyl)-6-isopropyl-2-(n-methyl-N-methylsulfony-lamino) pyrimidin-5-yl)-(3R, 5S)-dihydroxy-(E)-6-heptenoic acid." (Id.) Claim 8 is construed so as to encompass the monocalcium bis salt, reading the claim as "[t]he compound of Claim 6 in the form of a calcium salt." (Id.)
By this action, Plaintiffs seek an order prohibiting the FDA from approving Defendants' ANDAs prior to the expiration of the '314 patent on January 8, 2016, with attached six months of pediatric exclusivity ending on July 8, 2016, and enjoining Defendants from the commercial manufacture, use, offer to sell, sale or importation of their rosuvastatin calcium tablets prior to the expiration of Plaintiff's exclusivity. Defendants contend that claims 6 and 8 are invalid as obvious under 35 U.S.C. § 103 and as improperly reissued claims under 35 U.S.C. § 251. Defendants also contend that the '314 patent is unenforceable based upon the allegation that the original '440 patent was procured through inequitable conduct. Defendants also seek an order that Plaintiff AstraZeneca Pharmaceutical LP lacks standing to sue. The Court will address the issues raised in turn.
DISCUSSION
I. Infringement
A. The Parties' Contentions
Infringement is only at issue in this case with respect to Defendant Apotex Corp. ("Apotex"), and only concerns the question of whether Apotex "submitted" ANDA No. 79-145, such that it may be liable for infringement under Section 271(e)(2)(A). Plaintiffs contend that this Court, both in this action and others, as well as numerous other courts, have recognized that an agent for a foreign ANDA applicant who signs the ANDA application and intends to benefit directly if the ANDA is approved may be liable for infringement under Section 271(e)(2)(A). (D.I. 499 at 4-6.) Plaintiffs contend that under this standard, Apotex is liable for infringement, because it signed the ANDA, as the U.S. agent of its related company, Apotex, Inc., and further that Apotex intends to directly benefit if the FDA approves the application. (Id. at 6-8.) Thus, Plaintiffs contend that Apotex is properly considered to be an entity that submitted the ANDA.
In response, Apotex contends that it did not "submit" the ANDA within the meaning of Section 271(e)(2)(A). According to Apotex, the FDA regulations make it clear that only the "applicant" submits an ANDA. (D.I. 521 at 3-6.) Apotex contends that it has not sought approval to commercially manufacture, use, or sell the claimed invention and that every certification made in the ANDA was made by Apotex Inc., not Apotex. (Id. at 7-8.) Thus, Apotex contends that it is not the applicant of the ANDA. Although Apotex acknowledges that it acted as the authorized U.S. agent for the ANDA on behalf of Apotex, Inc., Apotex maintains that authorized U.S. agents cannot be liable for infringement under Section 271(e)(2), even though they have signed an ANDA application. Apotex contends that the act of signing the ANDA is a ministerial act that is insufficient to create "submitter" liability. According to Apotex, the cases relied upon by Plaintiffs for a contrary position are inconsistent with the statutory and regulatory framework governing ANDA submissions, including 21 U.S.C. § 355(j), 21 C.F.R. § 314.3(b), 21 C.F.R. §§ 314.94(a)(1), and FDA Form 356h, and are distinguishable both procedurally and factually from this action. (Id. at 8-14.) Apotex further contends that Section 271(e)(2)(A) does not require an inquiry *396 into whether one intends to benefit from ANDA approval, and that such an inquiry is speculative and does not meet the specified acts of seeking approval to make, use, or sell the claimed invention as required by Section 271(e)(2)(A).
Alternatively, Apotex contends that Plaintiffs have not demonstrated by a preponderance of the evidence that Apotex Corp. intends to directly benefit if the FDA approves ANDA No. 79-145. In this regard, Apotex contends that it is a distinct company from Apotex Inc., and that the decisions of Apotex, Inc. should not be imputed to Apotex. Apotex further contends that it selects which Apotex products it will market, and that it does not market every generic manufactured by Apotex, Inc. (Id. at 14-15.) Thus, Apotex contends that the evidence does not support a finding that Apotex intends to directly benefit from the FDA's approval of ANDA No. 79-145.
B. Whether Apotex Corp. May Be Liable For Infringement As The "Submitter" Of An ANDA
In previous decisions issued by the Court, the Court has held that
a wholly-owned subsidiary of a foreign ANDA applicant, which signs an ANDA as the agent of its parent-applicant, and which intends to benefit directly if the ANDA is approvedby participating in the manufacture, importation, distribution and/or sale of the generic drug[is] subject to suit under § 271(e) as one who has "submitted" an ANDA.
In re Rosuvastatin Calcium Patent Litig., 2008 WL 5046424, at *10 (D.Del. Nov. 24, 2008) (Stark, J.) ("Rosuvastatin I"), adopted by Astrazeneca Pharms. LP v. Aurobindo Pharma Ltd., 2009 WL 483131 at *3 (D.Del. Feb. 25, 2009) (Farnan, J.) ("Rosuvastatin II"). Regardless of whether this standard may be considered the law of the case as Plaintiffs contend, the Court is not persuaded that this recitation of the legal standard for determining who may be liable for submission of an ANDA application is erroneous such that it should be reconsidered by the Court as urged by Apotex. The Court's conclusion that liability for infringement may extend to an agent of the applicant who signs the ANDA and intends to benefit directly if the ANDA is approved is consistent with the decision of other courts considering this issue. Wyeth v. Lupin Ltd., 505 F.Supp.2d 303, 306-307 (D.Md.2007); Aventis Pharma Deutschland GMBH v. Lupin Ltd., 403 F.Supp.2d 484, 492-494 (E.D.Va.2005). Recent decisions of this Court are also consistent. See Cephalon, Inc. v. Watson Pharmaceuticals, Inc., 629 F.Supp.2d 338, 349 (D.Del.2009) (Robinson, J.); see also In re Cyclobenzaprine Hydrochloride Extended-Release Capsule Patent Litigation, 693 F.Supp.2d 409, 417-18 (D.Del.2010) (Robinson, J.). As Judge Robinson explained in Cephalon, "[p]arties `actively involved' in preparing the ANDA are deemed to have `submitted' the ANDA, regardless of whether they are the named applicant; this is especially true where the parties involved are in the same corporate family. `Active involvement' includes `marketing and distributing the approved generic drugs in the United States.'" 629 F.Supp.2d at 349 (citations omitted).
Apotex contends that the aforementioned cases are distinguishable on their facts in that the companies involved had a different corporate relationship and/or were more involved in the ANDA preparation than Apotex was in this case. While the Court acknowledges differences among the cases, the Court is not persuaded that these differences justify a different result insofar as the appropriate legal standard for a "submitter" of an ANDA application is considered. In the Court's view, the *397 FDA regulations cited by Apotex do not construe Section 271(e)(2)(A), and do not preclude an authorized agent who signs an applicant from being considered a "submitter" of the ANDA. See 21 C.F.R. § 314.3(b) (describing the "applicant" as any person who "submits" an ANDA). In addition, the Court finds nothing in the text of Section 271(e)(2)(A) to limit the submitter of the ANDA to one who signs the Paragraph IV certification. Moreover, the Court is persuaded that this interpretation of Section 271(e)(2)(A) is consistent with Congressional intent as explained by Magistrate Judge Stark in Rosuvastatin I, 2008 WL 5046424 at *10-11, and subsequently adopted by the Court.
Applying this legal standard to the facts of this case, the Court concludes that Apotex submitted the ANDA application such that it may be liable for infringement of the '314 patent. Apotex is identified in the ANDA and its amendment as the authorized U.S. agent for Apotex, Inc., and these documents were signed by Mr. Kiran Krishnan, Manager of Regulatory Affairs for Apotex, using the address and phone number of Apotex. (PTX-1343; PTX1410 at 2; Tao Dep. 73:13-19.) Although Apotex is not a wholly owned subsidiary of Apotex, Inc., the two companies are closely related. Apotex is a wholly-owned subsidiary of Aposherm, Inc., which in turn, is a wholly-owned subsidiary of Apotex Holdings Inc. (PTX-1255.) Apotex Inc. is a wholly-owned subsidiary of Apotex Pharmaceutical Holdings Inc., which in turn, is 94 percent-owned by Apotex Holdings Inc. (Id.) Aposherm, Inc., Apotex Pharmaceutical Holdings, Inc., and Apotex Holdings, Inc., are shell-companies that exist on paper, but have no formal meetings. (Sherman Dep. 9:22-12:11.) Apotex Inc. and Apotex hold themselves out publically and internally as part of the Apotex Group of companies. (PTX-1624; PTX-1625; PTX-1630; Fahner Dep. 14:21-15:6; McIntire Dep. 134:16-139:8; 140:5-11.)
In addition, the Court is persuaded that Apotex actively participated in activities related to the ANDA submission. The FDA directed inquiries to Apotex regarding the ANDA application (PTX-1779 at AC461; PTX-1780 at AC473), and Mr. Krishnan stayed at the headquarters of Apotex Inc. in Canada to assist in the preparation of the ANDA and answer questions while the Director of Regulatory Affairs for Apotex Inc., Ms. Bernice Atao, was out of the office. (Krishnan Dep. 64:2-65:5; Tao Dep. 60:1-13, 83:5-19, 98:7-99:4.) Mr. Krishnan reviewed the draft ANDA prior to submission to the FDA and consulted with and answered substantive questions posed by the regulatory staff of Apotex Inc., in connection with the submission. (PTX-1315; PTX-1329; PTX-1337; PTX-1340; PTX-1342; PTX-1357; PTX-1358; PTX-1360; Krishnan Dep. 56:20-57:18, 59:12-60:14, 61:16-62:14, 64:2-66:5, 67:11-69:20, 70:1-20, 76:1-78:8, 85:13-86:10, 86:21-91:15; Tao Dep. 83:13-19, 86:21-91:15, 107:10-108:15, 123:6-22.)
In addition to the foregoing, the Court is also persuaded that Plaintiffs have established by a preponderance of the evidence that Apotex intends to directly benefit from the approval of the ANDA. Apotex is the marketing arm of Apotex Inc. Ms. Tammy McIntire, the President of Apotex, testified that Apotex Inc. made the decision "to develop [r]osuvastatin calcium as a generic product for the United States, for Apotex Corp. to sell in the United States...." (McIntire Dep. 204:5-9.) Apotex's intention to market and sell Apotex Inc.'s generic rosuvastatin calcium products in the United States, coupled with its actions in connection with the ANDA submission and its designation as the U.S. agent for Apotex Inc., satisfy the legal standard for liability as an ANDA *398 "submitter" under Section 271(e)(2)(A). Accordingly, the Court concludes that Apotex may be held liable for infringement of claims 6 and 8 of the '314 patent under Section 271(e)(2)(A) as a submitter of an ANDA.
II. STANDING
A. The Parties' Contentions
Defendants have also moved to dismiss Plaintiff AstraZeneca Pharmaceuticals LP ("AstraZeneca") from this litigation for lack of standing. (D.I. 422.) Defendants contend that AstraZeneca LP does not own the '314 patent, does not possess an exclusive license to the '314 patent, and is not an exclusive marketer of CRESTOR®. Defendants further point out that Plaintiffs never specifically pled that each party had standing, but generally averred that all Plaintiffs held substantial rights in the '314 patent. Because AstraZeneca LP lacks any proprietary rights to the patent in suit. Defendants contend that it has no standing to pursue a claim of infringement under the Hatch-Waxman Act.
In response, AstraZeneca LP contends that it has standing because (1) it serves as the exclusive agent of Plaintiff, IPR Pharmaceuticals Inc. ("IPR"), who is the owner of the New Drug Application ("NDA") for CRESTOR®; (2) it submitted IPR's NDA to the FDA; and (3) it is IPR's licensed marketer of CRESTOR® in the United States. (D.I. 443.) AstraZeneca LP acknowledges that in a typical patent case, it would not have standing, but contends that a different conclusion is warranted here because the text, structure, and legislative history of the Hatch-Waxman Act supports standing for an NDA holder in the first instance and for the agent of an NDA holder under agency principles. (Id. at 4-13.)
B. Legal Principles Related To Standing
The party bringing an action for patent infringement bears the burden of establishing that it has standing. Sicom Sys., Ltd. v. Agilent Techs., Inc., 427 F.3d 971, 976 (Fed.Cir.2005). For purposes of demonstrating standing under Article III of the Constitution, the plaintiff must show (1) an injury in fact, (2) with a fairly traceable connection to the challenged action, and (3) the requested relief will redress the alleged injury. Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 103, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998). Courts also recognize three prudential principles that must be considered in the standing analysis: (1) a party generally must litigate its own rights and not the rights of a third party; (2) the question must not be an abstract, generalized grievance; and (3) the harm must be in the zone of interests protected by the statute or constitutional provision at issue. Valley Forge Christian College v. Americans United for Separation of Church & State, 454 U.S. 464, 474-475, 102 S.Ct. 752, 70 L.Ed.2d 700 (1982).
The Federal Circuit has recognized three potential categories of plaintiffs for purposes of considering the question of standing: "those that can sue in their own name alone; those that can sue as long as the patent owner is joined in the suit; and those who cannot even participate as a party to an infringement suit." Morrow v. Microsoft Corp., 499 F.3d 1332, 1339 (Fed. Cir.2007). The first category of plaintiffs hold all legal rights to the patent as the patentee or assignee of all patent rights. Id. at 1339-1340. The second category includes plaintiffs who hold exclusionary rights and interests, but not all substantial rights to the patent such as exclusive licensees. Id. at 1340. The third category of plaintiffs are those who hold less than all *399 substantial rights to the patent, and lack exclusionary rights such as non-exclusive licensees. Id. at 1340-1341. Plaintiffs in the third category lack standing and cannot bring suit. Id.
C. Whether AstraZeneca LP Lacks Standing To Bring This Action
In this case, AstraZeneca LP urges the Court to expand the second category of recognized plaintiffs to include NDA holders and their authorized agents. However, the Court is not persuaded that a valid legal basis exists for this expansion. Plaintiffs arguments and citations notwithstanding, the Court does not understand the Hatch-Waxman Act or its amendments to have expanded the traditional categories of recognized standing in patent infringement actions, except to create a case or controversy by a defined act of infringement. See e.g. Glaxo, Inc. v. Novopharm Ltd., 110 F.3d 1562, 1569 (Fed.Cir.1997). Indeed, this Court has previously utilized the traditional standing analysis in evaluating standing questions under the Hatch-Waxman Act. See Purdue Pharma Prods. L.P. v. Par Pharms, Inc., 2008 WL 7526342 at *2, 2008 U.S. Dist. LEXIS 98178 at *6-7 (D.Del. Dec. 23, 2008) (stating that "`only a patent owner or an exclusive licensee can have constitutional standing to bring an infringement suit; a non-exclusive licensee does not'"). Although AstraZeneca LP premises its argument on IPR's status as the NDA holder, IPR is actually the exclusive sub-licensee of the patent, allowing IPR to fall into one of the already recognized categories of plaintiffs with standing. AstraZeneca LP is not an exclusive licensee of the patent, Ortho Pharm. Corp. v. Genetics Inst., 52 F.3d 1026, 1031 (Fed.Cir.1995), and IPR's presence in this action cannot cure AstraZeneca LP's standing deficiency. Fairchild Semiconductor Corp. v. Power Integrations, Inc., 630 F.Supp.2d 365, 370 (D.Del.2007). Moreover, AstraZeneca LP is even further removed from IPR's status, because even if IPR's status as an NDA holder is considered relevant, AstraZeneca LP is only the authorized agent for IPR. AstraZeneca makes much of the fact that, as authorized agent for IPR, it received the Hatch-Waxman Act Notice Letters from Defendants. However, the mailing of Notice Letters is a requirement of the Hatch-Waxman Act and is not an action that in and of itself creates standing, absent a cognizable constitutional or statutory basis.
In sum, AstraZeneca Pharmaceuticals LP holds no interest in and does not have any exclusionary rights in the '314 patent, and therefore, the Court concludes that AstraZeneca LP has no standing to bring or join in this infringement action. Accordingly, the Court will grant Defendants' Motion and dismiss AstraZeneca LP from this action based upon lack of standing.
III. INEQUITABLE CONDUCT
A. The Parties' Contentions
Defendants contend that the '314 patent is unenforceable as a result of inequitable conduct in the prosecution of the original '440 patent from which the '314 patent was reissued. (D.I. 501.) Specifically, Defendants contend that three members of the Patent Department at Plaintiff Shionogi Seiyaku Kabushiki Kaisha ("Shionogi"), Ms. Kitamura[3], Mr. Shibata and Mr. Tamaki, failed to disclose to the PTO two highly material prior art patent applications by Bayer and Sandoz, as well as a *400 European Search Report. Defendants have no direct evidence of an intent to deceive the PTO, but urge the Court to infer such intent based on various actions taken by each of the aforementioned individuals during their tenure at Shionogi and their work in prosecuting the '440 patent.
In response, Plaintiffs contend that Defendants cannot establish intent to deceive by clear and convincing evidence, because there are other reasonable inferences that can be drawn from the actions of Ms. Kitamura, Mr. Shibata and Mr. Tamaki. (D.I. 540.) In particular, Plaintiffs contend that Ms. Kitamura left Shionogi before any Information Disclosure Statement ("IDS") was due, and in any event, did not recognize a patentability problem that would prompt her to make a disclosure prior to her departure. (Id. at 13-16.) Plaintiffs also contend that neither Mr. Shibata nor Mr. Tamaki were substantively involved in the patent application at issue, and that to the extent they were involved, neither realized that the prior art had not been disclosed because the Shionogi Patent Department was in a state of confusion and chaos due to the departure of certain employees and a significantly increased workload on the remaining employees. (Id. at 22-38.)
B. Legal Principles Related To Inequitable Conduct
Individuals associated with the filing and prosecution of a patent application, including inventors named in the application, attorneys or agents prosecuting the application, and those involved in the preparation or prosecution of the application who are associated with the inventor, have a duty of candor, good faith and honesty in their dealings with the PTO. 37 C.F.R. § 1.56(a), (c). The duty of candor, good faith and honesty includes the duty to submit truthful information to the PTO, as well as information which is material to the examination of the patent application. Elk Corp. of Dallas v. GAF Bldg. Materials Corp., 168 F.3d 28, 30 (Fed.Cir.1999).
"Inequitable conduct occurs when a patentee breaches his or her duty to the PTO of `candor, good faith, and honesty.'" Warner-Lambert Co. v. Teva Pharms. USA, Inc., 418 F.3d 1326, 1342 (Fed.Cir.2005). A patent procured as a result of inequitable conduct is unenforceable, and if inequitable conduct occurred in relation to one patent claim, the entire patent is rendered unenforceable. Kingsdown Medical Consultants v. Hollister Incorporated, 863 F.2d 867, 877 (Fed.Cir. 1988).
To establish inequitable conduct due to the failure to disclose material information or the submission of false information, the party raising the issue must prove by clear and convincing evidence that (1) the information is material; (2) the knowledge of this information and its materiality is chargeable to the patent applicant; and (3) the applicant's submission of false information or its failure to disclose this information resulted from an intent to mislead the PTO. Warner-Lambert, 418 F.3d at 1342-1343 (citations omitted). "Information is considered material when there is a substantial likelihood that a reasonable examiner would have considered the information important in deciding whether to allow the application to issue as a patent." TAP Pharm. Prods. v. OWL Pharm., L.L.C., 419 F.3d 1346, 1351 (Fed. Cir.2005). However, a reference that is material need not be disclosed if it is cumulative to or less material than other references that have already been disclosed. Elk Corp., 168 F.3d at 31. A reference is cumulative if it "teaches no more than what a reasonable examiner would consider to be taught by the prior art already before the PTO." Regents of *401 the Univ. of Cal. v. Eli Lilly & Co., 119 F.3d 1559, 1575 (Fed.Cir.1997).
In addition to materiality, the party seeking to establish inequitable conduct must demonstrate that the patent applicant acted with the intent to deceive the PTO. Intent to deceive the PTO may be established by direct evidence or inferred from the facts and circumstances surrounding the applicant's overall conduct. Impax Labs. v. Aventis Pharms., 468 F.3d 1366, 1375 (Fed.Cir.2006); Molins PLC v. Textron, Inc., 48 F.3d 1172, 1180 (Fed.Cir.1995). In determining whether the applicant's overall conduct evidences an intent to deceive the PTO, the Federal Circuit has emphasized that the challenged "conduct must be sufficient to require a finding of deceitful intent in the light of all the circumstances." Kingsdown Medical Consultants, 863 F.2d at 873. "`In a case involving nondisclosure of information, clear and convincing evidence must show that the applicant made a deliberate decision to withhold a known material reference.'" Star Scientific, Inc. v. R.J. Reynolds Tobacco Co., 537 F.3d 1357 (Fed.Cir.2008) (quoting Molins PLC v. Textron, Inc., 48 F.3d 1172, 1181 (Fed. Cir.1995) (emphasis in original)). Intent to deceive may not be inferred from the materiality of the undisclosed reference alone, but an inference of intent to deceive is generally appropriate where there is (1) a high degree of materiality of the reference; (2) evidence that the applicant knew or should have known of its materiality, and (3) the applicant has not provided a credible explanation for withholding the reference. Cargill, Inc. v. Canbra Foods, Ltd., 476 F.3d 1359, 1368 (Fed.Cir.2007); Cancer Research Tech. v. Barr Labs., Inc., 679 F.Supp.2d 560, 581-82 (D.Del.2010) (Robinson, J.) (quoting Praxair, Inc. v. ATMI, Inc., 543 F.3d 1306, 1314 (Fed.Cir. 2008) (internal quotations and citations omitted)). Generally, the more material the omission, the less the degree of intent that must be shown to reach a conclusion of inequitable conduct. Digital Control Inc. v. Charles Machine Works, 437 F.3d 1309, 1313 (Fed.Cir.2006) (discussing the balancing of materiality and intent and stating that "a greater showing of one factor allow[s] a lesser showing of the other"); Elk Corp., 168 F.3d at 32. In addition, an inference of intent to deceive must be "the single most reasonable inference able to be drawn from the evidence to meet the clear and convincing standard," and a court errs when it overlooks one reasonable inference in favor of an equally plausible inference where the evidence is susceptible to multiple reasonable inferences. Id. (citing Scanner Techs. Corp. v. ICOS Vision Sys. Corp., 528 F.3d 1365, 1376 (Fed.Cir.2008) (emphasis added)).
Once materiality and intent have been established, the court must conduct a balancing test to determine "whether the scales tilt to a conclusion that `inequitable conduct' occurred." Critikon, Inc. v. Becton Dickinson Vascular Access, Inc., 120 F.3d 1253, 1256 (Fed.Cir.1997). The question of whether inequitable conduct occurred is equitable in nature, and thus, is committed to the sound discretion of the trial court. Elk Corp., 168 F.3d at 30-31; Kingsdown Medical Consultants, 863 F.2d at 876.
Reissue proceedings cannot cure a patent held to be unenforceable due to inequitable conduct. Aventis Pharma S.A. v. Amphastar Pharms., Inc., 525 F.3d 1334, 1341 n. 6 (Fed.Cir.2008) (citing Hoffman-LaRoche Inc. v. Lemmon Co., 906 F.2d 684 (Fed.Cir.1990)). As the Federal Circuit has explained, "[i]t is well settled that, in the reverse case of inequitable conduct during prosecution of the original application, reissue is not available to obtain new claims and thereby rehabilitate *402 the patent." Hewlett-Packard Co. v. Bausch & Lomb, Inc., 882 F.2d 1556, 1563 n. 7 (Fed.Cir.1989).
C. Whether The '440 Patent Was Procured Through Inequitable Conduct
After reviewing the evidence adduced by the parties at trial, the Court concludes that Defendants have not established that the '440 patent was procured through inequitable conduct. Plaintiffs have not challenged the materiality of the Sandoz reference, but have challenged the materiality of the European Search Report and the Bayer reference. Based on the evidence submitted by the parties, the Court cannot conclude that these references are immaterial; however, the Court is not inclined to find them to be highly material such that the degree of materiality of these references should permit Defendants to make a lesser evidentiary showing on the intent element. Rather, the Court views the evidence of intent in this case on its own strength and concludes that Defendants have not established, by clear and convincing evidence, that Ms. Kitamura, Mr. Shibata and Mr. Tamaki intended to deceive the PTO by failing to disclose these reference. Although the Court certainly understands how the circumstances raised by Defendants could be suggestive of nefarious conduct on the part of the aforementioned individuals in the Shionogi Patent Department, the Court cannot conclude that these circumstances taken individually or collectively rise to the level of clear and convincing evidence of inequitable conduct.
In reaching this conclusion, the Court is simply not persuaded that the single most reasonable inference to be drawn from these circumstances is deceptive intent. For example, Defendants make much of the fact that Mr. Shibata held on to the European Search Report for forty days before sending it for filing, calling this an "unprecedented period of study" compared with Mr. Shibata's treatment of other correspondence during this time frame. (D.I. 501 at 14.) However, there is no evidence that Mr. Shibata was "studying" or otherwise even evaluating this document. Rather, the evidence produced by Plaintiffs collectively suggests a time of confusion, personnel change, and overwork in the Shionogi Patent Department such that it would not be unreasonable to infer from this 40 day period that the document had merely been caught in a stack of papers. (DTX-508-T at 79; Shibata Tr. 682:1-19.) Indeed, Mr. Shibata had no recollection of having reviewed this report, which required no response, and Mr. Shibata testified that he did not make any connections between the European Search Report that he sent unreviewed to the file and the correspondence that he checked for Ms. Shimizu concerning the timing of a response to the U.S. rejection of the pending application and matters of form associated with the U.S. claims. (Shibata Tr. 682:1-19; 798:15-801:14, 803:19-804:16.) As Mr. Shibata candidly explained, "I think I was in a very near sighted myopic state of mind" because
there was very much a limitation in time and much workload. And that meant that the amount of time that could be spent for individual matters had been reduced dramatically. And I think the result of it is that the care that could be allocated to each assignment, each task and the manner in which the job was being done just was not up to par.
(Shibata Tr. 800:6-15.)
Defendants also point to the splitting of the '440 application between Ms. Shimizu and Mr. Tamaki contending that "Mr. Shibata violated the longstanding Shionogi rule requiring that the same person be responsible for handling all corresponding *403 applications" so that he could manipulate and prevent the disclosure of the European Search report and the Sandoz reference. (D.I. 501 at 16.) However, the countervailing evidence produced by Plaintiffs and viewed as a whole, paints a more innocent explanation of Mr. Shibata as a new and inexperienced manager attempting to handle an understaffed and overworked Patent Department. (Shibata Tr. 798:15-801:14, 803:4-04:16.) Mr. Shibata admitted as much on the witness stand testifying, that:
[B]ack then, I wasI was doing the best I could do, and I thought I was doing what I had to do and ought to do. But through this lawsuit, I have been shown various documents and I have come to be ashamed as to my management. I think the management was very poor. And on that score, I do regret and I've done a lot of self retrospection.
(Shibata Tr. 803:10-16.)
In addition, Defendants emphasize Mr. Shibata's role in comparative testing of the compound claimed in the S-4522 application with the compounds from the Bayer, Nissan and Sandoz references to suggest that he was attempting to conceal these references. However, an equally plausible inference is that this comparative testing could have been used to confront the prior art and overcome challenges to patentability, particularly given Mr. Shibata's testimony, which the Court finds credible, that he had likely thought, at the relevant time, that the Bayer and Sandoz references had already been disclosed. (Shibata Tr. 751:12-752:18; DTX-68-T at 1.)
Defendants point to several actions by Mr. Tamaki to suggest that he intended to conceal material prior art from the PTO; however, Mr. Tamaki's conduct is also explained by the at least equally plausible explanation of the work load and confusion at the Shionogi Patent Department. (Tamaki Tr. 566:20-568:21; PTX-624-SUM.) Moreover, the evidence indicates that Mr. Tamaki's work on the '440 patent was much less extensive than what has been suggested by Defendants. (Tamaki Tr. 420:11-20, 431:22-432:4, 523:6-525:5; DTX-500-T at 159.) Although Mr. Shibata intended to assign the U.S. application to Mr. Tamaki, that intention was ultimately not carried out because of Mr. Tamaki's already strained workload. (Shibata 686:12-687:4, 709:7-18, 802:5-803:3; DTX-500-T at 138.)
Defendants also attempt to undermine Mr. Tamaki's credibility by pointing to his conduct with the AstraZeneca-affiliated Plaintiffs during licensing negotiations. In the Court's view, however, this evidence has limited relevance because it pertains to a period of time occurring well-after the issuance of the '440 patent. Star Scientific, 537 F.3d at 1370, n. 10. Further, it is equally reasonable for this evidence to be construed as indicative of Mr. Tamaki's good faith and credibility in that he conceded that Shionogi knew about the Sandoz and Bayer references, but provided reasonable explanations to the AstraZeneca-affiliated Plaintiffs for why the references were not disclosed. (Tamaki Tr. 482:22-484:9, 486:6-20, 542:12-545:3, 549:23-550:22; DTX-32-T; DTX-33 at 2-3; DTX22-T at 5-6; DTX-36 at 1.)
Defendants make much of Ms. Kitamura's testimony during trial that she knew of the duty of disclosure in connection with U.S. patent applications, but that she did not disclose the Bayer application, even though she knew that it "encompassed" at least some of the compounds being claimed in the application that issued as the '440 patent. As Plaintiffs point out, however, the duty to disclose does not pertain to prior art that "encompasses" the invention, but only to prior art that establishes a prima facie case of unpatentability. *404 See e.g. In re Baird, 16 F.3d 380, 382 (Fed.Cir.1994) ("The fact that a claimed compound may be encompassed by a disclosed generic formula does not by itself render that compound obvious.") (citations omitted). Indeed, the fact that a later invention may infringe an earlier patent does not affect the patentability of the later invention, and it is not unreasonable to view the June 1991 search report with respect to the Bayer application as raising a potential infringement problem, but not an invalidity or patentability problem. Ms. Kitamura testified that she did not perceive a patentability problem based on the Bayer application prior to her departure from Shionogi, and that she did not substantively consider what prior art, beyond that cited already in the specification, should be cited to the PTO in the IDS. (Kitamura Tr. 1533:13-23, 1535:6-14; PTX-1676-T; DTX-500 at 131.) Mr. Kitamura's testimony is not implausible as Defendants contend, given that Ms. Kitamura had given notice around the time the U.S. application was filed, that she would be leaving Shionogi at the end of July 1992. (Kitamura Tr. 1536:3-9.) Indeed, at the time Ms. Kitamura left Shionogi, the IDS was not due, and her testimony regarding the lack of a patentability issue is not inconsistent with the documentary evidence which judged the compounds to be novel. (PTX-1676-T at SH95938; DTX-500 at 131; DTX-508 at 79-82; DTX-22-T at 5-6; Kitamura Tr. 1459:10-13; Tamaki Tr. 544:16-545:3.) Defendants also point to a July 20, 1992 memorandum by Mr. Yasumi suggesting a potential patentability problem under Japanese law based on the Bayer reference to suggest that Ms. Kitamura was aware of a patentability problem. However, the memo is dated two days before Ms. Kitamura's departure, and therefore, it is not unreasonable to believe that Ms. Kitamura would not have been informed of this memorandum. (DTX-57-T; PTX-1676-T at SH95938.) Indeed, Ms. Kitamura had no recollection of receiving this memorandum, and there is no evidence in the record to the contrary. (Kitamura Tr. 1450:11-1451:1, 1536:3-9.)
In sum, the Court is not persuaded that the evidence presented by Defendants rises to the level of the clear and convincing evidence required to establish inequitable conduct. In reaching this conclusion, the Court credits the testimony of Ms. Kitamura, Mr. Shibata and Mr. Tamaki and finds the rationale concerning the inexperience, increased workload, and resulting confusion in the Shionogi Patent Department to be an equally plausible explanation for the failure of Shionogi to cite the European Search Report, the Bayer reference and the Sandoz reference to the USPTO during the application process that led to the issuance of the '440 patent. Indeed, none of the aforementioned individuals was a Japanese patent attorney or agent, and in fact, the Shionogi Patent Department as a whole employed no one with legal experience in the field of patents. While in hindsight it may be attractive to construct a deliberate scheme of deceptive intent from the actions of these individuals given the success of CRESTOR® in the marketplace, it is at least equally plausible from their testimony and the contemporaneous documentary evidence, that a scheme to defraud was the furthest thing from the minds of these individuals at the relevant time and that their vision was limited to the overwhelming demands they faced daily in their severely understaffed department. Viewed in this context, which the Court is persuaded is the appropriate context given the testimony and evidence, actions suggestive of malfeasance become no more than a string of mishaps, mistakes, misapprehensions and misjudgments on the part of inexperienced and *405 overworked individuals. Accordingly, the Court will enter judgment in favor of Plaintiffs and against Defendants' on the issue of inequitable conduct.
IV. OBVIOUSNESS
A. The Parties' Contentions
Defendants contend that the asserted claims of the '314 patent would have been obvious as of July 1, 1991, the date of the claimed invention, and thus, are invalid. (D.I. 501 at 35.) In presenting this argument, Defendants contend that the testimony and evidence at trial creates a prima facie showing of obviousness based on the prior art and that the secondary considerations related to obviousness are insufficient to overcome the patent's invalidity.
Defendant's argument is first premised on the contention that a person of ordinary skill in the art would likely have started the process of developing rosuvastatin with Compound lb. (Id. at 42.) Defendants note that Compound 1b is the closest prior art reference to the claimed invention and is derived from the Sandoz reference. (Id. at 37 (citing D.I. 517 at DFF 422).) Defendants further contend that Compound 1b was a particularly obvious choice from which to initiate development of rosuvastatin, because it was notably important within the Sandoz reference as highlighted by Sandoz's preferential treatment of Compound 1b in the reference. (Id. at 47.) According to Defendants, Compound 1b does not need to be shown to be the only possible starting point or the "lead compound" in the development of rosuvastatin, but rather, that Compound 1b would have been an obvious and suitable starting point from which to begin the development of rosuvastatin. (Id. at 37-42.)
From this starting point, Defendants further contend that the development of rosuvastatin would have been obvious because the pyrimidine core structures within rosuvastatin would also have been an obvious development at the time rosuvastatin was created, based upon contemporaneous experimentation with and publications concerning such structures. (Id. at 45.) Defendants also contend that a person of ordinary skill in the art would have been motivated to develop a more hydrophilic statin, such as rosuvastatin, so as to position a new product in the marketplace. (Id. at 49.) Lastly, Defendants contend that the differences between rosuvastatin and the prior art would have been obvious to a person of skill in the art, both concerning the method of modifying the prior art and in the expected results of rosuvastatin. (Id. at 52-59.)
In addition to Defendants' direct arguments on obviousness, Defendants contend that the secondary considerations relevant to obviousness do not overcome invalidity. (Id. at 59.) Specifically, Defendants contend that: (1) Plaintiff's clinical expert, Dr. Jones, was not credible and should not be considered (id. at 60-61); (2) rosuvastatin is not a commercial success (id. at 61); (3) rosuvastatin did not satisfy any long felt, but unmet need (id. at 61-62); (4) rosuvastatin's properties were not unexpected (id. at 62-63); (5) Plaintiffs did not establish that others tried and failed to develop a statin comparable to rosuvastatin (id. at 64); (6) there was no skepticism concerning rosuvastatin (id. at 65); and (7) the evidence of copying rosuvastatin is limited to Defendants' attempts to produce a generic version which is not evidence of non-obviousness. (Id. at 65-66.)
In response, Plaintiffs contend that Defendants have not established by clear and convincing evidence that the '314 patent is obvious. (D.I. 540 at 53.) Specifically, Plaintiffs contend that the scope and content of the relevant prior art does not provide evidence of obviousness, because several entities abandoned their research *406 efforts related to pyrimidine core statins based upon the prevailing belief that pyrimidine cores were inferior to then existing technology. (Id. at 61-62.) Additionally, Plaintiffs contend that the claims of the '314 patent that are specific to rosuvastatin present unique and inseparable features and properties that were discovered and developed by the inventors of the patent-in-suit. (Id. at 63-64.)
According to Plaintiffs, Defendants' assumptions and assertions about the development of rosuvastatin are based on a hindsight analysis of a successful product and ignore the judgments, decisions, and experimentation that was required to reach the end product. (Id. at 65-66.) In this regard, Plaintiffs contend that Defendants have not shown any reason why it would have been obvious to start with Compound 1b as opposed to one of the many other suitable starting points. (Id. at 67.) However, even if a person skilled in the art happened to start with Compound 1b, Plaintiffs contend that there was no obvious motivation to make the modifications to Compound 1b that ultimately led to the creation of rosuvastatin. (Id. at 68.)
In addition, Plaintiffs contend that the secondary considerations demonstrate that the invention claimed in the '314 patent was not obvious. Specifically, Plaintiffs contend that (1) rosuvastatin had unexpected properties; (2) others were skeptical of the safety of rosuvastatin; (3) rosuvastatin met a long-felt, but unmet need; and (4) other companies failed to develop a pyrimidine based statin at the time of the invention of rosuvastatin and Defendants now seek to copy the product that Plaintiffs succeeded in bringing to the market. (Id. at 72-76.)
B. Legal Principles Related To Obviousness
In pertinent part, 35 U.S.C. § 103 provides that a patent may not be obtained "if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious to a person having ordinary skill in the art." 35 U.S.C. § 103. Obviousness is a question of law that is predicated upon several factual inquiries. See Richardson-Vicks v. Upjohn Co., 122 F.3d 1476, 1479 (Fed.Cir. 1997). Specifically, the trier of fact must consider four issues: (1) the scope and content of the prior art; (2) the level of ordinary skill in the art; (3) the differences between the claimed subject matter and the prior art; and (4) secondary considerations of non-obviousness, such as commercial success, long felt but unsolved need, failure of others, acquiescence of others in the industry that the patent is valid, and unexpected results. Graham v. John Deere Co., 383 U.S. 1, 17-18, 86 S.Ct. 684, 15 L.Ed.2d 545 (1966) (the "Graham factors"). In KSR Intern. Co. v. Teleflex Inc., the Supreme Court reaffirmed that the Graham factors "continue to define the inquiry that controls" an obviousness analysis. 550 U.S. 398, 407, 127 S.Ct. 1727, 167 L.Ed.2d 705 (2007).
Because an issued patent is presumed valid, the party seeking to challenge the validity of a patent based on obviousness must demonstrate by clear and convincing evidence that the invention described in the patent would have been obvious to a person of ordinary skill in the art at the time the invention was made. Pfizer, Inc. v. Apotex, Inc., 480 F.3d 1348, 1359-60 (Fed.Cir.2007). Clear and convincing evidence is evidence that places in the fact finder "an abiding conviction that the truth of [the] factual contentions are `highly probable.'" Colorado v. New Mexico, 467 U.S. 310, 316, 104 S.Ct. 2433, 81 L.Ed.2d 247 (1984).
*407 C. Whether The '314 Patent Is Invalid As Obvious
After evaluating the extensive arguments of the parties and the evidence adduced at trial, the Court concludes that Defendants have not demonstrated by clear and convincing evidence that the '314 patent is invalid as obvious. In the Court's view, Defendants' arguments are driven by hindsight and based on numerous assumptions, the validity of which were countered by Plaintiffs' equally compelling evidence that significant work was needed to develop rosuvastatin. (See Heathcock Tr. 263:2-270:21; Roush Tr. 1743:24-1745:2, 1769:20-1773:15.) In addition, the Court is persuaded that the first and third Graham factors, concerning the scope and content of the prior art and the differences between the prior art and the claimed subject matter, respectively, weigh in favor of a conclusion that the claimed invention was not obvious. For example, while Compound 1b was relevant prior art to the '314 patent, the Court is not convinced that it would have been obvious to a person skilled in the art that rosuvastatin was merely several, obvious modifications away from Compound lb. That rosuvastatin was not obvious from the scope and content of the prior art is demonstrated by the fact that other pharmaceutical entities working on pyrimidine core statins did not create a statin comparable to rosuvastatin and, in fact, abandoned their efforts. Furthermore, multiple modifications to the basic pyrimidine core structure were required to create rosuvastatin, and the Court is not persuaded that these modifications would have been obvious to one skilled in the art.
Additionally, the Court concludes that the secondary factors of non-obviousness weigh in favor of a conclusion that the '314 patent is not obvious. The evidence demonstrates that there was much skepticism in the industry concerning the safety of rosuvastatin (Pears Tr. 1307:12-1310:22), and the Court finds it telling that no other pharmaceutical companies attempted to create a comparable product despite research in the area and the economic incentives of entering an additional player in the statin market. (Heathcock Tr. 290:6-18; Roush Tr. 1728:13-1729:19.) Accordingly, based on the foregoing, the Court concludes that Defendants have not shown by clear and convincing evidence that the '314 patent is invalid as obvious, and therefore, judgment will be entered in favor of Plaintiffs and against Defendants on the issue of invalidity due to obviousness.
V. REISSUE
A. The Parties' Contentions
Defendants contend that Plaintiffs cannot establish infringement of the '314 patent because it is invalid as improperly reissued. (D.I. 501 at 66.) According to Defendants, there were no errors in the original '440 patent that warranted reissue under the governing statute. (Id.) Defendants contend that Shionogi deliberately chose not to claim rosuvastatin in the '440 patent as part of a company decision to conceal the development of the product from competitors. (Id. at 78-80.) Defendants also contend that Shionogi deliberately crafted a broad claim in the '440 patent that overlapped the Sandoz reference in an attempt to garner extensive protection, despite timely knowledge of the Sandoz reference. (Id. at 80-83.) Defendants maintain that Shionogi took full advantage of the breadth of the claimed invention and only sought to narrow the patent to claim rosuvastatin specifically, when it became advantageous to license the compound. (Id. at 83.)
In response, Plaintiffs contend that the reissue of the '440 patent was entirely proper and based upon valid grounds for *408 reissue. (D.I. 540 at 42.) Specifically, Plaintiffs contend that the deliberate presentation of claims that are later recognized to be too broad is a correctable error justifying reissue. According to Plaintiffs, the over breadth of the '440 patent and the failure to claim rosuvastatin specifically was not based on an intent to deceive, but on the misunderstandings and misapprehensions of individuals who were not well-trained and sufficiently experienced. (See Id. generally.) Plaintiffs further contend that there is no legal support for Defendants' contention that equitable principles demand a conclusion that the reissue was improper. (Id. at 50.)
B. Legal Principles Related To The Reissue of Patents
A patent may be reissued to correct an error under 35 U.S.C. § 251, which, in pertinent part states:
Whenever any patent is, through error without any deceptive intention, deemed wholly or partly inoperative or invalid, by reason of a defective specification or drawing, or by reason of the patentee claiming more or less than he had a right to claim in the patent, the Director shall, on the surrender of such patent and the payment of the fee required by law, reissue the patent for the invention disclosed in the original patent, and in accordance with a new amended application, for the unexpired part of the term of the original patent. No new matter shall be introduced into the application for reissue.
35 U.S.C. § 251. Under this section, reissue is permitted to correct the following types of defects: (1) an error in the specification, (2) a defective drawing, (3) the original claim was too broad, and (4) the original claim was too narrow. Forest Labs., Inc. v. Ivax Pharms., Inc., 438 F.Supp.2d 479, 497 (D.Del.2006). "[T]he purpose of the reissue statute is to avoid forfeiture of substantive rights due to error made without intent to deceive." Id. (citations omitted). The statute is remedial in nature and based upon fundamental principles of equity and fairness, and thus, should be liberally construed so as to permit reissue. See In re Wilder, 736 F.2d 1516, 1519 (Fed.Cir.1984).
Not every event or circumstance that might be labeled an "error" is correctable by reissue proceedings. In re Weiler, 790 F.2d 1576, 1579 (Fed.Cir.1986) (citation omitted); see also MBO Labs. Inc. v. Becton, Dickinson & Co., 602 F.3d 1306, 1313 (Fed.Cir.2010) (confirming standard). Generally, those errors that are correctable by reissue are errors of "inadvertence, accident, or mistake." Weiler, 790 F.2d at 1582. A "deliberate action of an inventor or attorney during prosecution generally fails to qualify as correctable error," where the reissue would contravene the operation of applicable statutes or USPTO rules. In re Serenkin, 479 F.3d 1359, 1362, 1364 (Fed.Cir.2007). Thus, the mere fact that an action was taken in "full consciousness" does not necessarily preclude the finding of a correctable error, where the action was not taken with deceptive intent, and the reissue would not contravene the law. In re Wadlinger, 496 F.2d 1200, 1207 (C.C.P.A.1974).
When a party challenges a patent's validity based on reissue, the presumption that the patent is valid remains. Thus, the party challenging the appropriateness of the reissue must prove the invalidity of the reissue by clear and convincing evidence. See Kaufman Co. v. Lantech, Inc., 807 F.2d 970, 973-74 (Fed.Cir.1986).
C. Whether the '314 Patent Is Invalid As Improperly Reissued
After reviewing the parties' arguments in light of the evidence adduced at *409 trial, the Court concludes that Defendants have not established, by clear and convincing evidence, that the '314 patent is invalid as an improper reissue of the '440 patent. While the troubles in the Shionogi Patent Department raise the specter of malfeasance in hindsight, the Court is ultimately not convinced that the claims of the '440 patent that overlapped with the Sandoz reference were the result of some planned strategy or sinister motivation as opposed to mere mistake or oversight by overworked individuals with limited training and expertise. To reach a contrary conclusion in this case would require the Court to credit a number of inferences, which the Court finds unsupported by the requisite clear and convincing standard. Rather, the totality of the evidence demonstrates to the Court that it was equally plausible that this error was driven by chaos, confusion, and inexperience rather than any deliberate plan of action. The lack of legal training within the Shionogi Patent Department, the changing and limited personnel within that department, and the ongoing confusion level indicate that confusion is at least as likely a cause of the overlap with Sandoz, as any cause that would have made reissue improper. (See Shibata 799:9-800:19, 803:4-804:16; Kitamura 1536:3-9; DTX-500 at 214; Takayama Dep. 231:3-25.) As Ms. Kitamura credibly testified, the internal Shionogi search report of which she was aware, did not raise a patentability problem with respect to Sandoz, and a full copy of the Sandoz reference was not sent to her. (Kitamura Tr. 1414:14-1422:3, 1423:20-1424:4, 1481:3-14, 1458:17-22; DTX-33; DTX-22-T.) Thus, Ms. Kitamura did not appreciate any overlap with the Sandoz reference prior to her departure from Shionogi, and those who prosecuted the '440 patent after her departure were likewise unaware of the Sandoz reference due to the unintentional miscommunications that ensued during the various transitions at Shionogi. (Kitamura 1504:10-1505:14; DTX515-T at 22-23; DTX-5.)
Defendants also suggest that the overbreadth of the claims was a deliberate intent to conceal Shionogi's development of rosuvastatain from its competitors, and that this deceitful intent precludes reissue. Although Defendants provided some evidence that the Shionogi patent application process may have been driven by strategic decisions to delay competitors from learning of their development of rosuvastatin, the Court is ultimately not persuaded that Defendants have established, by clear and convincing evidence, that the reissue was improper. As a threshold matter, the Court finds no evidence that Shionogi deliberately and deceptively decided to forgo narrowly claiming rosuvastatin. Rather, the '440 patent both covered and described rosuvastatin in the examples listed within the specification and in the breadth of the original claims. (PTX-495 at SH89082-86; SH89090; PTX-590 at C57140-44, C57149-50; PTX-609 at SH88362, SH88369-71, SH88374; Tamaki 459:7-460:-13.) The application also presented data showing that rosuvastatin had activity 4.5 times higher than mevinolin, and therefore, rosuvastatin clearly had the best activity of any of the compounds disclosed in the patent application. (PTX-495 at SH89092; PTX-590 at C57150; PTX-609 at SH88375.) Thus, Shionogi's interest in rosuvastatin would have been evident from the application, and the Court is not persuaded that the failure to specifically claim rosuvastatin was the result of any deceptive intent by Shionogi or any purposeful desire to avoid such a narrow claim. Based on this disclosure, it is the Court's view, that the error in the '440 patent was not in failing to claim rosuvastatin but in unknowingly claiming subject matter broader than rosuvastatin that overlapped *410 with the Sandoz reference, an error which the Court concludes is properly remedied by reissue. See In re Harita, 847 F.2d 801, 804-805 (Fed.Cir.1988); Wilder, 736 F.2d at 1519.
In addition, the Court finds the circumstances here to be distinguishable from cases like In re Serenkin, 479 F.3d 1359, 1363 (Fed.Cir.2007). In Serenkin, reissue was denied for lack of error because the attorney prosecuting the patent knowingly surrendered a priority date for the patent in order to achieve a specific and defined gain in the form of being able to submit new drawings and other materials that had been missing in the earlier application. In contrast, the evidence adduced in this case shows no such deliberate choices and no violations of rules or statutes that would render the reissue of the '440 patent improper. Accordingly, the Court concludes that Defendants have not established by clear and convincing evidence that the reissued '314 patent, with its rosuvastatin specific claims, is invalid, and therefore, the Court will grant judgment in favor of Plaintiffs and against Defendants on the issue of improper reissue.
CONCLUSION
For the reasons discussed, the Court concludes that Apotex may be held liable for infringement of claims 6 and 8 of the '314 patent under Section 271(e)(2)(A) as a submitter of an ANDA. In addition, the Court will grant Defendants' Motion To Dismiss AstraZeneca Pharmaceuticals LP For Lack of Standing. Judgment will be entered in favor of Plaintiffs and against Defendants on the issues of invalidity and unenforceability of the '314 patent. Plaintiffs shall submit, with notice to Defendants a proposed Final Judgment Order, outlining the Court's rulings on infringement, invalidity and unenforceability contained herein.
An appropriate Order will be entered.
ORDER
At Wilmington, this 29 day of June 2010, for the reasons set forth in the Memorandum Opinion issued this date;
IT IS HEREBY ORDERED THAT:
1. Plaintiffs' Motion For Leave To File A Sur-Reply (D.I. 546) is GRANTED.
2. Defendants' Motion To Dismiss AstraZeneca Pharmaceuticals, LP For Lack Of Standing (D.I. 422) is GRANTED.
3. Within five (5) days of the date of this Order, Plaintiffs shall file, with notice to Defendants, a proposed Final Judgment Order encompassing the Court's rulings on infringement, invalidity and unenforceability as set forth in the accompanying Memorandum Opinion.
NOTES
[1] Unless otherwise noted, all docket item ("D.I.") references are to MDL. 08-1949. An action was also brought against Apotex, Inc., Aurobindo Pharma USA Inc., and Sandoz Inc. The action against Apotex, Inc. was transferred by the Court to the Southern District of Florida (D.I. 456.) The action against Aurobindo Pharma USA Inc. was dismissed by stipulation of the parties. (D.I. 359 in Civ. Act. No. 07-810; D.I. 218 in Civ. Act. No. 08-359.) The action against Sandoz, Inc. has been stayed, and the parties have agreed to be bound by the Court's decision in this litigation. (D.I. 217, 218 in Civ. Act. No. 07-807.)
[2] Following Defendants' final post-trial submission, Plaintiffs filed a Motion For Leave To File A Sur-Reply. (D.I. 546.) Plaintiffs contend that they are entitled to a sur-reply to address issues raised for the first time in Defendants' final submission, specifically the Japanese testimony of Mr. Masamichi Watanabe, the case Schering Corp. v. Glenmark Pharms. Inc. USA, 07-1334(JLL), 2010 WL 1566887, 2010 U.S. Dist. LEXIS 38382 (D.N.J. Apr. 19, 2010), and alleged misstatements made by Defendants. Defendants oppose the Motion. (D.I. 550.) In the Court's view, much of the disputed material is newly raised, and Plaintiffs did not have an opportunity to address it. Accordingly, the Court will grant Plaintiffs' Motion and the Sur-Reply will be deemed filed.
[3] Ms. Kitamura is also referred to in the record by her married name, Ms. Ozawa. However, for ease of understanding and consistency, she is referred to as Ms. Kitamura for both the purposes of discussion and for purposes of citation to the transcripts.
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711 F. Supp. 2d 1126 (2010)
George A. SALDATE, Jr., Plaintiff,
v.
WILSHIRE CREDIT CORPORATION, et al., Defendants.
Case No. CV F 09-2089 LJO SMS.
United States District Court, E.D. California.
February 12, 2010.
*1128 Sharon L. Lapin, Law Office of Sharon L. Lapin, San Rafael, CA, for Plaintiff.
Timothy Matthew Ryan, Ryan Firm, Anaheim, CA, Lawrence D. Harris, Law Offices of Glenn H. Wechsler, Walnut Creek, CA, David Christopher Scott, McCarthy & Holthus, LLP, San Diego, CA, for Defendants.
ORDER ON DEFENDANTS' F.R.Civ.P. 12(b)(6) MOTION TO DISMISS (Doc. 18.)
LAWRENCE J. O'NEILL, District Judge.
INTRODUCTION
Defendants Wilshire Credit Corporation ("Wilshire"), Mortgage Electronic Registration Systems, Inc. ("MERS") and Wells Fargo Bank ("Wells Fargo")[1] seek to dismiss as meritless, conclusory and time *1129 barred plaintiff George A. Saldate, Jr.'s ("Mr. Saldate's") statutory and common law claims arising from a "residential mortgage" for his Fresno property ("property"). Mr. Saldate filed no papers to oppose dismissal of claims against defendants. This Court considered defendants' F.R.Civ.P. 12(b)(6) motion to dismiss on the record and VACATES the February 24, 2010 hearing, pursuant to Local Rule 230(c), (g). For the reasons discussed below, this Court DISMISSES this action against defendants.
BACKGROUND
Mr. Saldate's Property Loan
On November 4, 2005, Mr. Saldate completed a loan for the property. The loan terms were memorialized in a promissory note which was secured by a deed of trust ("DOT") on the property. The DOT was recorded on November 22, 2005[2] and identifies defendant WMC Mortgage Corp. ("WMC") as lender, Westwood Associates as trustee, and MERS as beneficiary.
By a Corporate Assignment of Mortgage/Deed of Trust recorded on February 4, 2008, MERS assigned the DOT to Wells Fargo. By a Substitution of Trustee recorded on April 1, 2008, defendant Quality Loan Service Corporation ("Quality") substituted as trustee for Westwood Associates. Quality filed a Notice of Default and Election to Sell under Deed of Trust, which was recorded on March 6, 2009. The property has neither been sold nor advertised for sale.
Mr. Saldate's Claims
On December 1, 2009, Mr. Saldate filed his complaint ("complaint") to allege statutory and common law claims (addressed in greater detail below) arising from moving and other defendants'"negligent, fraudulent and unlawful conduct concerning a residential mortgage loan transaction with the Plaintiff." The complaint alleges that moving and other defendants "developed a scheme to rapidly infuse capital into the home mortgage lending system by selling mortgages on the secondary market, normally three to five times, to create a bankruptcy remote transaction." According to the complaint, "[n]o legal transfer of the Mortgage Note, Deed of Trust or any other interest in Plaintiff's Property was ever effected that gave any of the Defendants the right to be named a trustee, mortgagee, beneficiary or an authorized agent of trustee, mortgagee or beneficiary of Plaintiff [sic] Mortgage Note, Deed of Trust of any other interest in Plaintiff's Property." The complaint further alleges that moving and other defendants "are not the real parties in interest because they are not the legal trustee, mortgagee or beneficiary, nor are they authorized agents of the trustee, mortgagee or beneficiary, nor are they in possession of the Note, or holders of the Note, or non-holders of the Note entitled to payment."
The complaint seeks an injunction on "collecting on the subject Loan and from causing the Property to be sold" and compensatory, statutory and punitive damages.
DISCUSSION
F.R.Civ.P. 12(b)(6) Motion To Dismiss Standards
Defendants characterize the complaint as "nothing more than conclusory allegations and rejected interpretations of law in a garbled pleading."
A F.R.Civ.P. 12(b)(6) motion to dismiss is a challenge to the sufficiency of the pleadings set forth in the complaint. *1130 "When a federal court reviews the sufficiency of a complaint, before the reception of any evidence either by affidavit or admissions, its task is necessarily a limited one. The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S. Ct. 1683, 40 L. Ed. 2d 90 (1974); Gilligan v. Jamco Development Corp., 108 F.3d 246, 249 (9th Cir.1997). A F.R.Civ.P. 12(b)(6) dismissal is proper where there is either a "lack of a cognizable legal theory" or "the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir.1990); Graehling v. Village of Lombard, Ill., 58 F.3d 295, 297 (7th Cir.1995).
In resolving a F.R.Civ.P. 12(b)(6) motion, a court must: (1) construe the complaint in the light most favorable to the plaintiff; (2) accept all well-pleaded factual allegations as true; and (3) determine whether plaintiff can prove any set of facts to support a claim that would merit relief. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-338 (9th Cir.1996). Nonetheless, a court is not required "to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." In re Gilead Sciences Securities Litig., 536 F.3d 1049, 1055 (9th Cir.2008) (citation omitted). A court need not permit an attempt to amend a complaint if "it determines that the pleading could not possibly be cured by allegation of other facts." Cook, Perkiss and Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911 F.2d 242, 247 (9th Cir.1990). "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the `grounds' of his `entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 1964-65, 167 L. Ed. 2d 929 (2007) (internal citations omitted). Moreover, a court "will dismiss any claim that, even when construed in the light most favorable to plaintiff, fails to plead sufficiently all required elements of a cause of action." Student Loan Marketing Ass'n v. Hanes, 181 F.R.D. 629, 634 (S.D.Cal.1998). In practice, "a complaint... must contain either direct or inferential allegations respecting all the material elements necessary to sustain recovery under some viable legal theory." Twombly, 550 U.S. at 562, 127 S. Ct. at 1969 (quoting Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1106 (7th Cir.1984)).
In Ashcroft v. Iqbal, ___ U.S. ___, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009), the U.S. Supreme Court recently explained:
To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to "state a claim to relief that is plausible on its face." ... A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.
... Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice. (Citation omitted.)
Moreover, a limitations defense may be raised by a F.R.Civ.P. 12(b)(6) motion to dismiss. Jablon v. Dean Witter & Co., 614 F.2d 677, 682 (9th Cir.1980); see Avco Corp. v. Precision Air Parts, Inc., 676 F.2d 494, 495 (11th Cir.1982), cert. denied, 459 U.S. 1037, 103 S. Ct. 450, 74 L. Ed. 2d 604 (1982). A F.R.Civ.P. 12(b)(6) motion to dismiss may raise the limitations defense when the statute's running is apparent on the complaint's face. Jablon, 614 F.2d at 682. If the limitations defense does not appear on the complaint's face *1131 and the trial court accepts matters outside the pleadings' scope, the defense may be raised by a motion to dismiss accompanied by affidavits. Jablon, 614 F.2d at 682; Rauch v. Day and Night Mfg. Corp., 576 F.2d 697 (6th Cir.1978).
For a F.R.Civ.P. 12(b)(6) motion, a court generally cannot consider material outside the complaint. Van Winkle v. Allstate Ins. Co., 290 F. Supp. 2d 1158, 1162, n. 2 (C.D.Cal.2003). Nonetheless, a court may consider exhibits submitted with the complaint. Van Winkle, 290 F.Supp.2d at 1162, n. 2. In addition, a "court may consider evidence on which the complaint `necessarily relies' if: (1) the complaint refers to the document; (2) the document is central to the plaintiff's claim; and (3) no party questions the authenticity of the copy attached to the 12(b)(6) motion." Marder v. Lopez, 450 F.3d 445, 448 (9th Cir.2006). A court may treat such a document as "part of the complaint, and thus may assume that its contents are true for purposes of a motion to dismiss under Rule 12(b)(6)." United States v. Ritchie, 342 F.3d 903, 908 (9th Cir.2003). Such consideration prevents "plaintiffs from surviving a Rule 12(b)(6) motion by deliberately omitting reference to documents upon which their claims are based." Parrino v. FHP, Inc., 146 F.3d 699, 706 (9th Cir.1998).[3] A "court may disregard allegations in the complaint if contradicted by facts established by exhibits attached to the complaint." Sumner Peck Ranch v. Bureau of Reclamation, 823 F. Supp. 715, 720 (E.D.Cal.1993) (citing Durning v. First Boston Corp., 815 F.2d 1265, 1267 (9th Cir.1987)). Moreover, "judicial notice may be taken of a fact to show that a complaint does not state a cause of action." Sears, Roebuck & Co. v. Metropolitan Engravers, Ltd., 245 F.2d 67, 70 (9th Cir.1956); see Estate of Blue v. County of Los Angeles, 120 F.3d 982, 984 (9th Cir.1997). A court properly may "take judicial notice of matters of public record outside the pleadings'" and consider them for purposes of the motion to dismiss. Mir v. Little Co. of Mary Hosp., 844 F.2d 646, 649 (9th Cir. 1988) (citation omitted).
As such, this Court is able to consider Mr. Saldate's pertinent loan and related documents.
Rosenthal Fair Debt Collection Practices Act
The complaint's second claim against Wilshire is entitled "Violation of California Rosenthal Act California Civil Code § 1788 et seq." The claim alleges that Wilshire "used unfair and unconscionable means to collect a debt not owed to Defendant Wilshire or its principal by sending deceptive letters and making phone calls to Plaintiff demanding payment." The claim further alleges that Wilshire "made false reports to credit reporting agencies about Plaintiff's credit standing."
Wilshire faults the claim's failure to allege that Wilshire is a debt collector under the Rosenthal Fair Debt Collection Practices Act ("RFDCPA"), Cal. Civ.Code, §§ 1788 et seq., in that Wilshire, as a loan servicer, is authorized to enforce the DOT beneficiary's security interest. Wilshire notes that the RFDCPA does not prevent a creditor to enforce its security interest under a deed of trust because property foreclosure does not support a fair debt collection claim.
*1132 The RFDCPA's purpose is "to prohibit debt collectors from engaging in unfair or deceptive practices in the collection of consumer debts and to require debtors to act fairly in entering into and honoring such debts." Cal. Civ.Code, § 1788.1(b). The RFDCPA defines "debt collector" as "any person who, in the ordinary course of business, regularly, on behalf of himself or herself or others, engages in debt collection." Cal. Civ.Code, § 1788.2(c). "[F]oreclosure does not constitute debt collection under the RFDCPA." Izenberg v. ETS Services, LLC, 589 F. Supp. 2d 1193, 1199 (C.D.Cal.2008). The "law is clear that foreclosing on a property pursuant to a deed of trust is not a debt collection within the meaning of the RFDCPA or the FDCA [Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et seq.]." Gamboa v. Trustee Corps, 2009 WL 656285, *4 (N.D.Cal.2009). As this Court has explained previously, "[l]ogic suggests that non-judicial foreclosure is not a debt collector's act under California Civil Code section 1788.2(c)." Swanson v. EMC Mortgage Corp., 2009 WL 3627925 (E.D.Cal.2009).
The RFDCPA claim is barred in that complaint points to only non-judicial foreclosure. Moreover, the claim is doomed with failure to allege specific RFDCPA violations or violated RFDCPA sections. The RFDCPA claim is subject to dismissal.
Negligence
The complaint's (third) negligence claim alleges that "Wilshire breached their [sic] duty of care to the Plaintiff when they [sic] took payments to which they [sic] were not entitled, charged fees they [sic] were not entitled to charge, and wrongfully made or otherwise authorized negative reporting of Plaintiff's creditworthiness to various credit bureaus." The claim further alleges that "MERS and Wells Fargo owed Plaintiff a duty to perform its administrative function recording, maintaining and transferring documents as it relates to Plaintiff's loan in a manner not to cause Plaintiff harm."
Defendants fault the claim's absence of a cognizable duty.
"The elements of a cause of action for negligence are (1) a legal duty to use reasonable care, (2) breach of that duty, and (3) proximate [or legal] cause between the breach and (4) the plaintiff's injury." Mendoza v. City of Los Angeles, 66 Cal. App. 4th 1333, 1339, 78 Cal. Rptr. 2d 525 (1998) (citation omitted). "The existence of a duty of care owed by a defendant to a plaintiff is a prerequisite to establishing a claim for negligence." Nymark v. Heart Fed. Savings & Loan Assn., 231 Cal. App. 3d 1089, 1095, 283 Cal. Rptr. 53 (1991). "The existence of a legal duty to use reasonable care in a particular factual situation is a question of law for the court to decide." Vasquez v. Residential Investments, Inc., 118 Cal. App. 4th 269, 278, 12 Cal. Rptr. 3d 846 (2004) (citation omitted).
"The `legal duty' of care may be of two general types: (a) the duty of a person to use ordinary care in activities from which harm might reasonably be anticipated [, or] (b) [a]n affirmative duty where the person occupies a particular relationship to others.... In the first situation, he is not liable unless he is actively careless; in the second, he may be liable for failure to act affirmatively to prevent harm." McGettigan v. Bay Area Rapid Transit Dist., 57 Cal. App. 4th 1011, 1016-1017, 67 Cal. Rptr. 2d 516 (1997).
There is no actionable duty between a lender and borrower in that loan transactions are arms-length. A lender "owes no duty of care to the [borrowers] in approving their loan. Liability to a borrower for negligence arises only when the lender `actively participates' in the financed enterprise `beyond the domain of *1133 the usual money lender.'" Wagner v. Benson, 101 Cal. App. 3d 27, 35, 161 Cal. Rptr. 516 (1980) (citing several cases). "[A]s a general rule, a financial institution owes no duty of care to a borrower when the institution's involvement in the loan transaction does not exceed the scope of its conventional role as a mere lender of money." Nymark, 231 Cal.App.3d at 1096, 283 Cal. Rptr. 53; see Meyers v. Guarantee Sav. & Loan Assn., 79 Cal. App. 3d 307, 312, 144 Cal. Rptr. 616 (1978) (no lender liability when lender did not engage "in any activity outside the scope of the normal activities of a lender of construction monies").
"Public policy does not impose upon the Bank absolute liability for the hardships which may befall the [borrower] it finances." Wagner, 101 Cal.App.3d at 34, 161 Cal. Rptr. 516. The success of a borrower's investment "is not a benefit of the loan agreement which the Bank is under a duty to protect." Wagner, 101 Cal.App.3d at 34, 161 Cal. Rptr. 516 (lender lacked duty to disclose "any information it may have had").
Defendants note the complaint's attempt to impose on defendants "the common law duty of care" based on vague and conclusory allegations. Defendants are correct that the negligence claim lacks facts to support an actionable duty to impose on defendants. "No such duty exists" for a lender "to determine the borrower's ability to repay the loan.... The lender's efforts to determine the creditworthiness and ability to repay by a borrower are for the lender's protection, not the borrower's." Renteria v. United States, 452 F. Supp. 2d 910, 922-923 (D.Ariz.2006) (borrowers "had to rely on their own judgment and risk assessment to determine whether or not to accept the loan"). Defendants are correct that they lack an independent duty to "perform acts in such a manner as not to cause Plaintiff harm." The complaint lacks facts of special circumstances to impose duties on Wells Fargo in that the complaint depicts an arms-length loan transaction, nothing more. The complaint fails to substantiate a special lending relationship or an actionable breach of duty to substantiate a negligence claim. The negligence claim fails.
Real Estate Settlement Procedures Act
The complaint's fourth claim attempts to allege that Wilshire violated the Real Estate Settlement Procedures Act, 12 U.S.C. § § 2601 et seq. Defendants challenge the claim as time barred and for failure to allege pecuniary loss.
No Private Right Of Action For Disclosure Violations
The RESPA claim accuses Wilshire of failure to provide RESPA disclosures. Defendants note the absence of a private right of action to support such allegation.
RESPA's purpose is to "curb abusive settlement practices in the real estate industry. Such amorphous goals, however, do not translate into a legislative intent to create a private right of action." Bloom v. Martin, 865 F. Supp. 1377, 1385 (N.D.Cal. 1994), aff'd, 77 F.3d 318 (1996). "The structure of RESPA's various statutory provisions indicates that Congress did not intend to create a private right of action for disclosure violations under 12 U.S.C. § 2603 ... Congress did not intend to provide a private remedy ..." Bloom, 865 F.Supp. at 1384.
Defendants correctly point out the absence of a private right of action for RESPA disclosure violations to doom the RESPA claim to the extent it is based on disclosure violations.
Absence Of Pecuniary Loss
The RESPA claim asserts that Wilshire failed to respond properly to Mr. Saldate's qualified written request ("QWR").
*1134 Defendants fault the RESPA claim's failure to support an actionable 12 U.S.C. § 2605 violation in the absence of allegations of Mr. Saldate's pecuniary loss.
Under RESPA, a QWR is a "written request from the borrower (or an agent of the borrower) for information relating to the servicing of such loan." 12 U.S.C. § 2605(e)(1)(A). Among other things, a QWR must include a "statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower." 12 U.S.C. § 2605(e)(1)(B)(ii).
Defendants note the RESPA claim's conclusory allegation that Mr. Saldate "has suffered and continues to suffer damages" fails to support an actionable violation under 12 U.S.C. 2605. "Whoever fails to comply with this section shall be liable to the borrower ... [for] any actual damages to the borrower as a result of the failure..." 12 U.S.C. § 2605(f)(1)(A). "However, alleging a breach of RESPA duties alone does not state a claim under RESPA. Plaintiffs must, at a minimum, also allege that the breach resulted in actual damages." Hutchinson v. Delaware Sav. Bank FSB, 410 F. Supp. 2d 374, 383 (D.N.J. 2006).
A purported RESPA claim fails to allege pecuniary loss from Wilshire's failure to respond to a QWR. Such omission is fatal to the claim's mere reliance on a RESPA violation. The RESPA claim is doomed in the absence of allegations of Mr. Saldate's identifiable damages attributable to a RESPA violation.
Limitations Period
Defendants challenge the RESPA claim as time barred under the three-year limitations period of 12 U.S.C. § 2614 to seek damages for 12 U.S.C. § 2605 violations. Defendants note that more than three years have passed since the November 2005 completion of Mr. Saldate's loan.
The complaint lacks allegations to avoid the three-year limitations period to further doom the RESPA claim against Wilshire.
Fraud
The complaint's (sixth) fraud claim alleges that Wilshire misrepresented "the right to collect monies from Plaintiff on its behalf or on behalf of others when Defendant Wilshire had no legal right to collect such monies." The fraud claims further alleges that MERS misrepresented "on the Deed of Trust that it is a qualified beneficiary with the ability to assign or transfer the Deed of Trust and/or the Note and/or substitute trustees under the Deed of Trust" and that MERS "followed the applicable legal requirements to transfer the Note and Deed of Trust to subsequent beneficiaries."
Defendants fault the fraud claim's absence of sufficient particularity to satisfy F.R.Civ.P. 12(b)(6).
The elements of a California fraud claim are: (1) misrepresentation (false representation, concealment or nondisclosure); (2) knowledge of the falsity (or "scienter"); (3) intent to defraud, i.e., to induce reliance; (4) justifiable reliance; and (5) resulting damage. Lazar v. Superior Court, 12 Cal. 4th 631, 638, 49 Cal. Rptr. 2d 377, 909 P.2d 981 (1996). The same elements comprise a cause of action for negligent misrepresentation, except there is no requirement of intent to induce reliance. Cadlo v. Owens-Illinois, Inc., 125 Cal. App. 4th 513, 519, 23 Cal. Rptr. 3d 1 (2004).
"[T]o establish a cause of action for fraud a plaintiff must plead and prove in full, factually and specifically, all of the elements of the cause of action." Conrad v. Bank of America, 45 Cal. App. 4th 133, 156, 53 Cal. Rptr. 2d 336 (1996). There *1135 must be a showing "that the defendant thereby intended to induce the plaintiff to act to his detriment in reliance upon the false representation" and "that the plaintiff actually and justifiably relied upon the defendant's misrepresentation in acting to his detriment." Conrad, 45 Cal.App.4th at 157, 53 Cal. Rptr. 2d 336. "The absence of any one of these required elements will preclude recovery." Wilhelm v. Pray, Price, Williams & Russell, 186 Cal. App. 3d 1324, 1332, 231 Cal. Rptr. 355 (1986).
F.R.Civ.P. 9(b) requires a party to "state with particularity the circumstances constituting fraud."[4] In the Ninth Circuit, "claims for fraud and negligent misrepresentation must meet Rule 9(b)'s particularity requirements." Neilson v. Union Bank of California, N.A., 290 F. Supp. 2d 1101, 1141 (C.D.Cal.2003). A fraud claim must be pled "with a high degree of meticulousness." Desaigoudar v. Meyercord, 223 F.3d 1020, 1022 (9th Cir.2000). A court may dismiss a claim grounded in fraud when its allegations fail to satisfy F.R.Civ.P. 9(b)'s heightened pleading requirements. Vess, 317 F.3d at 1107. A motion to dismiss a claim "grounded in fraud" under F.R.Civ.P. 9(b) for failure to plead with particularity is the "functional equivalent" of a F.R.Civ.P. 12(b) (6) motion to dismiss for failure to state a claim. Vess, 317 F.3d at 1107. As a counter-balance, F.R.Civ.P. 8(a)(2) requires from a pleading "a short and plain statement of the claim showing that the pleader is entitled to relief."
F.R.Civ.P. 9(b)'s heightened pleading standard "is not an invitation to disregard Rule 8's requirement of simplicity, directness, and clarity" and "has among its purposes the avoidance of unnecessary discovery." McHenry v. Renne, 84 F.3d 1172, 1178 (9th Cir.1996). F.R.Cvi.P. 9(b) requires "specific" allegations of fraud "to give defendants notice of the particular misconduct which is alleged to constitute the fraud charged so that they can defend against the charge and not just deny that they have done anything wrong." Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir.1985). "A pleading is sufficient under Rule 9(b) if it identifies the circumstances constituting fraud so that the defendant can prepare an adequate answer from the allegations." Neubronner v. Milken, 6 F.3d 666, 671-672 (9th Cir.1993) (internal quotations omitted; citing Gottreich v. San Francisco Investment Corp., 552 F.2d 866, 866 (9th Cir.1977)). The Ninth Circuit has explained:
Rule 9(b) requires particularized allegations of the circumstances constituting fraud. The time, place and content of an alleged misrepresentation may identify the statement or the omission complained of, but these circumstances do not "constitute" fraud. The statement in question must be false to be fraudulent. Accordingly, our cases have consistently required that circumstances indicating falseness be set forth.... [W]e [have] observed that plaintiff must include statements regarding the time, place, and nature of the alleged fraudulent activities, and that "mere conclusory allegations of fraud are insufficient."... The plaintiff must set forth what is false or misleading about a statement, and why it is false. In other words, the plaintiff must set forth an explanation as *1136 to why the statement or omission complained of was false or misleading....
In certain cases, to be sure, the requisite particularity might be supplied with great simplicity.
In re GlenFed, Inc. Securities Litigation, 42 F.3d 1541, 1547-1548 (9th Cir.1994) (en banc) (italics in original) superseded by statute on other grounds as stated in Marksman Partners, L.P. v. Chantal Pharm. Corp., 927 F. Supp. 1297 (C.D.Cal. 1996); see Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir.1997) (fraud allegations must be accompanied by "the who, what, when, where, and how" of the misconduct charged); Neubronner, 6 F.3d at 672 ("The complaint must specify facts as the times, dates, places, benefits received and other details of the alleged fraudulent activity.")
As to multiple fraud defendants, a plaintiff "must provide each and every defendant with enough information to enable them `to know what misrepresentations are attributable to them and what fraudulent conduct they are charged with.'" Pegasus Holdings v. Veterinary Centers of America, Inc., 38 F. Supp. 2d 1158, 1163 (C.D.Ca.1998) (quoting In re Worlds of Wonder Sec. Litig., 694 F. Supp. 1427, 1433 (N.D.Ca.1988)). "Rule 9(b) does not allow a complaint to merely lump multiple defendants together but `require[s] plaintiffs to differentiate their allegations when suing more than one defendant ... and inform each defendant separately of the allegations surrounding his alleged participation in the fraud.'" Swartz v. KPMG LLP, 476 F.3d 756, 764-765 (9th Cir.2007) (quoting Haskin v. R.J. Reynolds Tobacco Co., 995 F. Supp. 1437, 1439 (M.D.Fla.1998)). "In the context of a fraud suit involving multiple defendants, a plaintiff must, at a minimum, `identif[y] the role of [each] defendant[ ] in the alleged fraudulent scheme.'" Swartz, 476 F.3d at 765 (quoting Moore v. Kayport Package Express, Inc., 885 F.2d 531, 541 (9th Cir.1989)).
Moreover, in a fraud action against a corporation, a plaintiff must "allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written." Tarmann v. State Farm Mut. Auto. Ins. Co., 2 Cal. App. 4th 153, 157, 2 Cal. Rptr. 2d 861 (1991).
The complaint is severely lacking and fails to satisfy F.R.Civ.P. 9(b) "who, what, when, where and how" requirements as to defendants. The complaint makes no effort to allege names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. The complaint fails to substantiate the circumstances alleging falseness attributable to defendants. The complaint lacks facts to support each fraud element. The fraud claim's deficiencies are so severe to suggest no potential improvement from an attempt to amend.
Defendants further take issue with the complaint's allegation that MERS "has no beneficial interest or right to enforce the terms of the Promissory Note, because it is not in possession of the Promissory Note, and has no authority to conduct a non-judicial foreclosure sale." Defendants challenge claims that MERS is not registered to do business in California.
Defendants provide a California Secretary of State listing that MERS is a current active corporation in California. Defendants note that courts have recognized that MERS "is fully entitled to exercise foreclosure rights or take other action consistent with rights granted to it under a deed of trust." Defendants point out that MERS, as the lender's nominee, acted as the DOT beneficiary and properly assigned the DOT to Wells Fargo. If a borrower defaults on a loan and the deed *1137 of trust contains a power of sale clause, the lender may non-judicially foreclose. See McDonald v. Smoke Creek Live Stock Co., 209 Cal. 231, 236-237, 286 P. 693 (1930). The complaint's conclusory allegations as to MERS lack sufficient factual support to render the allegations unworthy of consideration.
Unfair Competition Law
The complaint's seventh claim alleges that "Wilshire's violation of the Rosenthal Act, RESPA, their [sic] negligence, fraud and illegal foreclosure activities, as alleged herein, constitute unlawful, unfair, and/or fraudulent business practices," as defined in California Business and Professions Code, §§ 17200 et seq. (Unfair Competition Law ("UCL")). The claim further alleges that "MERS' negligence, fraud and illegal foreclosure activities, alleged herein, constitute unlawful, unfair, and/or fraudulent business practices" as defined by the UCL.
Standing
Defendants challenge Mr. Saldate's standing to pursue a UCL claim in absence of allegations of "facts as to the money or property Plaintiff allegedly lost as a result of any purported violation" of the UCL.
California Business and Professions Code section 17204 limits standing to bring a UCL claim to specified public officials and a private person "who has suffered injury in fact and has lost money or property as a result of the unfair competition."
Business and Professions Code section 17203 addresses UCL relief and provides in pertinent part:
Any person who engages, has engaged, or proposes to engage in unfair competition may be enjoined in any court of competent jurisdiction. The court may make such orders or judgments ... as may be necessary to restore to any person in interest any money or property, real or personal, which may have been acquired by means of such unfair competition. (Bold added.)
Defendants correctly note the complaint's absence of facts of Mrs Saldate's money or property allegedly lost due to a UCL violation. The UCL claim offers an insufficient, bare allegation that "Plaintiff has suffered various damages and injuries according to proof at trial." The complaint lacks sufficient allegations of Mr. Saldate's standing to warrant dismissal of the UCL claim.
Unfair, Fraudulent Or Deceptive Business Practices
Defendants challenge the complaint's absence of allegations of wrongdoing to support a UCL claim.
"Unfair competition is defined to include `unlawful, unfair or fraudulent business practice and unfair, deceptive, untrue or misleading advertising.'" Blank v. Kirwan, 39 Cal. 3d 311, 329, 216 Cal. Rptr. 718, 703 P.2d 58 (1985) (quoting Cal. Bus. & Prof.Code, § 17200). The UCL establishes three varieties of unfair competition"acts or practices which are unlawful, or unfair, or fraudulent." Shvarts v. Budget Group, Inc., 81 Cal. App. 4th 1153, 1157, 97 Cal. Rptr. 2d 722 (2000). An "unlawful business activity" includes anything that can properly be called a business practice and that at the same time is forbidden by law. Blank, 39 Cal.3d at 329, 216 Cal. Rptr. 718, 703 P.2d 58 (citing People v. McKale, 25 Cal. 3d 626, 631-632, 159 Cal. Rptr. 811, 602 P.2d 731 (1979)).
The UCL prohibits "unlawful" practices "forbidden by law, be it civil or criminal, federal, state, or municipal, statutory, regulatory, or court-made." Saunders v. Superior Court, 27 Cal. App. 4th 832, 838, 33 Cal. Rptr. 2d 438 (1994). According to the California Supreme Court, the UCL "borrows" violations of other laws and treats them as unlawful practices independently *1138 actionable under the UCL. Farmers Ins. Exchange v. Superior Court, 2 Cal. 4th 377, 383, 6 Cal. Rptr. 2d 487, 826 P.2d 730 (1992).
"Unfair" under the UCL "means conduct that threatens an incipient violation of an antitrust law, or violates the policy or spirit of one of those laws because its effects are comparable to or the same as a violation of the law, or otherwise significantly threatens or harms competition." Cel-Tech Communications, Inc. v. Los Angeles Cellular Tel. Co., 20 Cal. 4th 163, 187, 83 Cal. Rptr. 2d 548, 973 P.2d 527 (1999).
The "fraudulent" prong under the UCL requires a plaintiff to "show deception to some members of the public, or harm to the public interest," Watson Laboratories, Inc. v. Rhone-Poulenc Rorer, Inc., 178 F. Supp. 2d 1099, 1121 (C.D.Ca.2001), or to allege that "members of the public are likely to be deceived." Medical Instrument Development Laboratories v. Alcon Laboratories, 2005 WL 1926673, at *5 (N.D.Cal.2005).
"A plaintiff alleging unfair business practices under these statutes [UCL] must state with reasonable particularity the facts supporting the statutory elements of the violation." Khoury v. Maly's of California, Inc., 14 Cal. App. 4th 612, 619, 17 Cal. Rptr. 2d 708 (1993).
A fellow district court has explained the borrowing of a violation of law other than the UCL:
To state a claim for an "unlawful" business practice under the UCL, a plaintiff must assert the violation of any other law. Cel-Tech Commc'ns, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal. 4th 163, 180, 83 Cal. Rptr. 2d 548, 973 P.2d 527 (1999) (stating, "By proscribing `any unlawful' business practice, section 17200 `borrows' violations of other law and treats them as unlawful practices that the unfair competition law makes independently actionable.") (citation omitted). Where a plaintiff cannot state a claim under the "borrowed" law, she cannot state a UCL claim either. See, e.g., Smith v. State Farm Mutual Automobile Ins. Co., 93 Cal. App. 4th 700, 718, 113 Cal. Rptr. 2d 399 (2001). Here, Plaintiff has predicated her "unlawful" business practices claim on her TILA claim. However, as discussed above, Plaintiff's attempt to state a claim under TILA has failed. Accordingly, Plaintiff has stated no "unlawful" UCL claim.
Rubio v. Capital One Bank (USA), N.A., 572 F. Supp. 2d 1157, 1168 (C.D.Cal.2008).
Defendants are correct that the complaint is "insufficient to establish that Defendants engaged in any `unfair' business practices within the meaning of Section 17200." In the absence of violation of TILA, RESPA or other borrowed law, a UCL claim fails in that it cannot rest, as defendants note, on "alleged irregularities in the loan transaction." The complaint points to no predicate violation of law. The complaint is deficient to allege that defendants engaged in unfair practices subject to the UCL. The complaint lacks reasonable particularity of facts to support a UCL claim. The complaint's bare reference to TILA, RESPA and common law claims provides not the slightest inference that Mr. Saldate has a viable UCL claim. Similar to the fraud claim, the UCL claim lacks particularity of fraudulent circumstances, such as a misrepresentation, for a UCL claim. The complaint lacks allegations of ongoing wrongful business conduct or a pattern of such conduct. The complaint lacks facts to hint at a wrong subject to the UCL to warrant the UCL claim's dismissal against WMC.
Wrongful Foreclosure
The complaint's (tenth) wrongful foreclosure claim alleges that defendants are not entitled to utilize non-judicial foreclosure "to wrongfully convert Plaintiff's *1139 Property" in the absence of their possession of Mr. Saldate's promissory note. The claim also accuses defendants of failure "to give proper notice of the Notice of Default."
Defendants fault the wrongful foreclosure claim as "premature" in the absence of a foreclosure sale. Defendants further challenge the claim based on Mr. Saldate's failure to tender amounts owed.
"Financing or refinancing of real property is generally accomplished in California through a deed of trust. The borrower (trustor) executes a promissory note and deed of trust, thereby transferring an interest in the property to the lender (beneficiary) as security for repayment of the loan." Bartold v. Glendale Federal Bank, 81 Cal. App. 4th 816, 821, 97 Cal. Rptr. 2d 226 (2000). A deed of trust "entitles the lender to reach some asset of the debtor if the note is not paid." Alliance Mortgage Co. v. Rothwell, 10 Cal. 4th 1226, 1235, 44 Cal. Rptr. 2d 352, 900 P.2d 601 (1995).
If a borrower defaults on a loan and the deed of trust contains a power of sale clause, the lender may non-judicially foreclose. See McDonald v. Smoke Creek Live Stock Co., 209 Cal. 231, 236-237, 286 P. 693 (1930). The California Court of Appeal has explained non-judicial foreclosure under California's statutory scheme:
The comprehensive statutory framework established to govern nonjudicial foreclosure sales is intended to be exhaustive.... It includes a myriad of rules relating to notice and right to cure. It would be inconsistent with the comprehensive and exhaustive statutory scheme regulating nonjudicial foreclosures to incorporate another unrelated cure provision into statutory nonjudicial foreclosure proceedings.
Moeller v. Lien, 25 Cal. App. 4th 822, 834, 30 Cal. Rptr. 2d 777 (1994); see I.E. Assoc. v. Safeco Title Ins. Co., 39 Cal. 3d 281, 285, 216 Cal. Rptr. 438, 702 P.2d 596 (1985) ("These provisions cover every aspect of exercise of the power of sale contained in a deed of trust.")
Under California Civil Code section 2924(a)(1), a "trustee, mortgagee or beneficiary or any of their authorized agents" may conduct the foreclosure process. Under California Civil Code section 2924b(4), a "person authorized to record the notice of default or the notice of sale" includes "an agent for the mortgagee or beneficiary, an agent of the named trustee, any person designated in an executed substitution of trustee, or an agent of that substituted trustee." "Upon default by the trustor, the beneficiary may declare a default and proceed with a nonjudicial foreclosure sale." Moeller, 25 Cal.App.4th at 830, 30 Cal. Rptr. 2d 777.
A "trustee or mortgagee may be liable to the trustor or mortgagor for damages sustained where there has been an illegal, fraudulent or wilfully oppressive sale of property under a power of sale contained in a mortgage or deed of trust." Munger v. Moore, 11 Cal. App. 3d 1, 7, 89 Cal. Rptr. 323 (1970).
"Under Civil Code section 2924, no party needs to physically possess the promissory note." Sicairos v. NDEX West, LLC, 2009 WL 385855, *3 (S.D.Cal.2009) (citing Cal. Civ.Code, § 2924(a)(1)). Rather, "[t]he foreclosure process is commenced by the recording of a notice of default and election to sell by the trustee." Moeller, 25 Cal.App.4th at 830, 30 Cal. Rptr. 2d 777. An "allegation that the trustee did not have the original note or had not received it is insufficient to render the foreclosure proceeding invalid." Neal v. Juarez, 2007 WL 2140640, *8 (S.D.Cal.2007).
Mr. Saldate's challenge to produce his original note is unsupported. The complaint alleges no facts of failure to comply with the statutory scheme for non-judicial *1140 foreclosure. A purported unlawful foreclosure claim fails as a matter of law.
In addition, Mr. Saldate's default suggests an inability to tender amounts owed.
"A tender is an offer of performance made with the intent to extinguish the obligation." Arnolds Management Corp. v. Eischen, 158 Cal. App. 3d 575, 580, 205 Cal. Rptr. 15 (1984) (citing Cal. Civ.Code, § 1485); Still v. Plaza Marina Commercial Corp., 21 Cal. App. 3d 378, 385, 98 Cal. Rptr. 414 (1971). "A tender must be one of full performance ... and must be unconditional to be valid." Arnolds Management, 158 Cal.App.3d at 580, 205 Cal. Rptr. 15.
A defaulted borrower is "required to allege tender of the amount of [the lender's] secured indebtedness in order to maintain any cause of action for irregularity in the sale procedure." Abdallah v. United Savings Bank, 43 Cal. App. 4th 1101, 1109, 51 Cal. Rptr. 2d 286 (1996), cert. denied, 519 U.S. 1081, 117 S. Ct. 746, 136 L. Ed. 2d 684 (1997). In FPCIRE-HAB 01 v. E & G Investments, Ltd., 207 Cal. App. 3d 1018, 1021, 255 Cal. Rptr. 157 (1989), the California Court of Appeal has explained:
... generally "an action to set aside a trustee's sale for irregularities in sale notice or procedure should be accompanied by an offer to pay the full amount of the debt for which the property was security.".... This rule ... is based upon the equitable maxim that a court of equity will not order a useless act performed.... "A valid and viable tender of payment of the indebtedness owing is essential to an action to cancel a voidable sale under a deed of trust." ... The rationale behind the rule is that if plaintiffs could not have redeemed the property had the sale procedures been proper, any irregularities in the sale did not result in damages to the plaintiffs. (Citations omitted.)
An action to set aside a foreclosure sale, unaccompanied by an offer to redeem, does not state a cause of action which a court of equity recognizes. Karlsen v. American Sav. & Loan Assn., 15 Cal. App. 3d 112, 117, 92 Cal. Rptr. 851 (1971). The basic rule is that an offer of performance is of no effect if the person making it is not able to perform. Karlsen, 15 Cal.App.3d at 118, 92 Cal. Rptr. 851 (citing Cal. Civ.Code, § 1495.) Simply put, if the offeror "is without the money necessary to make the offer good and knows it" the tender is without legal force or effect. Karlsen, 15 Cal.App.3d at 118, 92 Cal. Rptr. 851 (citing several cases). "It would be futile to set aside a foreclosure sale on the technical ground that notice was improper, if the party making the challenge did not first make full tender and thereby establish his ability to purchase the property." United States Cold Storage v. Great Western Savings & Loan Assn., 165 Cal. App. 3d 1214, 1224, 212 Cal. Rptr. 232 (1985); see Abdallah, 43 Cal.App.4th at 1109, 51 Cal. Rptr. 2d 286 (the tender rule applies to "any cause of action for irregularity in the sale procedure").
Moreover, to obtain "rescission or cancellation, the rule is that the complainant is required to do equity, as a condition to his obtaining relief, by restoring to the defendant everything of value which the plaintiff has received in the transaction.... The rule applies although the plaintiff was induced to enter into the contract by the fraudulent representations of the defendant." Fleming v. Kagan, 189 Cal. App. 2d 791, 796, 11 Cal. Rptr. 737 (1961). "A valid and viable tender of payment of the indebtedness owing is essential to an action to cancel a voidable sale under a deed of trust." Karlsen, 15 Cal. App.3d at 117, 92 Cal. Rptr. 851.
"The rules which govern tenders are strict and are strictly applied." Nguyen v. *1141 Calhoun, 105 Cal. App. 4th 428, 439, 129 Cal. Rptr. 2d 436 (2003). "The tenderer must do and offer everything that is necessary on his part to complete the transaction, and must fairly make known his purpose without ambiguity, and the act of tender must be such that it needs only acceptance by the one to whom it is made to complete the transaction." Gaffney v. Downey Savings & Loan Assn., 200 Cal. App. 3d 1154, 1165, 246 Cal. Rptr. 421 (1988). The debtor bears "responsibility to make an unambiguous tender of the entire amount due or else suffer the consequence that the tender is of no effect." Gaffney, 200 Cal.App.3d at 1165, 246 Cal. Rptr. 421.
Defendants are correct that the complaint does not allege that Mr. Saldate "tendered the full amount that is owed under the loan." The absence of an allegation of ability to tender amounts owed dooms a purported wrongful foreclosure claim. Mr. Saldate's inability to make monthly payments reflects inability to tender amounts owed to bar a claim to challenge foreclosure.
Alternative F.R.Civ.P. 12(e) Motion For More Definite Statement
With dismissal of Mr. Saldate's claims, this Court need not address defendant's alternative F.R.Civ.P. 12(e) motion for a more definite statement.
Attempt At Amendment And Malice
Mr. Saldate's claims against defendants are insufficiently pled and barred as a matter of law. Mr. Saldate is unable to cure his claims by allegation of other facts and thus is not granted an attempt to amend.
Moreover, this Court is concerned that Mr. Saldate has brought this action in absence of good faith and that Mr. Saldate exploits the court system solely for delay or to vex defendants. The test for maliciousness is a subjective one and requires the court to "determine the ... good faith of the applicant." Kinney v. Plymouth Rock Squab Co., 236 U.S. 43, 46, 35 S. Ct. 236, 59 L. Ed. 457 (1915); see Wright v. Newsome, 795 F.2d 964, 968, n. 1 (11th Cir.1986); cf. Glick v. Gutbrod, 782 F.2d 754, 757 (7th Cir.1986) (court has inherent power to dismiss case demonstrating "clear pattern of abuse of judicial process"). A lack of good faith or malice also can be inferred from a complaint containing untrue material allegations of fact or false statements made with intent to deceive the court. See Horsey v. Asher, 741 F.2d 209, 212 (8th Cir.1984). An attempt to vex or delay provides further grounds to dismiss this action against defendants.
CONCLUSION AND ORDER
For the reasons discussed above, this Court:
1. DISMISSES with prejudice this action against defendants;
2. DIRECTS the clerk to enter judgment against plaintiff George A. Saldate, Jr. and in favor of defendants Wilshire Credit Corporation, Mortgage Electronic Registration Systems, Inc. and Wells Fargo Bank and in that there is no just reason to delay to enter such judgment given that Mr. Saldate's claims against Wilshire, MERS and Wells Fargo are clear and distinct from claims against the other defendants. See F.R.Civ.P. 54(b); and
3. ORDERS Mr. Saldate's counsel, no later than February 22, 2010 to file papers to show cause why this Court should not dismiss this action against defendants Valley Wide Home Loans, Craig H. Barton and Norfilia Garza.
This Court ADMONISHES Mr. Saldate and his counsel that this Court will dismiss this action against defendants *1142 Valley Wide Home Loans, Craig H. Barton and Norfilia Garza if Mr. Saldate's counsel fails to comply with this order and fails to file timely papers to show cause why this Court should not dismiss this action against defendants Valley Wide Home Loans, Craig H. Barton and Norfilia Garza.
IT IS SO ORDERED.
NOTES
[1] Wilshire, MERS and Wells Fargo will be referred to collectively as "defendants."
[2] All documents pertaining to Mr. Saldate's loans were recorded with the Fresno County Recorder.
[3] "We have extended the `incorporation by reference' doctrine to situations in which the plaintiff's claim depends on the contents of a document, the defendant attaches the document to its motion to dismiss, and the parties do not dispute the authenticity of the document, even though the plaintiff does not explicitly allege the contents of that document in the complaint." Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir.2005) (citing Parrino, 146 F.3d at 706).
[4] F.R.Civ.P. 9(b)'s particularity requirement applies to state law causes of action: "[W]hile a federal court will examine state law to determine whether the elements of fraud have been pled sufficiently to state a cause of action, the Rule 9(b) requirement that the circumstances of the fraud must be stated with particularity is a federally imposed rule." Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103 (9th Cir.2003) (quoting Hayduk v. Lanna, 775 F.2d 441, 443 (1st Cir.1985) (italics in original)).
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715 F. Supp. 2d 165 (2010)
Chaim KAPLAN, et al., Plaintiffs,
v.
HEZBOLLAH, et al., Defendants.
Civil Action No. 09-646 (RWR).
United States District Court, District of Columbia.
June 7, 2010.
*166 Robert Joseph Tolchin, Brooklyn, NY, for Plaintiffs.
MEMORANDUM ORDER
RICHARD W. ROBERTS, District Judge.
Plaintiffs attempted to serve defendant Hezbollah by sending a summons and the complaint by DHL to Mohammed Fneish, a minister in the Lebanese government and an alleged leader within Hezbollah. Fneish received the package on March 18, 2010. On April 12, 2010, plaintiffs filed an affidavit of default as to Hezbollah, but the Clerk's Office refused to enter default on the grounds that under 28 U.S.C. § 1608 Hezbollah had sixty days to answer or otherwise respond to the complaint, and that those sixty days had not yet elapsed. On April 15, 2010, plaintiffs filed an ex parte motion to direct the Clerk to enter default as to defendant Hezbollah, arguing that 28 U.S.C. § 1608 does not govern Hezbollah's time to answer, that Hezbollah had been served under Federal Rules of Civil Procedure 4(f)(2)(C)(ii) and 4(h)(2), and that the 21-day period to answer under Rule 12(a)(1)(A)(i) had expired. Plaintiffs were ordered to supplement their motion to explain the basis for asserting that Fneish is an official of Hezbollah and a proper person upon whom service may be made on behalf of Hezbollah. On May 17, 2010, plaintiffs filed a supplemental memorandum and motion stating that they could not base service of Hezbollah on Rule 4(f)(2)(C)(ii), which does not allow foreign service by mail if it is prohibited by the foreign country's law, because they could not state with certainty that service by DHL did not violate Lebanese law. Because plaintiffs concede that defendant Hezbollah has not yet been served under Rule 4(f)(2)(C)(ii), their motion to direct the Clerk to enter the default of defendant Hezbollah will be denied.
Plaintiffs instead moved for leave nunc pro tunc to serve Hezbollah by serving Fneish by DHL under Rule 4(f)(3). Rule 4(f)(3) provides for international service "by other means not prohibited by international agreement, as the court orders." "The rule was `adopted in order to provide flexibility and discretion to the federal courts in dealing with questions of alternative methods of service of process in foreign countries[.]'" Smith v. Islamic Emirate of Afg., Nos. 01 CIV 10132(HB), 01 CIV 10144(HB), 2001 WL 1658211, at *2 (S.D.N.Y. Dec. 26, 2001) (quoting In re Int'l Telemedia Assoc., Inc., 245 B.R. 713, 719 (Bankr.N.D.Ga.2000)). Several courts have approved of service by publication upon al Qaeda under Rule 4(f)(3). See Mwani v. bin Laden, 417 F.3d 1, 8 (D.C.Cir.2005) (approving service of Osama bin Laden and al Qaeda by publication under Rule 4(f)(3)); Smith, 2001 WL 1658211, at *3-4 (allowing service of bin Laden and al Qaeda by publication for six weeks in four Afghani newspapers, one Pakistani newspaper, and five broadcast networks). Other service methods, such as service by email, have also been approved under Rule 4(f)(3) in this district. See, e.g., Juniper Networks, Inc. v. Bahattab, Civil Action No. 07-1771(PLF), 2008 WL 250584, at *1-2 (D.D.C. Jan. 30, 2008).
Plaintiffs argue that serving Fneish by DHL is "infinitely more certain to ensure that the defendant actually receives notice of the action" than service by publication would be. (Pl.'s Mot. for an Order Pursuant to Fed.R.Civ.P. 4(f)(3) and Related Relief at 5.) Plaintiffs have submitted with their motion an affidavit of Yoram *167 Schweitzer, the Director of Terrorism and Low Intensity Warfare Project at Tel Aviv University's Institute for National Security Studies, in which he opines that "it is simply inconceivable that Fneish would not convey to the other leaders of Hezbollah an American court summons addressed to Hezbollah and a civil complaint against Hezbollah received by him." (Id., Decl. of Yoram Schweitzer ¶ 22.)
Courts are divided as to whether service may be authorized retroactively under Rule 4(f)(3). Compare Export-Import Bank of U.S. v. Asia Pulp & Paper Co., Ltd., No. 03Civ.8554 (LTS)(JCF), 2005 WL 1123755, at *4-5 (S.D.N.Y. May 11, 2005) (allowing service under Rule 4(f)(3) nunc pro tunc) with Brockmeyer v. May, 383 F.3d 798, 805-06 (9th Cir.2004) (refusing to allow service under Rule 4(f)(3) on the ground that the rule requires plaintiffs to obtain prior court approval for the alternative method of service). Marks v. Alfa Group, 615 F. Supp. 2d 375, 380 (E.D.Pa. 2009), authorized service nunc pro tunc by FedEx under Rule 4(f)(3) after the defendant returned a signed receipt acknowledging that it had received the summons. Marks distinguished Brockmeyer on the ground that the plaintiff in Brockmeyer had placed the complaint and summons in ordinary international first class mail and had not received a signed receipt that would have signaled that the defendant had actual notice of the suit. Marks, 615 F.Supp.2d at 380.
Here, even though DHL's tracking service confirmed that Fneish received the shipment (see Pl.'s Aff. in Supp. of Default), the plaintiffs have not filed on the docket any proof that Fneish is authorized to accept service on behalf of Hezbollah, or any receipt reflecting that Hezbollah as an organization received the summons and complaint and has actual notice of the suit. Nor has an attorney representing Hezbollah filed a notice of appearance on the docket. Just as in Brockmeyer, where there was no evidence that the defendants had received actual notice of the suit, the plaintiffs here will not be authorized nunc pro tunc to serve Hezbollah by only serving Fneish by DHL. Instead, plaintiffs will be authorized to serve Hezbollah by including service by publication. Since Lebanon is not a party to the Convention on Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters, Nov. 15, 1965, 20 U.S.T. 361, T.I.A.S. No. 6638, the Inter-American Convention on Letters Rogatory, Jan. 30, 1975, 14 I.L.M. 339 (reprinted following 28 U.S.C. § 1781), or Regulation (EC) No. 1393/2007 of October 12, 2003, O.J. (L 331), the combination of service by DHL on Fneish and service by publication would not appear to violate any international agreement regarding service of process and is reasonably calibrated to achieve notice to Hezbollah. Accordingly, it is hereby
ORDERED that plaintiffs' ex parte motion [14] to direct the Clerk to enter the default of defendant Hezbollah be, and hereby is, DENIED. It is further
ORDERED that plaintiffs' motion [16] for an Order pursuant to Fed.R.Civ.P. 4(f)(3) be, and hereby is, GRANTED in part. Plaintiffs are authorized to complete service upon Hezbollah within 75 days by publishing full notice of the suit in the three Lebanese newspapers with the largest national circulation twice per week in each newspaper on a staggered schedule to cover six days each week for a period of four weeks. Plaintiffs shall file proof of service upon defendant Hezbollah by publication within 75 days.
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720 F. Supp. 2d 1243 (2010)
CITY OF AURORA, COLORADO, a municipal corporation, acting by and through its Utility Enterprise, AURORA WATER, Plaintiff and Counterclaim Defendant, and
Grimm Construction Company, Inc., d/b/a Garney Construction, a Colorado corporation, Third-Party Defendant,
v.
PS SYSTEMS, INC., a Colorado corporation, and RAR Group, LLC, a Colorado limited liability company, Defendants, Counterclaimants, and Third-Party Plaintiffs.
Civil Action No. 07-cv-02371-PAB-BNB.
United States District Court, D. Colorado.
June 25, 2010.
*1245 Martha Fitzgerald Bauer, Ashley Krause, Ericka F. Houck Englert, Ronald C. Gorsche, Jr., Brownstein Hyatt Farber Schreck, LLP, Denver, CO, Charles H. Richardson, Aurora City Attorney's Office, Aurora, CO, for Plaintiff and Counterclaim Defendant.
*1246 Peter Attila Gergely, Merchant & Gould, PC, Denver, CO, for Defendants, Counterclaimants, and Third-Party Plaintiffs.
ORDER
PHILIP A. BRIMMER, District Judge.
This patent case comes before the Court on the motion to dismiss for lack of subject-matter jurisdiction filed by plaintiff City of Aurora ("Aurora") and third-party defendant Grimm Construction Company, Inc. (doing business as and hereinafter referred to as "Garney") [Docket No. 149]. Pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(h)(3), the motion requests dismissal of the counterclaim and third-party claim filed by defendants PS Systems, Inc. and RAR Group, LLC (collectively, the "patentees").[1] At a May 6, 2010 hearing in this matter, the Court instructed the parties that it would construe the motion as both a motion to dismiss under Rule 12(b)(1) and a motion for summary judgment under Rule 56.
I. BACKGROUND
A. Brief Factual Background
As the Court summarized in its June 2, 2010, 2010 WL 2232352, claim construction order, the patentees are the putative assignees of United States Patent No. 6,840,710 (the "'710 Patent") and United States Patent No. 7,192,218 (the "'218 Patent"). These patents describe structures and methods to be utilized in the storage of water in artificially constructed underground reservoirs. In 2004, the City of Aurora began planning a large water supply and treatment project known as the Prairie Waters Project. Under the project, wells draw water from an aquifer located near the banks of the South Platte River near Brighton, Colorado. The water is transported from the wells into a portion of the project known as the Aquifer Recharge and Recovery facility. The Aquifer Recharge and Recovery consists in part of a subterranean wall or walls encircling the area into which the water is placed. Water placed in the Aquifer Recharge and Recovery area is then pumped out and moved off-site for purification, storage, and eventual use by the residents of Aurora.
In the fall of 2007, after several years of design and preparation, Aurora put the entire Prairie Waters Project out for bid to pre-qualified bidders. Included in the bid documents for the project were plans, specifications, bid forms, and a proposed contract covering the Aquifer Recharge and Recovery facility. The invitation to bid and the proposed construction contract for the entire Prairie Waters Project also contained the following statement:
The City is currently resolving certain legal issues associated with patent claims related to the [Aquifer Recharge and Recovery or] ARR facility. Construction of the project components associated with the ARR will therefore be sequenced to allow the City an opportunity to delete the Bid Form Part C (ARR Site A) and/or Bid Form Part E(LPB) from the project if a satisfactory resolution of these patent issues can not be reached with the patent claimants. If in the sole judgment of the City such resolution is unfavorable to the City these project components may be eliminated, in whole or in part as best serves the City, from the Work prior to or after award of this contract.
*1247 PS Systems, Inc. and RAR Group, LLC's Resp. to Mot. to Dismiss Defs.' Countercl. for Lack of Subject Matter J. [Docket No. 170] ("Patentees' Resp."), ex. A [Docket No. 170-1] at 14 (internal pagination at 1), ex. A [Docket No. 170-2] at 5 (internal pagination at 3); see also Patentees' Resp., ex. B (executed construction agreement) [Docket No. 170-5] at 8 (internal pagination 3).
In response to Aurora's invitation to bid, Garney submitted a compliant bid for the Prairie Waters Project, including a proposed price to construct the Aquifer Recharge and Recovery facility. See Patentees' Resp., ex. B [Docket Nos. 170-6, 170-7]. Aurora selected Garney's bid and the two entered into a contract for the entire North Campus facility of the Prairie Waters Project, which includes the Aquifer Recharge and Recovery unit, on or around March 20, 2008. See Patentees' Resp., ex. B [Docket Nos. 170-5, 170-6, 170-7] at 21-23.
According to both the proposed construction agreement contained in the bid documents and the actual signed agreement, "[w]ork on [the Aquifer Recharge and Recovery facility] shall not begin before January 1, 2010. A separate written authorization will be given for this work." Patentees' Resp., ex. A [Docket No. 170-2] at 7 (internal pagination 5); ex. B [Docket No. 170-5] at 10 (internal pagination at 5); see also Patentees' Resp., ex. A [Docket No. 170-2] at 10 (internal pagination 8) ("If included in the Work, a separate written authorization for these components will be given on or about January 1, 2010."). The bid documents and the signed construction agreement allow Aurora to eliminate the Aquifer Recharge and Recovery facility from the project and adjust the total contract price accordingly:
If the City elects to eliminate the work described as Bid Form Part C (ARR Site A) and/or Bid Form Part E (LPB) in accordance with the terms of this Agreement, the price for the portions of the work described as Bid Form Part A (Mobilization and General Project) will be negotiated based on the revised contract time and work required.
If the City elects to eliminate the work described as Bid Form Part C (ARR Site A) and/or Bid Form Part E (LPB) in accordance with the terms of this Agreement, the unit price adjustments described in 7.03.A of this Agreement will not apply to these bid items (C-1 through C-108 and E-1 through E-29).
Patentees' Resp., ex. A [Docket No. 170-2] at 10 (internal pagination 8) ¶¶ D-E.
Construction has begun and been completed on several parts of the Prairie Waters Project. However, construction has not begun on the Aquifer Recharge and Recovery portion of the project. Aurora and its representatives assert that it will not build the Aquifer Recharge and Recovery facility if it is determined in this case that the design would infringe either the '710 Patent or the '218 Patent.
B. Procedural Background
On November 9, 2007, around the time it began soliciting bids for the entire Prairie Waters Project, Aurora filed this case seeking a declaratory judgment holding that Aurora's planned Aquifer Recharge and Recovery project does not infringe the '710 Patent or the '218 Patent. See Compl. for Declaratory J. of Non-Infringement, Invalidity, and Unenforceability [Docket No. 1]. In the alternative, Aurora seeks declarations that the two patents at issue are invalid and/or that the earlier of the two, the '710 Patent, is unenforceable due to inequitable conduct. On January 11, 2008, the patentees filed a motion to dismiss arguing that no justiciable case or controversy existed between them and Aurora because the Prairie Waters Project *1248 plans were only preliminary. See Defs.' Mot. to Dismiss [Docket No. 7] at 13-14. On September 19, 2008, Judge Wiley Y. Daniel, the district court judge previously assigned to this case, denied patentees' motion to dismiss, concluding that "that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." City of Aurora v. PS Sys., Inc., No. 07-cv-02371, 2008 WL 4377505, at *11 (D.Colo. Sept. 19, 2008) (quoting MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127, 127 S. Ct. 764, 166 L. Ed. 2d 604 (2007)). Judge Daniel based his decision on the fact that "Aurora asserts that the plans have been finalized, the construction has begun on the Project and there is a definite timetable for the Project to be operational." City of Aurora, 2008 WL 4377505, at *10. The day before Judge Daniel issued his ruling, Aurora first provided the patentees with a copy of the construction agreement between it and Garney.
On October 3, 2008, the patentees filed an answer together with a counterclaim against Aurora and Garney [Docket No. 55]. The patentees averred that "Aurora and Garney, both collectively and individually, have been and are infringing the '710 and '218 Patents, either directly, contributorily or by inducing others to infringe the '710 and '218 Patents." Defs. & Counterclaimants' Answer & Countercl. [Docket No. 55] ("Countercl.") at 9 ¶ 23.
On April 12, 2010, Aurora and Garney, believing that the patentees were alleging infringement through the making or using of the patented inventions at issue, brought the present motion as a challenge to the Court's subject-matter jurisdiction. See Mot. to Dismiss Defs.' Countercl. for Lack of Subject Matter J. [Docket No. 149] ("Mot. to Dismiss"). In 35 U.S.C. § 271(a), Congress proclaimed that "[e]xcept as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent." Aurora and Garney argue that the patentees lack standing because the allegedly infringing structure has not been built, Aurora has no plans to build it if it indeed infringes, and patentees have not requested declaratory relief.
The patentees conceded that, at the present time, they cannot bring a viable infringement claim based on the making or using of the patented inventions. Instead, the patentees asserted that their infringement claim survives based on 35 U.S.C. § 271(a)'s prohibition on the sale and offering for sale of a patented product and § 271(b)'s prohibition on the inducement of such infringement. According to the patentees' most recent articulation, Garney's bid on the Prairie Water Project, which Aurora accepted, qualifies as a sale or offer for sale of an infringing product. Furthermore, patentees contend that Aurora's invitation for such a bid constituted an inducement of that infringement.
Aurora and Garney's motion to dismiss has merit to the extent that it challenges the patentees' infringement claim based on the making or using of the inventions in the '710 and '218 Patents. Because the parties agree that Aurora has not constructed an infringing structure, there is a standing problem with those theories. In order to show standing, a party must demonstrate three things:
(1) "injury in fact," by which we mean an invasion of a legally protected interest that is "(a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical"; (2) a causal relationship between the injury and the challenged conduct, by which we mean that the injury "fairly can be traced to *1249 the challenged action of the defendant," and has not resulted "from the independent action of some third party not before the court"; and (3) a likelihood that the injury will be redressed by a favorable decision, by which we mean that the "prospect of obtaining relief from the injury as a result of a favorable ruling" is not "too speculative."
In re Integra Realty Res., Inc., 262 F.3d 1089, 1101 (10th Cir.2001) (quoting Northeastern Fla. Chapter of the Associated Gen. Contractors v. City of Jacksonville, 508 U.S. 656, 663-64, 113 S. Ct. 2297, 124 L. Ed. 2d 586 (1993)). Here, because neither side now claims that Aurora or Garney made or used an infringing structure, the patentees are unable to allege an injury in fact and, therefore, do not have standing. That claim is dismissed without prejudice.
The patentees' counterclaim for infringement based on theories of sale and offer for sale is based on past events and, as a result, this claim does not present similar standing problems. The Court finds Aurora and Garney's challenges more appropriately are read to address the merits of the patentees' claim. Because of this fact, the Court has concluded that Aurora and Garney's motion, to the extent that it seeks disposition of patentees' sale and offer-for-sale infringement claim, is more properly addressed under the standards of Federal Rule of Civil Procedure 56. Cf. Holt v. United States, 46 F.3d 1000, 1003 (10th Cir.1995) ("[A] court is required to convert a Rule 12(b)(1) motion to dismiss into a Rule 12(b)(6) motion or a Rule 56 summary judgment motion when resolution of the jurisdictional question is intertwined with the merits of the case.").
The dispositive motion deadline in this case, October 7, 2008, had passed long before Aurora and Garney filed the present motion. However, because Aurora argued, and the Court agreed, that theories of infringement through sale and offer for sale were not clearly disclosed in the patentees' pleadings and representations in this case, the Court allowed the motion out-of-time. The Court also permitted the parties to file supplemental briefs on the viability of sale or offer-for-sale theories of infringement. The parties filed these briefs [Docket Nos. 186, 190] and the issue is now suitable for disposition.
II. ANALYSIS
In their supplemental brief, Aurora and Garney assert three reasons why they believe summary judgment should be granted in their favor on the patentees' sale and offer-for-sale infringement theories. See Supplemental Br. in Supp. of Countercl.-Defs.' Mot. for Summ. J. of Noninfringement & Lack of Damages [Docket No. 190]. First, they argue that, based on the undisputed facts, no sale or offer for sale occurred and, therefore, no infringement occurred as a matter of law. Second, they assert that, even if a sale or offer-for-sale could be contemplated under the facts, the patentees have failed to demonstrate a viable theory of damages. Finally, Aurora and Garney claim that they were not given sufficient notice and opportunity to seek discovery on these theories of recovery. The Court addresses each of these questions in turn below.
A. The Merits of Patentees' Infringement Claim
As discussed above, under federal patent law, "[e]xcept as otherwise provided in [Title 35 of the United States Code], whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent." 35 U.S.C. § 271(a) (2006). Furthermore, "[w]hoever actively induces *1250 infringement of a patent shall be liable as an infringer." 35 U.S.C. § 271(b) (2006).
In the patentees' present articulation of their counterclaim against Garney, they argue that Garney's bid and subsequent construction agreement with Aurora represent an infringing offer for sale and sale of the Aquifer Recharge and Recovery facility. The patentees' articulation of their counterclaim against Aurora alleges that Aurora induced Garney's infringement by requesting bids on the Aquifer Recharge and Recovery facility, accepting Garney's bid, and signing the construction agreement.
1. Infringement Through Sale
Because the statute does not define the term "sells" or "sale," the Federal Circuit construes those terms according to their "ordinary meaning." NTP, Inc. v. Research In Motion, Ltd., 418 F.3d 1282, 1319 (Fed.Cir.2005). Under this construction, "[t]he definition of `sale' is: '1. The transfer of property or title for a price. 2. The agreement by which such a transfer takes place.'" NTP, Inc., 418 F.3d at 1319 (quoting Black's Law Dictionary 1337 (7th ed.1999)). The four elements of a sale are "(1) parties competent to contract, (2) mutual assent, (3) a thing capable of being transferred, and (4) a price in money paid or promised." NTP, Inc., 418 F.3d at 1319 (quoting Black's Law Dictionary 1337 (7th ed.1999)).
Patentees contend that the construction agreement between Aurora and Garney fits this definition of a sale:
First, Aurora and Garney are competent to contract. Second, there has been mutual assent to enter into the Construction Agreement. Third, there is a thing capable of being transferred, namely, the North Campus facility "Work" that is the subject matter of the Construction Agreement, and which includes the infringing technology. . . . Fourth, the parties agreed to a price of $53,350,972.50 for the Work.
Patentees' Resp. at 7-8. Aurora and Garney's response focuses on the second and third elements. Because the Court concludes that the second elementthe mutual assent of the partiesis dispositive on the question of whether a sale occurred, the Court focuses on that issue.
The parties do not identify, and the Court is unable to find, Federal Circuit case law discussing the idea of "mutual assent" in the context of an infringing sale. Under general contract law, however, in order to have mutual assent of the parties, acceptance of an offer by the offeree must be complete and unqualified. See 1-3 Corbin on Contracts § 3.28 (2010); see also Cal Wadsworth Constr. v. City of St. George, 898 P.2d 1372, 1376 (Utah 1995); Parry v. Walker, 657 P.2d 1000, 1002 (Colo.App.1982) ("It is true that a purported acceptance which adds qualifications or requires performance of conditions is not an acceptance." (citing Restatement (Second) of Contracts § 60));[2]see also Bogley's Estate v. United States, 206 Ct. Cl. 695, 514 F.2d 1027, 1032 (1975); United States v. Mitchell, 104 F.2d 343, 346 (8th Cir.1939). While in many cases an offeree's conditional acceptance is viewed as a counter-offer, see, e.g., Restatement (Second) of Contracts § 59, the rationale for this is based on the requirement that the terms of the offer and the terms of the acceptance be identical. Such considerations are inapplicable to the present case; the putative offer and acceptance contain identical terms.
*1251 The issue here is that the construction agreement between Aurora and Garney has a mutually-agreed-upon provision detailing the manner in which eventual acceptance will be affordedthat is, upon Aurora's determination of a "satisfactory resolution" of the present matter. Cf. Restatement (Second) of Contracts § 60 ("If an offer prescribes the place, time or manner of acceptance its terms in this respect must be complied with in order to create a contract."). Therefore, although there is no suggestion of a counter-offer, mutual assent of the parties to terms of the agreement having to do with the Aquifer Recharge and Recovery facility is nonetheless in doubt.
The Utah Supreme Court, in somewhat similar circumstances, held that no contract was formed due to a lack of assent. In Cal Wadsworth Construction v. City of St. George, the court noted that "[a]n acceptance is a manifestation of assent to an offer, such that an objective, reasonable person is justified in understanding that a fully enforceable contract has been made." 898 P.2d 1372, 1376 (Utah 1995). The City Council of the City of St. George awarded a contract on condition that the contractor negotiate a reduction in the scope and price of the project. 898 P.2d at 1374. The court held that this condition meant that the city had not assented to the contract. Cal Wadsworth Construction, 898 P.2d at 1376-77. Just as the City in Cal Wadsworth Construction accepted a bid conditioned on a favorable resolution of a key issue, Aurora accepted Garney's bid to construct the Aquifer Recharge and Recovery facility on the condition that the facility not infringe the patentees' patents.
The facts of the present case differ somewhat from those in Cal Wadsworth Construction. For example, there is no indication in the Utah case that the city signed the construction agreement. However, the construction agreement in the present case reiterates the conditional nature of Aurora's acceptance. Another difference is that the construction agreement here speaks in terms of removing the Aquifer Recharge and Recovery component rather than adding it following the satisfactory resolution of the patent issues. In construing the agreement, courts often refuse to "exalt form over substance" in interpreting the impact of contract language. See, e.g., 3D Sys., Inc. v. Aarotech Labs., Inc., 160 F.3d 1373, 1379 (Fed.Cir. 1998). The apparent effect and intent of the condition in the construction agreement is that the deal regarding the construction of the Aquifer Recharge and Recovery facility would not be consummated until Aurora resolved the patent dispute. Indeed, the highly subjective nature of the provision"If in the sole judgment of the City such resolution is unfavorable to the City these project components may be eliminated, in whole or in part as best serves the City, from the Work prior to or after award of this contract"supports a reading that the parties had not reached a mutual agreement regarding the construction of the Aquifer Recharge and Recovery facility. Therefore, as was the case in Cal Wadsworth Construction, without some additional form of acceptance, there is no mutual assent to the portion of Garney's bid that deals with the Aquifer Recharge and Recovery facility.
In coming to this conclusion, the Court disagrees with the patentees that the "satisfactory resolution" of the patent issues surrounding the Aquifer Recharge and Recovery facility stands merely as a condition precedent in an otherwise properly-formed and binding contract. Even under patentees' definition, this condition does not qualify as a typical "condition precedent," whereby some outside event must occur or some third person must act. See Patentees' Resp. at 9 ("If parties make a contract under which neither has a duty to *1252 perform until the occurrence of some event, such as the raising of a stated amount of capital or the approval of a third person, that event is a condition of the duty of each party. Both parties are bound, although neither will have to perform if the event does not occur." (quoting E. Allan Farnsworth, Contracts § 8.2, at 540-41(1982) (emphasis omitted)). "Conditions precedent," as they are commonly perceived, consist of "those facts and events, occurring after the making of a valid contract, that must exist or occur before there is a right to immediate performance, before there is a breach of contract duty and before the usual judicial remedies become available." 8-30 Corbin on Contracts § 30.7 (2010) (emphasis in original).
The condition in the construction agreement regarding the "satisfactory resolution" of the patent issues is not a condition to performance. Instead, by requiring the approval of one of the parties, it is effectively a condition to the mutual assent of the parties regarding the construction of the Aquifer Recharge and Recovery facility. As such, it is a condition to formation of the contract itself. Until the necessary assent is given, neither side can enforce against the other the portion of the construction agreement that deals with the Aquifer Recharge and Recovery facility. Therefore, rather than being a condition to performancei.e., condition subsequent the construction agreement contains a condition to assenti.e., to the formation of the contract. Without formation, there is no contract; without a contract, there is no sale; without a sale, by definition there is no infringement.
Therefore, because the undisputed facts show that there has been no transfer of property or title for a price or an agreement by which such a transfer would take place, NTP, Inc., 418 F.3d at 1319, Garney is entitled to summary judgment on the patentees' counterclaim for infringement based on the sale of an infringing product.
2. Infringement Through Offer for Sale
The Federal Circuit has "defined liability for an `offer to sell' under section 271(a) `according to the norms of traditional contractual analysis.'" MEMC Elec. Materials, Inc. v. Mitsubishi Materials Silicon Corp., 420 F.3d 1369, 1376 (Fed. Cir.2005) (quoting Rotec Indus. v. Mitsubishi Corp., 215 F.3d 1246, 1255 (Fed.Cir. 2000)). Under this framework, in order for there to be an "offer for sale," the alleged infringer "must communicate a manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it." MEMC Elec. Materials, Inc., 420 F.3d at 1376 (quoting Rotec Indus., 215 F.3d at 1257 (Fed.Cir.2000) (quoting Restatement (Second) of Contracts § 24 (1979))) (quotation marks and alteration marks omitted).
Construction bids typically are considered to be offers. See 1-2 Corbin on Contracts § 2.3 (2010). Nothing about the present case convinces the Court that Garney's bid should be treated differently. The conditional nature of the bid on the Aquifer Recharge and Recovery facility that is, it dependence upon Aurora's decision that the patent dispute is satisfactorily resolveddoes not make Garney's offer any less real. If Aurora exercises its discretion by finding that the patent dispute has been satisfactorily resolved, Garney's offer will be accepted and the formation of the contract to build the Aquifer Recharge and Recovery facility will be complete. Furthermore, according to the documents, Aurora's acceptance of Garney's bid is left to "the sole judgment of the City" and is dependent on Aurora's perception of whether the resolution is "satisfactory" or "unfavorable." Aurora's broad discretion *1253 does not appear to be directly tied to a finding of non-infringement. In other words, under the construction agreement, Aurora could potentially determine that it would be a "satisfactory" or "favorable" resolution to risk proceeding despite infringement. Representations by the Aurora City Council and officials, see, e.g., Supplemental Br. in Supp. of Countercl.-Defs.' Mot. for Summ. J. of Noninfringement and Lack of Damages [Docket No. 188] at 7 (citing exhibits), only prove that their present position is that they will not proceed if the design infringes. Nothing prevents them from changing their minds. Therefore, Garney's bid to construct and deliver the Aquifer Recharge and Recovery facility could potentially infringe the patents at issue in this case as an offer for sale. At the very least, there is a fact question regarding whether Garney's bid communicated a manifestation of willingness to enter into a bargain, so made as to justify Aurora in understanding that its assent to that bargain is invited and will conclude it. See MEMC Elec. Materials, Inc., 420 F.3d at 1376.
The cases cited by Aurora and Garney do not compel a different result. The courts in both casesFieldTurf Int'l, Inc. v. Sprinturf, Inc., 433 F.3d 1366, 1370 (Fed.Cir.2006), and Natare Corp. v. Aquatic Renovation Sys., Inc., 99 F. Supp. 2d 986, 991 (S.D.Ind.2000)found that the bids at issue constituted offers for sale. However, the courts in FieldTurf and Natare found no infringement as a matter of law because the bids did not actually offer an infringing product. See FieldTurf Int'l, 433 F.3d at 1370; Natare Corp., 99 F.Supp.2d at 991. This latter issue proved to be the crux of those opinions.
In the present litigation, issues of infringement remain unresolved. Therefore, the Court is unable say as a matter of law that Garney did not infringe the '710 or the '218 Patents by offering an infringing product for sale. As a consequence, Garney's motion for summary judgment in this regard is denied.
The Court does note, however, that "as a matter of law, an offer to sell a device cannot infringe a method patent without evidence of the device's actual use to carry out the method." Embrex, Inc. v. Service Eng'g Corp., 216 F.3d 1343, 1352 (Fed.Cir.2000). The parties have identified Claim 14 of the '710 Patent, a method claim, as being at issue. The patentees have presented no evidence that Aurora or Garney have used any patented device. Garney is entitled to summary judgment on patentees' counterclaim for infringement through sale as it pertains to Claim 14.
3. Inducement of Infringement
"In order to succeed on a claim of inducement, the patentee must show, first that there has been direct infringement, and second, that the alleged infringer knowingly induced infringement and possessed specific intent to encourage another's infringement." MEMC Elec. Materials, Inc., 420 F.3d at 1378 (quoting Minnesota Mining & Mfg. Co. v. Chemque, Inc., 303 F.3d 1294, 1304-05 (Fed.Cir. 2002)) (quotation marks omitted). Therefore, there can be no inducement of infringement in the absence of an underlying direct infringement.
To the extent that the Court dismissed or granted summary judgment on the patentees' underlying claim of infringement against Garney, Aurora is entitled to similar relief on the patentees' claim of inducement. Pursuant to the discussion above, the patentees' claim that Aurora induced infringement by making or using a patented invention is dismissed. Because Garney is entitled to summary judgment on the patentees' direct infringement claim regarding an infringing sale and direct *1254 claim regarding the offer for sale of an infringing method, Aurora is entitled to summary judgment on the claim that it induced either of those alleged forms of infringement.
As for the patentees' contention that Aurora induced Garney's infringing offer for sale of other patent claims, the question of an underlying infringement remains unresolved at this point. That, together with the fact that a disputed question of material fact remains as to the second element of inducementthat the alleged infringer knowingly induced infringement and possessed specific intent to encourage another's infringementprecludes summary judgment on this claim.
B. Damages Theory
"Upon a showing of infringement, a patentee is entitled to `damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer.'" ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, 868 (Fed.Cir.2010) (quoting 35 U.S.C. § 284 (2006)). "Two alternative categories of infringement compensation are the patentee's lost profits and the reasonable royalty he would have received through arms-length bargaining." Lucent Technologies, Inc. v. Gateway, Inc., 580 F.3d 1301, 1324 (Fed.Cir.2009).
The patentees in the present case do not seek lost-profit damages. They claim instead that they are entitled to a reasonable royalty. While "[l]itigants routinely adopt several approaches for calculating a reasonable royalty," the patentees in the present case have settled on the "more common approach, called the hypothetical negotiation or the `willing licensor-willing licensee' approach" Lucent Technologies, Inc., 580 F.3d at 1324. Under this approach, "[a] `reasonable royalty' derives from a hypothetical negotiation between the patentee and the infringer when the infringement began." ResQNet.com, Inc., 594 F.3d at 868. Courts typically consult the "comprehensive (but unprioritized and often overlapping) list of relevant factors for a reasonable royalty calculation [that] appears in Georgia-Pacific Corp. v. United States Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y.1970)." ResQNet.com, Inc., 594 F.3d at 869 (Fed.Cir. 2010).
Aurora and Garney argue that the patentees' claim for damages fails as a matter of law because the patentees have not suffered any damages from the alleged offer for sale of the patented inventions in the '710 and '218 Patents. "In the Supreme Court's words, awarding damages through litigation attempts to assess `the difference between the patentee's pecuniary condition after the infringement, and what his condition would have been if the infringement had not occurred.'" Lucent Technologies, Inc., 580 F.3d at 1324 (quoting Yale Lock Mfg. Co. v. Sargent, 117 U.S. 536, 552, 6 S. Ct. 934, 29 L. Ed. 954 (1886)) (alteration marks omitted). Patentees have not suggested that there is any difference in their pecuniary condition based simply on Garney's allegedly infringing offer for sale. Nor have they offered evidence supporting a finding on any of the fifteen factors listed in Georgia-Pacific as they relate to Garney's allegedly infringing offer for sale. All of the evidence in the record having to do with damages is directed toward those that would be due as a result of the hypothetical constructioni.e., the making and useof the Aquifer Recharge and Recovery facility. None of it discusses the injury suffered or the royalty that would be due from an offer of sale alone.
"In patent law, the fact of infringement establishes the fact of damage because the patentee's right to exclude has been violated." Lindemann Maschinenfabrik *1255 GmbH v. Am. Hoist & Derrick Co., 895 F.2d 1403, 1406 (Fed.Cir.1990) (citing 5 Chisum on Patents § 20.03[3], at 20-142 (1986)). Once infringement is established, a patentee only bears the burden of proving the amount of damages. Lindemann Maschinenfabrik GmbH, 895 F.2d at 1406. Offers for sale do not appear to be the type of activity for which a royalty is typically negotiated. See Embrex, Inc. v. Service Eng'g Corp., 216 F.3d 1343, 1350 (Fed. Cir.2000) ("Royalties are ordinarily computed based upon the sales of a patented product or process."). However, it is conceivable that a patentee would negotiate a fee from a general contractor to allow the general contractor to include a patented invention in a construction bid. This royalty would compensate the patentee for the interest that the general contractor generates in its own product, which incorporates the patented invention and which, in turn, may decrease interest in the products of a patentee or its licensees. Cf. 3D Systems, Inc., 160 F.3d at 1379 ("One of the purposes of adding `offer to sell' to § 271(a) was to prevent . . . generating interest in a potential infringing product to the commercial detriment of the rightful patentee." (alteration marks omitted)). However, the patentees have offered no evidence to support the calculation of the amount of such a royalty and "a reasonable royalty analysis requires a court to hypothesize, not to speculate." ResQNet.com, Inc., 594 F.3d at 869.
Patentees argue that Aurora and Garney are not entitled to summary judgment on the damages question because a reasonable royalty is "the floor below which damages shall not fall." Lucent Technologies, Inc., 580 F.3d at 1324 (quoting Bandag, Inc. v. Gerrard Tire Co., 704 F.2d 1578, 1583 (Fed.Cir.1983)). "[T]he district court must award damages in an amount no less than a reasonable royalty." Dow Chemical Co. v. Mee Industries, Inc., 341 F.3d 1370, 1382 (Fed.Cir.2003); see also Lindemann Maschinenfabrik GmbH, 895 F.2d at 1406. Therefore, strictly speaking, once the fact of infringement has been proven, it would be error for a Court to determine that a patentee is not entitled to damages. See Lindemann Maschinenfabrik GmbH, 895 F.2d at 1407; Dow Chemical Co., 341 F.3d at 1382.
That being said, "the district court's obligation to award some amount of damages `does not mean that a patentee who puts on little or no satisfactory evidence of a reasonable royalty can successfully appeal on the ground that the amount awarded by the court is not `reasonable' and therefore contravenes section 284.'" Dow Chemical Co., 341 F.3d at 1382 (quoting Lindemann Maschinenfabrik GmbH, 895 F.2d at 1407). "At all times, the damages inquiry must concentrate on compensation for the economic harm caused by infringement of the claimed invention." ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, 869 (Fed.Cir.2010). "The burden of proving damages falls on the patentee." Lucent Technologies, Inc., 580 F.3d at 1324.
Therefore, patentees' failure to offer such evidence certainly could impact the Court's determination of the amount of a reasonable royalty. See Lindemann Maschinenfabrik GmbH, 895 F.2d at 1406-07. In fact, there is some support for Aurora and Garney's position that, in the absence of any evidence of a reasonable royalty, the Court may award no damages. See Devex Corp. v. General Motors Corp., 667 F.2d 347, 363 (3d Cir.1981) ("The statute requires the award of a reasonable royalty, but to argue that this requirement exists even in the absence of any evidence from which a court may derive a reasonable royalty goes beyond the possible meaning of the statute. Even if there is no burden of proof on the party seeking damages in this type of case to come forward with a reasonable royalty, there must at the least *1256 be enough evidence in the record to allow the factfinder to formulate a royalty.") (cited by Lindemann Maschinenfabrik GmbH, 895 F.2d at 1407). To avoid speculating as to a reasonable royalty, "the trial court must carefully tie proof of damages to the claimed invention's footprint in the market place." ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, 869 (Fed.Cir. 2010). In the present case, that means that the Court must be able to hypothesize, not speculate, what royalty the patentees would negotiate with a general contractor like Garney for the ability of that general contractor to include the patented inventions in a construction bid which may or may not be accepted. Based on the complete lack of evidence provided thus far, the Court is doubtful that it could engage in anything but a speculative exercise in determining a reasonable royalty for an offer of sale that infringes the '710 or '218 Patents.
At the same time, the Court is mindful of the admonishment of the Federal Circuit that a "reasonable royalty" sets the baseline below which damages may not go. Therefore, the Court will not grant Garney summary judgment on the question of damages for Garney's alleged infringing offer for sale until the infringement question is resolved.
The Court does, however, hold that Aurora and Garney are entitled to a ruling as a matter of law on one of their damages arguments. Aurora and Garney argue that the patentees are not entitled to the same damages under their offer for sale theory that they would be entitled to if Garney and Aurora had constructed and used an infringing structure. Aurora and Garney are correct. Based on their claim of infringement through an offer for sale, the patentees would be entitled to only those damages that resulted from the infringing offer. See ResQNet.com, Inc., 594 F.3d at 869 ("At all times, the damages inquiry must concentrate on compensation for the economic harm caused by infringement of the claimed invention."). The reasonable royalty patentees seek for the alleged infringing offer for sale will represent the price, if any, the parties would have negotiated for Garney to include the inventions of the '710 or '218 Patents in its bid. The Aquifer Recharge and Recovery Facility has not been constructed. Therefore, any reasonable royalty will not encompass a royalty for the actual construction or use of the patented inventions in the '710 and '218 Patents. Furthermore, patentees' evidence, including the report and testimony of Mr. Kleeman, which calculates a reasonable royalty for the construction and use of the Aquifer Recharge and Recovery, is irrelevant to the question of damages for an offer for sale of an infringing facility. Therefore, the patentees may not use the evidence discussed here to establish a reasonable royalty for Garney's alleged infringement by offer for sale or Aurora's alleged inducement of that infringement.
C. Exclusion of Evidence and Theories of Recovery
The Court's ruling above effectively excludes patentees' damages evidence to the extent that patentees would use it to establish a reasonable royalty for an infringing offer for sale. Aurora and Garney also argue that the patentees should be precluded from asserting a claim for infringement through sale or offer for sale because the patentees did not disclose these theories in a timely manner. Reply in Supp. of Mot. to Dismiss Defs.' Counterclaim for Lack of Subject Matter Jurisdiction [Docket No. 177] at 9. Because the Court disposed of the infringement-through-sale theory above, the focus here is limited to the offer-for-sale theory.
*1257 Aurora and Garney argue that they were not made aware of the patentees' offer-for-sale and inducement theories until the parties conferred regarding the present motion. Patentees contend that their counterclaim, together with the course of discovery in this case, put Aurora and Garney on notice of these theories of infringement. In support of their contention, patentees cite the following factual averments in their counterclaim complaint:
Upon information and belief, Aurora solicited construction bids for the underground reservoir in November, 2007, including a bid from Garney.
On or about March 20, 2008, Aurora and Garney entered into a written Construction Agreement to build the underground reservoir. Aurora produced a copy of the written Construction Agreement to PS Systems on or about September 18, 2008. The construction price is $53,350,972.50[.]
Despite Aurora and Garney's knowledge of the '710 and '218 Patents, and in derogation of the rights of PS Systems, Aurora solicited bids for construction of the underground reservoir, Garney submitted a bid for construction of the underground reservoir, Aurora and Garney entered into the Construction Agreement, and Aurora and Garney have commenced construction. Therefore, Aurora and Garney actions are willful.
Countercl. at 8-9 ¶¶ 13, 14, 19; see Patentees' Resp. at 5. Patentees then claimed that "[b]y their actions alleged above, Aurora and Garney, both collectively and individually, have been and are infringing the '710 and '218 Patents, either directly, contributorily or by inducing others to infringe the '710 and '218 Patents." Countercl. at 9 ¶ 23.
However, several of the patentees' averments indicate that this broad language refers instead to the using or making of an allegedly infringing device. For example, patentees state that "Aurora is currently constructing the Prairie Waters Project, which includes an underground reservoir and related infrastructure (collectively `underground reservoir.')" Countercl. at 7-8 ¶ 12. The references to damages in the patentees' complaint also appear to assume infringement through construction of the Aquifer Recharge and Recovery facility:
Upon information and belief, the minimum construction cost savings alone to Aurora of building the underground reservoir according to PS Systems' patented technologies is approximately $50 million.
The Prairie Waters Project, of which the underground reservoir is a component, will result in significant financial benefits and/or cost savings to Aurora. Aurora claims on its project website that "the Prairie Waters Project will capture water rights the city already owns that are worth more than $300 million, which means we will not need to acquire resources from other water rights holders, saving the city money."
Under a 25 to 33% of cost savings "rule of thumb" analysis, a reasonable royalty in this case may be at least $75 million to $100 million.
Countercl. at 8-9 ¶¶ 15, 16, 20.
The final pretrial order, which supersedes all other pleadings, does not provide any clearer indications regarding the theories underlying the patentees' claim of infringement. In describing the patentees' claim, the final pretrial order states that patentees "assert a counterclaim for patent infringement that [Aurora and Garney] ha[ve] willfully infringed the '710 and '218 Patents by direct infringement under 35 U.S.C. § 271(a), actively inducing infringement under 35 U.S.C. § 271(b), and/or by contributory infringement under 35 U.S.C. § 271(c)." Final Pretrial Order [Docket No. 110] at 5.
*1258 The language in patentees' counterclaim complaint and in the final pretrial order is a broad, scattershot recitation of the legal bases for a wide array of infringement claims. Not only does the language fail to indicate which claim or claims it brings against which party, it also specifically alleges infractions of which no party is presently accused, for example, contributory infringement under 35 U.S.C. § 271(c). The averred facts do not provide a clear indication either; the words "offer," "sale," or "sell" do not appear anywhere in the patentees' counterclaim complaint. That being said, and despite the fact that the patentees' factual averments and descriptions of their claim are ambiguous, the allegations nonetheless encompass theories of infringement by offer for sale and the inducement thereof. Thus, the counterclaim provides enough notice of an infringement theory based on an offer for sale and inducement of that offer that the Court may not dismiss the counterclaim based solely upon the patentees' pleading. Therefore, the patentees may proceed under these theories unless Aurora and Garney are correct that the patentees' discovery responses should preclude such a claim.
After the patentees filed their counterclaim, the parties engaged in additional discovery. That discovery was limited to the issue of damages. The patentees claim that their disclosures during this limited additional discovery put Aurora and Garney on notice of the offer-for-sale theory of infringement. The Court disagrees. For example, the patentees' second supplemental Rule 26(a)(1) disclosures asserted damages in the form of a reasonable royalty for infringement in the amount of $89,349,000, an additional $178,698,000 in treble damages, and undetermined attorneys' fees, costs, and interest. See Mot. to Dismiss, ex. D at 2-3. According to that disclosure, the enumerated damages figures were based on the expert report of Robert Kleeman. The disclosure tracked Mr. Kleeman's report and disclosed damages in three categories: (1) "damages due to the [Aquifer Recharge and Recovery] Construction"; (2) "damages related to the cost saving of not building a reverse osmosis facility"; and (3) "damages related to ongoing savings." See Mot. to Dismiss, ex. D at 2-3. The disclosure makes no reference to a reasonable royalty due to an infringing offer for sale generally or, more specifically, to the amount Garney would have had to pay in order to include the patented inventions in its bid on the Aquifer Recharge and Recovery unit.
The report upon which patentees based their Rule 26(a)(1) disclosures and the deposition testimony of the report's author, Mr. Kleeman, do not advance the patentees' argument that they disclosed the offer for sale theory and the damages related to it. As the patentees describe it, they
served [their] expert report on damages on March 31, 2009. Mr. Robert Kleeman calculated a reasonable royalty as of the date infringement began pursuant to a hypothetical negotiation between the patent owner and the infringer. [Patentees' Resp., ex. D]. Before serving a rebuttal expert report on damages, Aurora and Garney took Mr. Kleeman's deposition, where he stated that the [sic] he assumed that the date of infringement, and therefore the date of the hypothetical negotiation was, at the earliest, the date Aurora solicited the infringing bids (November, 2007), but no later than the date of the Construction Agreement (March 20, 2008). (Ex. H, pp. 157-59).
Patentees' Resp. at 13-14.
Nothing in Mr. Kleeman's report addresses Aurora and Garney's argument that the patentees failed to disclose their offer for sale theory of recovery. The *1259 Kleeman report contains the following preface:
We have been asked to provide an opinion of what the appropriate royalty base and rate would be. In arriving at our conclusions, we have assumed that the patents in question are valid, and that the City of Aurora and Garney, as part of the Prairie Waters Project, are infringing on those patents. We are not experts on either of these issues, and therefore, this report relies on these assumptions and they are not addressed in this report.
Patentees' Resp. ex. D at 5 (internal pagination at 1).
In describing the nature and amount of damages, Mr. Kleeman does not calculate the damages based on an offer for sale. Instead the report identifies only two types of damages:
[i]t is our opinion that there are two distinct benefit streams that should be reviewed to determine the base benefit stream that a reasonable royalty would be applied to. These two benefit streams are Cost Savings, both at the beginning of the project, as well as the continued operation of the enterprise, and operating income of the enterprise over the course of the infringement.
Patentees' Resp. ex. D at 6 (internal pagination at 2). Regarding the former, Mr. Kleeman states that "PS Systems has alleged that the ARR portion of the system being used for the Prairie Waters Project infringes on the patents held by PS Systems. Specifically, PS Systems has alleged that the construction of the underground reservoir is an infringement of the patents." Patentees' Resp. ex. D at 7 (internal pagination at 3) (emphasis added). Therefore, rather than revealing an offer for sale theory of infringement, Mr. Kleeman's report reinforces Aurora and Garney's perception that the patentees' claim was based on theories of infringement through the using or making of the patented technology.
Mr. Kleeman's deposition testimony is somewhat less tied to the actual construction of an infringing structure. When asked when he thought the infringement occurred, Mr. Kleeman responded that "the moment they signed the contract with Garney, . . . the City gained the benefit of the bargain." Patentees' Resp., ex. H at 8 (internal pagination at 158 ll. 4-6). When asked the same question later, Mr. Kleeman first made clear that he was not qualified to opine as to what constituted infringement. He then explained that for purposes of his damages calculation he assumed an infringement on
either of two dates, the date that the City put the bids out specifying the infringing technology, that would be the earliest date in my opinion, but no later than the date the contract was signed because at that time they had reached a deal, again with my hypothetical, what it is infringing, at the date of the contract signing the infringement takes place and the benefit to the City becomes immediate.
Patentees' Resp., ex. H at 9 ll. 15-22). Based on this excerpt of Mr. Kleeman's testimony, it could be inferred that the patentees' theory of recovery was based on an act prior to the construction of the Aquifer Recharge and Recovery facility. However, even this generous reading only suggests infringement by sale; it does not hint at a theory of infringement through Garney's alleged offer of sale. As evidence of this, Mr. Kleeman only discusses a benefit to Aurora, not a benefit to the alleged offeror and infringer, Garney.
The patentees' reading of Mr. Kleeman's deposition testimony is at odds with the statements and the reasoning in his report. As discussed above, the report assumed that the infringement consisted of "the *1260 construction of the underground reservoir . . . ." Patentees' Resp. ex. D at 7 (internal pagination at 3); see also Patentees' Resp. ex. D at 12 (internal pagination at 8) ("The technology provides several advantages to [Aurora]. The first is in initial cost savings on the construction of portions of the system."). More importantly, the damage calculation assumes a royalty based on construction, not based on an offer for sale. In discussing the calculation of the rate of damages, Mr. Kleeman explained that "[i]t is our opinion that the overall royalty rates that would be negotiated related to the patented technology would fall into three distinct categories: The cost savings related to the construction of the ARR, the construction cost savings related to the production of a reverse osmosis facility, and the long term cost savings related to not operating a reverse osmosis facility as part of the Prairie Waters Project." Patentees' Resp. ex. D at 17 (internal pagination at 13); see also Patentees' Resp. ex. D at 18-19 (internal pagination at 14-15). There is no indication in his report or elsewhere how any of these considerations would work into a negotiation to include the patented technology in a general contractor's bid. The royalty amounts suggested by Mr. Kleeman$15,174,000, $50,000,000, and $24,175,000also suggest a royalty for use of the patented technology, not for the offering for sale of that technology in a bid or offer which may or may not be accepted by the offeree.
The patentees also rely on their disclosures surrounding their technical expert, Christopher Lidstone. The patentees explain that they provided his "expert report opining that Aurora's proposed system infringed both patents and furnished a detailed, technical claim chart that demonstrated infringement on an element-by-element basis." Patentees' Resp. at 13 (citing Patentees' Resp., ex. G ¶ 5.1 & Att. F). The patentees then note that "Aurora deposed Mr. Lidstone," Patentees' Resp. at 13, the inference being that the Lidstone report put Aurora and Garney on some sort of notice regarding patentees' infringement theories, but Aurora and Garney chose not to pursue the issue further. However, the cited portions of the Lidstone report give no such notice. Instead, they rebut an opposing expert's opinion that the Aquifer Recharge and Recovery facility, if built, would not infringe the '710 or '218 Patents. Lidstone makes no reference to the potential form of infringement, i.e., the making, using, selling, offering for sale, or importing the patented invention. Therefore, the Lidstone report did not serve as notice of a theory of damages or infringement based on an offer for sale and the inducement of that offer.
The patentees also suggest that the circumstances surrounding the filing of their counterclaim serve as a sufficient indication that they were challenging an offer for sale. The patentees contend that in their motion to dismiss and their interrogatory responses prior to their counterclaim they argued that no infringement based on construction had occurred. See Patentees' Resp. at 13. The patentees claim that "[u]pon learning of their infringement, PS Systems immediately counterclaimed against Aurora and Garney," Patentees' Resp. at 2, the implication being that Aurora and Garney should have known that the patentees did not allege infringing use or construction, but rather complained of the recently disclosed agreement.
It is true that patentees stated in a May 30, 2008 interrogatory response that "[o]n information and belief, and according to Plaintiff's complaint, Plaintiff has not yet built any apparatus or practiced any method that would infringe any claim of the '710 Patent." Patentees' Resp., ex. F [Docket No. 170-11] at 3 (internal pagination at 2). Based on this belief, the *1261 patentees "therefore moved to dismiss Plaintiff's complaint" arguing that there was no justiciable controversy. Patentees' Resp., ex. F [Docket No. 170-11] at 3 (internal pagination at 2) (referring to Defs.' Mot. to Dismiss [Docket No. 7]. It is also true that on September 18, 2008, the patentees first received evidence that Aurora and Garney signed a construction agreement.
However, the patentees neglect to mention an important event that occurred at that same time. On September 19, 2008, the Court denied patentees' motion to dismiss, based in part on the fact that "the plans have been finalized, the construction has begun on the Project and there is a definite timetable for the Project to be operational." City of Aurora, 2008 WL 4377505, at *10. The patentees filed their answer and counterclaim complaint on October 3, 2008, the date they were required to filed a responsive pleading to Aurora's complaint under the Federal Rules of Civil Procedure.
Patentees suggest that Aurora and Garney should have deduced from this course of events that the patentees' infringement claim was based on an alleged sale and offer for sale. The Court disagrees. Aurora first put the Prairie Waters Project out to bid and filed its complaint in November 2007. Aurora stated as much in a January 31, 2008 response to the patentees' aforementioned motion to dismiss. In that same response, Aurora further explained that it intended to award the contract for the Aquifer Recharge and Recovery unit in February 2008. See Pl.'s Resp. to Mot. to Dismiss [Docket No. 18] at 2-3. On March of that year, it did so. Despite these facts, on May 30, 2008, in responding to Aurora's interrogatories, the patentees stated that they believed that no infringement had occurred because nothing had been built yet. The patentees made no mention of an infringing sale or offer for sale or inducement of either. In fact, even after they received a copy of the construction agreement which discussed the Aquifer Recharge and Recovery system, the patentees cannot cite to a single instance in which they used the words "offer," "sell," or "sale" in describing Aurora's or Garney's infringing acts.
While the Court concludes that the patentees' counterclaim can be read broadly to allege offer-for-sale infringement by Garney and inducement of that infringement by Aurora, the patentees' disclosures since the filing of their counterclaim have effectively narrowed its scope. Moreover, patentees have failed to provide disclosure of their experts' opinions in that regard. In short, the patentees' failure to disclose the fact that they sought damages for an infringing offer for sale led Aurora and Garney to believe that the broad counterclaim language did not encompass an offer for sale and inducement thereof.
"If a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless." Fed.R.Civ.P. 37(c)(1). "This sanction is mandatory unless the non-disclosing party shows a substantial justification or that the failure to disclose was harmless." Cook v. Rockwell, 233 F.R.D. 598, 600 (D.Colo.2005). The patentees have not shown any justification for their failure to disclose the bases of their offer for sale and inducement theories. Furthermore, far from being harmless, allowing any such undisclosed evidence to be used at trial would greatly prejudice Aurora and Garney. Trial is two weeks away and the patentees still have not disclosed the basis for a damages calculation relating to an offer for sale.[3]
*1262 Furthermore, in addition to sanctioning the patentees by excluding damages evidence, the Court has the authority, based on Aurora and Garney's motion, see Mot. to Dismiss at 9, to impose additional sanctions for a party's failure to disclose materials covered by Rules 26(a) and (e). Fed. R.Civ.P. 37(c)(1). Some of those additional sanctions are enumerated in Rule 37(b)(2)(A)(i) through (vi). See Fed. R.Civ.P. 37(c)(1)(C). Rule 37(b)(2)(A)(ii) permits the Court to sanction delinquent parties by "prohibiting [them] from supporting or opposing designated claims or defenses, or from introducing designated matters in evidence."
Because the result of patentees' failure to disclose a basis for offer-for-sale damages was to lead Aurora and Garney to believe that such a claim was not at issue in this case, the Court is justified in precluding all evidence related to an offer-for-sale claim of infringement pursuant to Federal Rule of Civil Procedure 37(c)(1) and 37(b)(2)(A)(ii). By doing so, the Court is essentially precluding the patentees from pursuing their counterclaim for offer-for-sale infringement and for inducement of that offer. The Court also finds that, because Aurora and Garney reasonably believed that they did not face an infringement claim based on an offer for sale, it is also appropriate to consider striking or dismissing the counterclaim. See Fed. R.Civ.P. 37(b)(2)(A)(iii) & (v).
"A decision to sanction a litigant pursuant to Fed.R.Civ.P. 37 is one that is not unique to patent law and we therefore apply regional circuit law to that issue." ClearValue, Inc. v. Pearl River Polymers, Inc., 560 F.3d 1291, 1304 (Fed. Cir.2009) (quoting Transclean Corp. v. Bridgewood Servs., Inc., 290 F.3d 1364, 1370 (Fed.Cir.2002) (omission marks omitted)). In the Tenth Circuit, in deciding whether to dismiss a case or claim as a sanction under Rule 37(b), a court must apply the five factors set out in Ehrenhaus v. Reynolds, 965 F.2d 916 (10th Cir.1992). See Garcia v. Berkshire Life Ins. Co. of Am., 569 F.3d 1174, 1179 (10th Cir.2009). These factors include: (1) the amount of actual prejudice to the opposing party; (2) the degree of interference with the judicial process; (3) the litigant's culpability; (4) whether the litigant was warned in advance that dismissal was a likely sanction; and (5) whether a lesser sanction would be effective. Ehrenhaus, 965 F.2d at 921.
The amount of actual prejudice to Aurora and Garney from having to defend against patentees' offer-for-sale infringement claim would be substantial. This case has been litigated for nearly three years. Trial is set to begin in two weeks. Aurora and Garney would not have sufficient time before trial to prepare a defense against such a claim. The only other choice would be to continue the trial. Although Aurora and Garney appear to prefer a continuance over having to proceed to trial unprepared, the patentees have repeatedly stated that they do not want the trial to be continued. Neither does the Court; resetting this ten-day trial would interfere with other trials and other matters before the Court. Therefore, the first two factors weigh in favor of dismissal of the patentees' counterclaim for infringement by an offer-for-sale and the inducement of that offer.
As for the question of litigant's culpability, this factor also leans in favor of dismissal of the patentees' counterclaim. The patentees did not raise this theory until they were faced with dismissal of their claim for infringement from the making or *1263 using a patented invention. It appears that once the patentees discovered that their previous theories were flawed, they attempted, at the last moment, to shift gears and change theories. The patentees' failure to anticipate this result is no one's fault but their own.
Turning to the fourth factor, the only warning that the patentees received that this claim might be dismissed came in Aurora and Garney's present motion to dismiss. Although this does not constitute much advance warning, the blame for this fact rests on the patentees and their late disclosure. No litigant can expect that a late-disclosed theory will be admitted at trial. Finally, no lesser sanction would be effective. In fact, as the Court explained previously, most lesser sanctions such as excluding evidence would have the same ultimate effect: precluding the patentees from proceeding with their counterclaim. The only other alternative, continuance, is not effective as a sanction and otherwise fails to serve the interests of the parties and the Court.
III. CONCLUSION
In accordance with the foregoing, it is
ORDERED that the City of Aurora and Garney Construction's combined motion to dismiss and motion for summary judgment [Docket No. 149] is GRANTED as follows:
PS Systems, Inc. and RAR Group, LLC's counterclaim and third-party claim for direct and indirect infringement of the '710 and '218 Patents through the using or making of an infringing invention is DISMISSED without prejudice for lack of subject-matter jurisdiction;
The City of Aurora and Garney Construction are entitled to summary judgment on PS Systems, Inc. and RAR Group, LLC's counterclaim and third-party claim for direct and indirect infringement of the '710 and '218 Patents through the sale of an infringing invention;
The City of Aurora and Garney Construction are entitled to summary judgment on PS Systems, Inc. and RAR Group, LLC's counterclaim and third-party claim for direct and indirect infringement of Claim 14 of the '710 Patent through the offering for sale of an infringing invention;
As a sanction pursuant to Federal Rule of Civil Procedure 37(c)(1) and 37(b)(2)(A)(iii) & (v), patentees' claim that Garney infringed the '710 or '218 Patents by offering for sale an infringing product and that Aurora induced that infringement, is DISMISSED;
The motion is DENIED in all other respects. It is further
ORDERED that any Final Judgment entered upon resolution of all claims against all parties shall reflect the rulings in this order.
NOTES
[1] Although the claim against Garney is more appropriately considered a third-party claim than a counterclaim, for ease of reference going forward, the Court refers to both the third-party claim against Garney and the counterclaim against Aurora as the "counterclaim," which is the way the patentees have labeled it in their pleading. See Defs. & Counterclaimants' Answer & Countercl. [Docket No. 55].
[2] While the actual citation is to Restatement (Second) of Contracts § 60, the Reporter's Note indicates that § 60 was renumbered to what appears to be the section referenced in the case, § 59.
[3] At a June 16, 2010 hearing the Court granted on similar grounds patentees' motion [Docket No. 146] to exclude as untimely a number of examples of prior art disclosed by Aurora [Docket No. 224].
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511 S.E.2d 534 (1999)
236 Ga. App. 77
TUKES
v.
The STATE.
No. A99A0061.
Court of Appeals of Georgia.
January 25, 1999.
Certiorari Denied May 14, 1999.
*535 Carey & Dobson, Emerson Carey, Jr., Garland & Milam, Richard G. Milam, Jackson, for appellant.
Tommy K. Floyd, District Attorney, for appellee.
*536 ELDRIDGE, Judge.
Following a bench trial in the Superior Court of Butts County, the trial judge found Norbert Tukes guilty of trafficking in cocaine. He appeals from the conviction, and we affirm.
1. Tukes first contends that the stop of his vehicle was unsupported by probable cause. We disagree.
The record shows that the arresting officer in this case was on routine traffic patrol. The officer passed Tukes' car going in the opposite direction, and he observed that Tukes was not wearing a seat belt. The officer turned around and followed Tukes' vehicle. He observed that Tukes' county decal was partly obscured by the license plate's frame. As the officer followed Tukes' car, the vehicle "drifted fromturned from the slow lane to the middle lane in traffic, vehicles coming up from the rear traveling to his left and then went back into the slow lane without signaling." The officer then conducted a traffic stop.
"As a general matter, the decision to stop an automobile is reasonable where the police have probable cause to believe that a traffic violation has occurred. [Cits.]" Whren v. United States, 517 U.S. 806, 810, 116 S. Ct. 1769, 135 L. Ed. 2d 89 (1996); Hines v. State, 214 Ga.App. 476, 477, 448 S.E.2d 226 (1994). In this case, any one of the traffic violations observed by the officer would have provided probable cause to effectuate a stop of Tukes' car.[1]
Moreover, "[a] trial court's order on a motion to suppress will not be disturbed if there is any evidence to support it, and the trial court's decision with regard to questions of fact and credibility must be accepted unless clearly erroneous. [Cit.]" Hobdy v. State, 222 Ga.App. 625, 626, 475 S.E.2d 686 (1996). The trial court specifically found that the traffic stop was not pretextual and that there were other vehicles in the immediate area of Tukes' vehicle when he made the unsafe lane change without using a signal. Compare Bowers v. State, 221 Ga.App. 886, 887-888, 473 S.E.2d 201 (1996). As these findings are supported by the record, the trial court's denial of the motion to suppress based upon an allegedly improper traffic stop was not clearly erroneous.
2. Next, Tukes challenges (a) the search of his person as exceeding the scope of a Terry[2] search, and (b) the seizure of the cocaine as pursuant to an illegal arrest. This challenge is meritless.
After the proper stop of Tukes' vehicle, the officer approached the car and asked Tukes for his license and proof of insurance. Tukes was "acting real fast, his speech was kind of nervous and stammering." As the officer looked through the driver's window, he immediately saw a large, bulky object protruding from the inside of Tukes' pants and covered by his shirt; the object was apparent even when Tukes was sitting behind the wheel of the car. The officer testified that "I thought I was looking at something that Mr. Tukes was so concerned about that he had to hide it under his pants and that I realized that the possibilities are endless. The major safety concern would be a weapon, but it could be contraband, it could be other." The officer asked Tukes to exit the vehicle.
From the record it appears that Tukes is an obese man, and the bulge from the concealed object became "very obvious" when Tukes exited the car. The object bounced when Tukes walked. The officer asked Tukes if he was concealing something in his pants, and Tukes replied "no." The officer knew this to be a lie. The officer patted the bulging object. The nature of the object as contraband became immediately apparent to the officer. The officer testified that, while he could not narrow down the specific drug concealed in Tukes' pants, he knew that the concealed object was contraband based on: (1) his many years of experience in recognizing *537 and recovering contraband; (2) Tukes' nervous demeanor; (3) Tukes' obviously false assertion that an object was not concealed in his pants; (4) the package-like feel of the object; and (5) the fact the officer had "encountered similar bulky objects like that[.]"
Thereafter, the officer secured Tukes with handcuffs. From Tukes' pants, the officer removed a taped package containing 237.7 grams of 81 percent pure cocaine.
(a) "[A] law enforcement officer, for his own protection and safety, may conduct a patdown to find weapons that he reasonably believes or suspects are then in the possession of the person he has accosted." (Citations and punctuation omitted.) Hodges v. State, 217 Ga.App. 806, 808(2), 460 S.E.2d 89 (1995).
We find that the officer's initial observation of the bulky object so obviously concealed in Tukes' pants while Tukes was still behind the wheel, together with Tukes' nervous demeanor, provided a sufficient basis for the officer to remove him from the vehicle and conduct a patdown of his person for the officer's safety. Thompson v. State, 230 Ga.App. 131, 132-133, 495 S.E.2d 607 (1998). Thus, in this case, the Terry patdown was lawful.
Further, under what has been deemed the "plain feel" doctrine, "[i]f a police officer lawfully pats down a suspect's outer clothing and feels an object whose contour or mass makes its identity immediately apparent, there has been no invasion of the suspect's privacy beyond that already authorized by the officer's search for weapons; if the object is contraband, its warrantless seizure would be justified by the same practical considerations that inhere in the plain-view context." Minnesota v. Dickerson, 508 U.S. 366, 375-376, 113 S. Ct. 2130, 124 L. Ed. 2d 334 (1993); Seaman v. State, 214 Ga.App. 878, 449 S.E.2d 526 (1994). Accordingly, contraband identified through an officer's sense of touch in the course of a lawful Terry patdown may be seized. Howard v. State, 220 Ga. App. 579, 581-582, 469 S.E.2d 746 (1996).
Here, the officer testified that, based upon his experience as well as the other factors enumerated above, he knew immediately on touching the bulky object concealed in Tukes' pants that the object was contraband. It was unnecessary for the officer to "conclusively identify" what type of drug Tukes was carrying in order for the "plain feel" doctrine to make the seizure of the contraband lawful. Id. at 582, 469 S.E.2d 746. "Under the `plain feel doctrine,' the officer was entitled to seize the item and the evidence was properly admitted. He was not compelled to ignore what was apparent to him upon feeling the object and to walk away instead. [Cits.]" Andrews v. State, 221 Ga. App. 492, 493, 471 S.E.2d 567 (1996). The trial court determined that the seizure of the cocaine was lawful. Based on the record, we do not find such determination clearly erroneous, and the motion to suppress was properly denied.
(b) Contrary to Tukes' assertion, under the facts of this case, it was proper for the officer to secure Tukes prior to retrieving the contraband from his clothing. Assuming, without deciding, that Tukes was arrested when the officer secured him, the officer knew that Tukes was concealing contraband. "A warrantless arrest is constitutionally valid if, at the moment the arrest is made, the facts and circumstances within the knowledge of the arresting officers and of which they had reasonably trustworthy information were sufficient to warrant a prudent man in believing that the accused had committed or was committing an offense." (Citations and punctuation omitted.) Brown v. State, 190 Ga.App. 38, 40, 378 S.E.2d 357 (1989). By its nature, knowledge sufficient to satisfy the "plain feel" doctrine, i.e., knowledge that a concealed object is contraband, provides sufficient probable cause to arrest. In this case, "[t]he facts and circumstances within the knowledge of the officer[ ] were sufficient to warrant a prudent man in believing that [Tukes] had committed an offense. [Cits.]" Clark v. State, 212 Ga.App. 486, 487-488, 441 S.E.2d 885 (1994). There was no error.
3. As the officer turned Tukes around in order to secure him with handcuffs, he referenced the package concealed in Tukes' pants, asking "Marijuana?" Tukes allegedly replied "Cocaine." Tukes contends *538 that this statement was made without benefit of Miranda[3] warnings and thus was improperly admitted at trial.
Even assuming that the above statement could be considered an in-custody statement made without benefit of Miranda, we do not find reversible error in its admission. Immediately after the statement was made, the officer determined that the concealed package contained cocaine, thereby making the statement simply cumulative of that inevitable discovery. Further, since the cocaine was recovered from the inside of Tukes' pants, the contested statement was also cumulative as to knowledge and intent. Accordingly, "[t]his enumeration provides no grounds for reversal as any error in admission of these statements was not only cumulative of other admissible evidence, it is harmless because of overwhelming evidence of defendant's guilt." (Citation omitted.) Wright v. State, 216 Ga.App. 486, 455 S.E.2d 88 (1995).
Judgment affirmed.
POPE, P.J., and SMITH, J., concur.
NOTES
[1] See OCGA §§ 40-8-76.1; 40-2-31(e); 40-6-123(b); Buffington v. State, 229 Ga.App. 450, 494 S.E.2d 272 (1997); Temples v. State, 228 Ga.App. 228, 491 S.E.2d 444 (1997). See also State v. Wright, 221 Ga.App. 202, 204(3), 470 S.E.2d 916 (1996).
[2] Terry v. Ohio, 392 U.S. 1, 88 S. Ct. 1868, 20 L. Ed. 2d 889 (1968).
[3] Miranda v. Arizona, 384 U.S. 436, 86 S. Ct. 1602, 16 L. Ed. 2d 694 (1966).
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355 S.W.3d 296 (2011)
FAIRWAYS OFFSHORE EXPLORATION, INC., Appellant,
v.
PATTERSON SERVICES, INC. and Cudd Pressure Control, Inc., Appellees.
No. 01-11-00079-CV.
Court of Appeals of Texas, Houston (1st Dist.).
July 21, 2011.
*298 Christina Elise Ponig, Ileana M. Blanco, Mark Allen White, DLA Piper LLP (US), Houston, TX, for Appellant.
H. Dwayne Newton, Newton Jones & Spaeth, Houston, TX, Michael H. Bagot, Thomas A. Rayer Jr., Pan American Life Center, Ste 1660, New Orleans, LA, for Appellees.
Panel consists of Justices JENNINGS, HIGLEY, and BROWN.
ORDER
TERRY JENNINGS, Justice.
Judgment creditors, Patterson Services, Inc. ("Patterson") and Cudd Pressure Control, Inc. ("Cudd"), have filed in this Court a Motion for Enlargement of Supersedeas Bond,[1] challenging the trial court's order setting the amount of the bond filed by judgment debtor, Fairways Offshore Exploration, Inc. ("Fairways"), to suspend enforcement of the underlying judgment against it. Patterson and Cudd contend that the trial court erred in not including in its calculation of the amount of the supersedeas bond its award of attorney's fees to Patterson and Cudd and its award of prejudgment interest on the damages awarded to Patterson on its negligence claim.
We grant Patterson and Cudd's motion and order the supersedeas bond increased to include the amount of the trial court's award of attorney's fees to Patterson and Cudd and prejudgment interest to Patterson.
Background
In its judgment, the trial court awarded Patterson $375,426.30 as actual damages on its negligence claim, $521,427.05 as actual damages on its breach of contract claim, $99,022.44 as pre-judgment interest on its actual damages, $385,000 for its attorney's fees expended through trial, and $7,387.40 in court costs. The trial court awarded Cudd $198,079.28 as actual damages on its breach of contract claim, $21,924.39 as pre-judgment interest on its actual damages, $312,375 for its attorney's fees expended through trial, and $4,748.78 in court costs.
Fairways initially filed a supersedeas bond in the amount of $1,162,422.25, plus *299 post-judgment interest at the rate of five percent (5%) for one year from the date of judgment, to secure the contract and negligence damages awarded to Patterson, the contract damages awarded to Cudd, and the post-judgment interest awarded to both Patterson and Cudd. Patterson and Cudd then filed a motion, requesting that the trial court increase the amount of supersedeas bond to secure the trial court's awards of attorney's fees and prejudgment interest. The trial court granted this motion in part, ordering the amount of the bond increased by $79,495.65 to secure the portion of the prejudgment interest awarded to Patterson ($57,571.26) and Cudd ($21,924.39) for their respective contract damages. The amount of the bond, as increased by the trial court's order, did not secure the trial court's award of attorney's fees to Patterson and Cudd or its award of prejudgment interest to Patterson for its negligence damages.[2]
Standard of Review
On the motion of a party, an appellate court may review the sufficiency or excessiveness of the amount of bond set by a trial court to secure payment of a money judgment during the pendency of an appeal in a civil case. TEX. CIV. PRAC. & REM.CODE ANN. § 52.006(d) (Vernon Supp. 2010); TEX.R.APP. P. 24.4(a). We review the trial court's determination of the amount of security under an abuse of discretion standard. Ramco Oil & Gas, Ltd. v. Anglo Dutch (Tenge) L.L.C., 171 S.W.3d 905, 909 (Tex.App.-Houston [14th Dist.] 2005, no pet). Generally, the test for abuse of discretion is whether the trial court acted without reference to any guiding rules and principles or whether the trial court acted arbitrarily and unreasonably. See McDaniel v. Yarbrough, 898 S.W.2d 251, 253 (Tex.1995). However, a trial court has no discretion in determining what the law is and applying the law to the facts. See Gonzalez v. Reliant Energy, Inc., 159 S.W.3d 615, 623-24 (Tex.2005). A failure by a trial court to analyze or apply the law correctly constitutes an abuse of discretion. Id. If we conclude that the trial court abused its discretion, we may order the amount of the security decreased or increased in an amount not to exceed the lesser of 50 percent of the judgment debtor's net worth, or $25 million. See TEX. CIV. PRAC. & REM.CODE ANN. 52.006(d); TEX.R.APP. P. 24.4(a), (d). For example, this Court, under former Texas Rule of Appellate Procedure 47(b), increased the amount of a supersedeas bond to include post-judgment interest, explaining that "[a] supersedeas bond that does not include interest is `patently ineffective.'" Nat'l Convenience Stores, Inc. v. Martinez, 763 S.W.2d 960, 960 (Tex.App.-Houston [1st Dist.] 1989, no writ).
A Good and Sufficient Bond
The key issue presented to this Court is whether the amount of the supersedeas bond set by the trial court is "good and sufficient" to secure the money judgment of Patterson and Cudd from losses caused by the delay of Fairways' appeal. See TEX.R.APP. P. 24.1(a)(2). The "primary purpose" of a supersedeas bond is "security," and it is "intended to indemnify the judgment creditor from losses caused by delay of appeal." Muniz v. Vasquez, 797 S.W.2d 147, 150 (Tex.App.-Houston [14th Dist.] 1990, no writ). As has been explained,
The effect of a supersedeas bond is to suspend execution of judgment, so the *300 judgment creditor can look only to the bond for satisfaction of the judgment. To prevent recovery on the bond posted by the judgment debtor is to prevent recovery of the judgment.
Butron v. Cantu, 960 S.W.2d 91, 95 (Tex. App.-Corpus Christi 1997, no writ).
A judgment debtor may file a "good and sufficient" bond to supersede a trial court's judgment in a civil case and thereby suspend enforcement of the judgment during the pendency of an appeal. TEX.R.APP. P. 24(a)(2); see also TEX. CIV. PRAC. & REM. CODE ANN. § 52.006. When a judgment is for the recovery of "money," the amount of security "must equal the sum" of:
(1) the amount of compensatory damages awarded in the judgment;
(2) interest for the estimated duration of the appeal, and
(3) costs awarded in the judgment.
TEX. CIV. PRAC. & REM.CODE ANN. § 52.006(a) (emphasis added); see also TEX.R.APP. P. 24.2(a)(1). However, the amount of security "must not exceed" the lesser of 50 percent of the judgment debtor's net worth or $25 million.[3] TEX. CIV. PRAC. & REM.CODE ANN. § 52.006(b); see also TEX.R.APP. P. 24.2(a)(1).
Here, the parties dispute whether the trial court, in calculating the amount of the supersedeas bond, was required to include in its sum, as compensatory damages, the award of attorney's fees to Patterson and Cudd and the award of prejudgment interest on the damages awarded to Patterson on its negligence claim. Both sides recognize that since the Texas Legislature enacted section 52.006 in 2003, some have called into question whether the amount of attorney's fees and prejudgment interest awarded in a money judgment must be included in calculating the amount of security necessary to suspend enforcement of the judgment pending an appeal. See Elaine A. Carlson, Reshuffling the Deck: Enforcing and Superseding Civil Judgments on Appeal After House Bill 4, 46 S. TEX. L.REV. 1035, 1038, 1088 (2005) (stating that "[i]t is unclear whether attorneys' fees and prejudgment interest must be secured" under section 52.006 and that "[ultimately the issue of what is considered compensatory damages will be judicially determined").
Attorney's Fees
In determining whether attorney's fees awarded in a money judgment should be secured pursuant to section 52.006, we note that prior to the enactment of section 52.006, which was part of legislation commonly referred to as "House Bill 4," the amount of security required to supersede a money judgment was governed by the former version of Texas Rule of Appellate Procedure 24. See Former TEX.R.APP. P. 24.2(a)(1) (eff. Sept. 1, 1997) (amended Aug. 29, 2003 and Sept. 10, 2003, eff. Sept. 1, 2003; amended Mar. 10, 2008 and Aug. 20, 2008, eff. Sept. 1, 2008). The former version of rule 24 required a bond for "at least the amount of the judgment, interest for the estimated duration of the appeal, and costs." See id. (emphasis added). Texas courts interpreted the former version of rule 24 to require security for the amount of attorney's fees awarded in a money judgment. See Shook v. Walden, 304 S.W.3d 910, 918 (Tex.App.-Austin 2010, *301 no pet.) (citing Hamilton v. Hi-Plains Truck Brokers, Inc., 23 S.W.3d 442, 443 n. 1 (Tex.App.-Amarillo 2000) (per curiam order)).
Fairways argues that section 52.006's reference to "the amount of compensatory damages awarded in the judgment," instead of the former version of rule 24's reference to "the amount of the judgment," evidences a legislative intent to change the prior law so that attorney's fees awarded to a prevailing party in a money judgment no longer need be secured for a judgment debtor to suspend enforcement of a money judgment. Fairways acknowledges that there is no direct legislative history to support its argument that the legislature intended to make such a change in the law, but it urges us to consider the definition of "compensatory damages" in Chapter 41 of the Texas Civil Practice and Remedies Code as well as the general purposes of House Bill 4. Fairways' arguments are unpersuasive.
Although the Texas Legislature did not define the term "compensatory damages" in section 52.006, the term generally includes "[d]amages sufficient in amount to indemnify the injured person for the loss suffered." BLACK'S LAW DICTIONARY 445 (9th ed. 2009). Here, the trial court's judgment establishes that Patterson and Cudd, both of which prevailed against Fairways in the trial court, expended attorney's fees to recover a money judgment on their respective breach of contract claims against Fairways. See TEX. CIV. PRAC. & REM.CODE ANN. § 38.001(8) (Vernon Supp. 2010). Thus, the attorney's fees awarded by the trial court to Patterson and Cudd represent recoverable out-of-pocket losses that they incurred in prosecuting their breach of contract claims against Fairways. See id. We conclude that these fees, which the trial court awarded to Patterson and Cudd to compensate them for the amount of money that they expended to obtain relief against Fairways, fit within the common meaning of "compensatory damages."[4] There is nothing in the plain language of section 52.006 that evidences a legislative intent to either change the law in regard to securing an award of recoverable attorney's fees in a money judgment or exclude attorney's fees from the common meaning of "compensatory damages."
In regard to the definition of "compensatory damages" in Chapter 41, we note that, for purposes of that chapter, the term "[compensatory damages" is defined to mean "economic and noneconomic damages" and it "does not include exemplary damages." TEX. CIV. PRAC. & REM.CODE ANN. § 41.001(8) (Vernon Supp. 2010). Chapter 41 defines the term "[economic damages" to mean "compensatory damages intended to compensate a claimant for actual economic or pecuniary loss" and it "does not include exemplary damages or noneconomic damages." Id. § 41.001(4). And Chapter 41 defines the term "[n]oneconomic damages" to mean "damages awarded for the purpose of compensating a claimant for physical pain and suffering, mental or emotional pain or anguish, loss of consortium, disfigurement, physical impairment, loss of companionship and society, inconvenience, loss of enjoyment of life, injury to reputation, and all other *302 nonpecuniary losses of any kind other than exemplary damages." Id. § 41.001(12).
In its opinion in Shook, the Austin Court of Appeals went to great lengths to explain why these definitions should be applied when interpreting the term "compensatory damages" in section 52.006. 304 S.W.3d at 920-22; see also PopCap Games, Inc. v. MumboJumbo LLC, 317 S.W.3d 913 (Tex. App.-Dallas 2010, no pet.) (agreeing with Shook and holding that section 52.006 does not require superseding of attorney's fees). The court in Shook opined that Chapter 41 is not restricted to those cases in which exemplary damages are awarded and "plainly extends more broadly" to any action for "damages." Id. at 920. The court further opined that Chapter 41's "text and relationship to section 52.006 reflect legislative intent to incorporate chapter 41's definition of `compensatory damages' into section 52.006." Id.
However, the plain language of Chapter 41 reveals that the legislature enacted its provisions to create standards and procedures for the recovery of exemplary damages and define certain damages in order to limit exemplary damage awards. See id. §§ 41.001, 41.003, 41.008, 41.009 (Vernon Supp. 2010). There is no suggestion in Chapter 41 that any provision within it has any applicability to setting a good and sufficient supersedeas bond to suspend enforcement of a money judgment during the pendency of an appeal. Although the court in Shook saw evidence of a "relationship" between Chapter 41 and section 52.006, we, respectfully, see none. We conclude that the application of the definition of the term "compensatory damages" as used in Chapter 41 to the term as used in section 52.006 has created confusion in what should be a fairly straightforward matter. See Shook, 304 S.W.3d at 920. In short, the definitions employed in Chapter 41 are expressly prescribed to apply to that chapter only, not to section 52.006. See TEX. CIV. PRAC. & REM.CODE ANN. § 41.001 (stating that definitions provided by section 41.001 apply "[i]n this chapter"); see also Clearview Properties, L.P. v. Property Tex. SC One Corp., 228 S.W.3d 262, 263 (Tex.App.-Houston [14th Dist.] 2007, orig. proceeding [mand. denied]) (recognizing that definitions in Chapter 41 "do not expressly exclude attorney's fees" in calculating good and sufficient supersedeas bond).
Without stretching Chapter 41 beyond its prescribed application, there is no basis on which to interpret section 52.006's reference to "compensatory damages" as excluding the amount of recoverable attorney's fees awarded by the trial court to Patterson and Cudd from the amount of the security necessary to suspend enforcement of the trial court's money judgment. See Clearview Properties, L.P., 228 S.W.3d at 263 (indicating that attorney's fees awarded in judgment could be "in the nature of costs or damages" and affirming trial court's order setting bond in amount sufficient to secure attorney's fees award).[5] Had the legislature intended to so alter the law, it could have expressly referred to "actual damages" in section 52.006, rather than the broader and more encompassing term "compensatory damages," which is *303 more in accord with the basic purposes of securing a money judgment. See Muniz, 797 S.W.2d at 150. In light of section 52.006's reference to "compensatory damages," we conclude that a supersedeas bond that does not include in its sum the amount of recoverable attorney's fees is "patently ineffective" to secure a money judgment awarding such fees. See Martinez, 763 S.W.2d at 960. Accordingly, we hold that the trial court erred in denying Patterson and Cudd's motion to increase the amount of the supersedeas bond to include the trial court's award of recoverable attorney's fees in its money judgment.
Prejudgment Interest
As with the attorney's fees issue, the parties appear to agree that prior to the enactment of section 52.006, the former version of rule 24 required security for the amount of prejudgment interest awarded in a money judgment. See Former TEX.R.APP. P. 24.2(a)(1); Martinez, 763 S.W.2d at 960 (indicating that bond covered prejudgment interest); see also Gullo-Haas Toyota, Inc. v. Davidson, Eagleson & Co., 832 S.W.2d 418, 418 (Tex. App.-Houston [1st Dist.] 1992, no writ) (implying that sufficient bond included prejudgment interest). The question, then, is whether section 52.006 changed the law. In interpreting section 52.006 to determine if prejudgment interest can be considered "compensatory damages awarded in the judgment," the court in Shook again considered the definitions of Chapter 41. After undertaking a lengthy analysis, the court concluded that "prejudgment interest awarded under common-law or equitable principles comes within [C]hapter 41's `economic damages' definition because it is a form of damages intended to compensate for a form of economic or pecuniary loss recognized in Texas law." Shook, 304 S.W.3d at 927. Thus, the court held that the prejudgment interest awarded in that case constituted "compensatory damages awarded in the judgment" and such interest was required to be secured under section 52.006, although the court also appeared to recognize a distinction between certain types of prejudgment interest. Id. at 929.
Fairways argues that we should follow the distinction suggested in Shook between prejudgment interest awarded on breach of contract damages under common-law or equitable principles and prejudgment interest awarded on negligence damages under statutory authority. Fairways posits that prejudgment interest on a "negligence award for property damage" does not constitute "economic damages," and thus, cannot be characterized as compensatory damages under section 52.006. We find Fairways' arguments on the prejudgment interest issue unpersuasive.
As noted above, section 52.006 does not define the term "compensatory damages" in regard to calculating a good and sufficient supersedeas bond, and we find no support in the Texas Civil Practice and Remedies Code or the legislative history of Chapter 52 indicating that we should, in interpreting section 52.006, consult the definitions employed in Chapter 41 regarding exemplary damages. Although the legislature did not define "compensatory damages" in section 52.006, the compensatory nature of prejudgment interest is commonly understood and has been historically recognized by Texas courts. In Cavnar v. Quality Control Parking, Inc., the Texas Supreme Court explained the need to award prejudgment interest to compensate a plaintiff:
If a judgment provides plaintiffs only the amount of damages sustained at the time of the incident, plaintiffs are not fully compensated. They have been denied the opportunity to invest and earn interest on the amount of damages between *304 the time of the occurrence and the time of judgment.
696 S.W.2d 549, 552 (Tex.1985) (emphasis added). The supreme court has further acknowledged that "awarding prejudgment interest [is] necessary to fully compensate injured plaintiffs." Johnson & Higgins of Tex., Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 529 (Tex.1998). We see no reason to depart from these generally accepted principles recognizing that prejudgment interest is awarded to compensate an injured plaintiff. We also see no principled reason to follow Shook and distinguish between prejudgment interest awarded on contract damages but not negligence damages. We conclude that a supersedeas bond that does not include in its sum the amount of prejudgment interest is "patently ineffective" to secure a money judgment awarding such interest.[6]See Martinez, 763 S.W.2d at 960. Accordingly, we hold that the trial court erred in denying Patterson and Cudd's motion to increase the amount of the supersedeas bond to include the trial court's award of prejudgment interest to Patterson on its negligence damages.
Conclusion
We grant Patterson and Cudd's motion for enlargement of the supersedeas bond, and we order that the amount of the bond be increased to secure the amount of attorney's fees awarded to Patterson and Cudd as well as the amount of prejudgment interest awarded to Patterson on its negligence damages.[7] Accordingly, we direct Fairways to file an amended supersedeas bond, with the amount of the total bond to be $1,984,718.86, plus post-judgment interest as described in the supplemental supersedeas bond. Should Fairways fail to post the amended supersedeas bond 20 days after the date of this order, the judgment may be enforced. See TEX.R.APP. P. 24.4(e).
NOTES
[1] See TEX.R.APP. P. 24.4(a).
[2] In its judgment, the trial court also awarded Patterson and Cudd appellate attorney's fees, but Patterson and Cudd do not seek to secure the amounts of those fees with an increased supersedeas bond.
[3] Moreover, a trial court "must lower" the amount of security "to an amount that will not cause the judgment debtor substantial economic harm if, after notice to all parties and a hearing, the court finds that posting a bond" in the required amount "is likely to cause the judgment debtor substantial economic harm." TEX.R.APP. P. 24.2(b); see also TEX. CIV. PRAC. & REM.CODE ANN. § 52.006(c). Here, there is nothing in the record to suggest that the amount of the bond set by the trial court was affected by sections 52.006(b) and 56.006(c) of the Texas Civil Practice and Remedies Code or rules 24.2(a)(1) and 24.2(b).
[4] By way of example, we note that in litigation involving breach of contract claims, an award of attorney's fees may sometimes equal or exceed the amount of actual damages awarded to a prevailing party. In such a case, the prevailing party's success in prosecuting their claim could easily be rendered pyrrhic if the judgment debtor could suspend enforcement of the judgment without having to post a bond sufficient to cover the awarded attorney's fees.
[5] Fairways argues that Clearview Properties is distinguishable because, in that case, "the contract between the parties provided for attorney's fees to constitute compensation." Clearview Properties, L.P. v. Property Tex. SC One Corp., 228 S.W.3d 262, 264 (Tex.App.-Houston [14th Dist.] 2007, orig. proceeding [mand. denied]). The parties agreed at oral argument that there is no similar contractual provision here. Although we recognize this factual distinction, the court in Clearview cited this contractual provision as one of several reasons why the trial court properly set a supersedeas bond that included in its sum the award of attorney's fees.
[6] We recognize that to the extent that any provision in Chapter 52 conflicts with the Texas Rules of Appellate Procedure, Chapter 52 would control. TEX. CIV. PRAC. & REM.CODE ANN. § 52.006(a). However, we see no conflict between rule 24's requirement that a judgment debtor post a "good and sufficient bond" and the provisions of Chapter 52. Rather, the terms used in rule 24 and those used in Chapter 52 consistently reflect that the purpose of securing a money judgment is to protect a prevailing party's right to ultimately recover its compensatory damages pending an appeal.
[7] As noted above, Fairways has not argued that increasing the bond as requested by Patterson and Cudd would either exceed the caps provided in section 52.006(b) or cause it "substantial economic harm." TEX.R.APP. P. 24.2(a)(1), (b); see also TEX. CIV. PRAC. & REM. CODE ANN. § 52.006(b), (c).
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717 F. Supp. 2d 404 (2010)
SENJU PHARMACEUTICAL CO. LTD., Kyorin Pharmaceutical Co. Ltd. and Allergan, Inc., Plaintiffs,
v.
APOTEX INC. and Apotex Corp., Defendants.
No. Civ. No. 07-779-SLR.
United States District Court, D. Delaware.
June 14, 2010.
*407 Jack B. Blumenfeld, Esquire and Maryellen Noreika, Esquire of Morris, Nichols, Arsht & Tunnell LLP, Wilmington, Delaware. Counsel for Plaintiffs. Of Counsel: Richard D. Kelly, Esquire, Stephen G. Baxter, Esquire and Frank J. West, Esquire *408 of Obion, Spivak, McClelland, Maier & Neustadt, P.C., Alexandria, Virginia.
Francis J. Murphy, Esquire of Murphy & Landon, Wilmington, Delaware. Counsel for Defendants. Of Counsel: David G. Greene, Esquire and Alan B. Clement of Locke Lord Bissell & Liddell LLP, New York, New York, Keith D. Parr, Esquire, Scott B. Feder, Esquire, David B. Abramowitz, Esquire, Patrick C. Gallagher, Esquire and Kevin M. Nelson, Esquire of Locke Lord Bissell & Liddell LLP, Chicago, Illinois.
MEMORANDUM OPINION
SUE L. ROBINSON, District Judge.
I. INTRODUCTION
Senju Pharmaceutical Co., Ltd. ("Senju") and Kyorin Pharmaceutical Co., Ltd. ("Kyorin") are co-owners of U.S. Patent No. 6,333,045 ("the '045 patent"). (D.I. 100, ex. 1 at ¶ 1) The '045 patent is directed to aqueous liquid pharmaceutical compositions comprising gatifloxacin and disodium edetate, as well as various methods utilizing these compositions. Allergan, Inc. ("Allergan") holds a New Drug Application ("the NDA"),[1] approved by the United States Food and Drug Administration ("FDA"), which describes a 0.3% gatifloxacin ophthalmic solution containing disodium edetate, sold under the trade name ZYMAR®. (Id. at ¶¶ 9, 10) ZYMAR® is indicated for the treatment of bacterial conjunctivitis. (Id.) The FDA's Approved Drug Products With Therapeutic Equivalence Evaluations ("the Orange Book") lists, inter alia, the '045 patent and U.S. Patent No. 4,980,470 ("the '470 patent")[2] in connection with ZYMAR®. (Id. at ¶¶ 12, 31)
On July 18, 2007, Apotex Inc. filed an Abbreviated New Drug Application ("the ANDA")[3] with the FDA, seeking approval, prior to the expiry of the '045 patent, to manufacture, market and sell a generic version of the 0.3% gatifloxacin ophthalmic solution described in the NDA ("the ANDA product"). (Id. at ¶ 13) Apotex Inc. subsequently assigned its rights in the ANDA to Apotex Corp. (collectively, "Apotex" or "defendants"). (Id. at ¶ 16) On October 17, 2007, defendants sent Senju, Kyorin and Allergan (collectively, "plaintiffs") a notification letter, informing plaintiffs that the ANDA contained a Paragraph IV certification[4] for the '045 patent. (Id. at ¶ 17) In the Paragraph IV certification, defendants contend that the ANDA product will not infringe claims 4, 5, 10 and 11 of the '045 patent and that all the claims of the '045 patent are invalid. (Id. at ¶ 18)
Plaintiffs brought this infringement action on November 29, 2007 pursuant to 35 U.S.C. § 271(e)(2)(A), alleging that the ANDA product will infringe claims 1-3, 6, 7 and 9 of the '045 patent. (Id. at ¶ 19) Defendants responded with affirmative defenses and counterclaims seeking declaratory judgment of noninfringement, invalidity[5] and unenforceability of the '045 patent. (See D.I. 63) While defendants maintain that claims 6 and 7 will *409 not be infringed, the parties stipulate that, if valid, the ANDA product will infringe claims 1-3 and 9 of the '045 patent. (D.I. 100, ex. 1 at ¶ 8) The court held a claim construction hearing on December 4, 2009. A bench trial was conducted from January 12-14, 2010, principally to resolve these issues, which have been fully briefed posttrial. (D.I. 110; D.I. 112; D.I. 115; D.I. 116) The court has jurisdiction pursuant to 28 U.S.C. §§ 1331, 1338(a) and 1400(b). Having considered the documentary evidence and testimony, the court makes the following findings of fact and conclusions of law pursuant to Fed.R.Civ.P. 52(a).
II. FINDINGS OF FACT
A. The Parties
Senju is a Japanese corporation with its principal place of business in Osaka, Japan. (D.I. 100, ex. 1 at 11) Senju develops pharmaceutical products that have applications regarding the eye, ear, nose, throat and skin. Kyorin is a corporation organized and existing under the laws of the Nation of Japan, and having its principal place of business in Tokyo, Japan. (Id. at ¶ 2) Kyorin engages in the development of pharmaceuticals directed to infectious, immunological, allergic and metabolic diseases. Allergan is a corporation formed under the laws of the State of Delaware, having its principal place of business in Irvine, California. (Id. at ¶ 3) The business of Allergan is directed to the development and sale of pharmaceuticals, biologies and medical devices.
Apotex Corp. is a corporation formed under the laws of the State of Delaware, having its principal place of business in Weston, Florida. (Id. at ¶ 4) Apotex Inc. is a corporation formed under the laws of the Nation of Canada, having its principal place of business in Ontario, Canada. (Id. at ¶ 5) Apotex primarily develops, manufactures and commercializes generic pharmaceutical products.
B. The Asserted Prior Art
1. Gatifloxacin
Fluoroquinolones, otherwise known as quinolone carboxylic acids or simply "quinolones," are a class of broad spectrum antibacterial compounds[6] that share a common core chemical structure. (See DTX 37 at col. 1:7-10; D.I. 107 at 326-28) A carboxylic acid, along with a nitrogen-containing carbon ring and a double-bonded oxygen, are fundamental and common aspects of all quinolone antibiotics. (D.I. 107 at 327-28)
The '470 patent,[7] which was before the examiner during the prosecution of the '045 patent, claims gatifloxacin[8] and its acid derivatives. The properties of this fourth generation quinolone are revealed following a discussion of previously discovered quinolones, to wit, norfloxacin, ofloxacin and ciprofloxacin.[9] (Id., col. 1:32-61) The '470 patent teaches that gatifloxacin represents an improvement over the prior art quinolones in that it exhibits a broader antibacterial activity, higher selective toxicity and safe oral and parenteral administration. (col. 1:62-2:7)
*410 In a passing reference to chemical structure, the '470 patent explains that each of the disclosed quinolones have "similar substituents." (col. 1:41-43) Defendants' expert, Dr. Paul Myrdal ("Dr. Myrdal"), testified that, in this manner, the '470 patent recognizes the structural similarity between gatifloxacin and these prior art quinolones. (D.I. 107 at 326-27) This structural similarity is emphasized in a slide prepared by Dr. Myrdal, wherein the blue portion of the molecules represents a chemical backbone common to all four quinolones and the black portions represent functional group variations:
(DTX 194 at 44) Dr. Myrdal further testified that gatifloxacin is a polar compound due to its ability to readily ionize and because it contains several polar moieties. (D.I. 107 at 343)
2. Disodium edetate
Disodium edetate is the disodium salt of ethylenediamine tetraacetic acid (commonly known as "EDTA").[10] (D.I. 100, ex. 1 at ¶ 40) EDTA, a multi-purpose excipient,[11] is widely known as a chelating agent.[12] (D.I. 107 at 332-33; DTX 166 at 109-110) EDTA has four carboxylic acid groups. (D.I. 107 at 354; D.I. 108 at 669) In a September 1967 article by D.E. Griffith ("the Griffith reference"), the author reported that EDTA, by "sequestering" metal ions through a chelating mechanism, prevents coloration in a variety of active pharmaceutical ingredients. (JTX 56 at 1197-98) The Griffith reference teaches *411 that disodium edetate, in concentrations of between 0.005 and 0.02 w/v%, prevented coloration of papaverine hydrochloride and that, in concentrations between 0.005 and 0.04 w/v%, it similarly prevented coloration in other pharmaceutical agents. (Id.)
EDTA is also known to increase the corneal permeability of certain polar compounds. (See JTX 12) A layer of epithelial cells, bound tightly together by calcium ions, forms a protective barrier that prevents foreign molecules from entering the eye. (Id. at 111) In a 1985 publication by Grass et al. ("the Grass reference"), considered during the prosecution of the '045 patent, the authors sought to determine the effect of EDTA on the permeability of organic and inorganic compounds with respect to the corneal epithelia.[13] (Id. at 110) The Grass reference teaches that EDTA can reduce the number of calcium ions through chelation, thus creating small channels between corneal epithelial cells. (See id.) These channels allow polar molecules to penetrate through the cornea into the aqueous humor of the eye. (See id.) In reporting the results of this study, the Grass reference describes how the addition of 0.5 w/v% disodium edetate to separate solutions of glycerol and cromolyn resulted in increased corneal permeability in both solutions. (Id. at 112) A lower unspecified concentration of EDTA was also shown to function in this manner, albeit to a lesser extent.[14] (Id.) The authors of the Grass reference conclude that the propensity of EDTA to increase the corneal permeability of polar compounds has a "direct bearing upon ophthalmic solutions currently in use."[15] (D.I. 107 at 341; see also JTX 12 at 112-13)
3. Aqueous quinolone ophthalmic compositions comprising disodium edetate
Dr. Myrdal testified at trial that, in the context of quinolone solution chemistry, the variations in functional groups among the quinolones named by the '470 patent, shown in black, supra, are "really not from a physical/chemical standpoint huge differences." (D.I. 107 at 326-27) Generally, he contends that, while different functional groups may result in some differences in solubility (id. at 399-402), one of skill in the art can expect a relatively predictable pH-dependent solubility profile for these quinolones. (Id. at 329-30, 350-53) In support of this opinion, Dr. Myrdal relies upon a 1989 article by Riley et al. ("the Riley reference"),[16] which proposed several simulated solubility profiles for quinolones. (D.I. 108 at 665; JTX 15) The Riley reference demonstrates that quinolones with similar pKa values exhibit a U-shaped solubility curve with an inflection point around each of the pKa values.[17] (See JTX 15 at *412 32-34) A further teaching of the Riley reference describes how the addition of carboxylic acids of various sizes and structures to a quinolone solution maintained at pH 5 resulted in an increased solubility of the quinolone. (Id.)
U.S. Patent No. 4,551,456 ("the '456 patent"), which issued in 1985, teaches that then-known quinolones[18] are both "compatible with ocular tissue" and useful in treating bacterial ocular infections through topical administration. ('456 patent at col. 1:13-17) One of two exemplary ophthalmic compositions disclosed by the '456 patent comprises an aqueous solution of 0.3 w/v% norfloxacin and 0.01 w/v% disodium edetate. The '456 patent discloses EDTA in a list of 8 excipients described as "conventional ingredient[s]" in ophthalmic compositions. (Id. at col. 2:5-10)
U.S. Patent No. 4,780,465 ("the '465 patent"), which discloses aqueous compositions for the quinolone lomefloxacin, likewise characterizes disodium edetate as a conventional excipient. (col. 2:31-46) The '465 patent addressed the low solubility exhibited by lomefloxacin solutions containing sodium chloride, another common eye drop excipient. (col. 3:7-20) The inventors of the '465 patent solved these solubility issues irrespective of the presence of disodium edetate in the composition. Two exemplary ophthalmic compositions described in the '465 patent, similar to the ophthalmic composition disclosed by the '456 patent, contain 0.3 w/v% lomefloxacin and 0.01 w/v% disodium edetate. (col. 4:1-23)
Consistent with the '456 patent, the '470 patent discloses that pharmaceutical formulations of gatifloxacin follow "the routes well known . . ." with respect to "oral [] and parenteral []" administration, including ". . . liquids [and] eye drops. . . ." ('470 patent at col. 7:21-26) While the '470 patent does not provide any guidance regarding these formulations, the 1995 Physician's Desk Reference ("the PDR") provides several example formulations of then-available quinolone ophthalmic solutions. (See DTX 159) According to the PDR, the commercially marketed eye drop formulation of ciprofloxacin, CILOXAN®, contained 0.05 w/v% disodium edetate. (Id. at 472) Although in an unspecified amount, the marketed formulation of norfloxacin (CHIBROXIN®) likewise contained disodium edetate. (Id. at 1508) A third listed formulation, ofloxacin (OCUFLOX®), does not contain disodium edetate. (Id. at 496)
C. The Invention and Prosecution of the '045 patent
Shinichi Yasueda ("Yasueda"), a Senju employee of fifteen years, began experimenting with solutions of gatifloxacin after Kyorin licensed the '470 patent to Senju. (D.I. 106 at 65) Multiple research reports ("the research reports") authored by Yasueda demonstrate that the addition of EDTA to an aqueous gatifloxacin solution both increases the corneal permeability and prevents the precipitation of gatifloxacin. (JTX 23; JTX 24; JTX 25; JTX 30; JTX 31)
Several studies in the research reports form the basis for Yasueda's conclusion presented in experiment 1 of the '045 patent, which states that the corneal permeability of gatifloxacin increased "by about 1.2 and 1.5 times" in the presence of EDTA. ('045 patent at col. 4:1-5) The first study, which appears in table 7 of the research reports, presented the testing results[19]*413 of two formulations disclosed by table 1 of the '045 patent: formulation B (gatifloxacin alone)[20] and formulation C (gatifloxacin with disodium edetate).[21] (JTX 24 at 11; D.I. 106 at 85) table 7 is based on a sample size of three eyes for formulation B and five eyes for formulation C. (D.I. 106 at 86) A second study, also concerning formulations B and C, is reported in table 9 of the research reports. (JTX 24 at 12) In this study, Yasueda compared the aqueous humor migration of gatifloxacin and levofloxacin and concluded that the aqueous humor migration was "virtually the same" for these two compounds. Yasueda did not disclose either the sample size or his conclusion about the relative aqueous humor migration of gatifloxacin and levofloxacin.
The '045 patent does disclose that the area under the curve ("AUC") data presented by table 10 demonstrated that formulation C exhibited a corneal permeability 1.46 times greater than formulation B. (JTX 24 at 12) Yasueda also revealed several comparison tests which showed that a solution of gatifloxacin and EDTA demonstrated approximately 1.2 times the corneal permeability of its non-EDTA counterpart at the one hour mark. (JTX 25; JTX 30; JTX 31)
Yasueda also presented several precipitation studies which are summarized in experiment 2 of the '045 patent. (See JTX 23) Experiment 2 presents the data that supports Yasueda's conclusion that the precipitation of gatifloxacin "is prevented by formulating disodium edtate in an aqueous liquid preparation of gatifloxacin." ('045 patent at col. 4:51-54) Formulation D[22] and formulation C, both of which comprised, inter alia, gatifloxacin, disodium edetate and sodium chloride, did not exhibit precipitation after ten freeze-thaw cycles. (Id. at 8) The research reports also contained the results of two formulations, formulations E-1 and E-3, which lacked sodium chloride and eventually precipitated after multiple freeze-thaw cycles. (Id.) Likewise, this same study revealed that several formulations without EDTA did not precipitate after 10 freeze-thaw cycles. (Id.) Yasueda did not disclose the results regarding either formulations E-1 and E-3 or those formulations without EDTA which did not precipitate.
On December 25, 2001, the '045 patent, entitled "Aqueous Liquid Pharmaceutical Composition Comprised of Gatifloxacin," was issued listing Yasueda and Katsuhiro Inada ("Inada") as inventors and Senju and Kyorin as assignees. (D.I. 100, ex. 1 at ¶ 6) The '045 patent contains eleven claims. Only claims 1-3 and 6-9 are at issue in this case. They read as follows:
1. An aqueous liquid pharmaceutical composition which comprises gatifloxacin or its salt and disodium edetate.
2. The aqueous liquid pharmaceutical composition according to claim 1, wherein pH of the composition is within the range of 5 to 8.
3. The aqueous liquid pharmaceutical composition according to claim 1, where *414 the composition is in the form of eye drops.
6. A method for raising corneal permeability of gatifloxacin which comprises incorporating disodium edetate into eye drops containing gatifloxacin or its salt.
7. A method for preventing precipitation of gatifloxacin crystals which comprises incorporating disodium edetate into an aqueous liquid preparation containing gatifloxacin or its salt.
8. A method for preventing coloration of gatifloxacin which comprises incorporating disodium edetate into an aqueous liquid preparation containing gatifloxacin or its salt.
9. The aqueous liquid pharmaceutical composition according to claim 2, where the composition is in the form of eye drops.
D. The ANDA
On July 18, 2007, defendants filed two ANDA applications with the FDA seeking approval to manufacture and sell generic 0.3 w/v% gatifloxacin ophthalmic solutions. (D.I. 100, ex. 1 at ¶ 13) The ANDA currently at issue is directed to a 0.3 w/v% gatifloxacin solution containing 0.1 w/v% disodium edetate. (PTX 139) Defendants also filed a second ANDA[23] directed to a 0.3 w/v% gatifloxacin ophthalmic solution which did not contain disodium edetate ("the second ANDA"). (D.I. 100, ex. 1 at ¶ 14) The FDA informed defendants that, due to the absence of disodium edetate, the second ANDA would not be accepted for filing. (D.I. 100, ex. 1 at ¶ 15)
The gatifloxacin used to prepare the ANDA product is known as gatifloxacin hemihydrate. (PTX 139 at 210734) Each molecule of gatifloxacin in a gatifloxacin hemihydrate crystal is bound to 0.5 molecules of water. (Id.) By contrast, ZYMAR® is formulated using gatifloxacin sesquihydrate. (Id. at 210657) In a gatifloxacin sesquihydrate crystal, each molecule of gatifloxacin is bound to 1.5 molecules of water. (Id.) Once dissolved in an aqueous solution, the water bound to these respective forms is released into the solution, and both gatifloxacin hemihydrate and gatifloxacin sesquihydrate become functionally equivalent. (D.I. 107 at 257-59)
Defendants use hydrochloric acid and sodium hydroxide to adjust the pH of the ANDA product. This reaction generates excess sodium chloride, such that the 8.2 mg/mL sodium chloride originally added to the solution increases to 8.6 mg/mL, the amount of sodium chloride contained in ZYMAR®. (D.I. 107 at 259-62) An identical osmolarity[24] reinforces the understanding that both ZYMAR® and the ANDA product contain the same ultimate concentration of sodium chloride. (PTX 139 at 211019; D.I. 107 at 263-64, 437-38)
Defendants confirm the equivalence of the ANDA product, noting that "[t]here are no differences between our proposed formulation and that of [ZYMAR®]. As indicated in the Product Development Report[,] the proposed formulation is a solution that is equivalent to [ZYMAR®] both quantitatively and qualitatively. As there is no difference between the two formulations, no potential concerns are expected *415 with respect to therapeutic equivalence." (PTX 139 at 210693)
III. CONCLUSIONS OF LAW
A. Infringement
1. Legal standard
"`It shall be an act of infringement to submit' an ANDA to the FDA seeking approval `to engage in the commercial manufacture, use, or sale of a drug. . . claimed in a patent or the use of which is claimed in a patent before the expiration of such patent.'" Cephalon, Inc. v. Watson Pharmaceuticals, Inc., 629 F. Supp. 2d 338, 349 (D.Del.2009) (quoting 35 U.S.C. § 271(e)(2)). To determine whether a composition identified in an ANDA is a composition claimed in a patent, the court conducts the familiar two-step infringement inquiry: first, the court construes the patent claims; second, it compares the construed claims to the accused product to determine whether every claim limitation is found in the accused product. See, e.g., Roche Palo Alto LLC v. Apotex, Inc., 531 F.3d 1372, 1377 (Fed.Cir.2008) (condoning use of the two-step infringement inquiry in the ANDA context). Because a claim of infringement predicated upon the filing of an ANDA concerns prospective events, the court must consider "[w]hat is likely to be sold, or, preferably, what will be sold, [to] ultimately determine whether infringement exists." Glaxo Inc. v. Novopharm Ltd., 110 F.3d 1562, 1570 (Fed.Cir.1997).
"Direct infringement requires a party to perform each and every step or element of a claimed method or product." BMC Res., Inc. v. Paymentech, LP., 498 F.3d 1373, 1378 (Fed.Cir.2007). "If any claim limitation is absent from the accused device, there is no literal infringement as a matter of law." Bayer AG v. Elan Pharm. Research Corp., 212 F.3d 1241, 1247 (Fed. Cir.2000).
The patent owner has the burden of proving infringement and must meet its burden by a preponderance of the evidence. SmithKline Diagnostics, Inc. v. Helena Lab. Corp., 859 F.2d 878, 889 (Fed. Cir.1988) (citations omitted).
2. Discussion
Defendants have stipulated that, if found valid, the ANDA product infringes claims 1-3 and 9 of the '045 patent. (D.I. 100, ex. 1 at ¶ 8) In furtherance of the contention that the ANDA product also infringes claims 6 and 7, plaintiffs proffer several pre-litigation studies, including the results of several studies submitted to the FDA to support the NDA. Defendants do not dispute that the ANDA product contains disodium edetate in an amount of 0.001 to 0.2 w/v% as required by the court's construction of claims 6 and 7. Rather, the dispositive issue before the court concerns the limitations contained in the preambles of these claims, namely, whether the disodium edetate contained in the ANDA product increases the corneal permeability and prevents the precipitation of gatifloxacin. Despite admitting in the ANDA that there are no differences between the ANDA product and ZYMAR®, defendants contend that plaintiffs rely on flawed circumstantial evidence and take issue with the alleged failure to test exactly the formulation described in the ANDA. Also submitted for the court's consideration is testing commissioned by defendants that allegedly demonstrates the noninfringement of the ANDA product. The court evaluates, then, the sufficiency of plaintiffs' evidence on infringement within the context of each claim.
a. Claim 6
The court has concluded that the preamble "raising corneal permeability of gatifloxacin" further limits claim 6 and is properly construed to mean "showing an increased concentration of gatifloxacin in *416 the aqueous humor." Plaintiffs submit that both testing by Senju ("the Senju studies") and by Allergan ("the Allergan studies") demonstrate that disodium edetate increases the corneal permeability of gatifloxacin in the ANDA product.
The Senju studies, preformed prior to the filing of the ANDA, compared the corneal permeability of a 0.3 w/v% gatifloxacin eye drop solution with another solution identical but for the additional inclusion of EDTA. (JTX 30; JTX 31) The results of these studies demonstrated that the gatifloxacin concentrations in the aqueous humor were significantly higher in the solution containing EDTA. (D.I. 106 at 97-98, 246-48; D.I. 107 at 249-50) Defendants provide several allegations as to why this evidence cannot demonstrate that the ANDA product infringes claim 6.
First, defendants contend that plaintiffs failed to proffer critical evidence of how the formulations would behave in vivo. The alleged impropriety of plaintiffs' testing method, which involved the harvesting of the eyes of male Japanese albino rabbits as described above, is, according to defendants, implicit in the "many differences between rabbit eyes and human eyes that could affect corneal permeability. . . ." (D.I. 110) The evidence of record establishes that the use of rabbit eye and cell cultures to investigate corneal permeability is not only standard practice, but the only acceptable way of doing so. (D.I. 107 at 252-53) Indeed, obvious ethical concerns counsel against defendants' suggestion of human testing. Notwithstanding defendants' convrarian position, the study commissioned by defendants to convince the FDA that EDTA was not required to establish the bioequivalence of the ANDA product to ZYMAR® ("the NucroTechnics study") relied upon the use of rabbit eyes models. (JTX 33 at 14040-41) The court concludes that it was appropriate for plaintiffs to use rabbit eye models to determine if EDTA increases the corneal permeability of gatifloxacin within the meaning of claim 6.
Defendants also argue that, in contrast to the ANDA product, the formulations in the Senju studies did not contain benzalkonium chloride ("BAK"). (See id.) This results in a material difference, according to defendants, because BAK is a known corneal permeability enhancer. However, the Allergan studies, discussed infra, demonstrated that BAK did not affect corneal permeability in ZYMAR®, which contains the same amount of BAK as the ANDA product. (JTX 24; D.I. 106 at 69-70; D.I. 107 at 249) "A patentee may prove infringement by any method of analysis that is probative of the fact of infringement, and circumstantial evidence may be sufficient." Martek Biosciences Corp. v. Nutrinova, Inc., 579 F.3d 1363, 1372 (Fed.Cir.2009). The court finds that the Senju studies are probative and concludes that it is appropriate for the purposes of infringement to equate the ANDA product with the 0.3 w/v% gatifloxacin solution containing disodium edetate from the Senju studies.
Plaintiffs also proffer the results of the Allergan studies, which involved the comparison of ZYMAR® with 0.3 w/v% and 0.5 w/v% gatifloxacin solutions which did not contain EDTA. These formulations were tested in vitro using cultured rabbit cornea epithelial cells and revealed that ZYMAR® had corneal penetration values nearly three times higher than the solutions lacking EDTA. (PTX 88; D.I. 106 at 203; D.I. 107 at 251-53) Defendants object to the Allergan studies because the formulations without EDTA contained a salt buffer and ZYMAR® contained BAK. (D.I. 107 at 211-13) Dr. Stella testified at trial that neither of these distinctions altered his opinion that EDTA caused an increase *417 in the concentration of gatifloxacin in the aqueous humor. (D.I. 107 at 251-53) Consequently, to the extent that there are no material differences between the formulation of ZYMAR® and that of the ANDA product, the court concludes that the Allergan studies are likewise probative of infringement. Martek, 579 F.3d at 1372.
Defendants allege that the NucroTechnics study provides the only meaningful insight to the infringement inquiry, as it is the only study which specifically considered the ANDA product. (See JTX 33; see also PTX 140) According to defendants, the NucroTechnics study demonstrates that EDTA has no effect upon the corneal permeability of gatifloxacin. The NucroTechnics study was designed both to convince the FDA that EDTA has no effect upon the corneal permeability of gatifloxacin and to "invalidate the ['045] patent." (PTX 85 at 201000; PTX 130 at 17008) The FDA, however, rejected the second ANDA despite the NucroTechnics study. (PTX 156)
With respect to defendants' complaint that plaintiffs failed to provide evidence of testing of the ANDA product, the court is satisfied that plaintiffs tested the product that defendants were likely to market as described in the ANDA. See Glaxo, 110 F.3d at 1570. Moreover, insofar as the goal of the NucroTechnics study was to demonstrate the similarity of the aqueous humor concentrations of gatifloxacin in Jhe ANDA product and the formulations without EDTA, at a minimum, the court questions the objectivity of this study as evidence of noninfringement. The record also demonstrates that this study was not fully vetted by the discovery process as plaintiffs were denied the ability to depose anyone who actually preformed the study.[25] Accordingly, the court declines to accord the NucroTechnics study with the same evidentiary merit as plaintiffs' prelitigation studies that have been subjected to the full discovery process.
Upon weighing the evidence proffered by the parties, the court concludes that plaintiffs have demonstrated, by a preponderance of the evidence, that the ANDA product infringes claim 6 of the '045 patent, i.e., that it incorporates the claimed concentration of 0.01 w/v% disodium edetate in a manner that increases the aqueous humor concentration of gatifloxacin.
b. Claim 7
Plaintiffs contend that the ANDA product infringes the method of claim 7. As construed, this method requires the use of 0.001 to 0.2 w/v% disodium edetate to inhibit the precipitation of gatifloxacin in an aqueous gatifloxacin solution. Plaintiffs support this contention with a study conducted by Cyanta Analytical Laboratories ("the Cyanta study"), which concerned a freeze-thaw comparison of a product prepared according to the ANDA and another identical preparation lacking EDTA. (PTX 163 at 350; D.I. 106 at 111-126) Dr. Jonathan Mahnken ("Dr. Mahnken"), plaintiffs' statistical expert, analyzed the Cyanta study and concluded that it demonstrated "a reduced rate of precipitation and a delayed onset of precipitation" for the formulations containing EDTA. (PTX 188; D.I. 106 at 146-164)
Defendants offer multiple criticisms of the Cyanta study. First, defendants note that the Cyanta study used a formulation incorporating gatifloxacin sesquihydrate instead of the gatifloxacin hemihydrate defendants provided to plaintiffs. (D.I. 106 at 129) As explained above, these materials *418 are functionally equivalent once in solution. Defendants also contend that the Cyanta study did not account for the formulation's final pH, a key factor in whether gatifloxacin precipitates. Dr. Myrdal conceded at trial, however, that the Cyanta study carried out the pH measurements and final dilution step in the same manner as described in the ANDA. (D.I. 107 at 439-40) Finally, defendants contend that when a precipitate was observed in the Cyanta study, the composition of the precipitate was not conclusively identified and, thus, cannot be offered as evidence of the precipitation of gatifloxacin. This position is refuted by the mass spectral analysis preformed during this study, which identified the precipitate as gatifloxacin. (PTX 169) Moreover, the parties do not dispute that gatifloxacin is the only solute present in sufficient quantities to precipitate. (D.I. 107 at 264-66)
In rebuttal of the evidence presented by the Cyanta study, defendants proffer the results of an internal freeze-thaw testing. Defendants allege that this freeze-thaw testing demonstrates that neither the ANDA product nor an otherwise identical solution without EDTA precipitated. (PTX 4; PTX 20; D.I. 107 at 396) Using a different protocol than that described by the '045 patent, the thawing stage of defendants' method brought samples to 40 °C (104 °F), a temperature at which many precipitates would redissolve. (D.I. 107 at 442) Defendants do not dispute that precipitation is temperature dependant. (Id.)
In view of the foregoing, the court concludes that plaintiffs have demonstrated, by a preponderance of the evidence, that the ANDA product infringes claim 7 of the '045 patent, namely, that it incorporates the claimed concentration of 0.01 w/v% disodium edetate in a manner that will inhibit or hinder the precipitation of gatifloxacin from an aqueous gatifloxacin solution.
B. Obviousness
1. Legal standard
"A patent may not be obtained . . . if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art." 35 U.S.C. § 103(a). Obviousness is a question of law, which depends on several underlying factual inquiries.
Under § 103, the scope and content of the prior art are to be determined; differences between the prior art and the claims at issue are to be ascertained; and the level of ordinary skill in the pertinent art resolved. Against this background the obviousness or nonobviousness of the subject matter is determined. Such secondary considerations as commercial success, long felt but unsolved needs, failure of others, etc., might be utilized to give light to the circumstances surrounding the origin of the subject matter sought to be patented.
KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398, 406, 127 S. Ct. 1727, 167 L. Ed. 2d 705 (2007) (quoting Graham v. John Deere Co., 383 U.S. 1, 17-18, 86 S. Ct. 684, 15 L. Ed. 2d 545 (1966)).
"[A] patent composed of several elements is not proved obvious merely by demonstrating that each of its elements was, independently, known in the prior art." KSR, 550 U.S. at 418, 127 S. Ct. 1727. Likewise, a defendant asserting obviousness in view of a combination of references has the burden to show that a person of ordinary skill in the relevant field had a reason to combine the elements in the manner claimed. Id. at 418-19, 127 *419 S.Ct. 1727. The Supreme Court has emphasized the need for courts to value "common sense" over "rigid preventative rules" in determining whether a motivation to combine existed. Id. at 419-20, 127 S. Ct. 1727. "[A]ny need or problem known in the field of endeavor at the time of invention and addressed by the patent can provide a reason for combining the elements in the manner claimed." Id. at 420, 127 S. Ct. 1727. In addition to showing that a person of ordinary skill in the art would have had reason to attempt to make the composition or device, or carry out the claimed process, a defendant must also demonstrate that "such a person would have had a reasonable expectation of success in doing so." PharmaStem Therapeutics, Inc. v. ViaCell, Inc., 491 F.3d 1342, 1360 (Fed.Cir.2007).
"Because patents are presumed to be valid, see 35 U.S.C. § 282, an alleged infringer seeking to invalidate a patent on obviousness grounds must establish its obviousness by facts supported by clear and convincing evidence." Kao Corp. v. Unilever U.S., Inc., 441 F.3d 963, 968 (Fed. Cir.2006) (citation omitted). In conjunction with this burden, the Federal Circuit has explained that,
[w]hen no prior art other than that which was considered by the PTO examiner is relied on by the attacker, he has the added burden of overcoming the deference that is due to a qualified government agency presumed to have properly done its job, which includes one or more examiners who are assumed to have some expertise in interpreting the references and to be familiar from their work with the level of skill in the art and whose duty it is to issue only valid patents.
PowerOasis, Inc. v. T-Mobile USA, Inc., 522 F.3d 1299, 1304 (Fed.Cir.2008) (quoting Am. Hoist & Derrick Co. v. Sowa & Sons, 725 F.2d 1350, 1359 (Fed.Cir.1984)).
2. Discussion
a. Claims 1-3 and 9
As the asserted prior art does not explicitly disclose both gatifloxacin and EDTA in the same reference, defendants contend that the prior art abounds with reasons to combine these two compounds to arrive at the aqueous ophthalmic composition of the '045 patent.[26] Specifically, defendants point to the '456 patent, which teaches that disodium edetate is a conventional excipient that can be used in topical ophthalmic aqueous quinolone compositions. The '456 patent also discloses an exemplary formulation of a 0.3% quinolone solution that incorporates 0.01 w/v% disodium edetatean amount explicitly within the range of concentrations claimed by the '045 patent as construed by this court. According to the '470 patent, the quinolones disclosed by the '456 patent are structurally similar to gatifloxacin. In summation, defendants argue that insofar as the '470 patent teaches that gatifloxacin may be formulated in a manner similar to previously known and structurally similar quinolone compositionsincluding those compositions intended for ophthalmic administrationit would be obvious to look to the '456 patent for formulation guidance and arrive at an aqueous gatifloxacin composition containing disodium edetate in an amount of 0.001 to 0.2 w/v% as claimed by the '045 patent.
*420 Plaintiffs vigorously contest this portrayal of the prior art, arguing that Dr. Stella did not uncover any publications or theories regarding the ability of EDTA to affect the corneal permeability or precipitation of any quinolone drug composition, let alone a gatifloxacin composition, prior to the invention of the '045 patent. According to plaintiffs, even when a reference describes EDTA as a quinolone-compatible excipient, the disclosure suffers from a lack of guidance while simultaneously placing EDTA alongside "a laundry list" of such excipients. (D.I. 112 at 26)
In this regard, consistent with the court's construction, the invention of independent claim 1 is an aqueous liquid pharmaceutical composition comprising gatifloxacin or its salt and 0.001 to 0.2 w/v% disodium edetate. Dependent claim 2 limits this composition to a pH between 5 and 8, a condition that renders the composition suitable for topical ophthalmic administration. Dependent claim 3 limits the composition of claim 1 to eye drops. Claim 9 depends from claim 2 and further limits this composition to eye drops. Notably, neither corneal permeability nor precipitation behavior forms the substance of any of these limitations.
Moreover, the court declines to accept the characterization of the prior art disclosure of EDTA as among a "laundry list" of excipients compatible with quinolones. (D.I. 112 at 26; D.I. 116 at 8, 15) The Federal Circuit has predicated a finding of nonobviousness on a sheer number of variable combinations; however, the Court did so in the face of a prior art disclosure of a "potentially infinite genus." In re Baird, 16 F.3d 380, 382 (Fed.Cir.1994) (quoting In re Jones, 958 F.2d 347, 350 (Fed.Cir. 1992)). The case at bar does not remotely approach an infinite genus, as disodium edetate is listed among eight "conventional ingredients" in the '456 patent and a similarly small group of excipients in the '465 patent. ('456 patent at col. 2:1-16; '465 patent at col. 2:36-49)
Plaintiffs also argue that the prior art demonstrates the unpredictability of quinolone solutions, again emphasizing the absence of any teaching that disodium edetate is desirable. Highlighting the difficulties presented by the '465 patent in formulating an aqueous solution of lomefloxacin with a few conventional tonicity agents (sodium chloride and potassium chloride), plaintiffs suggest that one skilled in the art would predict gatifloxacin to display similar incompatibilities, perhaps with a different conventional excipient such as disodium edetate. (D.I. 112 at 26) However, the very reference relied upon to establish the general unpredictability of quinolone/excipient combinations includes an example formulation comprising lomefloxacin and disodium edetate. ('465 patent at col. 2:31-46)
The prior art characterizes gatifloxacin as nontoxic and superior in terms of antimicrobial activity, but structurally similar to its prior art quinolone counterparts. One skilled in the art[27] would understand that compositions of gatifloxacin follow "the routes well known . . ." with respect to "oral [] and parenteral []" administration and, thus, could be formulated according *421 to the recipes that existed with respect to prior art ophthalmic quinolone compositions. These prior art ophthalmic quinolone compositions included eye drops maintained at a pH of between 5 and 8. Likewise, the prior art reveals that disodium edetate is a conventional excipient with beneficial properties used in aqueous ophthalmic quinolone compositions. Multiple commercial and noncommercial quinolone compositions utilized disodium edetate in an amount of 0.01 w/v%, i.e., within the concentration range of 0.001 to 0.2 w/v% claimed by the '045 patent. Accordingly, the court concludes that defendants have presented a prima facie case of obviousness with respect to claims 1-3 and 9, i.e., that it would be obvious for one of ordinary skill to substitute the gatifloxacin of the '470 patent for any of the quinolones described by the '456 patent in the prior art quinolone compositions comprising disodium edetate in the amounts claimed by the '045 patent, with the reasonable expectation that it would result in an aqueous formulation.
b. Claim 6
Defendants rely upon the '456 patent, the '465 patent, the '470 patent and the Grass reference in arguing that the method of claim 6 is obvious. Plaintiffs correctly note that none of these references specifically disclose any impact by disodium edetate on the corneal permeability of any quinolone. In response, defendants argue that enhancing the corneal permeability of gatifloxacin by adding disodium edetate is not only obvious as a latent property of disodium edetate, but it would have been an expected feature of such compositions.
With respect to latency, defendants argue that the method of claim 6 merely combines two known constituents to result in a composition that exhibits the inherent property of increasing corneal permeability. According to defendants, this combination adds nothing new or patentable to an allegedly old and obvious method. See Great Atl. & Pac. Tea Co. v. Supermarket Equip. Corp., 340 U.S. 147, 152, 71 S. Ct. 127, 95 L. Ed. 162 (U.S.1950) (holding obvious a combination of old elements which perform the same function in combination and individually); see also In re Baxter Travenol Labs., 952 F.2d 388, 392 (Fed. Cir.1991) ("Mere recognition of latent properties in the prior art does not render nonobvious an otherwise known invention."). Latency, however, depends upon the presence of a known process. See Bristol-Myers Squibb Co. v. Ben Venue Labs., 246 F.3d 1368, 1376 (Fed.Cir.2001) (holding that "[n]ewly discovered results of known processes directed to the same purpose are not patentable because such results are inherent.") (emphasis added). Insofar as defendants have failed to identify a prior art disclosure concerning a process that explicitly discloses the addition of disodium edetate to gatifloxacin in solution, the latency argument must fail.
Alternatively, relying primarily on the Grass reference, defendants argue that one of ordinary skill would have expected disodium edetate to enhance the corneal permeability of gatifloxacin such that it would result in an increased concentration of gatifloxacin in the aqueous humor. With respect to the claimed concentration range of 0.001 to 0.2 w/v%, the record demonstrates that one skilled in the art would understand the Grass reference to suggest that EDTA concentrations lower than 0.5 w/v% would be effective in view of the increased corneal permeability of the 0.5 w/v% EDTA formulation to which calcium was added. Accordingly, one of ordinary skill would apply this teaching in conjunction with the pre-existing quinolone formulations, which incorporated between 0.05 and 0.1 w/v% EDTA, in arriving at a *422 gatifloxacin formulation characterized by increased corneal permeability.
Contrary to this position, Dr. Stella testified that the teachings of the Grass reference have no bearing upon the obviousness of the invention of the '045 patent because the two studied compoundsglycerol and cromolynhave no relationship with, and may well exhibit significant chemical and physical differences from, gatifloxacin. (D.I. 108 at 671-72) Dr. Stella's assertion is belied by the Grass reference, which attributes the improved corneal permeability on the ability of EDTA to transport a polar compound across the epithelial layer of the cornea. While glycerol, cromolyn and gatifloxacin may exhibit chemical and physical differences, the parties do not dispute that each shares the only trait pertinent to the Grass referencemolecular polarity.
In anticipation of this interpretation, plaintiffs insist that, to the extent that the Grass reference discloses polar compounds as the sizable genus of substances suitable to trigger the corneal permeability enhancing properties of EDTA, the selection of gatifloxacin to achieve this result is not rendered obvious merely due to its status as a species of this genus. Plaintiffs cite to In re Baird, 16 F.3d at 382, for the proposition that "the fact that a claimed compound may be encompassed by a disclosed generic formula does not by itself render that compound obvious." Again, the available universe is not quite as broad as plaintiffs suggest. The Court in In re Baird made this statement in the context of a prior art disclosure of a genus that consisted of more than 100 million compounds. Id. By contrast, the genus disclosed by the Grass reference is not, as plaintiffs contend, any polar compound; rather, it is polar compounds that have a topical ophthalmic application.
Plaintiffs also emphasize defendants' failure to proffer a single reference in the 15 years between the publication of the Grass reference and the filing of the '045 patent that specifically discloses the use of EDTA to increase the corneal permeability of any drug. Irrespective of this period of alleged silence, one of ordinary skill is presumed to have knowledge of all pertinent prior art-be it obscure Or unknown to actual individuals.[28]See, e.g., Custom Accessories, Inc. v. Jeffrey-Allan Industries, Inc., 807 F.2d 955, 962 (Fed.Cir.1986); Bausch & Lomb, Inc. v. Bames-Hind/Hydrocurve, Inc., 796 F.2d 443 (Fed.Cir. 1986). Certainly, the Grass reference meets the criteria of pertinency to warrant its inclusion among this hypothetical knowledge base.
Moreover, the validity of claim 6 does not hinge, as plaintiffs insist, upon the existence of a prior art teaching that EDTA affects the corneal permeability of gatifloxacin specifically, or even quinolones generally. Insofar as the parties agree that corneal permeability is a desirable property of a drug indicated for topical ophthalmic administration, creativity, at a minimum, would lead one of ordinary skill to place special value upon the teachings of the Grass reference. See KSR, 550 U.S. at 418-19, 127 S. Ct. 1727. The likely compatibility of gatifloxacin and EDTA, made evident by the '456 and '470 patents, would only reinforce this value. At a minimum, within the finite range of excipients disclosed to be suitable in combination *423 with quinolones, it would be obvious to try one such excipient characterized by the prior art as increasing the corneal permeability of polar compounds. See id. at 421, 127 S. Ct. 1727. In view of the foregoing, the court concludes that defendants have demonstrated a prima facie case that the Grass reference, combined with the '470, '456 and '465 patents, would lead one of ordinary skill in the art to reasonably expect that, consistent with the court's construction of claim 6, the step of adding disodium edetate (even at a concentration as low as 0.1 w/v%) to a solution of gatifloxacin eye drops would demonstrate an increased concentration of gatifloxacin in the aqueous humor.
c. Claim 7
Defendants argue that using disodium edetate to prevent the precipitation of gatifloxacin[29] is obvious as a latent property or, alternatively, that such a result would have been expected in view of the Riley reference, the '456 patent and the '470 patent. Having failed to identify a prior art process comprising the addition of disodium edetate to an aqueous solution of gatifloxacin and, for the reasons discussed, supra, defendants have not shown that this claim is obvious for disclosing a latent property of a known process. See Bristol-Myers Squibb Co., 246 F.3d at 1376.
The court next considers whether the method of claim 7 would have been expected. As construed, the method of this claim requires disodium edetate in the amount of 0.001 to 0.2 w/v% to inhibit the precipitation of gatifloxacin in an aqueous solution. The court finds that, drawing upon the teachings of the Riley reference, one of ordinary skill in the art would predict that gatifloxacin, having a pKa value similar to norfloxacin, ciprofloxacin, ofloxacin and lomefloxacin, would likewise display a similar and predictable solubility profile. Because gatifloxacin can be expected to behave similarly to these prior art quinolones in solution, one of ordinary skill would find apposite a further teaching of the Riley referencethat the addition of carboxylic acid will increase the solubility of a quinolone in the relevant pH range for topical ophthalmic administration.[30] The record demonstrates that the ability to increase the solubility of a quinolone using carboxylic acid bears a direct relationship to the ability to prevent or inhibit the quinolone from precipitating out of a solution.[31] (D.I. 107 at 349-58, 384)
In opposition to this understanding, Dr. Stella testified that the Riley reference merely demonstrates that quinolones and carboxylic acid behave unpredictably in solution. (D.I. 108 at 612) However, Dr. Stella conceded on cross examination that the Riley reference demonstrates a consistent increase in quinolone solubility at pH 5. (Id. at 668) Despite any unpredictability in quinolone solubility present in other pH ranges, this admitted positive effect on solubility falls squarely within the relevant pH range for topical ophthalmic applications. (D.I. 107 at 350-51; D.I. 108 at *424 668-69) The Riley reference attributes this increased solubility to one or both of two potential mechanisms: (1) complexation of the quinolone by the carboxylic acid; or (2) self association of the quinolones.[32] (D.I. 107 at 350-353, 453; see also JTX 15 at 34; D.I. 108 at 668)
In sum, one of ordinary skill in the art would understand from the Riley reference that adding carboxylic acids to aqueous formulations of quinolones would be reasonably expected to increase the solubility and, thereby, inhibit the precipitation, of the quinolones. As one of ordinary skill would predict gatifloxacin, based on its pKa value, to display solubility characteristics similar to the quinolones studied in the Riley reference, it would be reasonable to assume that the addition of carboxylic acid to an aqueous solution of gatifloxacin would also inhibit the precipitation of gatifloxacin crystals from an aqueous solution. EDTA, an excipient known to be compatible with the quinolones studied in the Riley reference, contains four carboxylic acid groups. Finally, the '456 patent, as well as several prior art commercial quinolone products, teach the addition of EDTA in the claimed concentration range of 0.001 to 0.2 w/v%. Defendants have demonstrated, by clear and convincing evidence, a prima facie case that the Riley reference, in view of the '456 and '470 patents, renders the '045 patent obvious; i.e., one skilled in the art concerned with inhibiting the precipitation of gatifloxacin from an aqueous solution would reasonably expect to achieve this goal by adding a known compatible carboxylic acid excipient (such as EDTA) in the amounts taught by these prior art references to the aforementioned gatifloxacin solution.
d. Non-asserted claim 8
Defendants submit that the method of preventing the coloration of an aqueous gatifloxacin solution through the inclusion of 0.001 to 0.2 w/v% disodium edetate is rendered obvious by the Griffith reference. Plaintiffs primarily argue in response that there is no evidence that one of ordinary skill would have added disodium edetate to prevent the coloration of gatifloxacin because no prior art even indicated a discoloration issue with quinolones.
The evidence of record belies plaintiffs' position, as the prior art teaches that aqueous solutions of quinolones could become discolored by iron ions. (DTX 107 at 360; DTX 170 at col. 3:1-60) According to the Griffith reference, one of ordinary skill would understand that disodium edetate in concentrations from 0.0Q5% to 0.4% would prevent discoloration caused by iron ions of many different pharmaceuticals. Even assuming, as plaintiffs contend, that the prior art did not describe the source of the coloration problem for quinolones, Dr. Myrdal testified that the first step that one skilled in the art would take when faced with such a problem would be to apply a chelating agent such as EDTA. Not only did plaintiffs' expert Dr. Stella fail to rebut this testimony, he testified that he could not defend the validity of claim 8.[33] (D.I. 108 at 631) Accordingly, defendants have demonstrated that the Griffith reference would lead one of ordinary skill to reasonably expect that adding disodium edetate *425 to the gatifloxacin eye drops of the '470 patent would prevent any discoloration issues.
e. Secondary considerations
The parties have each proffered evidence of secondary considerations. In support of the prima face case of obviousness, defendants cite to Kyorin's independent prior formulation of aqueous ophthalmic gatifloxacin solutions containing disodium edetate. Plaintiffs argue that any showing of obviousness is mitigated through evidence of commercial success and unexpected results. The court addresses each in turn.
i. Contemporaneous invention
The record demonstrates that, in 1995, a researcher at Kyorin independently[34] formulated several ophthalmic gatifloxacin solutions containing disodium edetate. (D.I. 100, ex. 1 at ¶ 25) One of these formulations bears a striking resemblance to example 1 of the '456 patent.[35] (DTX 19) Kyorin described these formulations as clear of precipitates after six months of storage at low temperature (5° C). Defendants argue that Kyorin's ophthalmic gatifloxacin solution containing disodium edetate is evidence that this formulation was within the ordinary skill in the art. See Monarch Knitting Mach. Corp. v. Sulzer Morat GmbH, 139 F.3d 877, 883 (Fed.Cir. 1998) ("[a]lthough this court has noted the relevance of contemporaneous independent invention to the level of ordinary knowledge or skill in the art, it has also acknowledged the view that this evidence is relevant as a secondary consideration ....") (internal citations omitted).
Monarch stands for the proposition that, while not dispositive of the obviousness inquiry, evidence of contemporaneous invention must be weighed "in light of all the circumstances, especially in light of evidence of long-felt need." Id. A subsequent case supports defendants' view that Monarch endorses the use of contemporaneous invention as a secondary consideration by itself and is not limited to rebutting evidence of long-felt but unsolved need. See Boehringer Ingelheim Vetmedica, Inc. v. Schering-Plough Corp., 68 F. Supp. 2d 508, 543 (D.N.J.1999), later opinion, 166 F. Supp. 2d 19 (D.N.J.2001), aff'd, 320 F.3d 1339 (Fed.Cir.2003).
The court agrees that Kyorin's prior formulation is relevant to the question of obviousness, at least with respect to composition claims 1-3 and 9. At a minimum, the similarity between Kyorin's formulation and the formulation of the '456 patent lends credence to defendants' argument that one skilled in the art would have reason to combine the gatifloxacin disclosed by the '470 patent with disodium edetate pursuant to the formulation guidance provided by the '456 patent. This evidence reinforces a finding of obviousness with respect to claims 1-3 and 9.
With respect to the method claims, there is no evidence that Kyorin appreciated that this specific formulation had enhanced properties with respect to corneal permeability, precipitation or color prevention. Despite Kyorin's observation that its formulation resulted in a clear and colorless *426 solution after nearly 6 months at low temperature storage, it is undisputed that Kyorin did not provide Senju with a formulation that contains EDTA. (JTX 36) An omission of this nature demonstrates that Kyorin did not recognize or appreciate the invention described by claims 6, 7 and 8. See Boehringer, 68 F.Supp.2d at 544 ("the Court is not satisfied that [defendant] has presented sufficient evidence that [alleged contemporaneous inventors] cultured the PRRS virus or that they chose MA-104 cells for any particular reason other than that they were available at the time."). Accordingly, evidence of contemporaneous invention does not affect the obviousness inquiry with respect to claims 6, 7 and 8.
ii. Commercial success
Plaintiffs submit that the commercial success enjoyed by ZYMAR®, the undisputed commercial embodiment of the '045 patent, rebuts defendants' prima facie showing of obviousness. The Federal Circuit "deems evidence of (1) commercial success, and (2) some causal relation or `nexus' between an invention and commercial success of a product embodying that invention, probative of whether an invention was nonobvious." Merck & Co. v. Teva Pharms. USA, Inc., 395 F.3d 1364, 1376 (Fed.Cir.2005). In this regard, plaintiffs have adduced evidence that ZYMAR® holds a 35% ophthalmology market share and has generated annual sales of approximately $100 million. Joe Schulz, Allergan's Senior Vice-President for U.S. Eyecare, testified for plaintiffs that Allergan marketed the product based on the formulation claimed by the '045 patent and, specifically, the formulation's ability to increase the corneal permeability of gatifloxacin. (D.I. 106 at 51-53)
Defendants argue that an inference of nonobviousness does not apply in the instance where an earlier patent precludes the market entry of generic products and the patentee attributes commercial success to a later patent on the product. Id. at 1377. The '470 patent, which claimed the compound gatifloxacin, did not expire until December 2009 and remains subject to pediatric exclusivity until June 15, 2010. Citing to Merck, defendants contend that, because others were legally barred from testing gatifloxacin products until the pediatric exclusivity associated with the '470 patent expires, the court may not find an inference of nonobviousness with respect to any alleged commercial success of ZYMAR®. Id. Consistent with the Federal Circuit's holding that an inference of nonobviousness is weakened in such context,[36] the court attributes "minimal probative value" to the commercial success of ZYMAR®. Id.
iii. Unexpected results
Plaintiffs also argue that the increase in corneal permeability and inhibited precipitation were unexpected results of the combination of EDTA and gatifloxacin and, therefore, provide strong support for nonobviousness. Unexpected results exist when "the claimed invention exhibits some superior property or advantage that a person in the relevant art would have found surprising or unexpected." In re Soni, 54 F.3d 746, 750 (Fed.Cir.1995). The Federal Circuit has explained the rationale for finding that unexpected results rebut a contention of obviousness as follows: "[T]hat which would have been surprising to a person of ordinary skill in a particular art would not have been obvious." Id. To the extent that the court determined, supra, that one of ordinary *427 skill would expect the combination to exhibit each of these properties, this secondary consideration does not assist plaintiffs in rebutting defendants' prima facie case of obviousness.
f. Conclusion
Based on the foregoing, the court finds that, taken as a whole, the secondary considerations favor neither party and do not change the obviousness determination discussed above. Therefore, defendants have demonstrated, by clear and convincing evidence, that claims 1-3 and 6-9 are invalidated as rendered obvious by the asserted prior art.
C. Enablement
1. Legal standard
The statutory basis for the enablement requirement is found in 35 U.S.C. § 112, paragraph 1, which provides in relevant part:
The specification shall contain a written description of the invention and of the manner and process of making and using it, in such full, clear, concise and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same.
The Federal Circuit has explained that "patent protection is granted in return for an enabling disclosure of an invention, not for vague intimations of general ideas that may or may not be workable.... Tossing out the mere germ of an idea does not constitute enabling disclosure." Genentech, Inc. v. Novo Nordisk A/S, 108 F.3d 1361, 1366 (Fed.Cir.1997). Enablement is determined as of the filing date of the patent application. In re Brana, 51 F.3d 1560, 1567 n. 19 (Fed.Cir.1995). The enablement requirement is a question of law based on underlying factual inquiries. Wands, 858 F.2d at 737.
To satisfy the enablement requirement, a specification must teach those skilled in the art how to make and to use the full scope of the claimed invention without undue experimentation. Genentech, 108 F.3d at 1365. "While every aspect of a generic claim certainly need not have been carried out by the inventor, or exemplified in the specification, reasonable detail must be provided in order to enable members of the public to understand and carry out the invention." Id. at 1366. The specification need not teach what is well known in the art. Hybritech v. Monoclonal Antibodies, Inc., 802 F.2d 1367, 1384 (Fed.Cir.1986).
The use of prophetic examples does not automatically make a patent nonenabling. The burden is on one challenging validity to show, by clear and convincing evidence, that the prophetic examples together with the other parts of the specification are not enabling. Atlas Powder Co. v. E.I. Du Pont de Nemours & Co., 750 F.2d 1569, 1577 (Fed.Cir.1984).
Some experimentation may be necessary in order to practice a claimed invention; the amount of experimentation, however, "must not be unduly extensive." Id. at 1576. The test for whether undue experimentation would have been required is not merely quantitative, since a considerable amount of experimentation is permissible, if it is merely routine, or if the specification in question provides a reasonable amount of guidance with respect to the direction in which the experimentation should proceed to enable the determination of how to practice a desired embodiment of the invention claimed. PPG Indus., Inc. v. Guardian Indus., Corp., 75 F.3d 1558, 1564 (Fed.Cir. 1996) (quoting Ex parte Jackson, 217 U.S.P.Q. 804, 807 (1982)).
*428 A court may consider several factors in determining whether undue experimentation is required to practice a claimed invention, including: (1) the quantity of experimentation necessary; (2) the amount of direction or guidance disclosed in the patent; (3) the presence or absence of working examples in the patent; (4) the nature of the invention; (5) the state of the prior art; (6) the relative skill of those in the art; (6) the predictability of the art; and (7) the breadth of the claims. In re Wands, 858 F.2d 731, 737 (Fed.Cir.1988). These factors are sometimes referred to as the "Wands factors." A court need not consider every one of the Wands factors in its analysis. Rather, a court is only required to consider those factors relevant to the facts of the case. See Amgen, Inc. v. Chugai Pharm. Co., Ltd., 927 F.2d 1200, 1213 (Fed.Cir.1991).
A discrete, but related, inquiry considers the presence of inoperative embodiments and informs the enablement inquiry. National Recovery Techs. Inc. v. Magnetic Separation Sys., Inc., 166 F.3d 1190, 1196 (Fed.Cir.1999). Pursuant to this inquiry, a claim is invalid for lack of enablement "if it reads on a significant number of inoperative embodiments." Crown Operations Int'l, Ltd. v. Solutia Inc., 289 F.3d 1367, 1381 (Fed.Cir.2002) (internal citations omitted).
2. Discussion
Defendants contend that method claims 6 and 7 are not enabled insofar as they fail to limit the pH or concentration levels of either gatifloxacin or disodium edetate, and that many permutations of these variables within this allegedly broad scope do not result in increased permeability or prevention of precipitation. The court addresses defendants' arguments vis a vis each claim.
a. Claim 6
According to defendants, the claimed range of 0.001 to 0.2 w/v% disodium edetate to a gatifloxacin solution does not per se result in increased corneal permeability. In support of this argument, defendants primarily rely upon the testimony of Dr. Myrdal, who contends that, based on the Grass reference, the low end of the claimed concentration range of EDTA will not work to increase corneal permeability. (D.I. 107 at 381) The slide that Dr. Myrdal used to illustrate this point consists of a line bar depicting a range of EDTA concentrations from below 0.001 to above 0.5 w/v%. (DTX 194 at 140) The line bar also depicts Dr. Myrdal's conclusion that EDTA, at a concentration somewhere above 0.001 w/v%, would be expected to increase corneal permeability. (Id.) However, neither the line bar nor Dr. Myrdal identifies a discrete concentration at which this functional transition occurs. Defendants also allege that the failure to enable claim 6 is implicit in a report by Yasueda showing that, "at the same one-hour time point used in the patent as the marking point for corneal permeability, formulation C (gatifloxacin with disodium edetate) showed no increase in permeability over formulation B (gatifloxacin alone)." (D.I. 110 at 40; JTX 24 at 10-12) The parties' experts agree that there is no statistical difference between the two formulations at the one-hour time point in this study. (D.I. 107 at 365-67)
Dr. Myrdal's ambiguous conclusion that a portion of the claimed range would "likely" not have an effect on corneal permeability does not establish clear and convincing evidence of invalidity. Even assuming defendants have identified a single one-hour data point that may correspond to an inoperable embodiment, this evidence, too, *429 suffers from a similar deficiency.[37] This is because, "[e]ven if some of the claimed combinations [are] inoperative, the claims are not necessarily invalid." Atlas Powder Co. v. E.I. Du Pont de Nemours & Co., 750 F.2d 1569, 1576 (Fed.Cir.1984). To the extent that defendants have alleged a lack of enablement based on inoperable embodiments, defendants must show that claim 6 "reads on significant numbers of inoperative embodiments." Crown, 289 F.3d at 1380. The court concludes that defendants have made no such showing and, therefore, have failed to demonstrate, by clear and convincing evidence, that one of ordinary skill cannot practice the full scope of the method of claim 6 without undue experimentation.
b. Claim 7
Defendants likewise allege that claim 7 fails to satisfy the enablement requirement because it reads upon multiple inoperable embodiments. In this regard, defendants contend that, contrary to the method of claim 7:(1) both sodium chloride and disodium edetate are required to prevent precipitation; and (2) certain compositions would not precipitate regardless of the inclusion of disodium edetate.
With respect to the first alleged ground, defendants note that testing by Yasueda demonstrates that combining only EDTA and gatifloxacin into an aqueous composition does not prevent precipitation. (JTX 23 at 7) Instead, defendants contend that sodium chloride is required as well. (See id. at 7-8) In response, plaintiffs submit the results of two formulations in this study, E-1 and E-3. Neither of these formulations contained sodium chloride. (Id. at 3) Yasueda determined that formulation E-3, which contained 0.05g disodium edetate, precipitated after 2 freeze-thaw cycles, and that formulation E-1, which contained 0.1g disodium edetate, precipitated after 3 freeze-thaw cycles. (Id. at 8) Consequently, despite a showing that sodium chloride further assists in preventing the precipitation of aqueous gatifloxacin compositions containing EDTA, the evidence of record demonstrates that increasing the amount of EDTA hindered the precipitation of formulations without sodium chloride. Because claim 7, as construed, only requires disodium edetate to "hinder the progress of" the precipitation of gatifloxacin, defendants have failed to demonstrate a lack of enablement in this regard.
Defendants next argue that, in the study performed by Yasueda, precipitation did not occur in several of the formulations that did not contain EDTA. The court agrees that EDTA cannot act to prevent what would not occur to begin with. However, there is no failure to satisfy the enablement requirement for claiming substantial inoperable embodiments if one of ordinary skill possesses the "necessary information to limit the claims to operative embodiments...." Crown, 289 F.3d at 1380 (citing In re Cook, 58 C.C.P.A. 1049, 439 F.2d 730, 735 (1971)). Here, the record demonstrates that one of ordinary skill would recognize that certain aqueous gatifloxacin compositions would not exhibit precipitation. (DTX 194 at 143) The mere fact that a solution does not precipitate to begin with would logically obviate the need to consider a remedy concerning the prevention of precipitation. These instances must be excluded from the inoperative embodiment inquiry. In accordance with the findings above, the court concludes that defendants have failed to demonstrate, by clear and convincing evidence, that claim 7 is invalid for lack of enablement.
D. Enforceability
1. Legal standard
Applicants for patents and their legal representatives have a duty of candor, *430 good faith, and honesty in their dealings with the United States Patent and Trademark Office ("PTO"). Molins PLC v. Textron, Inc., 48 F.3d 1172, 1178 (Fed. Cir.1995); 37 C.F.R. § 1.56(a) (2003). The duty of candor, good faith, and honesty includes the duty to submit truthful information and the duty to disclose to the PTO information known to the patent applicants or their attorneys which is material to the examination of the patent application. Elk Corp. of Dallas v. GAF Bldg. Materials Corp., 168 F.3d 28, 30 (Fed.Cir.1999). A breach of this duty constitutes inequitable conduct. Molins, 48 F.3d at 1178. If it is established that a patent applicant engaged in inequitable conduct, the patent application is rendered unenforceable. Kingsdown Med. Consultants v. Hollister Inc., 863 F.2d 867, 877 (Fed.Cir. 1988).
In order to establish unenforceability based on inequitable conduct, a defendant must establish, by clear and convincing evidence, that: (1) the omitted or false information was material to patentability of the invention; or (2) the applicant had knowledge of the existence and materiality of the information; and (3) the applicant intended to deceive the PTO. Molins, 48 F.3d at 1178. A determination of inequitable conduct, therefore, entails a two step analysis. First, the court must determine whether the withheld information meets a threshold level of materiality. A reference is considered material if there is a substantial likelihood that a reasonable examiner would consider it important in deciding whether to allow the application to issue as a patent. Allied Colloids, Inc. v. American Cyanamid Co., 64 F.3d 1570, 1578 (Fed.Cir.1995) (citations omitted). A reference, however, does not have to render the claimed invention unpatentable or invalid to be material. See Merck v. Danbury Pharmacal, 873 F.2d 1418 (Fed.Cir. 1989).
After determining that the applicant withheld material information, the court must then decide whether the applicant acted with the requisite level of intent to mislead the PTO. See Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1327 (Fed.Cir.2009); Baxter Int'l, Inc. v. McGaw Inc., 149 F.3d 1321, 1327 (Fed.Cir. 1998). "Intent to deceive cannot be inferred solely from the fact that information was not disclosed; there must be a factual basis for finding a deceptive intent." Hebert v. Lisle Corp., 99 F.3d 1109, 1116 (Fed.Cir.1996). That is, "the involved conduct, viewed in light of all the evidence, including evidence indicative of good faith, must indicate sufficient culpability to require a finding of intent to deceive." Kingsdown, 863 F.2d at 876 (Fed.Cir. 1988). Evidence of specific intent must "be clear and convincing, and inferences drawn from lesser evidence cannot satisfy the deceptive intent requirement." Star Sci., Inc. v. R.J. Reynolds Tobacco Co., 537 F.3d 1357, 1366 (Fed.Cir.2008). A "smoking gun" is not required in order to establish an intent to deceive. See Merck, 873 F.2d at 1422.
Once materiality and intent to deceive have been established, the trial court must weigh them to determine whether the balance tips in favor of a conclusion of inequitable conduct. N.V. Akzo v. E.I. DuPont de Nemours, 810 F.2d 1148, 1153 (Fed.Cir. 1987). The showing of intent can be proportionally less when balanced against high materiality. Id. In contrast, the showing of intent must be proportionally greater when balanced against low materiality. Id.
2. Discussion
Defendants contend that Yasueda and Inada made material misrepresentations and withheld material data bearing upon the claimed corneal permeability and precipitation properties during the prosecution *431 of the '045 patent. According to defendants, several instances of withheld data belie the applicants' conclusions that the invention of the '045 patent demonstrated increased corneal permeability and prevented precipitation.
With respect to the claims of increased corneal permeability, defendants propound that the results of the studies contained in the research reports contradict the conclusions asserted in the application for the '045 patent, namely, that adding disodium edetate increased the corneal permeability of an aqueous gatifloxacin composition by a multiple of 1.2 to 1.5.[38] First, defendants assert that the data presented by table 2 of the '045 patent is based on a "vanishingly small" sample size of testing. Defendants theorize that the inventors withheld the sample size so as to prevent the examiner from discovering the statistical insignificance of the presented results. Specifically, defendants contend that the sample of three eyes for formulation B and five eyes for formulation C created "exceeding unreliable" results.
As a preliminary matter, defendants have not identified any requirement of the patent laws regarding statistical significance. Of course, the failure to disclose a small sample size could still fall within the ambit of materiality if, for example, the applicants told the examiner that the disclosed results met the FDA's requirement for statistical significance, or statistical significance was otherwise heralded in the specification of the '045 patent. Defendants have adduced no such evidence. In fact, contrary to defendants' theory that plaintiffs only provided the PTO with results that favored the claim of increased corneal permeability, the evidence of record demonstrates that the applicants included in the data for table 2 of the '045 patent an inconsistent and potentially unreliable data point which tended to militate against a showing of increased corneal permeability. Dr. Jennifer Elder ("Dr. Elder"), defendants' statistical analysis expert, testified that without this "outlier" data point, formulation C has a statistically significantly higher corneal permeability than formulation A and B. (D.I. 108 at 508-511) The court concludes that the applicants' failure to disclose the sample size associated with table 2 did not result in a material omission.
Next, defendants contend that the applicants knowingly failed to disclose data tending to demonstrate that disodium edetate has no meaningful effect upon corneal permeability. In support of this theory, defendants note that, at the one-hour time point used in the patent as the marking point for increased corneal permeability, a second undisclosed study of formulations Band C revealed no appreciable difference in corneal permeability. (JTX 24 at 12) Defendants further allege that Yasueda recognized the significance of these results when he reported that the aqueous humor migration was "virtually the same." (Id.)
Viewing Yasueda's remarks within the context of the entire passage from which they are taken,[39] the court finds that they concern the relative aqueous humor migrations of gatifloxacin and levofloxacin, and do not compare formulation B with formulation *432 C. Moreover, the unrebutted testimony of Dr. Matthew Mayo ("Dr. Mayo") establishes that the experiment that generated the results of table 9 was not designed to look at the amount of gatifloxacin in the aqueous humor at a specific time. (D.I. 108 at 554) Instead, the appropriate baseline comparison is the total concentration of gatifloxacin measured in the aqueous humor over the entire span of the experiment, which is illustrated by the AUC. Table 10 reflects this data and confirms the conclusion set forth by the '045 patent, i.e., that formulation C (which contained disodium edetate) demonstrated a corneal permeability approximately 1.46 times that of formulation B (which did not contain disodium edetate). (JTX 24 at 13) The applicants' failure to disclose the results of table 9 did not result in a material omission.
With respect to the applicants' alleged material omissions of precipitation data, defendants argue that Yasueda failed to inform the examiner that both disodium edetate and sodium chloride are required to prevent the precipitation of gatifloxacin. Defendants allege that this requirement is made evident by comparing the absence of precipitation in formulations B and C (both of which contained sodium chloride) with the eventual precipitation of formulations E-1 and E-3 (neither of which contained this component). Yasueda's awareness regarding the necessity of sodium chloride is allegedly captured in the research reports in which he notes that, "[i]n the case of solutions containing both [disodium edetate] and sodium chloride, a crystal precipitate preventative action was observed for 0.5% [gatifloxacin] ophthalmic solution (pH 6.0)." (JTX 23 at 7-8) According to defendants, this contradicts the applicants' claims that disodium edetate alone prevents precipitation.
Defendants' arguments are unavailing under the court's construction of "preventing precipitation," which is properly defined as hindering the progress of precipitation. See Agfa Corp. v. Creo Prods., 451 F.3d 1366, 1377 (Fed.Cir.2006) (acknowledging the interrelationship of materiality and claim construction). As mentioned, supra, formulations E-1 and E-3 were identical aside from a greater concentration of EDTA in formulation E-1. The test results for these formulations established that it took longer, i.e., more freeze-thaw cycles were required, for formulation E-1 to precipitate. Such a result is entirely consistent with the meaning of "preventing precipitation." Moreover, Yasueda's statement is inapposite to the materiality inquiry to the extent that he made no comment that a precipitation effect was only observed in solutions containing sodium chloride. Accordingly, because the data from formulations E-1 and E-3 establishes that EDTA acts to prevent precipitation within the meaning of the '045 patent, this is cumulative of the other data submitted by the applicants in support of experiment 2. See 37 C.F.R. § 1.56(b).
An additional material omission allegedly arises from the applicants' failure to submit the results of tests showing that multiple gatifloxacin solutions made without disodium edetate did not precipitate. The evidence adduced at trial, however, establishes that one of ordinary skill would understand that the solubility of gatifloxacin, established above to be directly related to precipitation potential, was highly dependent upon pH. (D.I. 107 at 434-36) The '045 patent discloses this pH dependency. Accordingly, this undisclosed testing is consistent with, and cumulative of, other disclosures contained in the '045 patent and cannot form a basis for a material omission.
*433 In view of the foregoing, the court concludes that the applicants did not make material misstatements or withhold material information during the prosecution of the '045 patent. Having concluded as such, the court does not reach the issue of intent to deceive. Defendants have failed to demonstrate, by clear and convincing evidence, that the '045 patent is unenforceable on the basis that it was procured by inequitable conduct.
IV. CONCLUSION
For the reasons discussed above, the court concludes that plaintiffs have proven, by a preponderance of the evidence, that defendants infringe claims 1-3, 6, 7 and 9 of the '045 patent. Defendants have demonstrated, by clear and convincing evidence, that claims 1-3 and 6-9 are invalid as obvious. Defendants have failed to prove, by clear and convincing evidence, that claims 6 and 7 are invalid for lack of enablement. Likewise, defendants have failed to prove, by clear and convincing evidence, that the '045 patent is unenforceable for inequitable conduct. Having found no basis to conclude that this case is exceptional, the parties shall bear their own costs. An appropriate order shall issue.
ORDER
At Wilmington this 14th day of June, 2010, consistent with the memorandum opinion issued this same date;
IT IS ORDERED that:
1. Plaintiffs have demonstrated, by a preponderance of the evidence, that defendants' ANDA product infringes claims 1-3, 6, 7 and 9 of U.S. Patent No. 6,333,045.
2. Defendants have demonstrated, by clear and convincing evidence, that claims 1-3 and 6-9 of U.S. Patent No. 6,333,045 are rendered obvious by the prior art.
3. Defendants have failed to demonstrate, by clear and convincing evidence, that claims 6 and 7 of U.S. Patent No. 6,333,045 are invalid for lack of enablement.
4. Defendants have failed to demonstrate, by clear and convincing evidence, that U.S. Patent No. 6,333,045 is unenforceable because it was procured through inequitable conduct.
5. The Clerk of Court is directed to enter judgment in favor of defendants and against plaintiffs.
NOTES
[1] NDA No. 02-1493.
[2] The '470 patent, which claims the compound gatifloxacin and its derivatives, expired on December 15, 2009. (Id. at ¶ 32) Pediatric exclusivity associated with the '470 patent ends on June 15, 2010, after which time only the '045 patent remains to forestall the emergence of generic aqueous gatifloxacin ophthalmic solutions incorporating disodium edetate as an excipient. (Id. at ¶ 51)
[3] ANDA No. 79-084.
[4] See 21 U.S.C. § 355(j)(2)(A)(vii)(IV).
[5] Defendants include non-asserted claim 8 among these contentions of invalidity.
[6] Quinolones demonstrate high activity against both gram-negative and gram-positive bacteria. ('470 patent, col. 1:32-35)
[7] The '470 patent issued to Kyorin in 1990. (D.I. 100, ex. 1 at ¶¶ 21, 22)
[8] The IUPAC, or systematic, name for gatifloxacin is 1-cyclopropyl-6-fluoro-1, 4-dihydro-8-methoxy-7 (3-methyl-1-piperazinyl)-4-oxo-3-quinoline carboxylic acid.
[9] Ofloxacin and ciprofloxacin are both third generation quinolones, and norfloxacin is a second generation quinolone. (D.I. 106 at 44-45)
[10] Because the principles of solution chemistry render EDTA and disodium edetate functionally equivalent, and insofar as the parties make no distinguishing arguments on these grounds, the court treats a prior art disclosure of a property of one compound as the disclosure of the property with respect to both, and refers to these compounds interchangeably.
[11] The 1986 Handbook of Pharmaceutical Excipients discloses that EDTA, in addition to its chelating function, may act as an antibacterial synergyst/preservative enhancer. (DTX 166 at 6)
[12] A chelating agent can complex with certain undesirable ions (generally metals), thereby removing them from solution. (D.I. 107 at 332-333) This chelating effect is achieved in EDTA through its four carboxylic acid groups which act to wrap around these ions, forming complex bonds withand thereby inactivating within the solutionthe targeted ions. (D.I. 107 at 354; D.I. 108 at 669)
[13] The authors note that "the effects of chelating agents such as EDTA on the permeability of inorganic and organic solutes have been well documented in other epithelia, as well as the corneal endothelium, [but] no definitive studies examining the effects of these compounds upon the corneal epithelia have been reported." (Id.)
[14] In one example, the authors inhibited the corneal permeability of a solution of glycerol and 0.5 w/v% EDTA by adding calcium to the solution. This calcium complexes with the EDTA, leaving less EDTA to interact with the calcium ions in the corneal epithelia.
[15] Glycerol is a small polar compound, while cromolyn is a large pharmaceutically active polar compound. (JTX 12 at 112; see also D.I. 107 at 341-42)
[16] Plaintiffs' expert, Dr. Valentino Stella ("Dr. Stella"), co-authored this paper. (D.I. 108 at 664)
[17] In solution chemistry, pKa represents the logarithmic measure of the strength of an acid in solution, i.e., the tendency of a compound to accept or donate a proton. A numerically higher pKa corresponds to a compound that is more basic and less acidic.
[18] The quinolones discussed by the '456 patent include norfloxacin, ofloxacin, perfloxacin, enoxacin and ciprofloxacin. (Id. at col. 1:30-36)
[19] To measure corneal permeability, the subject formulation is instilled into the eyes of one or more male Japanese albino rabbits. At a designated time after this instillation, the rabbits are sacrificed and the eyes are harvested. The aqueous humor is then collected from each eye, and the concentration of the formulation is measured. (See '045 patent at col. 3:44-49)
[20] Formulation B corresponds to F-1 in the research reports.
[21] Formulation C corresponds to E-4 in the research reports.
[22] Formulation D corresponds to formulation E-2 in the research reports.
[23] ANDA No. 79-083.
[24] Osmolarity reflects the number of osmoles of solute per unit volume of solution. Osmolarity differs from molarity in that osmolarity measures particles of solute rather than moles of solute, the distinction being that not all solute will dissociate in solution. Defendants have conceded that only sodium chloride, a salt that freely dissociates in solution, affects this measurement in the ANDA product. (D.I. 107 at 219)
[25] The results of the NucroTechnics study were interpreted by defendants' experts. (D.I. 107 at 390, 443-45, 491-92)
[26] Despite requesting a construction of "disodium edetate" that would confine this limitation to a specific range of concentrations, i.e., 0.001 to 0.2 w/v%, plaintiffs make no prior art distinction based on this construction or any of the limitations contained in dependent claims 2 (pH between 5 and 8), 3 (eye drops), and 9 (eye drops with pH between 5 and 8).
[27] It is undisputed that the person of ordinary skill in the art would be skilled in the art of formulating aqueous pharmaceutical compositions as of August 21, 1998. This person would have a Ph.D. in pharmaceutics, pharmaceutical chemistry, or a closely related field, and at least two years of experience in formulating aqueous dosage forms. Alternatively, this person would have a lesser degree in an appropriate field and substantially more scientific training and practical experience in formulating aqueous pharmaceutical compositions. (See D.I. 107 at 319-20; D.I. 108 at 628-30)
[28] Here, however, the Grass reference was known to Inada, and it was cited during the prosecution of the '045 patent. While Inada testified that he was aware of the Grass reference, he further explained that he believed that the disodium edetate concentration taught in this reference was higher than the invention of the '045 patent. (D.I. 107 at 462)
[29] The parties agree that it is undesirable for the active pharmaceutical ingredient to precipitate out of a topical ophthalmic solution. (D.I. 107 at 233-34, 310, 316-17)
[30] Ophthalmic compositions are suitable for topical administration over a pH range of 5-8. (See D.I. 107 at 335; see also '045 patent at claim 2)
[31] Plaintiffs argue that defendants have failed to demonstrate a link between the solubility studies reported in Riley and the prevention of precipitation specifically in a freeze-thaw study. (D.I. 112 at 32) This is a distinction without a difference, as neither the parties' proposed claim constructions, nor the court's actual construction, identifies a freeze-thaw limitation in the method of claim 7.
[32] Dr. Stella maintains that he proposed the self association theory and that his colleague authored the carboxylic acid mechanism. (D.I. 108 at 668)
[33] Q. And you told plaintiffs' counsel that you could not support the validity of claim 8, isn't that correct?
A. That's correct.
Q. Okay. And that is because you had had enough experience to know that you had seen EDTA prevent coloration in some products, and you felt you could not defend the validity of claim 8, isn't that correct?
A. That's correct.
[34] While Kyorin ultimately provided Senju with a gatifloxacin formulation, it did not contain EDTA. (JTX 36) None of the Kyorin researchers are listed as inventors of the '045 patent.
[35] Example 1 is also the formulation of BACCIDAL®, a commercially marketed norfloxacin solution. The only appreciable differences between these two formulations is the substitution of gatifloxacin for norfloxacin, and the absence of benzalkonium chloride in Kyorin's formulation. (DTX 19; '456 patent at col. 3:25-36)
[36] As opposed to vitiated, as defendants contend. See id. (finding that where an earlier patent blocks entry of generic products into the market, a weak inference of commercial success may be attributed to a later patent on the product.).
[37] The court addresses defendants' characterization of the results of this test infra.
[38] Defendants state that the applicants asserted a 50% increase, however, the '045 patent discloses that the expected range of increase is between "about 1.2 times and 1.5 times." ('045 patent at col. 4:1-5)
[39] The full sentence reads: "The [gatifloxacin] and levofloxacin aqueous humor migration after instillation with 0.5% [gatifloxacin] ophthalmic solution, 0.5% [gatifloxacin] solution including 0.05% [disodium edetate], and 0.5% levofloxacin solution were virtually the same in aqueous humor concentration and AUCo-4 at the various times." (Id.) (emphasis added)
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716 F. Supp. 2d 848 (2010)
Briant CHUN-HOON and Carlo Guglielmino, Plaintiffs,
v.
McKEE FOODS CORPORATION, a Tennessee corporation; and Does 1 through 100, inclusive, Defendants.
No. C 05-620 VRW.
United States District Court, N.D. California.
June 7, 2010.
*849 Kevin K. Eng, Edward Scott Zusman, Markun Zusman & Compton LLP, San Francisco, CA, for Plaintiffs.
William H. Pickering, Anthony A. Jackson, Chambliss, Bahner & Stophel, P.C., Chattanooga, TN, Alan H. Silberman, Sonnenschein Nath & Rosenthal LLP, Chicago, IL, R. Brian Dixon, Littler Mendelson, PC, San Francisco, CA, for Defendants.
ORDER
VAUGHN R. WALKER, Chief Judge.
The parties seek final approval of settlement in this class action against McKee Foods Corporation ("McKee") for violation of the overtime requirements of the California Labor Code, fraud, negligent misrepresentation, breach of contract, unfair and fraudulent business practices and declaratory relief. Docs. # 103; 1.
As set forth in the court's October 15 order, Doc. # 100, McKee manufactures Little Debbie Snack Cakes and Sunbelt snacks and cereals and sells its products to independent distributors, who then resell the products to supermarkets, mass merchandisers and other retail outlets. After *850 unsuccessful settlement discussions, the parties engaged former United States District Judge Eugene F Lynch to mediate the case. The mediation proved fruitful and on August 11, 2009, the parties moved for preliminary approval of the proposed settlement.
The court granted preliminary approval of the class action settlement on October 15, 2009, 2009 WL 3349549. Doc. # 100. The factual background of the case and the terms of the settlement agreement have not changed since the issuance of that order; therefore, the court does not rescribe those items here.
Notice of the proposed settlement was provided to the class, and of the 329 class members who were mailed notices of the proposed settlement, only sixteen (16) returned exclusion forms. Doc. # 103 at 8; Cagle Decl. at ¶¶ 4-5, 9. Of the 148 class members who responded to the class notice, 132 submitted claim forms. Id. No objections to the proposed settlement have been filed. Id.
The parties, jointly, now move for final approval of the proposed settlement pursuant to FRCP 23(e). Doc. # 103. Class counsel also move for an order granting attorney fees, costs and class representative incentive payments. Doc. # 106. The court held a final settlement approval hearing on March 11, 2010, at which time the parties clarified that the settlement excludes new or additional individuals who were not part of the class as of the date of notice.
Before taking up the merits of the parties' application, the court notes that in this case, like many class actions, variables pertinent to the award of reasonable fees to class counsel, including the strength of the class's case, the opportunity costs incurred by class counsel, the spectra of risk faced by the parties and the business calculus that drives settlement discussions, are difficult to quantify. In an effort to obtain at least some measure of these factors, the undersigned has used the lodestar cross-check method, crafted by the late Judge Edward Becker, see In re General Motors Corp. Pick-Up Truck Fuel Tank Products Liability Litigation, 55 F.3d 768, 820 (3d Cir.1995), to evaluate whether, given the circumstances presented in a particular class action, a negotiated fee award appears reasonable. As discussed in more detail below, the abovecaptioned case provides further evidence of the utility of the lodestar crosscheck method in evaluating the true value of a proposed settlement and thus the worth of the services rendered by class counsel in bringing and prosecuting the action. As explained below, that analysis here suggests that this was a notably weak case and counsel's efforts could more profitably have been devoted to other pursuits.
For the reasons that follow, the court GRANTS the parties' motion for final settlement approval and GRANTS class counsel's motion for fees, costs and incentive payments.
I
Federal Rule of Civil Procedure 23(e) requires court approval for the settlement of any class action. In order to be approved, a settlement must be "fundamentally fair, adequate and reasonable." Torrisi v. Tucson Elec. Power Co., 8 F.3d 1370, 1375 (9th Cir.1993) (quoting Class Plaintiffs v. Seattle, 955 F.2d 1268, 1276 (9th Cir.1992), cert. denied, 506 U.S. 953, 113 S. Ct. 408, 121 L. Ed. 2d 333 (1992)), cert. denied, 512 U.S. 1220, 114 S. Ct. 2707, 129 L. Ed. 2d 834 (1994). In assessing whether a settlement is "fair, reasonable and adequate" under FRCP 23(e), the court is to consider: (1) the strength of the plaintiffs' case; (2) the risk, expense, complexity and likely duration of further litigation; *851 (3) the risk of maintaining class action status throughout the trial; (4) the amount offered in settlement; (5) the extent of discovery completed and the stage of the proceedings; (6) the experience and views of counsel; (7) the presence of a governmental participant; and (8) the reaction of class members to the proposed settlement.[1]Churchill Village v. General Electric, 361 F.3d 566, 575 (9th Cir.2004) (citing Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir.1998)). To these factors, the court adds as a ninth factor to consider the procedure by which the settlement was arrived at. See Manual for Complex Litigation (Fourth) § 21.6 (2004).
The first factor, the strength of plaintiffs' case, favors settlement, as plaintiffs' remaining claims appear tenuous. As class counsel recognize, there are significant barriers plaintiffs must overcome in making their case, including proving the existence of an employer-employee relationship between McKee and the distributors. See Doc. # 103 at 17. The parties seem to agree that McKee has "introduced significant evidence that the actual relationship between McKee and the distributors was consistent with the distributorship Agreements," which allegedly envision an independent contractor, rather than an "employee," relationship. Id. Because plaintiffs will likely face difficulty in establishing the existence of an employeremployee relationship, the likelihood of plaintiffs succeeding on their claims seems remote.
For the same reason, the second factor, the risk, expense, complexity and likely duration of further litigation, favors settlement as well. Given the tenuous nature of plaintiffs' claims described above, there is a significant risk of an outcome unfavorable to the plaintiffs and the class.
The risk of maintaining class action status throughout the trial additionally favors settlement, albeit slightly. McKee contends that developments in case law as well as further discovery will confirm that the issues in this case cannot be tried on a representative basis. Doc. # 103 at 18. While such an assertion does not lead to the conclusion that maintaining a class is unlikely, it does appear plaintiffs agree that before the conclusion of a trial the court would have to reconsider the issue of class certification. Id. at 19. Because a risk of decertification has been acknowledged by both parties, this factor slightly favors settlement.
The precise terms of offer also favor settlement. While the court noted its hesitation regarding the purported benefits to the class in its order of October 15, Doc. # 100, this concern evidently was not shared by the members of the class, none of whom objected to the settlement offer. Despite its earlier hesitation, the court finds that the terms of settlement do in fact provide benefits to the class. Specifically, former distributors may opt for a $250 cash settlement, which by definition is beneficial. As to current distributors, the court finds the marketing seminars, which are designed, in part, to provide examples of business models and practices that distributors have used to increase their sales and profitability, will afford distributors valuable business training and advice. The skills acquired during the seminars will then in turn enable distributors to utilize more efficient business practices and methods. Upon further reflection, therefore, the court finds the settlement to be beneficial to the class.
The extent of discovery completed and the stage of the proceedings, factor number *852 five, also supports settlement. The parties have engaged in several years of litigation, including depositions, substantial research, an interlocutory appeal and several motions. By the time the settlement was reached, therefore, the litigation had proceeded to a point at which both plaintiffs and defendants "ha[d] a clear view of the strengths and weaknesses of their cases." In re Warner Communications Sec. Litig., 618 F. Supp. 735, 745 (S.D.N.Y. 1985) aff'd 798 F.2d 35 (2d Cir.1986). Because the true value of the class' claims is well-known and class counsel possess a sufficient understanding of the issues involved and the strengths and weaknesses of the case, the fifth factor favors settlement.
The views of counsel support settlement as well. While some courts have indicated that such views are entitled to deference, see, for example, Williams v. Vukovich, 720 F.2d 909, 922-23 (6th Cir.1983), this court is reluctant to put much stock in counsel's pronouncements, as parties to class actions and their counsel often have pecuniary interests in seeing the settlement approved. Here, the parties move jointly for final approval of the settlement. While the court is disinclined to give this factor much weight, the favorable views of counsel do support settlement.
The reaction of class members to the proposed settlement, or perhaps more accurately the absence of a negative reaction, strongly supports settlement. A total of zero objections and sixteen opt-outs (comprising 4.86% of the class) were made from the class of roughly three hundred and twenty-nine (329) members. The Ninth Circuit has approved settlements over objections if the settlement otherwise meets the fairness requirements. See, e.g., Churchill Village, 361 F.3d at 577 (500 optouts and 45 objections out of approximately 90,000 notified class members); In re Mego Financial Sec. Litig., 213 F.3d 454, 459 (9th Cir.2000) (one objection out of a potential class of 5400). Accordingly, the overwhelming positive reaction of the class members supports settlement.
Lastly, the procedure by which the settlement was arrived further supports settlement. The arms-length negotiations, including a day-long mediation before Judge Lynch, indicate that the settlement was reached in a procedurally sound manner. Doc. # 176 at 4. Additionally, there is nothing in the record indicating collusion or bad faith by the parties.
After considering the above factors and the lodestar figure discussed below, the court finds the settlement to be fair, reasonable and adequate to the class within the meaning of FRCP 23(e)(1)(C). The court, therefore, GRANTS the parties' motion for final approval of the settlement.
II
The court has the authority and duty to determine the fairness of attorney fees in a class action settlement. Zucker v. Occidental Petroleum Corp., 192 F.3d 1323, 1328-29 (9th Cir.1999). Class counsel seek an award of attorney fees in the amount of $255,000, plus litigation costs of $34,156.07. Doc. # 106 at 5.
Class counsel have submitted data on their own stated hourly rates and have calculated the lodestar figure using the Laffey matrix.[2] Id. at 11-12 (reenlisting a 2008 class action fee analysis); Doc. # 107, Exh. B; see also Laffey v. Northwest Airlines, Inc., 572 F. Supp. 354 (D.D.C.1983), rev'd on other grounds, 746 F.2d 4 (D.C.Cir.1984), cert. denied, 472 U.S. 1021, *853 105 S. Ct. 3488, 87 L. Ed. 2d 622 (1985), as modified by Save Our Cumberland Mountains, Inc. v. Hodel, 857 F.2d 1516 (D.C.Cir.1988).
While class counsel's submissions are helpful, the court recalculates the lodestar figure as follows. Under the 2009-2010 Laffey matrix,[3] attorneys bill at the following rates according to experience:
Experience Rate Per Hour
20+ Years $465
11-19 Years $410
8-10 Years $330
4-7 Years $270
1-3 Years $225
Paralegals & Law Clerks $130
Class counsel further recognize that these figures are tailored for the District of Columbia and cost of living data differ for San Francisco and Los Angeles (the cities in which class counsel operate). Class counsel have adjusted the hourly rates based on the federal locality pay differentials as indicated on federally compiled cost of living data. See Doc. # 107, Exh. B.
Applying the adjustments for San Francisco (107.4%) and Los Angeles (102.77%), the court obtains the following rates[4]:
San Francisco Los Angeles
Experience Hourly Rate Hourly Rate
20 + Years $499.41 $477.88
11-19 Years $440.34 $421.36
8-10 Years $354.42 $339.14
4-7 Years $289.98 $277.48
1-3 Years $241.65 $231.23
Paralegals &
Law Clerks $139.62 $133.60
The following table reflects the court's adjusted lodestar calculations for attorneys and legal assistants working on the case. See Doc. # 106.
Attorney/Legal 2009-10 Total
Assistant Office Experience Laffey Rate Total Hours Lodestar
Jeffrey Compton LA 21 $477.88 2.2 $ 1051.34
Kevin Eng SF 10 $354.42 903.1 $320,076.70
Legal Assistant SF n/a $139.62 21 $ 2,932.02
Edward Zusman SF 19 $440.34 193 $ 84,985.62
Legal Assistant LA n/a $133.60 .5 $ 66.80
David Markun LA 27 $477.88 46.7 $ 22,316.97
________ ___________
Totals 1166.5 $431,429.45
First, it appears that, given the length of proceedings, as well as the motions filed and discovery conducted, it is reasonable that the attorneys in this case have spent almost 1,200 hours working on this matter.
The court now turns to the lodestar cross-check, which entails evaluation of the multiplier implied by counsel's requested fee ($255,000) and counsel's lodestar fee (computed above as $431,429.45). The lodestar calculation under the Laffey methodology results in a multiplier of 0.59 (255000/431429.45 = .59).
*854 This resulting multiplier of less than one, (sometimes called a negative multiplier) suggests that the negotiated fee award is a reasonable and fair valuation of the services rendered to the class by class counsel. Assuming that the Laffey numbers capture class counsel's opportunity costs, see Laffey, 746 F.2d at 24, a negotiated fee that works out to a negative multiplier quantifies the amalgam of circumstances the court would otherwise have difficulty evaluating. While it is certainly true that because the negative multiplier reflects a negotiated result that, like any bargain, represents a number of interests, calculations and risk analyses that provide a glimpse into the parties' collective views of the settlement at this precise snapshot in time, class counsel's willingness to negotiate a fee award reflecting a negative multiplier signals to the court that, in counsel's view, plaintiffs' case is weak and/or fraught with risk.
Again assuming that the adjusted Laffey rates more or less accurately reflect class counsel's opportunity costs (i e, what they could earn in other engagements), a negative multiplier evinces that undertaking this litigation was not a wise use of class counsel's time and resources. No matter class counsel's expectations at the beginning of this case, at the current juncture, by agreeing to a negotiated fee that is but a fraction of prevailing market rates, counsel tacitly confirm that plaintiffs' case is not what they thought it once was. The lodestar seems to capture numerically this momentary conception of risk and expected outcome; class counsel are willing to accept a fee less than what counsel could have earned in other pursuits. The negative lodestar thus reinforces the court's findings as to the first and second class action factors discussed in Part II, above; counsel are willing to earn less than they would in a normal case in order to get the class some benefit in a litigation which they see as challenging. To be sure, accuracy of the lodestar multiplier as an index of the strength of the plaintiffs' case (and hence the value of the services rendered by counsel in bringing and prosecuting the litigation) hinges on Laffey rates accurately capturing counsel's opportunity costs. A further refinement of this analysis would require class counsel to substantiate their opportunity costs by demonstrating income likely foregone by work on the litigation under scrutiny. Obviously, that requires more than a simple averment of counsel's "regular" hourly fees. The court has not demanded this here in the interest of bringing this litigation to a close, but a more searching inquiry may be necessary in future applications of this analysis.
Having performed a lodestar crosscheck, the requested fee award looks reasonable, indeed on the low side. Because the lodestar cross-check revealed a multiplier of 0.59, the court is satisfied that counsel's requested fee award is not unreasonable.
III
Incentive awards are appropriate only to compensate named plaintiffs for work done in the interest of the class as well as to compensate named plaintiffs for their reasonable fear of workplace retaliation. See Staton v. Boeing Co., 327 F.3d 938, 977 (9th Cir.2003). The court must ensure that the incentive awards are not the result of fraud or collusion. Id. at 975.
Here, class counsel represents that class representatives Chun-Hoon and Guglielmino have made "significant contribution[s] to the prosecution of this matter." Doc. # 106 at 12. These efforts included reviewing court documents, providing thousands of pages of personal and business records for review by McKee and *855 participation in early-neutral evaluation and mediation. Id.
The amount of each plaintiff's incentive award, $5,000, appears reasonable in light of the work performed by each plaintiff and the risk each faced. Nothing in the record indicates fraud or collusion. Because the incentive awards appear fair, the court approves them.
IV
For the above reasons, and for those stated in its October 15 order, Doc. # 100, the court GRANTS the parties' joint motion for final approval of class action settlement. Doc. # 103. The court also GRANTS plaintiffs' motion for attorney fees, costs and class representative incentive payments. Doc. # 106.
IT IS SO ORDERED.
NOTES
[1] Because there is no government participant in this litigation, the seventh factor courts consider in approving a class action settlement does not apply in this case.
[2] The Laffey Matrix is "a schedule of charges based on years of experience." Covington v. District of Columbia, 57 F.3d 1101, 1105 (D.C.Cir.1995) (citation omitted).
[3] See United States Attorney's Office for the District of Columbia's website (available at: http://www.justice.gov/usao/ dc/Divisions/Civil_Division/Laffey_Matrix_8.html) (last visited June 6, 2010).
[4] Hourly Mean Wage for Attorneys, (May 2008): Los Angeles, $71.66; San Francisco, $74.89; Washington, $69.73 (available at http://bls.gov) (last visited March 9, 2010). Using these figures, the court calculates the San Francisco and Los Angeles adjustments to be 107.4% and 102.77%, respectively.
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345 S.W.3d 600 (2011)
U.S. RENAL CARE, INC., Appellant
v.
Laura JAAFAR, Lisa Lewis, and Bob A. Ehl, Appellees.
No. 04-09-00043-CV.
Court of Appeals of Texas, San Antonio.
March 30, 2011.
*603 Kurt Arbuckle, Kurt Arbuckle, P.C., Ronald Cohen, Cohen and Small, Houston, TX, for Appellant.
Sharon E. Callaway, Crofts & Callaway, P.C., San Antonio, TX, for Appellees.
Sitting: PHYLIS J. SPEEDLIN, REBECCA SIMMONS, STEVEN C. HILBIG, Justices.
OPINION
Opinion by: REBECCA SIMMONS, Justice.
The appellees' motion for rehearing is denied. This court's opinion and judgment dated December 8, 2010 are withdrawn, and this opinion and judgment are substituted. We substitute this opinion to clarify our judgment.
This case stems from a dispute regarding Appellant U.S. Renal Care's (Renal Care) purchase of Rencare, Ltd., formerly owned by Appellees Laura Jaafar, Lisa Lewis, and their father, Bob Ehl (collectively Sellers). Jaafar and Lewis sued Renal Care for breach of contract, violation of prompt payment statutes, and attorney's fees, among other claims. Renal Care counterclaimed for breach of contract and sued third party defendant Ehl for breach of contract and fraud. Following a jury trial, the trial court entered a final judgment in favor of the plaintiffs on the jury's verdict in the amount of $750,000.00 in damages, $300,000.00 in attorney's fees for trial, and prejudgment interest of $68,938.36. In addition, a conditional award of $375,000.00 in appellate attorney's fees was granted. A take-nothing judgment was entered on Renal Care's counterclaims against the plaintiffs and its third party claim against Ehl. The only portion of the judgment challenged on appeal is the award of damages, interest, and attorney's fees to Jaafar and Lewis. Because we conclude there is no evidence to support the jury's award of damages and, consequently, no right to attorney's fees, we reverse the judgment as to the award of damages, interest, and attorney's fees and render a take-nothing judgment in favor of Renal Care with regard to Jaafar and Lewis's claims. The remaining portions of the judgment which have not been challenged on appeal are affirmed.
BACKGROUND
Bob Ehl started Rencare, which owned and operated several dialysis clinics in and around San Antonio. In 2006, Renal Care contacted Ehl, Jaafar, and Lewis regarding the purchase of Rencare, and ultimately the parties entered into an agreement. The Sale Agreement (also referred to as the Stock Purchase Agreement (Agreement)) stated Renal Care would acquire 100% of the stock in Rencare, but Sellers would retain all accounts receivable for services rendered by Rencare prior to the closing date of February 23, 2006. Following the sale, a controversy arose over the accounting for the pre-sale receivables, and Sellers sued Renal Care for breaching the Agreement specifically as it pertained *604 to the pre-sale accounts receivable.[1]
At trial, Sellers asked the jury to find that Renal Care breached at least one of three specific sections of the Agreement: (1) Section 6.13, by failing to promptly pay to Sellers funds received in payment of services provided by Rencare prior to the Agreement; (2) Section 6.06, by failing to pay Sellers any balance due from any third party payors pertaining to services rendered by Rencare prior to closing; and (3) Section 6.11, by failing to provide documents, data, and software pertaining to the retained accounts receivable to Sellers.
A. Prior to Closing
This case focuses on the Sellers' retained accounts receivable and a perhaps tedious, but thorough, discussion of the accounts receivable is necessary to understand the nature of the parties' dispute. A pre-sale audit was completed in November 2005 that calculated the value of Rencare's receivables as of September 30, 2005. From its opening in 1997, Rencare had maintained its books on a cash basis and never wrote off uncollectable receivables. The amount of receivables on Rencare's books in 2005 totaled approximately $22 million, but only an unknown fraction was collectable. For these reasons, the auditors were unable to rely on Rencare's books and, therefore, had to develop a method capable of determining a reasonable value for the collectable accounts receivable.
To determine the amounts that were actually collected for the services performed prior to December 31, 2004, the auditors first looked at the services rendered prior to December 31, 2004, and the collection history for those services during the following eleven-month period. Based on the eleven-month period, the auditors determined that virtually all payments received by Rencare were collected within sixty days of the date of the bill. Using this method, the auditors developed an accounts receivable figure as of December 31, 2004. The auditors then looked at the sixty-day period following September 30, 2005, to determine the value of Rencare's receivables as of September 30, 2005. The estimated collectible receivables, as of September 30, 2005, totaled approximately $1.011 million. This accounts receivable value was inserted into the final financial statements attached to the Agreement.
Because the audit was effective as of September 2005, and the sale was not finalized until February 2006, Renal Care sought assurance that no substantial change had occurred in Rencare's business during the interim months, including the value of its receivables. In response, the auditors prepared a management representation letter that Ehl signed on behalf of Rencare. This letter provided that no material change had occurred in the condition of the business, and acknowledged the accuracy of the accounts receivable as recorded at December 31, 2004, and September 30, 2005.
B. After Closing
The Agreement required Renal Care to promptly pay Sellers any funds received by Renal Care attributable to Rencare's pre-sale services. It also required Renal Care to keep former Rencare office employees on staff for ninety days following the closing date, thus allowing them to collect the bills already sent. During this time, the Rencare staff worked the outstanding claims, and Sellers ultimately collected *605 $1.4 million in pre-sale receivables. After the ninety days passed, the former Rencare employees were discharged and Renal Care moved many of Rencare's computers, files, and boxes to various locations. As to the receivables remaining after ninety days, Renal Care asserts that it provided Ehl with both a CD-ROM of the Med Bill software and the Med Bill claims file required to work the files and collect the remaining pre-sale receivables owed to Rencare. Ehl, however, strongly disputes his receipt of all the information necessary for continued collection efforts.
Because the Sellers retained the right to be paid for their pre-sale services, the accounting of proceeds collected after the sale became critical. Following the sale, Renal Care received payments from third party payors for pre-sale services provided by Rencare. The payments to Sellers and other amounts still owed from Sellers were displayed on spreadsheets created by Renal Care. These spreadsheets, or "true-ups" as they were named, were sent to Sellers on a weekly basis, along with a check and copies of underlying documentation. Sellers began voicing concerns regarding the true-up system of offsetting money owed by Rencare to Renal Care with payments received by Renal Care for services rendered by Rencare.[2] Additionally, Sellers, and specifically Ehl, frequently complained that the disorganization, and lack of itemization contained in the documentation, made the true-ups confusing. Ehl sent Renal Care a letter alleging that based on discrepancies found between true-ups, he calculated that approximately $260,000.00 was owed to Rencare. Ehl's demand letter stated, "[W]e want to look at Rencare's books and all bank accounts to confirm the total amount of [accounts receivable] collected since February 23, 2006, and the amounts due each party."[3] Dissatisfied with Renal Care's lack of payment, Sellers subsequently filed suit.
Upon notice of suit, Renal Care hired an accountant to examine Renal Care's books and determine what monies, if any, were still owed to Sellers under the Agreement. The accountant, Mark Schwartz, determined that $4,400.00 was still owed, and Renal Care promptly paid this amount to Sellers. At trial, Renal Care asserted all the monies owed to Sellers had been paid. Rencare offered a different picture. Their expert, Gene Trevino, opined that the retained accounts receivable that could have been collected totaled over $2.3 million. By including interest and prompt payment penalties, Trevino arrived at a damage figure of $2,787,157.21. During closing argument, Sellers' attorney offered an additional damage figure, encouraging the jury to award $22,359,502.29, representing the balance calculated from two trial exhibits.
At trial, the various breach of contract allegations were submitted as one question for the jury: "Did [Renal Care] fail to comply with the [Agreement] dated February 23, 2006?", to which the jury answered "Yes." The jury then returned a verdict awarding $750,000.00 in damages, $300,000.00 in attorney's fees for trial, and prejudgment interest of $68,938.36. In addition, a conditional award of $375,000.00 in appellate attorney's fees was granted. Renal Care argues on appeal: (1) the evidence is legally insufficient to show a material breach of the Agreement, (2) the trial court erroneously admitted the expert testimony, (3) the evidence is legally insufficient *606 to support the damage award, and (4) the evidence is legally insufficient to support the award of attorney's fees. We first address Renal Care's issues pertaining to the damage award, including the expert opinion on damages.
EXPERT TESTIMONY REGARDING DAMAGES
Sellers relied on the expert testimony of Gene Trevino to support their damage award. Renal Care complains that Trevino's testimony was inadmissible based on his lack of qualifications and his unreliable damage model.[4] If Trevino's testimony is excluded, Renal Care argues that there is no evidence to support the damage award. The Sellers respond (1) that Trevino is a qualified expert under Texas Rule of Evidence 702, (2) that his methodology is reliable, and (3) that even if Trevino is excluded, there was other evidence sufficient to support the damage award. Because Trevino's methodology and assumptions were unreliable, we conclude that the trial court abused its discretion in admitting his testimony, and Trevino's testimony provides no evidentiary support for the damages found by the jury.
A. Standard of ReviewAdmissibility of Expert Testimony
Texas Rule of Evidence 702 permits a witness who is "qualified as an expert by knowledge, skill, experience, training, or education" to "testify . . . in the form of an opinion or otherwise" when "scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue." TEX.R. EVID. 702. A two-prong test governs whether expert testimony is admissible: (1) the expert must be qualified, and (2) the testimony must be relevant and based on a reliable foundation. E.I. du Pont de Nemours & Co. v. Robinson, 923 S.W.2d 549, 554 (Tex.1995). "If the expert's scientific testimony is not reliable, it is not evidence." Merrell Dow Pharm., Inc. v. Havner, 953 S.W.2d 706, 713 (Tex.1997). Generally, courts review a challenge to the admission of expert testimony under an abuse of discretion standard. Whirlpool Corp. v. Camacho, 298 S.W.3d 631, 638 (Tex.2009).[5] "But a party may assert on appeal that unreliable scientific evidence or expert testimony is not only inadmissible, but also that its unreliability makes it legally insufficient to support a verdict." Id.; see Goodyear Tire & Rubber Co. v. Rios, 143 S.W.3d 107, 113 (Tex.App.-San Antonio 2004, pet. denied). In a no-evidence review, an appellate court considers "whether the evidence at trial would enable reasonable and fair-minded [jurors] to reach the verdict." City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). "[A] no-evidence review encompasses the entire record, including contrary evidence tending to show the expert opinion is incompetent or unreliable." Whirlpool, 298 S.W.3d at 638 (citing City of Keller, 168 S.W.3d at 814).
Expert testimony is unreliable if it is based on unreliable data, or "if the expert draws conclusions from [his underlying] data based on flawed methodology." Merrell Dow Pharm., 953 S.W.2d at 714. Likewise, "[e]xpert testimony lacking a *607 proper foundation is incompetent, City of Keller, 168 S.W.3d at 813, and its admission is an abuse of discretion." TXI Transp. Co. v. Hughes, 306 S.W.3d 230, 239 (Tex.2010) (citing Cooper Tire & Rubber Co. v. Mendez, 204 S.W.3d 797, 800 (Tex.2006)). Expert testimony is also unreliable if "there is simply too great an analytical gap between the data and the opinion proffered." Gammill v. Jack Williams Chevrolet, Inc., 972 S.W.2d 713, 726 (Tex.1998) (quoting Gen. Elec. Co. v. Joiner, 522 U.S. 136, 146, 118 S. Ct. 512, 139 L. Ed. 2d 508 (1997)). "The court's ultimate task, however, is not to determine whether the expert's conclusions are correct, but rather whether the analysis the expert used to reach those conclusions is reliable and therefore admissible." TXI Transp. Co., 306 S.W.3d at 239 (citing Exxon Pipeline Co. v. Zwahr, 88 S.W.3d 623, 629 (Tex.2002)). Once an opposing party objects to proffered expert testimony, the proponent of the witness's testimony bears the burden to demonstrate its admissibility. See Gammill, 972 S.W.2d at 718.
B. Trevino's Qualifications
Renal Care first contends the trial court erred in denying its motion to exclude Trevino's testimony because Trevino was not qualified to give an opinion as to the value of the retained accounts receivable owed to Rencare. Because no bright-line test exists to guide us as to whether a particular witness is qualified to testify as an expert, we focus instead on "whether the expert's expertise goes to the very matter on which he or she is to give an opinion." Broders v. Heise, 924 S.W.2d 148, 153 (Tex.1996); see also Helena Chem. Co. v. Wilkins, 18 S.W.3d 744, 752 (Tex.App.-San Antonio 2000), aff'd, 47 S.W.3d 486 (Tex.2001).
Renal Care lists the following reasons why Trevino is unqualified to testify to a damage figure based on healthcare billing: (1) although Trevino has his bachelor's and master's degrees, they are in the field of finance, not accounting, and his Ph.D. is from an online university; (2) although he is a Certified Financial Analyst, this is an investment advisor certification and he is not certified as a Certified Public Accountant; (3) he has published no peer reviewed articles and his non-peer reviewed articles deal with being an expert witness; and (4) he has no training or experience concerning insurance practices or healthcare billing. Sellers respond that Trevino has the following background that makes him qualified to testify regarding unpaid accounts receivable: (1) the above listed degrees; (2) a publication in a non-peer reviewed journal; (3) his experience valuing businesses for twenty years; (4) his understanding of the Medicare payor system; and (5) his accreditations as a credit senior appraiser from the American Society of Appraisers.
Trevino holds a bachelor's degree in finance and a master's degree in business from the University of Texas at San Antonio. He received a Ph.D. from Walden University, a distance learning center. Trevino testified to extensive experience in valuing businesses over the preceding twenty years. He explained that in the normal course of a business valuation the biggest asset is often "the accounts receivableor what money people owe them." He described his experience in valuing several physician practices, clinics, ambulatory surgery centers, home health care agencies, nursing agencies, and physical therapy businesses involving a valuation of their accounts receivable. The majority of these valuations, however, were for non-litigation purposes. He is also accredited as a "credit senior appraiser" as conferred *608 by the American Society of Appraisers and has taught courses on their behalf.
We, therefore, conclude that Trevino's qualifications are based on specialized knowledge, skill, and experience in the area in which he offered testimony. See Helena Chem. Co., 18 S.W.3d at 752. Thus, the trial court did not abuse its discretion in permitting Dr. Trevino to testify as an expert on Rencare's damages. See Broders, 924 S.W.2d at 153. We now turn to Trevino's opinion and the second prong of Robinson.
C. Trevino's Methodology
Robinson's, second prong requires courts to assess whether the expert's methodology is relevant and based on a reliable foundation. Robinson, 923 S.W.2d at 556. In Robinson, the court identified factors to determine whether an expert's testimony is reliable, and thus admissible. Id. at 557.[6] Renal Care argues that Trevino's methodology is deficient under Robinson. The Sellers respond that the Robinson factors are irrelevant, and the reliability of Dr. Trevino's opinion is properly measured by the less rigorous "analytical gap" test. See Gammill, 972 S.W.2d at 726-27.[7] Rather than focus on a fixed test, the Texas Supreme Court has applied a more flexible approach:
In determining whether expert testimony is reliable, a court may consider the factors set out by the Court in Robinson and the expert's experience. However, in very few cases will the evidence be such that the trial court's reliability determination can properly be based only on the experience of a qualified expert to the exclusion of factors such as those set out in Robinson, or, on the other hand, properly be based only on factors such as those set out in Robinson to the exclusion of considerations based on a qualified expert's experience.
Whirlpool Corp., 298 S.W.3d at 638 (internal citation omitted).[8] "[A] trial court should consider the factors mentioned in Robinson when doing so will be helpful in determining reliability of an expert's testimony, regardless of whether the testimony is scientific in nature or experience-based." Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 579 (Tex.2006).
Irrespective of the test applied, in its gate-keeping function, "courts are to rigorously examine the validity of facts and assumptions on which the testimony is based, as well as the principles, research, and methodology underlying the expert's conclusions and the manner in which the principles and methodologies are applied by the expert to reach the conclusions." Whirlpool, 298 S.W.3d at 637. An *609 impermissible analytical gap exists if an expert "has offered nothing to suggest that what he believes could have happened actually did happen," because, in that case, "[h]is opinions are little more than `subjective belief or unsupported speculation.'" Gammill, 972 S.W.2d at 728 (emphases omitted) (quoting Robinson, 923 S.W.2d at 557). "It is not so simply because an expert says it is so." Merrell Dow Pharm., 953 S.W.2d at 712 (quoting Viterbo v. Dow Chem. Co., 826 F.2d 420, 421 (5th Cir.1987)). Bearing these precepts in mind, we review the testimony of Dr. Trevino.
1. Trevino's "Balance Sheet" Method of Calculating Accounts Receivable
Trevino testified that the currently unpaid balance of accounts receivable Renal Care owed to Rencare was $2,350,691.00 and that with interest and penalties the total amount of damages amounted to $2,787,157.27. Trevino explained that his calculation was "very straightforward: I just took a percentage of what's been paid on the amount billed in the past and applied that percentage to the amounts outstanding." Trevino called his method the "Balance Sheet Approach," which involved looking at Rencare's historical experience in collecting receivables and applying that experience to current outstanding amounts.
Trevino testified, that in terms of data, his opinion is based solely on two reports known as the "44-page report," the non-Medicare or private pay report, and the "77-page report," or Medicare report (collectively Reports). The Reports identify the patients receiving services from January 2005 to the date of sale, February 23, 2006.[9] The Reports list Rencare's patients followed below by their data contained in several columns including: date of service range, filed date, amount billed, amount paid, balance, and date last paid.[10]
In arriving at his damage figure of $2,350,691.00, Trevino stated this number "does not include [the] $1.4 million collected by Rencare during the ninety days following the sale." Those amounts are reflected in the "paid" column of the Reports. An example of the data contained in the Reports is replicated below without the patient's name.
The two reports split the accounts receivable into patients with Medicare (the 77-page report) and patients who were private pay (the 44-page report). However, Trevino applied the same methodology to both. The 44-page report contains patients whose payment history varies reflecting: (1) payments substantially less than the amount billed; (2) non-payment for some billed services; and (3) the amount paid equals the amount billed for some services.
a. Patient Example 1 (from the 44-page private pay report)
Date Amount Amount Date
Date(s) of Service Filed Billed Paid Balance Last Paid
--------------------------------------------------------------------------------------------
465
--------------------------------------------------------------------------------------------
02/02/2005 02/28/2005 12,601.50 10,146.60 2,454.90 04/03/2005
02/23/2005 02/28/2005 03/03/2005 432.00 0.00 432.00
03/02/2005 03/07/2005 03/08/2005 5,865.00 5,722.80 142.10 04/12/2005
*610
03/09/2005 03/14/2005 03/15/2005 5,139.00 5,139.00 0.00 04/12/2005
03/16/2005 03/21/2005 03/22/2005 5,518.00 5,518.00 0.00 04/21/2005
--------------------------------------------------------------------------------------------
29,555.50 26,526.50 3,029.00
To determine the balance actually owed by the patient in Example 1, Trevino made several assumptions. First, Trevino assumed some patients were insured by companies that contracted to pay less than the entire bill. Second, he assumed other patients were insured by companies with no Rencare contract and remained responsible for the entire billed amount. Third, to determine which patients were insured by companies with Rencare contracts and which were not, Trevino assumed that if a patient had ever paid the entire amount billed, then that patient's insurance company did not have a contract with Rencare; patients falling under this category owed the entire unpaid balance reflected in the report. Thus, under Example 1, because the entire amount billed on March 15, 2005, was paid, Trevino determined the patient's insurance company did not have a contract with Rencare and the entire amount of the outstanding balance of $3,029.00 was due.
The inequities resulting from this assumption is reflected in Trevino's testimony about a different patient listed in the 44-page report. The patient paid reduced amounts toward forty-three bills and the total amount owed on five other bills. Because she had paid the total amount owed on some services, Trevino assigned her to the no-contract group in calculating damages. Finally, based on Ehl's testimony that Rencare aggressively worked claims, Trevino assumed all of these non-contract patients would ultimately pay their balance owed.
b. Patient Example 2 (from the 44-page private pay report)
Date Amount Amount Date
Date(s) of Service Filed Billed Paid Balance Last Paid
--------------------------------------------------------------------------------------------
544
--------------------------------------------------------------------------------------------
07/25/2005 08/05/2005 6,010.00 0.00 6,010.00
07/08/2005 07/11/2005 07/14/2005 3,288.00 271.82 3,016.18 03/28/2006
07/18/2005 07/20/2005 07/21/2005 3,303.00 287.96 3,015.04 03/13/2006
07/22/2005 07/25/2005 08/01/2005 3.644.00 320.08 3,323.92 10/21/2005
08/15/2005 08/19/2005 08/23/2005 5,963.00 0.00 5,963.00
08/22/2005 08/22/2005 08/29/2005 1,999.00 0.00 1,999.00
08/15/2005 08/17/2005 01/17/2006 80.00 0.00 80.00
--------------------------------------------------------------------------------------------
24,287.00 879.86 23,407.14
Trevino likewise assumed that some patients were insured by companies that contracted with Rencare and only paid a percentage of the services provided to their insureds. For those patients, Trevino averaged the percentage of past collection reflected for that patient and applied the percentage to the total amount outstanding. Thus, in Example 2 above, despite the varying percentages of collection for different bills, Trevino merely added the amount billed, added the amount paid on a per-patient basis, and determined the percentage ratio which he then applied to the balance figure. On one patient, whose history reflected no payment toward any of his six bills, Trevino assumed a 29% collection rate because that was the average percentage paid for those patients that he assumed had contracts with Rencare.
c. Patient Example 3 (from the 77-page Medicare patient report)
*611
Date Amount Amount
Date(s) of Service Filed Billed Paid Balance Date Last Paid
------------------------------------------------------------------------------------------------------------------------
459 MEDICARE PART A TEXAS MEDICAID AND
08/01/2005 08/26/2005 09/01/2005 9,232.20 2,513.48 10/06/2005 0.00 6,718.72
01/20/2006 01/30/2006 02/10/2006 5,393.00 786.25 05/03/2006 195.82 05/10/2006 4.410.92
02/01/2006 02/22/2006 03/01/2006 10,752.00 0.00 0.00 10,752.00
03/14/2005 03/30/2005 03/31/2005 6,157.90 1,133.38 06/06/2005 314.34 06/17/2006 4,710.18
04/01/2005 04/29/2005 04/29/2005 12,233.00 2,767.38 02/23/2006 0.00 9,465.72
05/02/2005 05/30/2005 05/31/2005 12,160.00 2,033.24 06/24/2005 538.08 08/11/2005 9,588.68
06/01/2005 06/29/2005 06/29/2005 4,868.00 834.93 08/03/2005 214.37 08/25/2005 3,818.70
07/01/2005 07/29/2005 07/29/2005 9,179.00 2,055.31 10/21/2005 0.00 7,123.00
08/08/2005 08/10/2005 08/16/2005 2,086.00 0.00 0.00 2,086.00
02/02/2005 01/18/2006 15,213.00 0.00 0.00 15,213.00
01/17/2005 01/31/2005 02/01/2005 5,447.00 1,140.88 03/04/2005 286.09 04/03/2005 4,020.03
02/02/2005 02/28/2005 02/28/2005 8,898.60 1,864.86 07/05/2005 462.55 04/20/2005 6,571.19
03/02/2005 03/07/2005 03/09/2005 2,149.70 409.66 06/06/2005 110.29 06/17/2005 1,629.75
-------------------------------------------------------------------------------------------------------------------------
103,769.50 15,539.38 2,121.54 86,108.58
Finally, Example 3 reflects a patient with Medicare and secondary coverage under Texas Medicaid. As with the 44-page private pay report, Trevino employed a similar methodology. He assumed that Medicare simply paid an 80% portion of the amount billed and the secondary insurer was responsible for some or all of the remainder using the same methodology described above. As will be discussed further below, Trevino did not review any of the underlying documents upon which both reports were based. Likewise, Trevino did not age any of the amounts outstanding. During cross-examination, Trevino testified that he did not "consider aging of the accounts receivable" because "all the payors were creditworthy," and there was no need to write off accounts because he was told Rencare aggressively worked claims. Trevino performed no independent analysis or testing to determine if aging had affected Rencare's accounts receivable.
2. Underlying Data Reviewed by Trevino
Renal Care's strongest criticism of Trevino's opinion was that his assumptions were based on speculation. Trevino never looked at any of the underlying patient data to determine if his assumptions were correct. He never examined the underlying explanation of patient benefits (EOBs) from the insurers or Medicare to determine the reasons for non-payment or reduced payment. Renal Care presented Richard Robertson, who primarily worked in the dialysis arena, as an expert.[11] Weighing conflicting evidence is a matter for the jury, but we must consider the testimony of opposing experts in a no-evidence review because we must also consider contrary evidence showing the opinion has no scientific basis. See City of Keller, 168 S.W.3d at 813; Cooper Tire, 204 S.W.3d at 800-03. "[I]f an expert's opinion is based on certain assumptions about the facts, we cannot disregard evidence showing those assumptions were unfounded." City of Keller, 168 S.W.3d at 813.
Robertson reviewed the payor contracts, EOBs, and some individual patient files for the patients listed on the 44-page and 77-page reports.[12] He explained many reasons exist for reduced or non-payment by third party payors including the reimbursement rate for the services provided, *612 the patient's coverage, the payor contracts, lapsed coverage, and other issues that require a review of the underlying documents. In addressing Trevino's opinion, Robertson noted that a basic problem was Trevino's assumption "that a patient's healthcare coverage was the same throughout that time period which [doesn't] happen." Additionally, Robertson testified that Trevino's methodology "assumes that all services are covered" by a third party payor. However, he saw one patient's EOB that specifically declined payment for services that were not covered by insurance. And when the 77-page report showed a zero under secondary payors, Robertson stated that "it might be because the amount that was paid by the primary exceeded the amount that would have been covered by the secondary," and Trevino did not take this into account. Robertson then discussed the validity of Trevino's basic assumptions based on a review of the underlying data.
Specifically, Robertson tested Trevino's assumptions regarding the patients on the 77-page Medicare report by pulling eight patient files that were produced in the litigation. On seven out of the eight patients, the secondary insurance payment was posted as a primary Medicare payment, "which basically created the zero balance on the secondary side, which inflated the retained accounts receivable in Dr. Trevino's report." On the eighth patient, there was a handwritten note in the file that the patient had no secondary insurance, but on the 77-page report it incorrectly reflected private secondary insurance. The importance of Robertson's testimony is that it indicates the underlying documentation was available for Trevino to at least test his assumptions, but Trevino declined to look at the data. Robertson ultimately concluded Trevino's methodology was "extremely unreliable."
Trevino testified that he asked for patient files and underlying data but was not provided the information because his attorneys stated it did not exist or was unavailable. He further testified that he was aware that Renal Care had produced EOBs, but did not know if they were relevant, and did not ask to see them. Renal Care's expert, Robertson, had sufficient data to test Trevino's assumptions, and expert Mark Schwartz also reviewed patient EOBs that were produced. While there is evidence that certain patient documents, including EOBs, were not provided by Renal Care until over two years after the sale and then in a disorganized fashion, substantial documentation including EOBs and patient files were produced at the deposition of Kristie Harlson. The burden was on Sellers to establish Dr. Tevino's testimony was admissible. See Gammill, 972 S.W.2d at 718. A review of the underlying documents would have allowed Trevino to test his assumptions regarding insurance, coverage, and aging.
D. Trevino's Testimony Unreliable
Under either an analytical gap approach or review of Trevino's opinion against the Robinson factors, we conclude that his opinion is unreliable. Trevino's analysis of the 44-page and 77-page reports was subjective, his assumptions were unfounded, his opinion has not been subjected to peer review, and his technique has an unknown rate of error. See Robinson, 923 S.W.2d at 557 (listing factors for determining reliability of expert testimony). Additionally, we note that Trevino's theory appears to have been developed for the litigation in this case. "[O]pinions formed solely for the purpose of testifying are more likely to be biased toward a particular result." Id. at 559.
Not only did Trevino fail to look at the data behind the numbers on the 44-page *613 and 77-page reports, but he assumed that aging the accounts would not be necessary. He did not do any analysis to determine if the zero entries in the reports were due to lapse of coverage, improper billing, reduced coverage, or other insurance problems. Trevino's assumptions regarding contract and non-contract patients are unsupported by the evidence and the failure to test those assumptions renders his report unreliable. Trevino did not "connect the data relied on and his . . . opinion . . . to show how that data is valid support for the opinion reached." See Whirlpool, 298 S.W.3d at 642. There is simply too great an analytical gap between the data and Trevino's testimony. See Gammill, 972 S.W.2d at 726. "Reliability may be demonstrated by the connection of the expert's theory to the underlying facts and data in the case." TXI Transp. Co., 306 S.W.3d at 239. Because, inter alia, Trevino did not examine any underlying data, his expert testimony was unreliable. Based on the analysis above, we conclude that the trial court abused its discretion in admitting Trevino's expert opinion. Likewise, it constitutes no evidence to support the jury's damage award.
LEGAL SUFFICIENCY
Renal Care claims that without Trevino's testimony there is no evidence to support the jury's award of $750,000.00 in damages. Sellers counter that the Reports reflect an approximately $22,359,502.29 balance for all the patients listed.[13] Sellers also point to a demand letter, stating that payments of $263,473.36 were not credited to the Sellers, as some evidence of damages. Because the jury award of $750,000.00 falls within the foregoing two numbers, Sellers argue that there is more than a scintilla of evidence to support the jury's damage award.
A. Standard of Review
In analyzing a legal sufficiency challenge, we must determine "whether the evidence at trial would enable reasonable and fair-minded people to reach the verdict under review." City of Keller, 168 S.W.3d at 827. We must review the evidence in the light most favorable to the verdict, crediting any favorable evidence if a reasonable fact-finder could and disregarding any contrary evidence unless a reasonable fact-finder could not. Id. at 819-21, 827. We must sustain a no-evidence point only if:
(a) the record discloses a complete absence of evidence of a vital fact; (b) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact; (c) the only evidence offered to prove a vital fact is no more than a mere scintilla; [or] (d) the evidence establishes conclusively the opposite of the vital fact.
Id. at 810 (quoting Robert W. Calvert, "No Evidence" and "Insufficient Evidence" Points of Error, 38 TEX. L.REV. 361, 362-63 (1960)).
B. Jury Awards
It is the plaintiff's burden to prove its damages with a reasonable degree of certainty. A.B.F. Freight Sys., Inc. v. Austrian Imp. Serv., Inc., 798 S.W.2d 606, 615 (Tex.App.-Dallas 1990, writ denied). "We recognize the jury has the discretion to award damages within the range of evidence presented at trial, so *614 long as a rational basis exists for the jury's calculation." Swank v. Sverdlin, 121 S.W.3d 785, 799 (Tex.App.-Houston [1st Dist.] 2003, no pet.) (citing Mayberry v. Tex. Dep't of Agric., 948 S.W.2d 312, 317 (Tex.App.-Austin 1997, no writ)). "A jury must have an evidentiary basis for its findings." Salinas v. Rafati, 948 S.W.2d 286, 289 (Tex.1997) (emphasis added). We turn then to the evidence of damages relied upon by Sellers.
C. Sellers' Evidence of Damages
1. $22,359,502.29 Balance Based on Closing Argument
In his closing argument, the Sellers' attorney argued that the $22,359,502.29 balance from the Reports was the outstanding amount owed to the Sellers. Their attorney derived this figure by adding the totals calculated in both the 44-page and 77-page reports and subtracting the amount paid to arrive at a balance. Several witnesses confirmed the reports reflected such a balance. However, the evidence at trial was uncontroverted that Sellers had no expectation of being paid the entire amount it billed for all patients.[14] For the same reasons Trevino's opinion based on the 44-page and 77-page reports was unreliable, the witnesses' addition of the balance figures in the two reports and counsel's argument that the reports support an award in excess of $22 million, without further explanation, does not constitute evidence to support the jury's award. "It is well settled that the naked and unsupported opinion or conclusion of a witness does not constitute evidence of probative force and will not support a jury finding even when admitted without objection." Dallas Ry. & Terminal Co. v. Gossett, 156 Tex. 252, 256, 294 S.W.2d 377, 380 (1956). The jury's award of "damages must be ascertainable in some manner other than by mere speculation or conjecture, and by reference to some fairly definite standard, established experience, or direct inference from known facts." A.B.F. Freight Sys., 798 S.W.2d at 615. Without some additional testimony or evidence, only speculation and conjecture support the $22,329,502.29 figure, and this cannot support the jury's award of damages. See id.
2. The $263,473.36 Balance Based on the Demand Letter
In June 2006, Bob Ehl sent a letter to Renal Care expressing dissatisfaction with the accounting between the parties, and demanding $263,473.36 as the amount of money collected by Renal Care that was attributable to Sellers' retained accounts receivable. The letter discusses the "true-up" spreadsheets that had been provided by Renal Care and his disagreement with the figures contained therein. Ehl concludes in the letter: "For these three months, $263,473.36 [is] due the Sellers for claims that were paid but did not show up on the `true-up' spreadsheets, and no receipt of funds were received."
Though the trial court admitted the demand letter into evidence, Bob Ehl never discussed it in detail. He never testified how he derived his calculations or substantiated the figure reflected in the letter. On appeal, Sellers argue that "there is evidence of at least $263,473.36 in payments that were not credited to the Sellers." Furthermore, Sellers point out the preceding figure combined with the general spoliation instruction given to the jury *615 as support for the $750,000.00 jury award.[15] The Sellers' demand letter is not proof that the demanded amount is actually owed because it contained mere conclusory statements. See Kelley v. Sw. Bell Media, Inc., 745 S.W.2d 447, 449 (Tex. App.-Houston [1st Dist.] 1988, no writ). At trial, the letter's author, Bob Ehl, did not discuss the letter and explain how the demand amount was calculated or how the amounts owed for the accounts receivable were determined. In fact Ehl testified he would not opine about the amount of retained accounts receivable owed by Renal Care because he was not an accountant. Without more detail, the jury could not base their damages on the demand letter. See Paradigm Oil, Inc. v. Retamco Operating, Inc., 242 S.W.3d 67, 74-75 (Tex. App.-San Antonio 2007, no pet.). "Opinion testimony on damages must be supported by objective facts, figures or data from which the amount may be ascertained with reasonable certainty; if it is not, it is speculative and conclusory and will not support a judgment." Id. at 74 (citing Szczepanik v. First S. Trust Co., 883 S.W.2d 648, 649-50 (Tex.1994)) (additional citations omitted).
3. The Spoliation Instruction
Sellers contend that the adverse inference contained in the spoliation instruction in this case (1) supplants legally sufficient evidence of damages, and (2) overcomes any unreliability in Trevino's expert testimony.[16] The adverse inference does not obviate the requirement that Sellers present legally sufficient evidence of their damages. See Trevino v. Ortega, 969 S.W.2d 950, 959 (Tex.1998) (Baker, J., concurring) (explaining that an adverse inference is a much less severe spoliation remedy than an instruction that expressly shifts the burden of proof to the spoliator).[17] For similar reasons, the adverse inference cannot compensate for the deficiencies of the Sellers' demand letter of Trevino's expert testimony. Cf. Robinson, 923 S.W.2d at 553 (requiring courts "to ensure that expert testimony show some indicia of reliability").
We, therefore, conclude that neither the testimony regarding the $22,359,502.29 *616 balance of the Reports nor the demand letter amount to a scintilla of evidence to support the jury's award of damages in this case.
CONCLUSION
The testimony and opinion of Dr. Trevino was unreliable and thus, inadmissible and legally insufficient to support the damage award. The demand letter and the witness testimony regarding the 44-page and 77-page reports is legally insufficient to support the award. Because Renal Care's challenge to the legal sufficiency of the damage award is dispositive, we do not reach the remainder of the issues. We reverse the portion of the trial court's judgment awarding Jaafar and Lewis damages, interest, and attorney's fees and render judgment that Jaafar and Lewis take nothing.
NOTES
[1] The Sellers' pre-sale accounts receivable are sometimes referred to as the retained accounts receivable.
[2] At trial several Renal Care employees confirmed the Agreement did not provide for offsets.
[3] Sellers sent an auditor to Renal Care to reconcile amounts owed; however, he did not testify at trial and the results of his audit are unknown.
[4] The trial court conducted a pre-trial hearing on the admissibility of Trevino's testimony and determined that Trevino was qualified and his methodology reliable. At trial, Renal Care moved for a directed verdict arguing that Trevino's testimony was unreliable and, therefore, the plaintiffs presented no evidence of damages.
[5] "Admission of expert testimony that does not meet the reliability requirement is an abuse of discretion." Cooper Tire & Rubber Co. v. Mendez, 204 S.W.3d 797, 800 (Tex. 2006).
[6] These factors include, but are not limited to:
(1) the extent to which the theory has been or can be tested;
(2) the extent to which the technique relies upon the subjective interpretation of the expert;
(3) whether the theory has been subjected to peer review and/or publication;
(4) the technique's potential rate of error;
(5) whether the underlying theory or technique has been generally accepted as valid by the relevant scientific community; and
(6) the non-judicial uses which have been made of the theory or technique.
Robinson, 923 S.W.2d at 557 (internal citation omitted).
[7] Under the analytical gap approach, the focus is on the experience of the expert and an examination of whether there is "too great an analytical gap between the data and the opinion proffered." Gammill, 972 S.W.2d at 727.
[8] "An expert's opinion might be unreliable, for example, if it is based on assumed facts that vary from the actual facts. . . ." Whirlpool, 298 S.W.3d at 637. "Further, each material part of an expert's theory must be reliable." Id.
[9] Trevino stated he read the depositions of various Rencare employees in order to gain knowledge on the rigorous claim collection techniques utilized. He also relied on the testimony of Kristie Harlson as confirmation of his methodology.
[10] If the figures in the "balance" column are totaled for both reports, the sum is $22,359,502.29.
[11] Robertson was the owner of RPM Health Care, a firm specializing in health care receivables management.
[12] We note that Robertson testified that he could not find all the patient files and data he looked for, but there was sufficient information to test Trevino's assumptions.
[13] The $22 million figure is derived by totaling all sums in the balance column of the Reports, and assuming every amount billed would be collected. At closing, Sellers argued that there were two models the jury could base their damage award upon: (1) the Trevino model of $2,787,157.27 and (2) the $22,359,502.29 sum of the balances reflected in the 44-page and 77-page reports.
[14] At trial the deposition of Bob Ehl was played. Bob Ehl testified that Medicare only paid 80% of billed amounts; and certain contractual arrangements between Rencare and insurers resulted in payments less than the amount billed. Neither Sellers' expert, nor any witnesses, testified that the amount owed to Sellers equaled $22,359,502.29.
[15] The charge provided in part:
When a party has possession of a piece of evidence at a time it knows or should have known it will be evidence in a lawsuit, and thereafter he disposes of it, alters it, makes it unavailable, or fails to produce it, there is a presumption in law that the piece of evidence, had it been produced, would have been unfavorable to the party who did not produce it.
The instruction referenced neither party.
[16] Renal Care raises no issue on appeal addressing the propriety of the spoliation instruction.
[17] See also Kammerer v. Sewerage & Water Bd. of New Orleans, 633 So. 2d 1357, 1359 n. 3 (La.Ct.App.1994) (Waltzer, J., concurring); Battocchi v. Wash. Hosp. Ctr., 581 A.2d 759, 765 (D.C.1990); Bronson v. J.L. Hudson Co., 376 Mich. 98, 135 N.W.2d 388, 391 (1965) (O'Hara, J., dissenting, joined by Dethmers and Kelly, JJ.); Maszczenski v. Myers, 212 Md. 346, 129 A.2d 109, 114 (1957) ("[I]t is well settled that this inference does not amount to substantive proof and cannot take the place of proof of a fact necessary to the other party's case.") (citing, inter alia, Stocker v. Boston & M.R.R., 84 N.H. 377, 151 A. 457 (1930); Eldridge v. Terry & Tench Co., 145 A.D. 560, 129 N.Y.S. 865 (1911); Rosenthal v. Ostrow, 287 Pa. 87, 134 A. 384 (1926); F.R. Patch Mfg. Co. v. Prot. Lodge, No. 215, Int'l Ass'n of Machinists, 77 Vt. 294, 60 A. 74, 84 (1903); 2 WIGMORE ON EVIDENCE § 290, at 179 (3d. ed.1940); id. § 2524 at 441). We decline to follow Wackenhut Corrections Corp. v. de la Rosa, 305 S.W.3d 594, 626 (Tex.App.-Corpus Christi 2009, no pet.), because its explanation that the adverse inference will always constitute legally sufficient evidence but never factually sufficient evidence is not supported by the authority it cites. See generally Trevino, 969 S.W.2d at 953-61 (Baker, J., concurring).
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01-03-2023
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719 F. Supp. 2d 846 (2010)
Erick C. CARTER, et al., Plaintiffs,
v.
WELLES-BOWEN REALTY, INC., et al., Defendants, and
Joshua J. Grzecki, Plaintiff,
v.
The Danberry Co., et al., Defendants.
Case Nos. 3:05 CV 7427, 3:09 CV 400.
United States District Court, N.D. Ohio, Western Division.
June 30, 2010.
*848 James S. Timmerberg, John T. Murray, Murray & Murray, Sandusky, OH, John L. Huffman, Mickel & Huffman Toledo, OH, for Plaintiffs.
Richard H. Carr, Balk, Hess & Miller, Toledo, OH, Derek E. Diaz, Justin M. Croniser, Robert J. Fogarty, Steven A. Goldfarb, Hahn Loeser & Parks LLP, Cleveland, OH, for Defendants.
MEMORANDUM OPINION AND ORDER
JACK ZOUHARY, District Judge.
INTRODUCTION
These two consolidated cases are before the Court on Defendant Chicago Title's Motion for Summary Judgment (Doc. Nos. 119).[1] Plaintiffs purchased title insurance services from Defendants Welles Bowen Title Agency ("WB Title") and Integrity Title Agency of Ohio & Michigan, Ltd. ("Integrity Title"). Plaintiffs claim those services were rendered in violation of the Real Estate Settlement Practices Act ("RESPA"), 12 U.S.C. §§ 2601-2617, and they seek treble damages pursuant to 12 U.S.C. § 2607(d)(2), plus attorneys' fees. The matter has been briefed (Doc. Nos. 119, 169, 174, 189), and the Court held a hearing on May 27, 2010 (Doc. No. 187). The Court previously denied Plaintiffs' Motions for Class Certification (Doc. No. 156).
BACKGROUND
Plaintiffs allege Defendant Chicago Title Insurance Company ("Chicago Title") collaborated with two real estate firms to create two sham title companies. Case 05-CV-7427 involves Plaintiffs Erick and Whitney Carter, who purchased title insurance services from WB Title in 2005. WB Title was formed by Defendants Chicago Title and Welles Bowen Realty ("WB Realty"). Case 09-CV-400 involves Plaintiff Joshua Grzecki, who purchased title insurance services from Integrity Title in 2008. Integrity Title was formed by Defendants Chicago Title and the Danberry Co. ("Danberry"). Chicago Title owns 50.1 % of both WB Title and Integrity Title; WB Realty and Danberry (through their subsidiaries) own the remaining 49.9% of each entity, respectively. WB Title and Integrity Title are known as affiliated business arrangements ("ABAs")a term specifically defined by RESPA.
Plaintiffs allege agents for the real estate firms are encouraged to refer their clients to WB Title and Integrity Title, which receive more than 90% of their work from those referrals. According to Plaintiffs, WB Title and Integrity Title provide few substantive services themselves; rather, they contract out the bulk of their work to Chicago Title. In Plaintiffs' view, WB Title and Integrity Title were created so Chicago Title would capture title insurance work in the Toledo, Ohio area, and so WB Realty and Danberry would share in the title insurance profits. Plaintiffs claim that WB Title and Integrity Title are sham *849 companies that were set up to be conduits for kickbacks from Chicago Title. Plaintiffs believe such arrangements violate RESPA.
In the specific transactions at issue in these cases, Chicago Title performed the title searches. WB Title and Integrity Title then evaluated the title evidence to determine insurability, issued title commitments, and issued final title insurance policies (Kost Decl., ¶ 47; Nosker Decl., ¶ 44). When Plaintiffs purchased title insurance from Defendants, Plaintiffs were provided with disclosures of Defendants' ownership arrangement on forms promulgated by the Department of Housing and Urban Development ("HUD") (Carter Dep., p. 89; Grzecki Dep., p. 50-51). Plaintiffs were not required to use any particular title insurance agency (Carter Dep., p. 90, Def. App'x, p. 92). The only thing of value that the owners of WB Title and Integrity Title received was a return on their ownership interest (Kost Decl., ¶ 25; Nosker Decl., ¶ 23).
Plaintiffs do not allege they received subpar title insurance services or were overcharged for those services. However, RESPA allows recovery of treble damages by consumers who are charged for any settlement service rendered in violation of the anti-kickback provision. 12 U.S.C.A. § 2607(d)(2); see also In re Carter, 553 F.3d 979, 989 (6th Cir.2009) (holding that plaintiffs need not allege a concrete injury to sue under RESPA's anti-kickback provision).
STANDARD OF REVIEW
Pursuant to Federal Civil Rule 56(c), summary judgment is appropriate where there is "no genuine issue as to any material fact" and "the moving party is entitled to judgment as a matter of law." Id. When considering a motion for summary judgment, the court must draw all inferences from the record in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). The court is not permitted to weigh the evidence or determine the truth of any matter in dispute; rather, the court determines only whether the case contains sufficient evidence from which a jury could reasonably find for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986).
DISCUSSION
RESPA's Prohibition Against Kickbacks and Unearned Fees
RESPA's anti-kickback provision contains two broad prohibitions:
(a) Business referrals
No person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person.
(b) Splitting charges
No person shall give and no person shall accept any portion, split, or percentage of any charge made or received for the rendering of a real estate settlement service in connection with a transaction involving a federally related mortgage loan other than for services actually performed.
12 U.S.C. § 2607(a)-(b). However, RESPA explicitly provides five exceptions from these prohibitions. Defendants invoke two of those exceptions (subsections (c)(2) and (c)(4)) here:
(c) Fees, salaries, compensation, or other payments
Nothing in this section shall be construed as prohibiting ...
(2) the payment to any person of a bona fide salary or compensation or other *850 payment for goods or facilities actually furnished or for services actually performed,... [or]
(4) affiliated business arrangements so long as (A) a disclosure is made of the existence of such an arrangement to the person being referred and, in connection with such a referral, such person is provided a written estimate of the charge or range of charges generally made by the provider to which the person is referred[,]... (B) such person is not required to use any particular provider of settlement services, and (C) the only thing of value that is received from the arrangement, other than the payments permitted under this subsection, is a return on the ownership interest or franchise relationship ... [.]"
Exception for "Services Actually Performed"
Defendants first invoke the Section 2607(c)(2) exception for "services actually performed." Defendants claim it is undisputed that WB Title and Integrity Title received fees for actual servicesnamely, they evaluated title evidence to determine insurability, issued title commitments, cleared underwriting objections, and issued final title insurance policies. But even if true, that argument ignores the thrust of Plaintiffs' Complaint, which is that part of those fees were passed on to WB Realty and Danberry in the form of kickbacks. Thus, the question is whether WB Realty and Danberry (not WB Title and Integrity Title) received fees for "services actually performed." Defendants do not argue that they do. Defendants cite no cases suggesting that simply because one entity performed some services, all affiliated entities can take advantage of the Section 2607(c)(2) exception. The one case cited by Defendants in support of their Section 2607(c)(2) argument did not involve an ABA; rather, it involved whether an appraiser selected by a mortgage lender was paid for "services actually performed." Cedeno v. IndyMac Bancorp, Inc., No. 06 Civ. 6438, 2008 WL 3992304, at *3-4 (S.D.N.Y. Aug. 26, 2008). Of course, Defendants contend that WB Realty and Danberry received only their share of the profits of WB Title and Integrity Title, and not any kickbacks. But that is an argument for applying the ABA exception in Section 2607(c)(4) (addressed below). In sum, Defendants cannot take advantage of the Section 2607(c)(2) exception for "services actually performed."
Exception for ABAs
Defendants also claim they are entitled to judgment under the Section 2607(c)(4) exception for ABAs. Defendants claim it is undisputed that WB Title and Integrity Title meet the three requirements for that exception: (1) disclosure of the ownership arrangement, (2) the consumers were not required to use a particular provider, and (3) the ABAs compensated their owners based purely on ownership interest. 12 U.S.C. § 2607(c)(4). Plaintiffs contend the statute does not tell the whole story. In order to take advantage of the Section 2607(c)(4) exception, argue Plaintiffs, an ABA must first be a "bona fide provider of settlement services." That determination is made, according to Plaintiffs, by applying the ten-factor test in HUD Policy Statement 1996-2 ("Policy Statement"), 61 Fed. Reg. 29,258, 20 C.F.R. Pt. 3500. The Policy Statement aims to distinguish between "sham" ABAs that are "mere conduits for kickbacks" and ABAs that are bona fide providers. Id. The Policy Statement explains that no one factor is determinative; rather, the ten factors "will be considered together in determining whether the entity is a bona fide settlement service provider." 61 Fed. Reg. at 29,262. The ten factors are as follows (id.):
(1) Does the new entity have sufficient initial capital and net worth, typical in *851 the industry, to conduct the settlement service business for which it was created? Or is it undercapitalized to do the work it purports to provide?
(2) Is the new entity staffed with its own employees to perform the services it provides? Or does the new entity have "loaned" employees of one of the parent providers?
(3) Does the new entity manage its own business affairs? Or is an entity that helped create the new entity running the new entity for the parent provider making the referrals?
(4) Does the new entity have an office for business which is separate from one of the parent providers? If the new entity is located at the same business address as one of the parent providers, does the new entity pay a general market value rent for the facilities actually furnished?
(5) Is the new entity providing substantial services, i.e., the essential functions of the real estate settlement service, for which the entity receives a fee? Does it incur the risks and receive the rewards of any comparable enterprise operating in the market place?
(6) Does the new entity perform all of the substantial services itself? Or does it contract out part of the work? If so, how much of the work is contracted out?
(7) If the new entity contracts out some of its essential functions, does it contract services from an independent third party? Or are the services contracted from a parent, affiliated provider or an entity that helped create the controlled entity? If the new entity contracts out work to a parent, affiliated provider or an entity that helped create it, does the new entity provide any functions that are of value to the settlement process?
(8) If the new entity contracts out work to another party, is the party performing any contracted services receiving a payment for services or facilities provided that bears a reasonable relationship to the value of the services or goods received? Or is the contractor providing services or goods at a charge such that the new entity is receiving a "thing of value" for referring settlement service business to the party performing the service?
(9) Is the new entity actively competing in the market place for business? Does the new entity receive or attempt to obtain business from settlement service providers other than one of the settlement service providers that created the new entity?
(10) Is the new entity sending business exclusively to one of the settlement service providers that created it (such as the title application for a title policy to a title insurance underwriter or a loan package to a lender)? Or does the new entity send business to a number of entities, which may include one of the providers that created it?
Defendants argue the Policy Statement should carry no force, for two reasons. First, Defendants argue the Policy Statement deserves no deference under Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984), as it is contrary to the plain terms of the Section 2607(c)(4) exception; because that exception sets forth threeand only three conditions in plain terms, HUD had no warrant to fashion a test that essentially adds ten new requirements to the statute. Second, Defendants argue the ten-factor test is unconstitutionally vague.
Vagueness
This Court will first address Defendants' latter argument that HUD's ten-factor test for distinguishing "sham" and "bona fide" providers is unconstitutionally vague. This Court is "obliged to construe the statute to avoid constitutional difficulties *852 if such a construction is not plainly contrary to the intent of Congress." Chamber of Commerce of U.S. v. Fed. Election Comm'n, 69 F.3d 600, 605 (D.C.Cir.1995). "This canon of constitutional avoidance trumps Chevron deference... and [a court] will not submit to an agency's interpretation of a statute if it presents serious constitutional difficulties." Nat'l Mining Ass'n v. Kempthorne, 512 F.3d 702, 711 (D.C.Cir.2008) (internal quotation and citation omitted). This Court concludes that the ten-factor HUD test raises serious constitutional difficulties.
The void-for-vagueness doctrine, grounded in the Due Process Clauses of the Fifth and Fourteenth Amendments, requires that a law or regulation (1) define prohibited conduct "with sufficient definiteness that ordinary people can understand" what is prohibited, and (2) establish standards permitting authorities "to enforce the law in a non-arbitrary, non-discriminatory manner." Belle Maer Harbor v. Charter Twp. of Harrison, 170 F.3d 553, 557 (6th Cir.1999) (citing Kolender v. Lawson, 461 U.S. 352, 357, 103 S. Ct. 1855, 75 L. Ed. 2d 903 (1983)). Courts employ various levels of strictness in analyzing vagueness challenges, depending on the type of conduct regulated and the potential consequences of violations. See Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 494, 102 S. Ct. 1186, 71 L. Ed. 2d 362 (1982). Laws deserve closer scrutiny when they reach conduct protected by the First Amendment, or when they impose criminal penalties. Belle Maer, 170 F.3d at 557. In this case, although Plaintiffs bring a private civil enforcement action, violations of RESPA can result in criminal sanctions. 12 U.S.C. § 2607(d)(1) ("Any person or persons who violate the provisions of this section shall be fined not more than $10,000 or imprisoned for not more than one year, or both."). Moreover, a statute must be given the same construction in its civil and criminal applications. See Fed. Commc'ns Comm'n v. Am. Broad. Corp., 347 U.S. 284, 296, 74 S. Ct. 593, 98 L. Ed. 699 ("[T]hese are not criminal cases, but it is a criminal statute that we must interpret. There cannot be one construction for the Federal Communications Commission and another for the Department of Justice."); H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 255, 109 S. Ct. 2893, 106 L. Ed. 2d 195 (1989) (Scalia, J., concurring) ("RICO, since it has criminal applications as well, must, even in its civil applications, possess the degree of certainty required for criminal laws [.]").[2]
Accordingly, because RESPA imposes potential criminal sanctions, "a relatively strict [vagueness] test is warranted." Springfield Armory, Inc. v. City of Columbus, 29 F.3d 250, 252 (6th Cir.1994). This Court must examine the Policy Statement "on its face to determine whether it lacks sufficient definiteness to meet the requirements of the Due Process Clause." Belle Maer, 170 F.3d at 553.[3]Belle Maer involved *853 a local ordinance that regulated the operation of bubbler systems that kept ice off of harbors in the winter. The ordinance provided that the open-water area "could not exceed a five-foot radius ... or an area `determined by the inspecting officer to be a reasonable radius.'" Id. at 555 (quoting the local ordinance at issue). The court held that the "reasonableness" language rendered the ordinance unconstitutionally vague, because "neither the enforcement officer nor the bubbler operator can ascertain by examining the language of the Ordinance alone whether criminal sanctions will result from one foot or ten feet of open water." Id. at 559. Further, the court rejected the defendant's argument that enforcement decisions would be constrained by the stated purpose of the statute, which was to protect the health and safety of local residents. Id. Reference to the ordinance's purpose could not cure the vagueness of the "reasonableness" language. Id.
HUD's ten-factor test suffers from similar infirmities. First, half of the factors use vague terms reminiscent of the "reasonableness" language struck down in Belle Maer. The first factor asks whether the ABA has "sufficient" operating capital and net worth; the fifth and sixth factors ask whether the entity performs "substantial" services; the seventh factor asks whether the entity is paying "reasonable" rates for services contracted out to other entities; and the ninth factor asks whether the entity "actively competes" in the marketplace. All of these factors invite a highly subjective evaluation. The Policy Statement gives no guidance as to what level of capital would be deemed "sufficient," how many services must be performed to be deemed "substantial," what "reasonable" rates are, or what an entity must do to "actively compete."
The vagueness of the individual factors is compounded by the subjective balancing process inherent in the test. HUD explains that the ten factors "will be considered together in determining whether the entity is a bona fide settlement service provider." But HUD gives no indication how many factors might be determinative, or which factors might weigh more heavily in the analysis. Any entity wishing to operate as an ABA (an arrangement RESPA specifically condones, with certain limitations) is thus confronted with a massive gray area. At some point within that gray area, both civil and criminal liability might attach. But the test gives no indication of where that point might be. Thus, the regulation does not contain "sufficient exactness to prevent arbitrary enforcement and give notice of what an individual must do to comply with the enactment." Belle Maer, 170 F.3d at 559.
The instant cases present examples of the necessarily murky application of the ten-factor test. Counsel for both sides agree that the underlying material facts are not in dispute (TR 45-47), but the application of the test to those facts is fuzzy at best. For example, it is undisputed that WB Title and Integrity Title had initial capitalizations of $36,000 and $30,000, respectively (Kost Decl., ¶ 15; Nosker Decl., ¶ 9). But would those numbers represent "sufficient" operating capital? The regulation does not give this Court, the parties, or a potential jury any standard for answering this question. Likewise, it is undisputed that WB Title and Integrity Title provided some settlement *854 services: they evaluated title evidence to determine insurability, issued title commitments, cleared underwriting objections, and issued title insurance policies, even though they did not perform the underlying title searches (Chicago Title did). Are such services "substantial"? Again, the Policy Statement offers no standard for judging an imprecise adjective such as "substantial"an adjective that would, in some cases, lead to criminal liability. Moreover, this is not a circumstance in which a jury could simply apply the ordinary, common sense definition of a broad term. Determining what "sufficient," "reasonable," or "substantial" mean in the context of the title insurance business is a highly technical enterprise, for which courts and juries require precise guidance.
Plaintiffs argue that any potential vagueness in the HUD ten-factor test is cured by the limited class of entities subject to its restrictions, because those entities would be able to request guidance from HUD. "[B]usinesses, which face economic demands to plan behavior carefully, can be expected to consult relevant legislation in advance of action. Indeed, the regulated enterprise may have the ability to clarify the meaning of the regulation by its own inquiry, or by resort to an administrative process." Hoffman Estates, 455 U.S. at 498, 102 S. Ct. 1186 (footnote omitted). The parties dispute whether HUD is willing to give informal opinions to prospective ABAs about the application of its ten-factor test. But even if HUD is willing to offer informal opinions, such guidance would only alleviate the first prong of the vagueness testwhether the public has sufficient notice of what conduct is prohibited. The HUD test would still flunk the second prongwhether the regulation gives authorities sufficient guidance to enforce the regulation in a non-arbitrary manner. As explained above, the statute gives no guidance to courts or juries (both integral parts of the enforcement process) on applying its vague standards, and it confers extremely broad discretion on HUD and other enforcement agencies.[4]
In sum, HUD's interpretation of 12 U.S.C. § 2607 in Policy Statement 1996-2 is unconstitutionally vague. It provides insufficient guidance to the regulated public, and it lacks identifiable standards under which authorities (or private parties) can enforce its provisions in a criminal or civil context. Furthermore, HUD's Policy Statement is not "amenable to a limiting construction." Skilling v. United States, ___ U.S. ____, 130 S. Ct. 2896, 2929-30, 177 L. Ed. 2d 619 (2010). Neither party has suggested a way to cure the Policy Statement's vagueness while still retaining its essential meaning. In addition, crafting a limiting construction here would be conceptually awkward, as the Policy Statement itself represents HUD's construction of the statute.
It is unnecessary for this Court to decide Defendants' alternative argument that the Policy Statement is not entitled to deference under Chevron. Accordingly, this Court has no comment on HUD's authority to develop and announce a more specific rule regarding sham entities. Importantly, RESPA's general prohibition on *855 kickbacks remains in full force, as do the three requirements in Section 2607(c)(4)'s exception for ABAs. This Court's void-for-vagueness ruling reaches only the particular interpretation of RESPA advanced in Policy Statement 1996-2.
Application of the ABA Exception to These Cases
Because the terms of HUD's Policy Statement cannot apply, this Court is left with the plain terms of the Section 2607(c)(4) exception for ABAs. The first question under a straightforward application of the statute is whether Defendants are ABAs, as defined by RESPA (12 U.S.C. § 2602(7)):
(7) the term "affiliated business arrangement" means an arrangement in which (A) a person who is in a position to refer business incident to or a part of a real estate settlement service involving a federally related mortgage loan, or an associate of such person, has either an affiliate relationship with or a direct or beneficial ownership interest of more than 1 percent in a provider of settlement services; and (B) either of such persons directly or indirectly refers such business to that provider or affirmatively influences the selection of that provider... [.]
There is no dispute that WB Title and Integrity Title did provide at least some "settlement services"namely, they evaluated the title evidence to determine insurability, issued title commitments, and issued final title insurance policies. See 12 U.S.C. § 2602(3) (defining "settlement services" to include, among other things, "title searches, title examinations, the provision of title certificates, [and] title insurance"). Thus, under the plain terms of the ABA definition, WB Title and Integrity Title are "providers of settlement services."
The next question is whether the ABAs complied with the three requirements of Section 2607(c)(4): (1) disclosure of the ownership arrangement; (2) no requirement for the consumer to use a particular provider; and (3) the only thing of value received by the ABA parents was their ownership interest in the provider. There is no dispute that all three requirements were met in this case. First, Plaintiffs were provided with disclosures of Defendants' ownership arrangement on forms promulgated by HUD (Carter Dep., p. 89; Def. App'x, p. 92). Second, Plaintiffs were not required to use any particular title insurance agency (Carter Dep., p. 90, Def. App'x, p. 92). Finally, the only thing of value that the owners of WB Title and Integrity Title received was a return on their ownership interest (Kost Decl., ¶ 25; Nosker Decl., ¶ 23).[5]
CONCLUSION
In sum, under the plain terms of RESPA, WB Title and Integrity Title are providers of settlement services, and there is no dispute they meet the three requirements of the Section 2607(c)(4) exception for ABAs. Therefore, Defendants have not violated the anti-kickback or unearned fee provisions of RESPA. Defendants' Motions for Summary Judgment (Case No. 05-CV-7427, Doc. No. 119; Case No. 09-CV-400, Doc. No. 52) are granted.
IT IS SO ORDERED.
NOTES
[1] The other Defendants filed a joint Motion for Summary Judgment (Case 09-CV-400, Doc. No. 52). The arguments advanced in the joint Motion are similar, but not identical, to the arguments advanced in Chicago Title's Motion. The oral argument focused on Chicago Title's Motion, and this Court will do the same here. Given that Plaintiffs' allegations are directed to the business relationships among all the Defendants, the disposition of Chicago Title's Motion will apply to the other Defendants as well.
[2] Plaintiffs' counsel struggled at the hearing to address the issue of potential criminal liability, alternatively suggesting one standard for civil liability and another for criminal prosecution, or using the ten-factor test to prove scienter or as a good faith defense (TR 21-23).
[3] An unpublished Sixth Circuit decision indicates that outside the First Amendment context, a criminal statute or regulation cannot be challenged as overly vague on its face; rather, the vagueness analysis should be limited to whether the statute is vague as applied to the particular facts of the case. Condon v. Wolfe, 310 Fed.Appx. 807, 821 (6th Cir.2009). However, the Condon approach is at odds with Belle Maer, which employed a facial analysis. 170 F.3d at 553. The Supreme Court has sent mixed messages on the issue. Compare Hoffman Estates, 455 U.S. at 497, 102 S. Ct. 1186 ("[T]he complainant must demonstrate that the law is impermissibly vague in all of its applications.") with Kolender v. Lawson, 461 U.S. 352, 358, n. 8, 103 S. Ct. 1855, 75 L. Ed. 2d 903 (1983) ("[W]here a statute imposes criminal penalties, the standard of certainty is higher, [and][t]his concern has, at times, led us to invalidate a criminal statute on its face even when it could conceivably have had some valid application.") (citation omitted). In any event, this Court is bound to follow the approach of the Sixth Circuit's published decision in Belle Maer.
[4] Both the Ohio Department of Insurance ("ODI") and HUD have had the opportunity to weigh in on the conduct of WB Title and Integrity Title. ODI investigated both entities but found nothing improper (Kajfasz Decl., ¶¶ 20-22; Def. App'x, p. 206). HUD was given notice of these cases, including the constitutional challenge to Policy Statement 1996-2, but ultimately declined to participate (Doc. No. 139). Yet Defendants still face civil liability for alleged violations of RESPA. Regardless of what HUD or some other enforcement agency says (or does not say) in a particular case, the regulation must give courts and juries meaningful guidance.
[5] Chicago Title, a part owner of both WB Title and Integrity Title, also received a fee for an underwriter's portion of the title insurance premiums. RESPA specifically exempts the split of a title insurance premium between an agent and its underwriter, 12 U.S.C. § 2607(c)(1)(B), so such a payment would not deprive Defendants of the ABA exemption. See 12 U.S.C. § 2607(c)(4)(C) (allowing other "payments permitted under this subsection [2607(c)]"). Plaintiffs do not argue to the contrary.
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366 S.W.3d 837 (2012)
LITTON LOAN SERVICING, LP, Appellant,
v.
Zachariah MANNING and Intrarealty, Inc. d/b/a Intrarealty, Appellees.
No. 05-10-00675-CV.
Court of Appeals of Texas, Dallas.
April 26, 2012.
*839 Sean Michael Reagan, Steven A. Leyh, Brandon Seth Payne, Leyh & Payne, LLP, Houston, TX, Kirsten M. Castaneda, Locke Lord Bissell & Liddell LLP, Thomas G. Yoxall, Locke Liddell & Sapp LLP, Dallas, TX, for Appellant.
Robert J. Reagan, Monica I. Garcia, Reagan McLain Lee & Hatch, LLP, Dallas, TX, for Appellee.
Before Justices MORRIS, FILLMORE, and MYERS.
OPINION
Opinion By Justice MYERS.
Litton Loan Servicing, LP appeals the trial court's judgment awarding Zachariah Manning and IntraRealty, Inc. d/b/a IntraRealty a real estate commission on residential property that did not sell. Appellant brings five issues asserting the trial court erred in disregarding a finding that appellant was not at fault for the failure to close on the property and that the evidence is legally and factually insufficient to support the judgment. We conclude the evidence is legally insufficient to show there was a contract to pay appellees a commission that complied with the Real Estate License Act. We reverse the trial court's judgment and render judgment that appellees take nothing.
BACKGROUND
Appellees are licensed real estate brokers. In 2006, appellees accepted a listing from HomeEq, a mortgage servicer acting as agent for the property owner, to sell the home at issue in this case. Appellees received several offers on the property, which they passed on to HomeEq. HomeEq accepted an offer from Karen Vicknair for $195,000. While that contract was pending, HomeEq transferred management of the property to Litton. Appellees did not have a standing commission agreement with Litton.
The real estate contract with Vicknair originally scheduled the closing for March 23, 2007. The closing was delayed when Litton had difficulty collecting the documents to establish good title. Manning helped clear up the title issue, and the closing was rescheduled for April 27. However, Litton was unable to close because it did not have the correct person to sign the deed. When Litton was unable to close by April 27, Vicknair terminated the contract and received the return of her earnest money. Appellees then sent appellant a letter demanding a commission of $11,500 because they had produced a ready, willing, and able buyer. Litton refused to pay the commission because the property had not sold. Appellees then brought this lawsuit for payment of the commission.
Appellees alleged causes of action for breach of contract and negligent misrepresentation. Appellant answered, raising the affirmative defense the contract was subject to the statute of frauds and was not in writing or signed by appellant.
The case proceeded to a jury trial. The trial court rendered judgment for appellees for the $11,700 real estate commission plus $30,000 for attorney's fees. The court then made findings of fact and conclusions of law concluding that a series of e-mails *840 around March 7, 2007 constituted a legally binding contract for Litton to pay appellees a commission of $11,700 for producing a ready, willing, and able cash buyer for the property.
STATUTE OF FRAUDS
In its third issue, Litton contends the evidence is legally and factually insufficient to support a finding that a written agreement existed that complied with the statute of frauds provision of the Real Estate License Act (RELA). In reviewing the legal sufficiency of the evidence, we consider all the evidence before the jury, crediting evidence in support of the verdict if reasonable jurors could, and disregarding evidence contrary to the verdict unless reasonable jurors could not. City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex.2005); Morris v. Wells Fargo Bank, N.A., 334 S.W.3d 838, 842 (Tex. App.-Dallas 2011, no pet.). If there is more than a scintilla of evidence to support the finding, the evidence is legally sufficient. Formosa Plastics Corp. USA v. Presidio Eng'rs & Contractors, Inc., 960 S.W.2d 41, 48 (Tex.1998). When the evidence offered to prove a vital fact is so weak as to do no more than create a mere surmise or suspicion of its existence, the evidence is no more than a scintilla and, in legal effect, is no evidence. Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983). If the evidence furnishes a reasonable basis for differing conclusions by reasonable minds as to the existence of a vital fact, then there is legally sufficient evidence, more than a scintilla, to support the fact. Id.
The statute of frauds provision of RELA provides,
A person may not maintain an action in this state to recover a commission for the sale or purchase of real estate unless the promise or agreement on which the action is based, or a memorandum, is in writing and signed by the party against whom the action is brought or by a person authorized by that party to sign the document.
TEX. OCC.CODE ANN. § 1101.806(c) (West 2012). To comply with this section, an agreement or memorandum must: (1) be in writing and must be signed by the person to be charged with the commission; (2) promise that a definite commission will be paid, or must refer to a written commission schedule; (3) state the name of the broker to whom the commission is to be paid; and (4) either itself or by reference to some other existing writing, identify with reasonable certainty the land to be conveyed. Lathem v. Kruse, 290 S.W.3d 922, 925 (Tex.App.-Dallas 2009, no pet.). Strict compliance with RELA is required; the agreement to pay a real estate commission must be in writing or it is not enforceable. Id. The essential elements of the agreement may not be supplied by parol evidence. Boyert v. Tauber, 834 S.W.2d 60, 62 (Tex.1992).
In this case, appellees relied on five exhibits as forming the contract for payment of a real estate commission. Plaintiff's exhibit 1 was an e-mail dated March 7, 2007 from "[email protected]. com" and addressed to "," with the subject of "Accepted Offer." The body of the e-mail identified a file number, the property address, and "Borrower Name." It then stated,
Stefanie Otto has ACCEPTED the following offer information:
Buyer Name: Karen Vicknair
Sales Price: $195,000.00
Total Commission: $11,700.00
Buyers Closing Costs: $0.00
Contract Repairs: $0.00
Termite Completion: $0.00
Miscellaneous Costs: $0.00
Earnest Money: $1,850.00
Scheduled Close Date: 3/23/2007
*841 Please contact your Asset Manager if you have any questions.
Thank you!
Appellees argue this e-mail constitutes a signed writing under the Uniform Electronic Transactions Act that meets the requirements of RELA. See TEX. BUS. & COM.CODE ANN. §§ 322.002(8), .007(c), (d) (West 2009); TEX. OCC.CODE ANN. § 1101.806(c). We disagree. The document identifies an amount as "Commission," but it does not identify the broker to whom the commission is to be paid. The fact that the e-mail was sent to "" does not identify IntraRealty, Inc. or Manning as the real estate broker to whom the commission is to be paid. The exhibit does not constitute an agreement for Litton to pay appellees a real estate commission. Plaintiffs' exhibit 1 does not meet the requirements of the statute of frauds in the RELA.
Appellees also assert that Plaintiffs' exhibit 1, when read with Plaintiffs' exhibits 4, 5, 6, and 7, satisfies the statute of frauds. Plaintiffs' exhibit 4 is a document on Litton's letterhead and is styled "New Referral E-mail or Fax (Non-Web Broker)." The document identifies the property, the "order/loan" number (which is the same as the file number in Plaintiffs' Exhibit 1), the previous owner, and the "investor." The document is addressed to Zachariah Manning and states, "You have been selected to represent Litton Loan Servicing LP as the agent for this asset." The document then describes the actions Manning is to take for the inspection and protection of the property. It instructs Manning to file a W-9 before submitting any "reimbursement invoices." It also asks that Manning assist appraisers and other brokers seeking entry to the property and states, "You can be assured they are not in competition for the listing." This document does not provide a promise to pay a real estate commission to appellees or identify appellees as brokers to whom a real estate commission is to be paid.
Plaintiffs' exhibit 5 is also on Litton's letterhead, and it is headed "Listing Agent Closing Instructions." This document is dated March 15, 2007 and is addressed to Zachariah Manning. Under "RE:," it identifies the property address, the loan number, the buyer's name, the estimated close date, the "Entity Name," and "Commission: $11,700." The remainder of the document contains instructions for Manning to follow before the closing. The document does not contain a promise by Litton to pay Manning or IntraRealty a real estate commission, and it does not identify either appellee as a broker to whom a real estate commission is to be paid.
Plaintiffs' exhibit 6 is the real estate contract, styled "One to Four Family Residential Contract (Resale)," and executed on March 20, 2007. It also identifies the property, and it is signed by Vicknair as buyer and by Litton's "REO Marketing Supervisor" as seller. This document makes no mention of a commission. It does refer to brokers' fees, but it states, "All obligations of the parties for payment of brokers' fees are contained in separate written agreements." In a section of the contract headed "Broker Information And Ratification of Fee," it identifies "IntraRealty" as the "Listing Broker" and "Zachariah C. Manning, Pres/Broker" as the "Listing Associate" and states IntraRealty represents "Seller only as Seller's agent." This section contains blank provisions for the listing broker to pay another broker a portion of the sales price when the listing broker receives its fee. Plaintiffs' exhibit 6 does not contain a promise by Litton to pay appellees a real estate commission, nor does it identify appellees as brokers to whom a commission is to be paid.
*842 Plaintiffs' exhibit 7 is an e-mail dated March 15, 2007 from "[email protected]. com," addressed to "," and has the subject heading, "Contract Executed." The document lists the file number and the property address. The document states,
The contract for the property referenced above has been executed. Please deliver the earnest money to the seller's closing agent immediately. The accepted offer information is as follows:
Sales Price: $195,000.00
Earnest Money: $1,850.00
Scheduled Closed Date: 3/29/2007
Seller Concessions: $0.00
Contract Repairs: $0.00
Special Note: This e-mail is sent upon contract execution in the system. Contracts will be processed and sent to the listing agent with a copy to the seller's title agent within 3 days of this notice.
This document does not identify a broker to whom a real estate commission is to be paid or promise that a commission will be paid.
None of the documents on which appellees rely contains a promise to pay a real estate commission or identifies appellees as brokers to whom a commission will be paid. Accordingly, there is no evidence of a written agreement complying with the statute of frauds provision of RELA. See TEX. OCC.CODE ANN. § 1101.806(c); Lathem, 290 S.W.3d at 925. We sustain Litton's third issue.
Having sustained Litton's third issue, we need not consider its other issues. TEX. R.APP. P. 47.1.
CONCLUSION
We reverse the trial court's judgment and render judgment that appellees take nothing on their claims against Litton.
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352 S.W.3d 121 (2011)
Ex parte Bryan Scott CHAMBERLAIN.
No. 02-09-00079-CR.
Court of Appeals of Texas, Fort Worth.
August 30, 2011.
William S. Harris, Fort Worth, TX, for Appellant.
Joe Shannon, Jr., Criminal District Attorney, Charles M. Mallin, Andrea Jacobs, Assistant District Attorneys, Fort Worth, TX, for State.
*122 PANEL: GARDNER, WALKER, and McCOY, JJ.
OPINION ON REMAND
SUE WALKER, Justice.
This appeal is before us on remand from the court of criminal appeals. See Ex parte Chamberlain, 335 S.W.3d 198, 200 (Tex.Crim.App.2011) (vacating our judgment, but not our opinion, and remanding the appeal).[1] In our initial opinion, we overruled Chamberlain's two issues arguing that (1) the trial court in this case was required to conduct an evidentiary hearing on Chamberlain's article 11.072 application for a writ of habeas corpus, and (2) the Texas Sex Offender Registration Program's (SORP) lifetime registration requirement as applied to Chamberlain violated the substantive due process rights guaranteed to him under the Fourteenth Amendment to the United States Constitution. See Ex parte Chamberlain, 306 S.W.3d 328, 332-38 (Tex.App.-Fort Worth 2009), vacated and remanded, 335 S.W.3d at 198. In our prior opinion, we first held that Chamberlain's interest in his reputation did not constitute a fundamental right or liberty interest as required to trigger heightened substantive due process protection. Id. at 334. Accordingly, applying the rational basis test, we secondly held that the SORP's registration requirement bore a rational relationship to Texas's legitimate interest in protecting its citizens from sexual predators. Id. at 334-35. We also thirdly held that because the SORP required Chamberlain's compulsory registration based on his conviction of a crime that met the SORP's definition of a "sexually violent offense," the SORP's initial registration requirement was rationally related to the legitimate state interest of protecting citizens from sexual predators. Id. at 336. Finally, in rejecting Chamberlain's argument that the SORP as applied to him violated substantive due process because it required him to continue to register for his entire life and provided no mechanism for a determination that, at some point in his life, he was no longer dangerous or a recidivism risk, we pointed out that in fact "the SORP[] reveals that a statutory mechanism does exist for persons subject to lifetime registration to seek early termination of their obligation to register." Id. at 337 (citing Texas Code of Criminal Procedure articles 62.401-.408 (West 2006)). We thus fourthly held that "the SORP contains a mechanism that allows sex offenders who are purportedly not dangerous and who pose a low risk of re-offending to petition for early termination of the registration requirements." Id. at 338.
The court of criminal appeals granted Chamberlain's petition for review to decide the following issue: "Did the court of appeals err in holding that the lifetime registration requirement imposed on [Chamberlain] did not violate his substantive due process rights because there is a statutory mechanism by which [Chamberlain] can seek to be excused from further registration?" Ex parte Chamberlain, 335 S.W.3d at 200. After the court of criminal appeals granted review but before the case was submitted, the Council on Sex Offender Treatment (CSOT) published a list as mandated by code of criminal procedure article 62.402, which the court of criminal appeals stated in its opinion "altered the legal landscape for individuals eligible for early termination from the sex offender registration requirements."[2]See id. Accordingly, *123 the court of criminal appeals vacated our judgment and remanded the case to us to reconsider Chamberlain's substantive due process claim[3] "in light of this new information." Id.
For the reasons set forth in our prior opinion, we reaffirm and readopt the first three holdings we made, as referenced above. Concerning our fourth holding that "the SORP[] reveals that a statutory mechanism does exist for persons subject to lifetime registration to seek early termination of their obligation to register," this is still true. The list promulgated by the CSOT, however, specifically excludes individuals who have been convicted of sexual assault from deregistration "at this time." See Deregistration for Certain Sex Offenders, www.dshs.state.tx.us/csot/csot_dregupdate.doc. Thus, Chamberlain, who pleaded guilty to sexual assault, a second-degree felony,[4] is not eligible at this time to petition for deregistration.
The fact that Chamberlain is not eligible to petition for deregistration, however, does not mean that the SORP's lifetime registration requirement is not rationally related to a legitimate state interest or that it violates substantive due process as applied to Chamberlain. As we noted in our original opinion, complaints about whether the application of the SORP's registration requirements should be contingent on the seriousness of the offense or whether registration for nonviolent sex offenders should be limited in duration are questions better left for the legislature. Ex parte Chamberlain, 306 S.W.3d at 337 n. 9. To the extent that the SORP's rational relationship to the State's legitimate interest in protecting its citizens from sex offenders diminishes as a sex offender over time establishes his lack of dangerousness and low risk of recidivism, the SORP does provide a vehicle for such an offender (with a single reportable adjudication) to obtain an individualized assessment of dangerousness and risk of recidivism and to possibly obtain an early release from his obligation to register as a sex offender. See Tex.Code Crim. Proc. Ann. arts. 62.401-.408. The fact that Chamberlain is not eligible at this time to pursue deregistration because he pleaded guilty to and was convicted of an offense that is not *124 included on the CSOT's list does not create a violation of Chamberlain's substantive due process rights; it simply means that the legislature, via the CSOT, in consideration of the category of offense committed by Chamberlain, has determined that Texas's citizens should continue to be protected from perpetrators of this type of sexual offense. To hold otherwise would judicially mandate inclusion of all offenses on the CSOT's list in order to make the statute pass substantive due process constitutional muster. The determination of which offenses should be eligible for deregistration is a matter best left for the legislature or its designees, like the CSOT. See Flores v. State, 904 S.W.2d 129, 131 (Tex.Crim.App. 1995) (rejecting defendant's disparate treatment argument because accepting it would lead to unintended consequences better left for the legislature to decide), cert. denied, 516 U.S. 1050, 116 S. Ct. 716, 133 L. Ed. 2d 670 (1996); accord Safety Nat'l Cas. Corp. v. State, 273 S.W.3d 157, 165 (Tex.Crim.App.2008) (Cochran, J., concurring) (explaining that statutory inadequacies are best left to the legislature to remedy); see also In re M.A.H., 20 S.W.3d 860, 865-66 (Tex.App.-Fort Worth 2000, no pet.); In re J.W., 204 Ill. 2d 50, 272 Ill. Dec. 561, 787 N.E.2d 747, 760 (recognizing that rational basis test does not require that statute be best means of protecting public and that it is up to the legislature and not courts to determine whether statute is best means for achieving desired results), cert. denied sub nom., J.W. v. Illinois, 540 U.S. 873, 124 S. Ct. 222, 157 L. Ed. 2d 133 (2003). Because the Texas SORP does provide a mechanism for early deregistration for certain offenses and under certain circumstances dictated by the legislature and the CSOT, the lifetime registration requirement is rationally related to Texas's legitimate interest in protecting its citizens from sexual predators. We overrule Chamberlain's second issue.
Having overruled the sole issue before us on remand, we affirm the trial court's order denying habeas corpus relief.
NOTES
[1] See Tex.R.App. P. 78.1(f) (stating that court of criminal appeals may vacate lower court's judgment and remand case for further proceedings in light of changes in law).
[2] The list states,
[I]t is very important to note that not all Registered Sex Offenders are eligible to pursue deregistration at this time. The amendments to the Code of Criminal Procedure, Chapter 62 allow sex offenders who have been convicted or placed on deferred adjudication for the following offenses to pursue deregistration:
Compelling prostitution
Compelling prostitution (victim under 17 years old)
Indecent exposure (two or more convictions)
Unlawful restraint (victim under 17 years old)
Indecency with a child by exposure
Possession or promotion of child pornography
Online solicitation of a minor
Sexual performance of a child
Indecency with a child (victim 13 to 17 years old)
Any attempts, conspiracies, and solicitations of any of the above listed.
Thus individuals who have been convicted of other sex offenses like . . . Sexual Assault,. . . are not eligible for deregistration at this time. This determination is mandated under current law. . . .
See Deregistration for Certain Sex Offenders, December 14, 2010, available at www. dshs.state.tx.us/csot/cso_dregupdate.doc.
[3] Thus, Chamberlain's first issuewhether the trial court was required to conduct a hearingis not before us on remand. See Lopez v. State, 57 S.W.3d 625, 629 (Tex.App.-Corpus Christi 2001, pet. ref'd) (limiting issues on remand to those raised by court of criminal appeals's opinion).
[4] See Tex. Penal Code Ann. § 22.011(f) (West 2011) (categorizing sexual assault as a second-degree felony).
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Dismissed and Memorandum Opinion filed May 13, 2004
Dismissed and Memorandum Opinion filed May 13, 2004.
In The
Fourteenth Court of Appeals
____________
NO. 14-03-00337-CR
____________
JOSEPH ALLEN
SHEPARD, Appellant
V.
THE STATE OF TEXAS, Appellee
On Appeal from the
263rd District Court
Harris County,
Texas
Trial Court Cause No. 955,636
M E M O R A N D U M O P I N I O N
Appellant entered a guilty plea to aggravated robbery. In accordance with the terms of a plea
bargain agreement with the State, on March 15, 2004, the trial court sentenced
appellant to confinement for ten years in the Institutional Division of the
Texas Department of Criminal Justice.
Appellant filed a pro se notice of appeal. Because appellant has no right to appeal, we
dismiss.
The trial court entered a certification of the defendant=s right to appeal in which the court
certified that this is a plea bargain case, and the defendant has no right of
appeal. See Tex. R. App. P. 25.2(a)(2). The trial court=s certification is included in the
record on appeal. See Tex. R. App. P. 25.2(d).
Accordingly, we dismiss the appeal.
PER CURIAM
Judgment rendered and Memorandum
Opinion filed May 13, 2004.
Panel consists of Chief Justice
Hedges and Justices Frost and Guzman.
Do Not Publish C Tex. R. App.
P. 47.2(b).
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711 F. Supp. 2d 9 (2010)
UNITED STATES of America,
v.
Eddie Ray KAHN, et al., Defendants.
Criminal No. 08-271(RCL).
United States District Court, District of Columbia.
May 11, 2010.
*10 Jeffrey A. McLellan, U.S. Department of Justice, Washington, DC, for United States of America.
MEMORANDUM & ORDER
ROYCE C. LAMBERTH, Chief Judge.
This matter comes before the Court on the government's Motion [256] in Limine to Preclude the Testimony of Walker Fowler Todd. For the reasons set forth below, the government's motion shall be granted.
DISCUSSION
In his Notice [253] of Intent to Offer Expert Testimony, defendant True identifies six topics on which his expert, Walker Fowler Todd ("Todd"), is expected to testify: (1) the creation of the United States monetary system; (2) the origins of bills of exchange ("BOE") and redemption theory; (3) enforcement actions of the United States to counter fraudulent use of BOEs; (4) the government's ability to identify fraudulent BOEs; (5) third party views of concerning the viability of BOEs and redemption theory; and (6) non-fraudulent purposes of defendant True's BOEs. The government seeks to preclude Todd from testifying on each of these topics. The Court will address whether Todd may testify on these topics in turn.
1. Creation of the United States Monetary System
The government contends that Todd's testimony on the creation of the United States monetary system is irrelevant. Federal Rule of Evidence 402 provides that "[e]vidence which is not relevant is not admissible." Relevant evidence is evidence that has "any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable that it would be without the evidence." Fed. R.Evid. 401.
Here, Todd's proposed testimony on the creation of the United States monetary system is not relevant because the monetary history of the United States is not at issue in this case. The jury will be able to understand the place of BOEs in the United States monetary system without an expert discussing at length the creation of that system. Indeed, his proposed testimony has no effect on "the existence of any fact that is of consequence to the determination of this action." Id. Accordingly, the Court precludes Todd from testifying on the creation of the United States Monetary System.
2. Origins of BOEs and Redemption Theory
The government next contends that Todd's testimony on the origins of *11 BOEs and redemption theory is irrelevant because Todd is expected to testify as to how BOEs and redemption theory were utilized in the United States by people who disagreed with the government's view regarding the nature of money and underpinnings of the federal tax system. Defendant True argues that Todd should be allowed to testify on this subject because Todd's testimony will assist the jury in determining whether he acted in good faith. The Court agrees with the government.
In Cheek v. United States, the Supreme Court held that "a defendant's views about the validity of the tax statutes are irrelevant to the issue of willfulness and need not be heard by the jury." 498 U.S. 192, 206, 111 S. Ct. 604, 112 L. Ed. 2d 617 (1991). Although Cheek involved charges of willful failure to file tax returns and willful attempt to evade taxes, id. at 194, 111 S. Ct. 604, not mail fraud and conspiracy, the Court finds that its holding applies to this case. Disagreement with the tax laws is not a defense to the charges in the indictment. Moreover, expert testimony on BOEs and redemption theory will not assist the jury in determining whether defendant True acted in good faith because under Cheek, the good faith inquiry is subjective. Id. at 202, 111 S. Ct. 604. Thus, having an expert explain why individuals disagree with the tax system is irrelevant and may confuse or mislead the jury.
3. Enforcement Actions
The third topic in defendant True's notice of expert testimony states that Todd "will testify regarding enforcement actions of the United States to counter the fraudulent use of [BOEs] and the Redemption Theory that underlies some of the BOEs utilized in the United States." (Notice [253] at ¶ 3.) The government argues that this testimony is inadmissible because the Court previously precluded defendants from introducing evidence regarding the government's exercise of prosecutorial discretion. Defendant True argues that Todd will not opine on the government's use of its prosecutorial discretion; rather he will testify about how the United States identifies fraudulent BOEs.
The enforcement actions taken by the government to counter fraudulent use of BOEs are irrelevant to this case. Although defendant True asserts in his opposition that Todd's testimony on this topic is about how the government identifies fraudulent BOEs, the language of the notice is clear that this topic covers "enforcement actions," and that topic four covers how the government identifies fraudulent BOEs. (Id. at ¶¶ 3-4.) Moreover, the enforcement actions taken by the government fall within the government's prosecutorial discretion, which the Court already prohibited. (Order [229], Nov. 9.2009.) Accordingly, Todd is precluded from testifying on the enforcement actions of the government to counter fraudulent use of BOEs and redemption theory.
4. The Government's Ability to Identify Fraudulent BOEs
Defendant True expects Todd to testify regarding the government's ability to identify fraudulent BOEs and the government's ability "to isolate fraudulent BOEs without undue disruption of the tax collection system." (Notice [253] at ¶ 4.) The government argues that Todd does not qualify as an expert on this subject.
Federal Rule of Evidence 702 provides:
If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise, if (1) the testimony is *12 based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case.
Defendant True argues that Todd qualifies as an expert on this topic by knowledge, skill, experience, training, or education because he worked at the Federal Reserve Bank for twenty years. Fed. R.Evid. 702. During that time, he reviewed fictitious notes and other instruments. In addition, Todd has testified at several trials and has worked as a consultant, instructor, research fellow, and author since his employment with the Federal Reserve.
Todd, however, never worked for the IRS. Moreover, his curriculum vitae does not demonstrate any extensive interaction with the IRS or education that he received on how IRS processes BOEs. Indeed, his curriculum vitae is silent as to whether Todd has any specialized knowledge of the IRS and its workings. He has no basis to express his opinion on whether the IRS can isolate fraudulent BOEs without disruption of the tax system, or how the IRS identifies fraudulent BOEs. Accordingly, Todd lacks the "knowledge, skill, experience, training, or education" to testify as an expert on this topic. Fed.R.Evid. 702.
5. Third Party Views
Defendant True expects Todd to testify that defendant True's actions were "typical of many of the persons who personally have adopted non-traditional views of the monetary and taxing systems of the United States." (Notice [253] at ¶ 5.) He seeks to offer this testimony in support of his defense that he acted in good faith.
As discussed above, whether defendant True's actions and beliefs are shared by other individuals is not relevant to whether he acted in good faith. See Cheek, 498 U.S. at 202, 111 S. Ct. 604. The inquiry is subjective and thus must focus on the belief of the defendant. Moreover, an expert testifying that defendant True's purported good faith belief is widely held may confuse or mislead the jury. See Fed.R.Evid. 403. Accordingly, Todd is precluded from testifying on this topic
6. Non-Fraudulent Purposes of Bills of Exchange
The government expert witness did not testify that the BOEs related to defendant True were created for the sole purpose of perpetrating fraud. In his opposition, defendant True acknowledged that if the government's expert did not testify to that effect, Todd's testimony on this topic is not necessary. Accordingly, Todd is precluded from testifying on this topic.
CONCLUSION
Upon consideration of the government's motion, the opposition and reply thereto, the applicable law, and the entire record herein, it is, for the reasons set forth above, hereby
ORDERED that the government's Motion [256] in Limine is GRANTED; and it is further
ORDERED that Walker F. Todd is precluded from testifying at trial.
SO ORDERED.
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IN THE COURT OF CRIMINAL APPEALS OF TENNESSEE
AT JACKSON
JANUARY SESSION, 1997
FILED
STATE OF TENNESSEE, ) July 18, 1997
) No. 02C01-9610-CR-00348
Appellee ) Cecil Crowson, Jr.
) SHELBY COUNTY Appellate C ourt Clerk
vs. )
) Hon. BERNIE WEINMAN, Judge
HEATHER R. DOWDY, )
) (Aggravated Burglary;
Appellant ) Theft of property worth less
than five hundred dollars)
For the Appellant: For the Appellee:
R. PORTER FEILD CHARLES W. BURSON
Burch, Porter & Johnson Attorney General and Reporter
130 North Court Avenue
Memphis, TN 38103
LISA A. NAYLOR
Assistant Attorney General
Criminal Justice Division
450 James Robertson Parkway
Nashville, TN 37243-0493
WILLIAM GIBBONS
District Attorney General
P. T. HOOVER
Asst. District Attorney General
201 Poplar Avenue, 3rd Floor
Memphis, TN 38103
OPINION FILED:
REMANDED
David G. Hayes
Judge
OPINION
The appellant, Heather R. Dowdy, pled guilty in the Shelby County
Criminal Court to one count of aggravated burglary, a class C felony, and two
counts of theft of property valued less than five hundred dollars, class A
misdemeanors. Pursuant to the plea agreement, the trial court imposed
concurrent sentences of three years incarceration in the county workhouse for
the burglary conviction and eleven months and twenty-nine days incarceration in
the county workhouse for each of the theft convictions. Following a sentencing
hearing, the trial court suspended the sentences, except for one hundred and
eighty days to be served on weekends. Additionally, the trial court imposed six
years of intensive probation. The conditions of probation included restitution in
the amount of $7,200.00, to be paid in monthly installments of $100.00, one
hundred hours of community service, and a 9:00 p.m. curfew.
On April 26, 1996, the appellant filed a motion pursuant to Tenn. R. Crim.
P. 35(b) for reduction of her sentence. On May 10, 1996, the trial court denied
the appellant’s motion. The appellant now appeals the trial court’s denial of her
motion and also appeals pursuant to Tenn. Code Ann. § 40-35-401 (1990).
Specifically, the appellant challenges the amount and terms of restitution and,
consequently, the length of her probationary period; the imposition of a 9:00 p.m.
curfew; and the requirement of drug testing and counseling.
I. Factual Background
On March 29, 1996, the trial court conducted a hearing in order to
determine the manner of service of the appellant’s sentences. The appellant
testified that she was employed by a company called “We Rep You Advertising
Agency.” She worked four days each week and was paid $5.00 per hour. She
further testified that she had only completed the ninth grade in school but had
2
obtained a GED. The appellant resides with her current boyfriend, who owns a
small business.
The appellant’s criminal record consists of a 1992 conviction for disorderly
conduct and public intoxication, a 1991 conviction for DUI, and a 1991 conviction
for a traffic offense. She was placed on probation pursuant to the DUI
conviction. Her probation was revoked following her conviction for disorderly
conduct and public intoxication. Additionally, the appellant admitted to the pre-
sentence investigator that she had previously experimented with marijuana and
cocaine.1 At the hearing, the appellant reaffirmed her guilt of the instant
offenses and asserted that she accepted responsibility for her crimes. She
recounted that her co-defendant, Scott Marino, had been her boyfriend at the
time of these offenses. She explained that she and Marino decided to commit
the burglaries or thefts because they were unemployed and needed money. The
appellant testified that Marino had previously been convicted of burglary and was
convicted of burglary in this case.2 Finally, she further asserted that her
boyfriend was abusive and was the principle actor in the commission of these
crimes.
The appellant testified at the hearing that she could probably pay $100.00
per month toward restitution to the victims. The victim impact statements
included in the record indicate that, with respect to the misdemeanor theft
convictions, the appellant stole jewelry and silver flatware worth approximately
$7,606.00 from her aunt, Jane Graham. Douglass Curry, the appellant’s step-
father and the victim of the second theft, indicated that he did not want restitution
from the appellant and declined to state the value of any property stolen from
1
The appellant also indicated that she drank heavily for approximately one year at the age
of nineteen. She asserted that she no longer abused alcohol or drugs.
2
The pre -senten ce rep ort indicates that the appellant’s c o-defendant wa s senten ced to six
years incarceration, presumably in the Department of Correction. The appellant testified that
Marino is currently serving his sentence.
3
him by the appellant. With respect to the felony burglary conviction, the victim
Patti Ramsey reported that the appellant stole property worth approximately
$3,465.37.
II. Analysis
Pursuant to Tenn. Code Ann. § 40-35-401(d) (1990), review by this court
of the manner of service of a sentence is de novo with a presumption that the
determination made by the trial court is correct.3 This presumption only applies,
however, if the record demonstrates that the trial court properly considered
sentencing principles and all relevant facts and circumstances. State v. Ashby,
823 S.W.2d 166, 169 (Tenn. 1991). In any event, the appellant bears the
burden of establishing that the sentences imposed by the trial court are
erroneous. State v. Lee, No. 03C01-9308-CR-00275 (Tenn. Crim. App. at
Knoxville, April 4, 1995).
At the conclusion of the sentencing hearing, the trial court stated:
I'm going to place you on six years probation; restitution at a
hundred dollars a month. As part of that probation you are to serve
180 days at the Shelby County Correctional Center starting at 7:00
p.m. on Friday until 7:00 p.m. Sunday, every weekend -- so you
can continue to work and make this restitution. In addition, do a
hundred hours of community service. That's intensive probation
and that's a 9:00 p.m. curfew.
The appellant challenges the conditions of her probation, i.e. the terms
and amount of restitution, the imposition of a curfew, and mandatory drug
testing.
3
Again, the app ellant also challenges the trial co urt’s denial of her m otion p ursuan t to
Tenn. R. Crim. P. 35(b) for reduction of her sentence. In contrast to the standard of review
applicable to sentencing appe als perfected pursu ant to Tenn. C ode An n. § 40-35-401 (d),
app ellate review o f Ru le 35(b) rulings is g overned by the “a bus e of d iscre tion” stand ard. State v.
Irick, 861 S.W .2d 375, 376 (T enn . Crim . App . 1993); State v. Burden, No. 02C01-9509-CC-00267
(Tenn. Crim. App. at Jackson, February 5, 1997). Clearly, therefore, a determination of the
app ellant’s T enn . Code A nn. § 40-3 5-40 1(d) app eal will also resolve her R ule 35 (b) appe al.
4
A. Imposition of Special Conditions
First, we review the appellant’s claim that the trial court’s imposition of a
9:00 p.m. curfew is improper. The appellant contends that the curfew is “unduly”
restrictive of her liberty. Tenn. Code Ann. §40-35-303(d)(9). Specifically, the
appellant contends that, as a result of the curfew, she is unable to accept full-
time employment at a convenience store at night. However, the Probation Order
clearly authorizes the appellant’s probation officer “to give permission for night
employment if necessary.” In light of the probation officer’s authority, we do not
find that the conditions of the appellant’s probation are unduly burdensome.
Moreover, should the appellant encounter insurmountable obstacles in
complying with the conditions of her probation, Tenn. Code Ann. §40-35-308
(1990) permits the appellant or her probation officer to apply to the trial court for
the modification or removal of any condition.
With respect to the appellant’s challenge to conditions of her probation
relating to drug testing and counseling, the record before this court does not
reflect that any such conditions were imposed by the trial court. Therefore, we
are unable to consider this issue. See Tenn. R. App. P. 24(b) (it is the
appellant’s obligation to have prepared an adequate record in order to allow
meaningful review on appeal).
B. Restitution
The appellant challenges the trial court’s imposition of restitution in the
amount of $7,200.00, to be paid in monthly installments of $100.00. She argues
that the trial court, in imposing restitution, did not adequately account for her
ability to pay or her co-defendant’s participation in the crimes. Moreover, she
5
contends that, because the trial court did not consider these factors in imposing
restitution, it could not impose a probationary period of six years in order to
accommodate the payment schedule.
Tenn. Code Ann. § 40-35-304(a) (1996 Supp.) authorizes the sentencing
court to impose restitution as a condition of probation. Tenn. Code Ann. §40-35-
304(c) provides that a court must establish a restitution payment schedule that
does not extend beyond the maximum term of probation supervision that could
have been imposed for the offense. A court may place a defendant on
supervised probation for a period of time up to and including the statutory
maximum time for the class of conviction offense. Tenn. Code Ann. §40-35-
303(c). Thus, the trial court was authorized to impose a probationary period of
six years for the offense of aggravated burglary and extend the appellant’s
restitution payments for this crime over that time. See 40-35-111(b)(3) (1990).
With respect to the appellant’s contention that the order of restitution fails
to account for her co-defendant’s proportionate liability, we disagree. In
essence, the appellant asks that we adopt some form of comparative fault for the
purpose of determining restitution in criminal cases. This we decline to do.
While this court has tacitly acknowledged the trial court’s authority to impose joint
and several liability for restitution upon co-defendants, see, e.g., State v.
Roberts, No. 01C01-9410-CC-00332 (Tenn. Crim. App. at Nashville, March 10,
1995), and State v. Akins, No. 134 (Tenn. Crim. App. at Knoxville, June 28,
1991), the 1989 Sentencing Act does not require the division of restitution
responsibility. In any case, we recognize that the policy expressed by the
legislature in the 1989 Sentencing Act is that the punishment imposed should fit
the crime and the offender. State v. Boggs, 932 S.W.2d 467, 477 (Tenn. Crim.
App.), perm. to appeal denied, (Tenn. 1996). See also Johnson, No. 03C01-
9606-CC-00214(restitution is not only a means of compensating the victim, but
6
also a form of punishment). In the context of this policy, the appellant
acknowledged at the sentencing hearing that she was a full participant in the
burglary. Moreover, the record does not reflect that the co-defendant, Marino,
was convicted for the incidents resulting in the appellant’s theft convictions.
Next, the appellant argues that the trial court failed to consider her ability
to pay in awarding restitution. The record reflects that the appellant is a single
person who lives with her boyfriend and currently earns $5.00 per hour. The
appellant testified at the hearing that she could make scheduled restitution
payments of “probably about a hundred dollars a month.” Based on these facts,
the trial court ordered restitution payments of $100.00 per month. The appellant
offered no other proof at the hearing relating to her ability to pay. We find this
issue without merit.
In performing our review of the issues in this case, we are constrained to
note that the trial court, in ordering restitution, combined the pecuniary losses of
both victims into one payment and ordered that this amount be repaid over the
seventy-two month period of supervision for the aggravated burglary conviction.
This, in effect, permitted the restitution for the misdemeanor conviction to be
repaid over a six year period.4 The plain language of our statute requires that
restitution as a condition of probation be related to the offense that warrants the
probation. See Tenn. Code Ann. § 40-35-304(a). In other words, the trial court
cannot order a restitution payment schedule extending beyond the statutory
maximum term for the offense occasioning the restitution, or attach the
restitution schedule to an unrelated offense. Moreover, the proof in the record
pertaining to the losses of the two victims conflicts with that amount set by the
4
The a ppellant’s plea bargain agre em ent perm itted her to plead to m isdem eanor theft
which involved a loss from the victim, Jane Graham , of $7607.00. As previously noted, the
second misdemeanor theft involved the victim’s stepfather and no restitution was sought. The
burglary conviction involved the victim, Patti Ramsey, and restitution of $3590.37.
7
trial court5 and there is no apportionment of the restitution between the two
victims. Accordingly, we find it necessary to remand this case for a
determination of the amount of restitution applicable to each offense, the
imposition of payment schedules in accordance with this opinion, and a
determination of the appropriate probation period.6 7
Notwithstanding our decision to remand, we also note that the victim
impact statements, included in the record, reflect that the property stolen from
Ms. Graham and Ms. Ramsey was insured and that their respective insurance
companies have paid these claims. Whether or not an insurance company is a
"victim" contemplated by the legislature in providing for repayment of restitution
to "victims", see Tenn. Code Ann. § 40-35-304, is currently pending before our
supreme court. Thus, although this court has held an insurance company to be
a victim for purposes of restitution, this issue may be moot dependant upon the
decision of our supreme court. See State v. Alford, No. 02C01-9509-CC-00281
(Tenn. Crim. App. at Jackson, Sept. 30, 1996), perm. to appeal granted, (Tenn.
Apr. 14, 1997).
For the foregoing reasons, this case is remanded consistent with this
opinion.
5
The victim impact statements revealed that Jane Graham sustained a loss of $7,606.00,
while Patti Ramsey suffered losses amounting to $3590.37, a total of $11,196.37. Apparently, the
trial court acc epte d the State 's argum ent in determ ining the am oun t of res titution. The S tate
argued that Graham sustained a loss of $3700 and Ram sey, a loss of $3590.37, totaling
$7290.37.
6
The trial court may conclude that a probationary period of six years for the aggravated
burglary offense is still appropriate. However, it must base its determination on factors other than
the payment schedule for restitution to victims of another offense.
7
W e would note that m any of the pro blem s presente d in this case could be elim inated by
carefully constructed plea agreements.
8
____________________________________
DAVID G. HAYES, Judge
CONCUR:
__________________________________
PAUL G. SUMMERS, Judge
__________________________________
THOMAS T. WOODALL, Judge
9
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351 S.W.3d 501 (2011)
Joel MAGAÑA, Appellant,
v.
The STATE of Texas, Appellee.
No. 04-10-00120-CR.
Court of Appeals of Texas, San Antonio.
August 10, 2011.
*503 Fausto Sosa, Law Office of Fausto Sosa, Laredo, TX, for Appellant.
Isidro R. Alaniz, District Attorney, Edward Nolen, Assistant District Attorney, Laredo, TX, for Appellee.
Sitting: CATHERINE STONE, Chief Justice, SANDEE BRYAN MARION, Justice, REBECCA SIMMONS, Justice.
OPINION
Opinion by: REBECCA SIMMONS, Justice.
Appellant Joel Magaña appeals his convictions for the murder of Jose Rodriguez-Vidal, the robbery of Jose Rodriguez-Vidal, and the robbery of Abiel Rodriguez. Magaña raises three issues on appeal: (1) the trial court committed harmful error by allowing the jury to convict him by a less-than-unanimous verdict of the felony murder charge; (2) his conviction for robbery of Rodriguez-Vidal should be vacated because it violates the Double Jeopardy Clause; and (3) the trial court committed harmful error by allowing the State to impeach Magaña with juvenile adjudications. We reverse Magaña's conviction for the robbery of Rodriguez-Vidal, and reform the judgment to delete his conviction and the punishment therefor. We affirm the judgment as reformed.
*504 BACKGROUND
Around 3:00 am on January 20, 2009, Emilio Barron arrived at a friend's house where Joel Magaña was sleeping. Barron woke him up so that they could "go do some jobs." Magaña and Barron left the house and encountered Jose Rodriguez-Vidal and his son, Abiel Rodriguez, who were walking down the road. Magaña approached Abiel and struck him on the side of his face. Abiel saw Barron strike his father who then fell to the ground. Abiel ran away toward a nearby gas station and Magaña chased after him. Magaña caught up with Abiel, and Abiel gave Magaña all the money in his wallet. Magaña then ran back to where he had last seen Barron, and Abiel then chased after him. When Abiel caught up with Magaña, he saw Barron and Magaña kicking his father. Rodriguez-Vidal died from the injuries he incurred as a result of the attack.
Abiel explained what had happened to the police. Officer De Hoyos patrolled the area for the men matching Abiel's description and arrested Magaña and Barron in the neighborhood about ten minutes later. A grand jury indicted Magaña for the murder of Rodriguez-Vidal, robbery of Rodriguez-Vidal, and robbery of Abiel; Barron was indicted and tried separately. After a five-day trial, a jury convicted Magaña of all offenses charged. The jury assessed a punishment of seventy-five years' imprisonment and a fine of $10,000.00 for murder, and ten years' imprisonment and a $10,000.00 fine for each robbery. Magaña appeals.
JURY CHARGE
Magaña's first issue is that the trial court committed harmful error by failing to include an application section in Count I for felony-murder for which robbery was the predicate felony. He contends that as a result, he was convicted of murder by a less-than-unanimous verdict.
A. Applicable Law
Under the Texas Constitution and Texas Code of Criminal Procedure, a jury's verdict must be unanimous in all felony cases. Jefferson v. State, 189 S.W.3d 305, 311 (Tex.Crim.App.2006); accord Tex. Const. art. V, § 13; Tex.Code Crim. Proc. Ann. art. 36.29(a) (West 2006 & Supp. 2010). A jury must unanimously convict a defendant of a single, specific offense, but it need not unanimously agree as to any particular theory of how the defendant committed that offense. See Stuhler v. State, 218 S.W.3d 706, 716-19 (Tex.Crim.App.2007); Jefferson, 189 S.W.3d at 312; Sanchez v. State, 182 S.W.3d 34, 63 (Tex.App.-San Antonio 2005), aff'd, 209 S.W.3d 117 (Tex.Crim. App.2006). "In reviewing a disjunctive jury charge, we first determine whether the separate application paragraphs contain different criminal acts or whether they merely instruct as to different means of committing a single offense." Holford v. State, 177 S.W.3d 454, 461 (Tex.App.-Houston [1st Dist.] 2005, pet. ref'd).
In reviewing a claim of charge error, we first determine whether error exists. Druery v. State, 225 S.W.3d 491, 504 (Tex.Crim.App.2007); Hutch v. State, 922 S.W.2d 166, 170 (Tex.Crim.App.1996). A trial court must submit a jury charge accurately setting forth "the law applicable to the case." Huffman v. State, 234 S.W.3d 185, 198 (Tex.App.-San Antonio 2007), aff'd on other grounds, 267 S.W.3d 902 (Tex.Crim.App.2008). If we find error, we "must then determine whether the error caused sufficient harm to require reversal." Druery, 225 S.W.3d at 504; Hutch, 922 S.W.2d at 170-71. "[T]he degree of harm necessary for reversal depends upon whether the error was preserved." *505 Druery, 225 S.W.3d at 504. If error is preserved, as in this case, "any harm, regardless of degree, is sufficient to require reversal." Id.; see also Huffman, 234 S.W.3d at 198.
B. Analysis
Magaña argues that the jury charge enabled him to be convicted by a less-than-unanimous verdict because some of the jurors could have convicted him of murder based on the robbery of Rodriguez-Vidal and others could have convicted him based on the robbery of Abiel. However, "alternate pleading of the differing methods of committing one offense may be charged in one indictment." Kitchens v. State, 823 S.W.2d 256, 258 (Tex.Crim.App.1991); Mata v. State, 75 S.W.3d 499, 501 (Tex.App.-San Antonio 2002), rev'd on other grounds, 122 S.W.3d 813 (Tex.Crim.App.2003). If an indictment alleges multiple felonies as alternative bases for felony murder liability, the "felonies are not elements about which a jury must be unanimous" because "[t]hese felonies constitute the manner or means that make up the `felony' element." White v. State, 208 S.W.3d 467, 469 (Tex.Crim.App.2006); see also Cameron v. State, 988 S.W.2d 835, 849-50 (Tex.App.-San Antonio 1999, pet. ref'd). Moreover, the jury unanimously convicted Magaña for the robbery of Abiel and for the robbery of Rodriguez-Vidal.
He further contends that the jury instruction was improper because the robbery of Abiel could not be the predicate felony for the felony-murder of Rodriguez-Vidal because Abiel was a different victim. But the Court of Criminal Appeals has explained, "Nothing prohibits a single capital murder from containing alternate underlying offenses that are the same statutory offense but with different victims or different underlying methods of commission, so long as the same victim is alleged with respect to the predicate murder." Davis v. State, 313 S.W.3d 317, 342 (Tex. Crim.App.2010).
Magaña lastly states that the evidence was insufficient to support that he robbed Rodriguez-Vidal because there was no evidence that Barron or Magaña had taken anything from Rodriguez-Vidal.[1] Again, we disagree because "the actual commission of the offense of theft is not prerequisite to commission of a robbery," so long as it is "alleged and proven that the alleged offense was committed `in the course of committing a theft' and `with intent to obtain or maintain control of the property' involved in the theft." Earl v. State, 514 S.W.2d 273, 274 (Tex.Crim.App. 1974). In this case, the jury was so instructed and the State presented evidence of Barron and Magaña's intent to take property from Rodriguez-Vidal. Because there is no error in the jury charge, we overrule Magaña's first issue. See Druery, 225 S.W.3d at 504; Hutch, 922 S.W.2d at 170-71.
DOUBLE JEOPARDY
Magaña's second issue is that the conviction for the robbery of Rodriguez-Vidal contained in the trial court judgment violates the Double Jeopardy Clause because it is a lesser included offense of felony murder for which he was also convicted. See Littrell v. State, 271 S.W.3d *506 273, 275 (Tex.Crim.App.2008) (citing Brown v. Ohio, 432 U.S. 161, 164, 97 S. Ct. 2221, 53 L. Ed. 2d 187 (1977)). The State agrees. Accordingly, we reverse Magaña's conviction for the robbery of Rodriguez-Vidal and reform the judgment to delete that conviction and his sentence therefor.
IMPROPER IMPEACHMENT
In his third and final issue, Magaña argues that the trial court erred by allowing the State to question Magaña about his prior juvenile adjudications. During cross-examination, the State asked Magaña if he had any prior convictions and Magaña responded, "No." When the State asked Magaña about his prior juvenile adjudications, Magaña objected and the trial court overruled his objection. The State again asked Magaña about his prior juvenile adjudications and Magaña admitted to having a history of fighting in school. The State concedes that the trial court's ruling was erroneous, but argues that it was harmless error.
A. Standard of Review
Both parties agree that the trial court's error is not constitutional. See TEX.R.APP. P. 44.2(b). A non-constitutional error must be disregarded unless it affects the substantial rights of the accused. See id.; Pollard v. State, 255 S.W.3d 184, 190 (Tex.App.-San Antonio 2008), aff'd, 277 S.W.3d 25 (Tex.Crim.App.2009). "To make this determination, [we] must decide whether the error had a substantial or injurious effect on the jury verdict." Pollard, 255 S.W.3d at 190 (quoting Llamas v. State, 12 S.W.3d 469, 471 n. 2 (Tex.Crim. App.2000)). "Substantial rights are not affected by the erroneous admission of evidence if, after examining the record as a whole, we have a fair assurance that the error did not influence the jury, or had but a slight effect." Id.
In assessing the degree of the impact of a non-constitutional error on the jury's verdict, we consider the entire record, including: (1) all physical evidence and testimony; (2) "the nature of the evidence supporting the verdict"; and (3) the nature of the error and how the erroneously admitted evidence "might be considered in connection with other evidence in the case." Id.; see also Motilla v. State, 78 S.W.3d 352, 355-56 (Tex.Crim.App.2002). We may also consider: (4) the jury instructions; (5) the parties' respective theories and closing arguments; and (6) voir dire, if applicable. Motilla, 78 S.W.3d at 355-56. "Overwhelming evidence of guilt is a factor in any thorough harm analysis." Pollard, 255 S.W.3d at 190.
B. Analysis
Based on the record as a whole, we have fair assurance that the error did not influence the jury. Initially, the State offered substantial physical and testimonial evidence of Magaña's guilt. Abiel testified that Magaña and Barron attacked him and Rodriguez-Vidal. He also stated that Magaña then chased him to a nearby gas station where he gave all the money in his wallet to Magaña, who then stopped chasing him. Abiel further testified that he then saw Magaña and Barron kicking Rodriguez-Vidal. The State introduced a photo of the shoes Magaña was wearing that evening and offered testimony that the blood on those shoes matched Rodriguez-Vidal's blood. Magaña's roommate, Raquel Carrasco, testified that earlier that evening, Barron sold to her several items he had stolen that same night and then woke up Magaña and told him, "Let's go do some jobs." Magaña's testimony did not contradict much of the State's evidence, but he denied kicking or punching Rodriguez-Vidal and demanding any money from Abiel.
*507 Although the trial court's error improperly permitted the State to impeach Magaña's credibility, the State impeached Magaña several other times. Magaña admitted on cross-examination that he had changed his story at trial from what he had told investigators following his and Barron's attack on Abiel and Rodriguez-Vidal. Magaña admitted that he had lied to investigators about where he had been that night, the nature of his friendship with Barron, and the money he took from Abiel. After Magaña denied hitting Rodriguez-Vidal, the State impeached Magaña with a prior inconsistent statement in which Magaña had told investigators that he had hit Rodriguez-Vidal with both his hands and his feet. Finally, the State did not rely on Magaña's school fights in its theory of the case or in closing argument.
Although the trial court abused its discretion by permitting the State to ask Magaña about his prior juvenile adjudications, this error was harmless. As such, we overrule Magaña's third and final issue.
CONCLUSION
Based on the foregoing, we reverse Magaña's conviction for the robbery of Rodriguez-Vidal and reform the judgment to delete that conviction and the punishment therefor. We affirm the trial court's judgment as reformed.
NOTES
[1] Although it appears from Magaña's brief that he complains of the inclusion of multiple theories of liability (e.g., principal, party, conspirator), counsel for Magaña at oral argument clarified that his sole position was that it was improper for the jury charge to not include an application paragraph regarding the proper predicate robbery, and that it was improper for the jury to convict Magaña of felony murder of Rodriguez-Vidal based on the robbery of Abiel.
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341 S.W.3d 812 (2011)
Richard PLACKE, Appellant,
v.
STATE of Missouri, Respondent.
No. SD 30679.
Missouri Court of Appeals, Southern District, Division One.
May 25, 2011.
*813 Kyle L. Warren, Poplar Bluff, MO, for Appellant.
SChris Koster, Atty. Gen., and James B. Farnsworth, Asst. Atty. Gen., Jefferson City, MO, for Respondent.
ROBERT S. BARNEY, Presiding Judge.
Appellant Richard Placke ("Movant") appeals the motion court's denial following an evidentiary hearing of his "SECOND AMENDED MOTION UNDER RULE *814 29.15."[1] In his two points relied on, Appellant asserts the motion court erred in denying his request for postconviction relief because he received ineffective assistance of counsel due to his trial counsel's failure to interview certain witnesses and his failure to object to evidence of "uncharged crimes, wrongs and bad acts. . . ."
The record reveals Movant was charged via "INFORMATION" with one count of the unclassified felony of statutory sodomy in the first degree, a violation of section 566.062, and one count of the unclassified felony of attempted statutory rape in the first degree, a violation of section 566.032.[2] The testimony below revealed that Movant was charged with engaging in deviant sexual intercourse on several occasions with B.K. ("Victim"), who was the niece of Movant's live-in girlfriend. Following a jury trial, Movant was sentenced to ten years on the statutory sodomy charge and seven years on the attempted statutory rape charge with the sentences to run concurrently. Movant appealed these convictions to this Court in State v. Placke, 290 S.W.3d 145 (Mo.App.2009). This Court affirmed the convictions on the merits, but remanded the matter for re-sentencing due to plain error in sentencing Movant to a term of imprisonment greater than recommended by the jury. Id. at 156-57. Upon re-sentencing, he was apparently sentenced to seven years imprisonment on the statutory sodomy charge and ten years imprisonment on the attempted statutory rape charge.
On October 20, 2008, Movant timely filed his pro se Rule 29.15 motion seeking postconviction relief. Movant was thereafter appointed counsel and an amended motion was filed on January 11, 2010. Following an evidentiary hearing on April 12, 2010, the motion court denied Movant's request for relief in a "JUDGMENT" and "FINDINGS OF FACT AND . . . CONCLUSIONS OF LAW" entered on June 30, 2010. This appeal by Movant followed.
Appellate review of a motion court's ruling on a Rule 29.15 motion for postconviction relief is limited to a determination of whether the motion court's findings of fact and conclusions of law issued in support thereof are clearly erroneous. Rule 29.15(k); see Moss v. State, 10 S.W.3d 508, 511 (Mo. banc 2000). "The findings of the motion court are presumptively valid." Fry v. State, 244 S.W.3d 284, 285 (Mo.App. 2008). "Findings and conclusions are clearly erroneous if, after a review of the entire record, the appellate court is left with the definite impression that a mistake has been made." State v. Taylor, 944 S.W.2d 925, 938 (Mo. banc 1997).
A movant bears the burden of proving, by a preponderance of the evidence, that he received ineffective assistance of counsel. Rule 29.15(f). To establish ineffective assistance of counsel, a movant must show that: (1) "counsel's performance did not conform to the degree of skill, care, and diligence of a reasonably competent attorney;" and (2) counsel's poor performance prejudiced the defense. State v. Hall, 982 S.W.2d 675, 680 (Mo. banc 1998); see Strickland v. Washington, 466 U.S. 668, 687, 104 S. Ct. 2052, 80 L. Ed. 2d 674 (1984). To satisfy the first prong, a movant must demonstrate that "counsel's representation fell below an objective standard of reasonableness." Strickland, 466 U.S. at 688, 104 S. Ct. 2052. Movant bears the heavy burden of overcoming the motion court's presumption that trial counsel's conduct was reasonable and effective. Clayton v. State, 63 S.W.3d 201, 206 (Mo. banc 2001). *815 The second prong of the Strickland test is met when a movant shows that his attorney's errors affected the judgment. Strickland, 466 U.S. at 694, 104 S. Ct. 2052. A movant can prove that the judgment was affected when there is a "reasonable probability that, but for counsel's unprofessional errors, the result of the proceeding would have been different." Id. at 694, 104 S. Ct. 2052. Movant must prove each portion of this two-pronged performance and prejudice test in order to prevail on his ineffective assistance of counsel claim. Sanders v. State, 738 S.W.2d 856, 857 (Mo. banc 1987).
In his first point relied on, Movant asserts the motion court erred in denying his Rule 29.15 motion because his trial counsel "was ineffective for failing to investigate and interview potential witnesses prior to trial. . . ." He maintains that had his counsel conducted these interviews it would "have provided [Movant] with a viable defense . . ." to both charged counts. His argument asserts that trial counsel, Steven Lynxwiler ("Attorney Lynxwiler"), was ineffective for failing to interview and locate Marian Lincoln ("Ms. Lincoln"), Russ Lincoln ("Mr. Lincoln"), Bill Wahlberg ("Mr. Wahlberg") and Carol Wahlberg ("Ms. Wahlberg"). He maintains that had these witnesses been called they would have testified that, contrary to Victim's assertions that Movant tried to rape her in his above-ground swimming pool "somewhere right around the 4th of July holiday of 2006," the swimming pool at Movant's home was, instead, "in an unswimable condition" when the potential witnesses visited the home for a barbeque on July 4, 2006. He asserts that such testimony would have refuted Victim's testimony and given additional credence to the defense theory that Victim fabricated her allegations against Movant.
At the evidentiary hearing on this matter, Attorney Lynxwiler testified that Movant discussed the aforementioned potential witnesses with him during trial preparations, but their discussions about them "were related to more collateral-type issues." He stated he talked to Movant and his girlfriend about their relationships with the four potential witnesses and "talked about how those witnesses could be used as character witnesses." He also related that at some point they discussed the potential witnesses in relation to "some other things to do with the case." He recalled that during Movant's trial Ms. Lincoln spoke with him about having seen the condition of the pool at Movant's home, but he did not recall the conversation specifically or even where the conversation occurred. He related that "[a]t some point [Ms. Lincoln] told . . ." him that the pool was "dirty" and "scummy" "in July" of 2006. He additionally stated Ms. Lincoln did testify during the penalty phase of Movant's trial as a character witness. Furthermore, he related he did not attempt to contact the other three potential witnesses because it was his understanding that "their information was substantially the same as what Ms. Lincoln was telling [him]."
Attorney Lynxwiler related that the swimming pool issue was one that he "didn't want to bring up [because] with the allegations as they were and the depositions that [had been] conducted, [Victim] was kind of bouncing back and forth about when certain things had happened." He recited that
[t]o the best of [his] recollection at d[epositions], there w[ere] actually three incidents that had c[o]me out; one of which was an incident that happened in the pool, another of which was an incident that had happened in a barn, and. . . there was also another incident . . . on a vehicle. And it was one of those things where [he] was a little bit afraid *816 of . . . what that would do. [He] was afraid it would . . . muddy the waters.
He recalled telling Ms. Lincoln that he
was worried about her testimony, that [he] didn't . . . feel that [he] needed to [go into the condition of the pool] at that time. You know, [there was] some different testimony at d[epositions] that [he] could . . . use to show that [Victim] . . . was lying. And it was one of those issues where [he] felt that it would . . . cause more confusion to the jury than what it would do good. [He] didn't want the jury to think [they] were just trying to throw everything at the wall that [they] could and make something stick.
He related that the "basic overall [defense] strategy was to show that [V]ictim was lying" and that while testimony as to the condition of the pool "could have" played into that strategy, he felt "that it'd be one of those things where the jury would believebecause of that close relationship that [Movant] had with . . . the witnesses, that they would think it was an excuse that it was . . . potentially made up, and that was [his] judgment call then." Attorney Lynxwiler maintained that his decision not to explore the issue of the pool's condition by calling Ms. Lincoln to testify or by interviewing Mr. Lincoln and the Wahlbergs was a matter of trial strategy.
Ms. Lincoln testified at the evidentiary hearing that she attended a barbeque at Movant's home on July 4, 2006, and she observed that no one was swimming in the pool because "[t]he water was pretty scummy." She related when she returned to the home "within that week" she observed Movant and his girlfriend "cleaning" the pool. She related that she spoke with Attorney Lynxwiler on two occasionsone time prior to trial and one time during trial, but just prior to the jury's adjournment for deliberations. She stated that she spoke with him about her availability as a witness, but she never spoke with him about what her testimony would entail and she never discussed the condition of the pool with him. She related she would have testified as to the condition of the pool had she been called to do so.
Mr. Lincoln testified that he also attended the barbeque at Movant's home on July 4, 2006, and that at that time the swimming pool "was full of algae and it looked real scummy." He related when he returned with his wife the following Saturday, the pool "was just kind of laying there on the ground" with "most of the water. . . spilled out of it." It was his "recollection that it hadn't been cleaned up or anything." He stated he was never contacted by Mr. Lynxwiler and he would have testified had he been called to do so.
Mr. Wahlberg testified at the motion hearing that at Movant's July 4, 2006, barbeque the water in his above-ground pool was "stagnant. . . . It was green, slimy, you know, a pool that hadn't been taken care of in quite some time." He related he was not contacted by Attorney Lynxwiler and he would have testified had he been asked to do so.[3]
After hearing the aforementioned evidence at the evidentiary hearing, the motion court concluded Attorney Lynxwiler's failure to interview the proposed witnesses and call them to testify "was part of [his] trial strategy made after a reasonable investigation. This strategy decision does not furnish a ground for finding ineffective assistance of counsel." The motion court found that Attorney Lynxwiler's "failure. . . to attempt to impeach [Victim's] testimony by these witnesses did not deprive [M]ovant of a viable defense or change the *817 outcome of the trial" such that Movant failed to prove by a preponderance of the evidence "that further investigation of the condition of the pool, or testimony as to its condition, would have improved his position, or provided a viable defense, or changed the outcome of the trial." As such, the motion court denied Movant's request for relief.
"`Counsel has a duty to make reasonable investigations or to make a reasonable decision that makes particular investigation unnecessary.'" Edwards v. State, 200 S.W.3d 500, 516 (Mo. banc 2006) (quoting Strickland, 466 U.S. at 695, 104 S. Ct. 2052). "`[A] defense attorney has an obligation to investigate the evidence available on behalf of [his] client and then to take the steps necessary to produce that evidence at trial.'" Kuehne v. State, 107 S.W.3d 285, 300 (Mo.App.2003) (quoting Honeycutt v. State, 54 S.W.3d 633, 647 (Mo.App.2001)). In order to demonstrate that defense counsel was ineffective in failing to call a witness to testify, the movant must first prove that his attorney's failure to call this witness was something other than reasonable trial strategy, and he must establish that this witness could have been located through reasonable investigation, that he would have testified if called, and that his testimony would have provided the accused with a viable defense. Hurst v. State, 301 S.W.3d 112, 117 (Mo. App.2010). Trial counsel's decision not to call a witness is "presumptively a matter of trial strategy and will not support a claim of ineffective assistance of counsel unless the defendant clearly establishes otherwise." Williams v. State, 168 S.W.3d 433, 441 (Mo. banc 2005); see Sanders, 738 S.W.2d at 858.
The selection of witnesses and the introduction of evidence are questions of trial strategy. Allegations of ineffective assistance of counsel relating to matters of trial strategy do not provide a basis for postconviction relief, for counsel is allowed wide latitude in conducting the defense and is entitled to use his or her best judgment in matters of trial strategy.
State v. Borders, 844 S.W.2d 49, 54 (Mo. App.1992) (internal citations omitted). "Only rarely does a court find that failure to interview witnesses is sufficient to justify the finding of ineffective assistance of counsel." State v. Buchanan, 836 S.W.2d 90, 93 (Mo.App.1992).
Here, Attorney Lynxwiler's decision not to interview or call the above witnesses was a matter of trial strategy. It is clear that while the Lincolns could testify as to the condition of the pool on July 4, 2006, as well as approximately a week later, they could offer no testimony as to its condition prior to those dates. Likewise, the Wahlbergs could only testify as to the condition of the pool on the date of the barbeque and not as to its condition before or after July 4, 2006. Victim testified at trial that Movant attempted to rape her "somewhere right around the 4th of July holiday of 2006" and Movant was charged in the information with attempting to rape Victim "on or about July 4, 2006. . . ." The testimony that could have been offered by these witnesses would not have necessarily aided Movant's defense and, as stated by Attorney Lynxwiler at the evidentiary hearing, could have operated to confuse the jury. In fact, the testimony from the Lincolns in relation to the fact that Movant cleaned the pool following the July 4, 2006, barbeque could actually have bolstered the testimony of Victim who testified that the attempted rape occurred around July 4, 2006, after Movant, his girlfriend, and Victim had cleaned the pool. An attorney is not ineffective for not calling a witness who would contradict the defendant's testimony or undermine the *818 theory of defense. Maclin v. State, 184 S.W.3d 103, 110 (Mo.App.2006). Clearly, "`[c]ounsel may and often does elect not to call a witness because he judges the witness's testimony will not be helpful and may be damaging.'" Simmons v. State, 247 S.W.3d 86, 91 (Mo.App.2008) (quoting State v. Hayes, 785 S.W.2d 661, 663 (Mo. App.1990)). Movant in the present matter has not demonstrated that Attorney Lynxwiler's decision not to interview the Wahlbergs and Mr. Lincoln and not to call the Wahlbergs or the Lincolns to testify at trial was a matter of sound trial strategy. "When defense counsel believes a witness' testimony would not unequivocally support his client's position, it is a matter of trial strategy not to call him, and the failure to call such witness does not constitute ineffective assistance of counsel.'" Id. (quoting Winfield v. State, 93 S.W.3d 732, 739 (Mo. banc 2002)). Movant has failed to prove that he received ineffective assistance of counsel due to Attorney Lynxwiler's decisions as to the four proposed witnesses. Point I is denied.
In his second point relied on, Movant maintains the motion court erred in denying his request for postconviction relief in that his trial counsel was ineffective "for failing to object to uncharged crimes, wrongs and bad acts. . . ." He asserts Attorney Lynxwiler's actions violated his constitutional rights because "the evidence of uncharged crimes, wrongs and bad acts . . . prejudiced the jury with otherwise inadmissible propensity evidence." Specifically, he takes issue with evidence introduced by his attorney that he also had inappropriate sexual contact with his girlfriend's daughter, T.D.
We note that on direct appeal Movant requested plain error review of purported trial court errors in admitting testimony that Movant had sexually abused T.D. Placke, 290 S.W.3d at 152-53. This Court stated:
[Movant] argues the admission of the challenged evidence was so prejudicial that it resulted in a manifest injustice or miscarriage of justice. This Court disagrees. At trial, [Movant] presented evidence of alleged sexual abuse of T.D. by himself during his casein-chief [Attorney Lynxwiler] intentionally did so for the strategic purpose of attempting to show that the allegations made by [Victim] and T.D. were lies. For example, during T.D.'s direct examination, [Attorney Lynxwiler] elicited testimony from her that she had said [Movant] raped her. During surrebuttal, [he] also called [a Children's Division caseworker], who testified on direct examination that T.D. said [Movant] had touched her as often as once a day. In addition, [the caseworker] testified that T.D. said [Movant] `poked his penis in between her vagina and bottom hole,' and that he `pushed his private against her, but it did not go in.' [Movant] could not have been prejudiced by the admission of [testimony relating to possible abuse of T.D. when] he elicited the same type of testimony from his own witnesses. . . . [Movant] cannot seek plain error review arising from failed tactical and strategic decisions made at trial. [Movant] attempts to avoid the consequences of his actions by asserting that T.D. and [the caseworker] would not have testified at trial `if the State had not brought in the improper hearsay and propensity evidence in the first place.' That assertion is contradicted by the transcript. [Attorney Lynxwiler] stated at the April 2008 pre-trial conference that he planned to call [Victim's aunt] and T.D. as witnesses. In opening statement, [he] told the jury he would present evidence that [Victim] and T.D. made up their allegations against [Movant]. [Attorney Lynxwiler] said T.D. was going to testify to that effect and explain *819 why these allegedly false allegations had been made. T.D. did exactly that during her direct examination by [Attorney Lynxwiler]. [Movant's] first argument has no merit.
Id. at 153-54 (emphasis added).
In the present proceedings, the motion court, citing to Skipper v. State, 209 S.W.3d 552, 554 (Mo.App.2006), concluded that "[a]lthough counsel's trial strategy was unsuccessful, the trial strategy decisions did not result in a substantial deprivation of [M]ovant's right to a fair trial," such that he was not entitled to postconviction relief. The motion court's ruling is supported by Leisure v. State, 828 S.W.2d 872, 874 (Mo. banc 1992), which stands for the proposition that "[i]ssues decided upon direct appeal cannot be relitigated on a theory of ineffective assistance of counsel in a [postconviction] proceeding." "Further analysis would be unnecessary but for the Supreme Court's later ruling in Deck v. State, 68 S.W.3d 418 (Mo. banc 2002)." Shifkowski v. State, 136 S.W.3d 588, 590 (Mo.App.2004). Interpreting the Deck ruling, this Court in Skipper, 209 S.W.3d at 554, observed that in
considering whether plain error occurred in a direct appeal, the determination that must be made is whether manifest injustice or miscarriage of justice occurred by reason of erroneous rulings at trial. Whereas, in reviewing a [postconviction] judgment directed to a claim of ineffective assistance of counsel, the issue is not whether a just result was reached, but whether, through dereliction of counsel, the reviewing court's confidence is undermined in the fairness of the proceeding. Notwithstanding the different standards of review for determining plain error on direct appeal and considering claims of [postconviction] relief when there are allegations of ineffective assistance of counsel, it is only in rare cases that those differences would cause a court to grant [postconviction] relief after it has denied relief on direct appeal.
(Emphasis added.)
Here, we do not perceive Movant's claim of ineffective assistance of trial counsel to be one of those rare cases that would compel this Court to grant postconviction relief because our confidence is undermined in the fairness of the proceedings at trial, particularly after this Court has previously denied relief on direct appeal on the basis of plain error review. See Shifkowski, 136 S.W.3d at 590. As already stated, as a matter of trial strategy, during opening statements and at trial, Movant's attorney introduced evidence relative to T.D.'s allegations that Movant had engaged in sexual abuse of both Victim and T.D. in an attempt to destroy Victim's credibility by having T.D. recant her testimony and explain why the allegedly false allegations had been made against Movant. "[Movant] cannot seek plain error review arising from failed tactical and strategic decisions made at trial," Placke, 290 S.W.3d at 154, such that he cannot recast his evidentiary claim as one of ineffective assistance of counsel due to Attorney Lynxwiler's failure to object to such evidence. Given the circumstances of this case, "[w]hen, as here, a plain error point was reviewed on direct appeal and the appellate court concluded that no error occurred, the issue cannot be relitigated in a [postconviction] proceeding." Shifkowski, 136 S.W.3d at 591; see Ringo v. State, 120 S.W.3d 743, 744-46 (Mo. banc 2003). Point II is denied.
The judgment and findings of fact and conclusions of law entered by the motion court are affirmed.
LYNCH, J., and BURRELL, J., concur.
NOTES
[1] All rule references are to Missouri Court Rules (2010).
[2] All statutory references are to RSMo 2000.
[3] Mr. Wahlberg also related that he and Ms. Wahlberg were divorced at the time of the evidentiary hearing and he had no knowledge as to her whereabouts.
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719 F. Supp. 2d 130 (2010)
TRAVELER'S CASUALTY AND SURETY COMPANY OF AMERICA, Plaintiff,
v.
CRESTA CONSTRUCTION INC., John P. Cresta and Donna M. Cresta, Defendants, and
The Town of Harvard, Reach and Apply Defendants.
Civil Action No. 10-10662-NMG.
United States District Court, D. Massachusetts.
June 16, 2010.
*131 Bradford R. Carver, Charcretia V. DiBartolo, Hinshaw & Culbertson LLP, Boston, MA, for Plaintiff.
James F. Grosso, O'Reilly, Grosso & Gross PC, Framingham, MA, for Defendants.
MEMORANDUM & ORDER
GORTON, District Judge.
This case arises out of an indemnity dispute between Travelers Casualty and Surety Company of America ("Travelers"), a Connecticut corporation, and Cresta Construction, Inc. ("Cresta"), a commercial construction contractor incorporated in Massachusetts. Before the Court is plaintiff's motion for a Preliminary Injunction.
Pursuant to an Indemnity Agreement between the parties, Cresta agreed to "exonerate, indemnify and save [Travelers] harmless from and against Loss." Travelers alleges that, in reliance on the Indemnity Agreement, it issued surety bonds on behalf of Cresta, as principal. Travelers subsequently received claims on those bonds and, in good faith, investigated and defended the claims. It ultimately incurred damages in the form of loss payments to various claimants. Travelers contends that, as a direct and proximate result of its issuance of bonds on behalf of Cresta, it has sustained losses in excess of $297,457, plus legal fees and other costs incurred in the prosecution of this action.[1]
Apparently, Cresta is owed money by the reach and apply defendant, the Town of Harvard, for work performed on a construction project. Travelers seeks to reach and apply those funds in payment of Cresta's debt to Travelers.
The Court heard argument on plaintiff's motion for a preliminary injunction on June 4, 2010. Present at that hearing were counsel for the plaintiff and the reach and apply defendant. The Court indicated that it would enter an injunction in the plaintiff's favor and the reach and apply defendant did not object. The Court directed plaintiff's counsel to draft and submit a proposed order on or before June 9, 2010, and to indicate the reach and apply defendant's position in that regard. The Court also noted that it would not require the plaintiff to post a bond until it heard from the Cresta defendants (which had not been served with process but had definitely been notified about the pending motion for injunctive relief and the hearing on *132 that motion).[2]
On June 8, 2010, the plaintiff submitted its proposed order but did not indicate whether the reach and apply defendant consents to it. That deficiency may simply be an oversight, however, because the reach and apply defendant has not subsequently filed any objection or submitted a counter-proposal.
Because the plaintiff has demonstrated that 1) it is likely to succeed on the merits of its claim, 2) it will suffer irreparable harm in the absence of injunctive relief and 3) the balance of hardships is in its favor, its motion for injunctive relief will be allowed. See Nieves-Márquez v. Puerto Rico, 353 F.3d 108, 120 (1st Cir.2003).
ORDER AND PRELIMINARY INJUNCTION
In accordance with the foregoing, plaintiff's motion for preliminary injunction (Docket No. 3) is ALLOWED and it is hereby ORDERED, ADJUDGED AND DECREED that, from the date of this order until further notice of the Court:
1) Defendants Cresta Construction, Inc., John P. Cresta and Donna M. Cresta (collectively, "the Cresta Defendants"), and their officers, servants, employees, attorneys, agents and those persons or entities in active participation or concert with them, are restrained and enjoined from receiving any sums payable to them by the Town of Harvard, up to the amount of $330,181, or from encumbering, lending or otherwise transferring their interest in said sums;
2) the designated reach and apply defendant, the Town of Harvard, and its agents, servants, employees, attorneys and those persons in active participation or concert with it, are restrained and enjoined from paying, conveying or otherwise transferring any monies to the Cresta Defendants or to their officers, servants, employees, attorneys, agents or any persons or entities acting on their behalves, up to the amount of $330,181, on account of sums that are due or will hereafter become due to the Cresta Defendants from the reach and apply defendant; and
3) because the Court has determined that, at this stage of the proceedings, there is no need for Plaintiff to post a security bond pursuant to Fed. R.Civ.P. 65(c), Plaintiff is excused, until further notice, from posting such a bond.
So ordered.
NOTES
[1] Plaintiff's alleged damages have increased to $330,181 since the filing of its motion for injunctive relief.
[2] The Cresta defendants were duly served on June 10, 2010.
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701 F. Supp. 2d 49 (2010)
RECENT PAST PRESERVATION NETWORK, et. al., Plaintiffs,
v.
John LATSCHAR, et. al., Defendants.
Case No. 06-cv-2077 (TFH-AK).
United States District Court, District of Columbia.
March 31, 2010.
*52 Nicholas C. Yost, Matthew G. Adams, Sonnenschein, Nath & Rosenthal, LLP, San Francisco, CA, for Plaintiffs.
Samantha Klein, U.S. Department of Justice, Washington, DC, Carol Lee Draper, United States Department of Justice, Washington, DC, for Defendants.
MEMORANDUM OPINION
THOMAS F. HOGAN, District Judge.
Before the Court are the First and Second Report and Recommendation ("Report I" or "First Report" and "Report II" or "Second Report") of Magistrate Judge Alan Kay [Doc. Nos. 45 & 46] regarding Plaintiffs' Motion to Augment the Record [29]; Plaintiffs' Motion for Judicial Notice [39]; and the Parties' Cross-Motions for Summary Judgment [28 & 30], along with the objections and responses thereto. Upon consideration of the pending motions, the Reports and Recommendations, the parties' briefs, and the entire record herein, the Court (1) rejects in part and adopts in part with modification the First Report and Recommendation, and (2) rejects in part and adopts in part the Second Report and Recommendation. For the reasons explained herein, the Court will deny Plaintiffs' Motion to Augment the Record, grant Plaintiffs' Motion for Judicial Notice, grant in part and deny in part Plaintiffs' Motion for Summary Judgment, and grant in part and deny in part Defendants' Cross-Motion for Summary Judgment.
I. BACKGROUND
The Recent Past Preservation Network ("RPPN"), Dion Neutra, and Christine Madrid French filed this lawsuit against the National Park Service and the named public officials in December 2006, seeking declaratory and injunctive relief "to ensure that the Park Service does not demolish the historic Gettysburg Cyclorama Center. . . ." Compl. at 2. The Gettysburg Cyclorama Center ("Cyclorama Center" or "the Center") was commissioned by the Park Service and designed by architect Richard Neutra to serve as a visitor center and to display a 356-foot long cylindrical painting by Paul Philippoteaux depicting "Pickett's Charge," a pivotal attack during the Battle of Gettysburg. Report II at 2-3. The Center remains on Ziegler's Grove in Gettysburg National Park, but it no longer serves either of these functions.[1] A.R. 1592-95. In June 1999, the Park Service published a Final General Management Plan/Environmental Impact Statement (GMP/EIS) that included (as Alternative C) plans to remove the Center as part of an effort to rehabilitate the site to reflect conditions in 1863. Report II at 3-6. On November 23, 1999, the Park Service issued a Record of Decision ("ROD") announcing its decision to implement Alternative C of the GMP/EIS. A.R. 20. *53 Based in part on the Center's eligibility for listing in the National Register of Historic Places, Plaintiffs contend that the Park Service has failed to comply with the requirements of the National Environmental Policy Act of 1969 ("NEPA"), 42 U.S.C. §§ 4321-4347, and the National Historic Preservation Act ("NHPA"), 16 U.S.C. §§ 470 et. seq.[2]
In January 2008, Plaintiffs filed a Motion for Summary Judgment and a Motion to Augment the Record. On March 14, 2008, Defendants filed a Cross-Motion for Summary Judgment. On July 25, 2008, Plaintiffs filed a Motion for Judicial Notice of a supplemental authority. The undersigned referred these four motions to Magistrate Judge Alan Kay for proposed findings of fact and recommendations on their dispositions pursuant to Local Civil Rule 72.3. Referral Order (Sept. 22, 2008)[41]. On March 23, 2009, 2009 WL 6325768, Magistrate Judge Kay issued two Reports. The First Report recommends that the Court grant Plaintiffs' Motion to Augment the Record and Plaintiffs' Motion for Judicial Notice. Report I at 5. The Second Report recommends that the Court grant summary judgment in favor of Plaintiffs on their NEPA claims and grant summary judgment in favor of Defendants on the NHPA claims. Report II at 35. Defendants filed timely objections to each Report. Plaintiffs filed a timely response, but raised no objections. They instead encourage the Court to adopt both Reports in full. The Court here considers de novo the portions of the Reports to which objections have been made.[3]
II. ANALYSIS
A. First Report and Recommendation
1. Plaintiffs' Motion to Augment the Record
At the time they submitted the administrative record to the Court, Defendants noted a dispute over whether certain documents should be included in the record. Defs.' Notice of Filing [20]. Three months later, Defendants supplemented and certified the record. Defs.' Notice of A.R. Supp. [26 & 27]; Report II at 28 n.20. Plaintiffs thereafter filed a Motion to Augment the Record with five declarations and several documents that they request the Court consider as either part of the administrative record or as extra-record evidence. Pls.' Mot. to Augment [29]. Magistrate Judge Kay recommends that the Court accept these documents as extra-record evidence of "(1) the feasibility of potential alternatives to demolition that were not evaluated by the Park Service, *54 and (2) Plaintiffs' post-ROD requests for information from the Park Service and relevant responses (or non-responses)." Report I at 4.
a. Legal Standard
The Administrative Procedure Act ("APA") instructs a reviewing court to "review the whole record or those parts of it cited by a party." 5 U.S.C. § 706. The review "is to be based on the full administrative record that was before the agency decision makers at the time they made their decision." Pacific Shores v. Army Corps of Engineers, 448 F. Supp. 2d 1, 4 (D.D.C.2006) (Facciola, M.J.) (brackets omitted) (quoting Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 420, 91 S. Ct. 814, 28 L. Ed. 2d 136 (1971)). "Once an agency presents a certified copy of the complete administrative record to the court, the court presumes that the record is properly designated. . . . For a court to supplement the record, the moving party must rebut the presumption of administrative regularity and show that the documents to be included were before the agency decisionmaker." Id. at 5-6 (citation omitted). Consideration of extra-record information is appropriate when the movant shows that simply reviewing the administrative record is not enough to resolve the case. Esch v. Yeutter, 876 F.2d 976, 991 (D.C.Cir.1989). One example is where a court requires additional information to evaluate an agency's analysis of potential environmental impacts under NEPA. Id.; see also Pacific Shores, 448 F.Supp.2d at 6.
b. Discussion and Disposition
The Declarations of Jerry Matyiko, Robert Shoaff, and David McIlnay discuss the feasibility of alternatives to demolishing the Cyclorama Center. The Declaration of RPPN President Christine French discusses her correspondence with the Park Service regarding plans for the Center. The Declaration of Matthew Adams attempts to lay the foundation for the fourteen documents that accompany it, including information requests submitted to the Park Service, dictionary definitions, and letters to Superintendent Latschar. Plaintiffs contend, in a conclusory manner, that some of these materials provide "information necessary for effective judicial review of Defendants' failure to take actions required under NEPA and the NHPA."[4] Pls.' Mot. to Augment at 4. Defendants argue that the motion should be denied "[b]ecause Plaintiffs have failed to carry their burden of showing that these documents are essential for effective judicial review and are consistent with one of the exceptions to the rule that [] agency action must be reviewed on the record." Defs.' Objs. to Report I [48] at 6 (internal quotation marks omitted).
Some of the declarations and accompanying exhibits might aid an assessment of the notice that the Park Service provided regarding plans for the Cyclorama Center. Others might be relevant to standing, which is not contested here. Should the Court reach the question, some of the submitted material might be relevant to an evaluation of the Park Service's assessment of environmental impacts. The Court *55 is left to such speculation because Plaintiffs' motion does not reveal inadequacies in the Park Service's record or otherwise explain how the documents would aid judicial review. Indeed, the motion is unsupported by even a single citation to the administrative record. See generally United States v. Dunkel, 927 F.2d 955, 956 (7th Cir.1991) ("Judges are not like pigs, hunting for truffles buried in briefs"). Accordingly, the Court will respectfully reject Section II of Magistrate Judge Kay's First Report and Recommendation and will deny Plaintiffs' Motion to Augment the Record.[5]
2. Motion for Judicial Notice
Plaintiffs also request that the Court take Judicial Notice of a Ninth Circuit opinion issued after motions were filed in this case. Defendants question the applicability of the opinion, but do not oppose the motion. Defs.' Resp. to Pls.' Mot. for Jud. Notice [40]. The Court routinely accepts supplemental authorities brought to its attention on a timely basis. Therefore, the First Report recommends granting the motion, citing Federal Rule of Evidence 201. Report I at 5.
Rule 201 provides an avenue for the Court to take judicial notice of reasonably indisputable adjudicative facts at any time. FED.R.EVID. 201. It is not clearly an appropriate mechanism for acknowledging a persuasive authority, however. The Court therefore adopts Section III of Magistrate Judge Kay's First Report and Recommendation with a minor modification by accepting Plaintiffs' notice of a supplemental authority, disregarding the citation to Rule 201.
B. Second Report and Recommendation: Cross-Motions for Summary Judgment
1. NHPA Claims
Plaintiffs contend that the Park Service failed to properly consider the re-use and preservation of the Cyclorama Center as required by NHPA Section 110(a)(1) (Count IV). They also contend that the Park Service failed to prepare an adequate preservation program under NHPA § 110(a)(2) (Count V). Magistrate Judge Kay determined the § 110(a)(1) claim to be time barred by 28 U.S.C. § 2401(a).[6] Report II at 13-15. Judge Kay also recommends granting summary judgment in favor of Defendants on the § 110(a)(2) claim based on evidence that an agency-wide preservation program exists and Plaintiffs' failure to demonstrate any deficiency in the program. Report II at 34-5. The Plaintiffs filed no objections. The Court accordingly adopts the Second Report with regard to Plaintiffs' NHPA Claims (Sections III.B and V), and will grant summary judgment in favor of Defendants on those claims.
2. NEPA Claims
a. Statutory Background
NEPA requires federal agencies to prepare, and make publicly available, an environmental impact statement ("EIS") before taking any major action "significantly *56 affecting the quality of the human environment." Citizens Against Burlington, Inc. v. Busey, 938 F.2d 190, 193 (D.C.Cir.1991). An EIS should "provide full and fair discussion of significant environmental impacts and inform decisionmakers and the public of the reasonable alternatives which would avoid or minimize adverse impacts or enhance the quality of the human environment." 40 C.F.R. § 1502.1. The EIS requirement obligates agencies to "take a `hard look' at the environmental consequences before taking a major action." Baltimore Gas & Elec. Co. v. Natural Res. Def. Council, 462 U.S. 87, 97, 103 S. Ct. 2246, 76 L. Ed. 2d 437 (1983) (citations omitted).
Council on Environmental Quality ("CEQ") regulations interpreting NEPA help agencies determine which actions require an EIS. See 40 CFR § 1500.3 (2003). They permit an agency to prepare a more limited document (an Environmental Assessment or "EA"), if the agency's proposed action is neither categorically excluded from the requirement to produce an EIS nor would clearly require the production of an EIS. DOT v. Public Citizen, 541 U.S. 752, 757-58, 124 S. Ct. 2204, 159 L. Ed. 2d 60 (2004); see 40 C.F.R. §§ 1501.4(a)-(b). An EA is a "concise public document" that "[b]riefly provide[s] sufficient evidence and analysis for determining whether to prepare an [EIS]." 40 C.F.R. § 1508.9(a). If, pursuant to an EA, an agency determines that an EIS is not required, it must issue a "finding of no significant impact" ("FONSI"), which briefly presents the reasons why the proposed action will not have a significant impact on the human environment. Public Citizen, 541 U.S. at 758, 124 S. Ct. 2204 (citing 40 C.F.R. §§ 1501.4(e), 1508.13). CEQ regulations also impose a largely commonsense approach to paperwork and public notice. See, e.g., 40 C.F.R. §§ 1500.4 (reducing paperwork); 1502.8 (writing in plain language); 1502.22 (noting incomplete or unavailable information).
NEPA imposes procedural requirements, but it does not divest agency decision makers of their authority to make professional decisions by compelling a particular result. See Stewart Park & Reserve Coal. v. Slater, 352 F.3d 545, 557 (2nd Cir.2003). Indeed, "[i]f the adverse environmental effects of the proposed action are adequately identified and evaluated, the agency is not constrained by NEPA from deciding that other values outweigh the environmental costs." Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 350, 109 S. Ct. 1835, 104 L. Ed. 2d 351 (1989). In reviewing an EIS, the Court considers whether "the agency has made an adequate compilation of relevant information, has analyzed it reasonably, has not ignored pertinent data, and has made disclosures to the public." Slater, 352 F.3d at 557 (internal quotation marks omitted).
b. Discussion
Plaintiffs contend that the Park Service failed to produce an adequate implementation level or site-specific environmental assessment or statement for the demolition of the Cyclorama Center in violation of NEPA.[7] Specifically, they claim that, with regard to the Center, the Park Service failed to prepare an EIS as required *57 by 42 U.S.C. § 4332(2)(C) (Count I), failed to prepare an EA pursuant to 40 C.F.R. §§ 1501.3 and 1504.4 (Count II), and failed to adequately analyze alternative methods of "restoring" Ziegler's Grove as required by 42 U.S.C. § 4332(2)(E) (Count III). Complaint at 24-28. They argue that these each of these omissions constitutes a failure to act under 5 U.S.C. § 706(1) and that the decision to destroy the Center without producing such assessments is an action that is arbitrary, capricious, or otherwise not in accordance with law under 5 U.S.C. § 706(2). Pls.' Mot. for Summ. J. at 22. Defendants claim that the Park Service's June 1999 Final General Management Plan/EIS ("GMP/EIS") satisfies NEPA's analytical requirements. Defendants also argue that the November 1999 Final Record of Decision ("ROD") constitutes notice of final agency action with regard to the Cyclorama Center. Report II at 11-12. Plaintiffs dispute this, arguing that the Park Service contemplated, but never issued, a site-specific EIS. Id.
Magistrate Judge Kay determined that the neither the 1999 GMP/EIS nor the ROD satisfied NEPA requirements with regard to the Center, noting that the 1999 GMP/EIS left the door open for "more detailed assessments of impacts . . . as part of necessary implementation planning."[8] Report II at 13. Thus, the limitations clock did not begin ticking until some undetermined time after 1999. Id. Judge Kay recommends that the Court grant summary judgment in favor of Plaintiffs on their NEPA claims because "the Park Service did not properly evaluate the site-specific environmental impacts of demolition of the Cyclorama Center and did not properly consider alternatives to demolition." Report II at 33.
i. Statute of Limitations
Defendants contend that Magistrate Judge Kay incorrectly determined that the 1999 ROD did not amount to notice of final agency action with regard to the Cyclorama Center.[9] They accurately explain that NEPA requires agencies to evaluate environmental consequences before committing to any actions that might affect the quality of the human environment. Defs.' Objs. to Report II at 15 (citing Sierra Club v. Peterson, 717 F.2d 1409, 1414 (D.C.Cir. 1983)). Defendants then argue, without any supporting citation, that "an irreversible and irretrievable commitment of resources was made, with the concomitant obligation to comply with NEPA." Id. at 17. There is no support in the record for this notion.[10] Moreover, Defendants' argument *58 conflates ripeness with final action for purposes of determining the limitations period. Even if a claim became ripe in 1999, Defendants bear the burden of demonstrating that Plaintiffs had sufficient notice to set the limitations clock running. See, e.g., Sprint Communs. Co., L.P. v. FCC, 76 F.3d 1221, 1226 (D.C.Cir.1996) (noting that a court may deem a cause of action not to have accrued during a period of concealment); see also P & V Enters. v. United States Army Corps of Eng'rs, 466 F. Supp. 2d 134, 149 (D.D.C.2006) (a "rebuttable presumption of equitable tolling applies to lawsuits governed by the six-year limitations period of § 2401(a)" (internal quotation marks and citation omitted)). Defendants dispute this, citing Alder Terrace, Inc. v. United States, for the proposition that the "burden of establishing jurisdiction, including jurisdictional timeliness, must be carried by the plaintiffs." 161 F.3d 1372, 1377 (Fed.Cir.1998) (internal quotation marks omitted). Alder Terrace involved a different statute of limitations, and it is of questionable validity on this point, particularly in this Circuit, where 28 U.S.C. § 2401(a) has been treated as non-jurisdictional. See Smith v. United States, 518 F. Supp. 2d 139, 147 (D.D.C.2007); see also Grass Valley Terrace v. United States, 69 Fed. Cl. 341, 347 (Fed.Cl.2005) (summarizing inconsistent opinions and concluding that, with regard to 28 U.S.C. § 2501, "the statute of limitations issue goes to the sufficiency of the claim asserted and, thus, does not affect the court's subject matter jurisdiction").
Defendants also contend that "the administrative record reflects a complete awareness by Plaintiffs and others that the Park Service intended the ROD to be the final agency action with regard to demolition of the Cyclorama Building." Defs.' Objs. to Report II at 19. Defendants point to evidence indicating that, months prior to the publication of the Final GMP/EIS, Plaintiff Dion Neutra was informed that the preferred alternative would require demolition. Id. at 22. Yet Defendants provide no authority suggesting that such awareness on the part of the individual plaintiffs would preclude the APA claims raised here. Rather than providing public notice of a final decision with regard to the Center, the ROD and GMP/EIS indicated a likelihood of a future, site-specific statement. The Court accordingly adopts Section III.A of the Second Report.
ii. Site-Specific Analysis
Defendants further suggest that the Second Report wrongly disregards the project-specific analyses referenced in the 1999 GMP/EIS. Defs.' Objs. to Report II at 17, 26. Specifically, they point to the 1995 and 1996 Draft Development Concept Plans/Environmental Assessments and the 1999 MOA between the Park Service, the Pennsylvania Historic Preservation Office, and the Advisory Council on Historic Preservation. Id. at 28-36. The MOA does indicate that the decision to demolish was reached in August 1999, a few months before the ROD was issued. A.R. 51-55. But as Judge Kay explained, neither the Draft EAs[11] nor the MOA was properly incorporated by reference into the Final EIS or ROD.[12] Report II at 28-29; see 40 *59 C.F.R. § 1502.21 (requiring incorporated material to be cited in the statement and its content briefly described); A.R. 45 (containing a general citation to the MOA). The Court cannot countenance disregard for NEPA's public notice requirements by considering unincorporated documents in its evaluation of the Park Service's actions here.
iii. Alternatives to Demolition
Defendants also attack the Second Report's conclusion that the Park Service failed to properly consider alternatives to demolition of the Cyclorama Center. Defs.' Objs. to Report II at 37. Magistrate Judge Kay's analysis properly focuses on the 1999 GMP/EIS, which provides a park-wide overview,[13] but does not provide the reader with an analysis of the Center's demolition and removal, either by way of discussion or adequate reference to another source. Consequently, Defendants' argument that any claim regarding alternatives to demolition not raised in comments before the agency was waived, id. at 37-38, is unavailing. See Report II at 32-33. With regard to consideration of alternatives, the Court is careful not to treat the absence of evidence as evidence of absence. It may be that the Park Service conducted sufficient analyses yet failed to provide adequate notice,[14] but that would not change the result here.
iv. Scope of Remedies
Finally, Defendants object to the relief recommended by Judge Kay. They claim that an order requiring an EIS would "usurp" the agency's authority to decide whether a site-specific EIS is appropriate: "While a proposal contemplating the demolition of historic property certainly triggers NEPA obligations to undertake a review, as such a proposal is a `major federal action,' it does [sic], on its own necessarily dictate the level of appropriate review." Defs.' Objs. to Report II at 43. Defendants point to Section IV of the Second Report, which states, in pertinent part: "Because the Cyclorama Center was declared eligible for listing in the National Register of Historic Places . . . in 1998, any demolition of the building would itself be a significant impact, and therefore a major federal action affecting the environment and requiring an EIS under NEPA." Report II at 20. This passage is incorrect. See 36 C.F.R. 800.8 ("A finding of adverse effect on a historic property does not necessarily require an EIS under NEPA"). Accordingly, the Court will modify Section IV of the Report to ensure it is consistent with Judge Kay's concluding recommendation "that Defendants be ordered to undertake a full implementation-level and site-specific environmental analysis on the demolition of the Cyclorama Center and non-demolition alternatives before any implementing *60 action is taken on the Center."[15] Report II at 34 (emphasis added).
c. Disposition of NEPA Claims
With regard to Section IV of the Second Report, the Court agrees that, with regard to the restoration of Ziegler's Grove and the demolition of the Cyclorama Center, the Park Service failed to produce an EIS sufficient to meet its obligations under NEPA. See Report II at 21. The Court does not agree that the Center's eligibility for listing in the National Register of Historic Places compels the conclusion that a site-specific EIS is required. Therefore, the Court will reject (1) the final sentence on page 20, and (2) both paragraphs beginning on page 21. The Court adopts the remainder of Section IV.A. The upshot is that the Park Service must determine whether the proposed demolition and restoration constitutes a significant impact for purposes of 42 U.S.C. § 4332 and proceed accordingly. Whether that means a categorical determination or an environmental assessment followed by a FONSI or an EIS (or Supplemental EIS) is for the Park Service to determine.[16]
Consistent with the other findings adopted here, the Court finds that the Park Service produced neither an adequate EIS, see 42 U.S.C. § 4332(C), nor any other assessment or determination consistent with 40 C.F.R. § 1501.4 covering the site of the Cyclorama Center. The Court agrees that by failing to take such action in satisfaction of NEPA before reaching a final decision to demolish the Center, the Park Service withheld or unreasonably delayed agency action under 5 U.S.C. § 706(1). The Court also agrees that the Park Service's final decision to destroy the Center and rehabilitate Ziegler's Grove without first satisfying NEPA constitutes an unlawful agency action under 5 U.S.C. § 706(2). Accordingly, the Court will grant summary judgment in favor of Plaintiffs on Counts I and II. The Court need not rule on the merits of Count III, as the Court's resolution of Counts I and II renders it moot, and the inadequate discussion of alternatives in the GMP/EIS has already been noted here. See generally Report II at 31.
III. CONCLUSION
For the foregoing reasons, the Court adopts in part, modifies in part, and rejects in part Magistrate Judge Kay's First Report and Recommendation, and adopts in part and rejects in part his Second Report and Recommendation. Specifically, the Court adopts Section I of the First Report, rejects Section II, and adopts Section III with modification. With respect to the Second Report, the Court adopts the proposed findings in Sections I, II, III, and V with the caveat that references to extra-record material proffered by Plaintiffs are disregarded. See, e.g., Report II at 13 (citing Adams Decl.). As discussed in the preceding section, the Court adopts *61 in part and rejects in part the proposed findings in Section IV. Accordingly, the Court will deny Plaintiffs' Motion to Augment the Record, grant Plaintiffs' Motion for Judicial Notice, grant in part and deny in part Plaintiffs' Motion for Summary Judgment, and grant in part and deny in part Defendants' Cross-Motion for Summary Judgment.
Proper, legally sufficient notice is a theme herePlaintiffs must adequately explain the utility of extra-record evidence to the Court, and the Park Service must adequately describe its intentions to the public. As Magistrate Judge Kay noted, the Park Service may pursue the rehabilitation of the Ziegler's Grove cite as its officials see fit in the exercise of their professional judgment. But that judgment must be informed, reached and announced in compliance with NEPA.
An Order accompanies this Memorandum Opinion.
NOTES
[1] The Center opened in 1962 but ceased to function as the visitor center and museum in 1971. Defs.' Objs. to Report II at 5. The painting now resides in the Gettysburg National Military Park Museum and Visitor Center on Baltimore Pike.
[2] The relevant facts of this case are set forth in greater detail in Magistrate Judge Kay's Reports. The parties do not object to Judge Kay's description of the factual background of the case or the applicable standards of review. The Court accordingly adopts Section I (Background) of the First Report and Sections I (Background) and II (Standard of Review) of the Second Report.
[3] When a party files written objections to any part of a magistrate judge's recommendation with respect to a dispositive motion, the court considers de novo those portions of the recommendation to which objections have been made, and "may accept, reject, or modify the recommended disposition." FED.R.CIV.P. 72(b)(3). The parties indicate that the First Report should be adopted except to the extent it is "clearly erroneous or contrary to law." See Defs.' Reply at 2 ("A Magistrate Judge's decision is entitled to great deference unless it is clearly erroneous or contrary to law. . . ."). Each party is clearly erroneous. Since the First Report concerns only non-dispositive matters, the parties would be right if the motion were "referred to magistrate judge to hear and decide." FED.R.CIV.P. 72(a) (emphasis added). Here the case was referred under LCvR 72.3 for "proposed findings of fact and recommendations." Therefore, de novo is the proper standard of review for both Reports.
[4] This argument supports consideration of the materials sub judice as extra-record evidence. Plaintiffs do not provide an argument supporting consideration of these materials as part of the administrative record. Nor did they object to Magistrate Judge Kay's treatment of the documents as extra-record evidence rather than as part of the administrative record. Therefore, despite the Defendants' supplemental filing of their heavily-relied-upon 1995 and 1996 Draft Environmental Assessments concerning the Cyclorama Center, the Court finds that Plaintiffs have not rebutted the presumption of administrative regularity.
[5] Although the Court declines to admit these documents as exhibits, parties (and judges) may nonetheless refer to certain forms of publicly available agency guidance. As such, the Court sees no reason to strike the Second Report's references to Park Service documents (e.g., the Director's Orders or the "DO-12 Handbook") to the extent they are accompanied by citation to the agency's website rather than to Plaintiffs' proffered exhibits.
[6] Defendants argue that Plaintiffs' claims are time barred because they were not brought within six years of the 1999 Report of Decision and GMP/EIS. See 28 U.S.C. § 2401(a) ("every civil action commenced against the United States shall be barred unless the complaint is filed within six years after the right of action first accrues").
[7] Agencies must make "diligent efforts to involve the public in preparing and implementing their NEPA procedures." 40 C.F.R. § 1506.6. Under Department of Interior regulations, the Park Service must, "to the extent practicable, provide for public notification and public involvement when an environmental assessment is being prepared. However, the methods for providing public notification and opportunities for public involvement are at the discretion of the Responsible Official." 43 C.F.R. § 46.305.
[8] The Second Report cites internal Park Service guidance regarding site-specific analyses, including Director's Orders and the "DO-12 Handbook." Report II at 29-30. To the extent the Report relies on these documents, Defendants object to its conclusion that the Park Service contemplated a future site-specific EIS on demolition of the Cyclorama Center on the grounds that the materials are not judicially enforceable. Defs.' Objs. to Report II at 19. Defendants' argument is inapposite. Even without regard for these documents, Defendants have failed to show that the Park Service provided notice sufficient to trigger the limitations clock or to satisfy NEPA. Indeed, Judge Kay's analysis on this point is based primarily on the Park Service's description of the 1999 GMP/EIS as a "programmatic statement."
[9] Defendants did not raise a latches defense. See generally Comm. to Save the Fox Bldg. v. Birmingham Branch of the Fed. Reserve Bank of Atlanta, 497 F. Supp. 504 (N.D.Al.1980) (denying last-minute NEPA and NHPA claims on grounds of latches); Apache Survival Coalition v. United States, 21 F.3d 895, 906 (9th Cir.1994) (same).
[10] Indeed, Defendants' counsel indicated that the Park Service had not solicited bids for demolition of the Center as of November 2008. Defs.' Objs. to Report II Ex. 2 (Nov. 3, 2008 Letter to the Hon. Alan Kay).
[11] Moreover, both the 1995 and 1996 Draft DCP/EAs were abandoned. A.R. 2270 (1995 Notice of Termination), A.R. 646, 2311-12 (announcing Termination of 1996 DCP/EA). Additionally, the 1996 DCP/EA did not invite comments, and the record does not reflect any response to the comments that the Park Service nevertheless received.
[12] The Final ROD does include, in an Appendix, a report that notes the "fatal" effect the Park Service's proposed action would have on the Center. A.R. 559. Overall, however, the ROD discusses the effects of demolition and new construction only in general, park-wide terms (e.g., a loss of two acres of wetlands), and it is unclear about the fates of different facilities. See, e.g., ROD at 13 (A.R. 45) ("Construction activities related to a relocation of the park's museum complex, visitor facilities and administrative facilities to a site removed from its prime resources have the potential to cause environmental harm." (emphasis added)).
[13] See, e.g., Final GMP/EIS at 169-70 (A.R. 315-16) (noting that the park contains 148 historic buildings and that the "sheer number of buildings and structures places strain on the park's financial and staff resources").
[14] Scattered throughout the record are facts that support the Park Service's decision. The Section 106 Report describes the disrepair of the Center, A.R. 1594, the original plan to demolish the Center after seven years, A.R. 1597, mitigation measures, A.R. 1605, and reasons for declining to rehabilitate the building, A.R. 1606 ("Because the building is poured-in-place concrete, it cannot be jacked up"). See also Advisory Council Finding at 11 (A.R. 561) (The siting of the Center, "by today's standards, would be rejected out of hand.").
[15] Since Defendants concede this is a major federal action, Defs.' Objs. at 43, they must determine whether it will "significantly affect[] the quality of the human environment." 42 U.S.C. § 4332(C). CEQ regulations provide options on how to make this determination, with the result being either (a) a categorical determination, or (b) an environmental assessment. 40 C.F.R. § 1501.4. After an environmental assessment, the Park Service may prepare and issue either an EIS or a FONSI. Id.; see also id. § 1508.9.
[16] Naturally, in making these decisions, Park Service officials should follow applicable CEQ regulations and agency procedures. See, e.g., 40 C.F.R. §§ 1507.3, 1508.27 (defining "significantly"), 1502.20 (tiering). If categorical treatment is not suitable, an environmental assessment covering the site would be appropriate. See City of Dania Beach v. FAA, 485 F.3d 1181, 1189 (D.C.Cir.2007).
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253 P.3d 632 (2011)
The TOHONO O'ODHAM NATION, a federally recognized Indian tribe, Plaintiff/Appellant,
v.
CITY OF GLENDALE, an Arizona municipal corporation; Elaine M. Scruggs, in her official capacity as Mayor of the City of Glendale; Manny Martinez, in his official capacity as a Glendale City Council Member and Vice Mayor; Yvonne J. Knaack, in her official capacity as a Glendale City Council Member; Phil Lieberman, is his official capacity as a Glendale City Council Member; David Goulet, in his official capacity as a Glendale City Council Member; Steven Frate, in his official capacity as a Glendale City Council Member; and Joyce Clark, in her official capacity as a Glendale City Council Member, Defendants/Appellees.
No. 1 CA-CV 10-0341.
Court of Appeals of Arizona, Division 1, Department A.
May 3, 2011.
Quarles & Brady LLP By James A. Ryan, Lauren Elliott Stine, Phoenix, and Gammage & Burnham, By Lisa T. Hauser, Phoenix, Co-Counsel for Plaintiff/Appellant.
Office of the City Attorney City of Glendale Glendale By Craig D. Tindall, Nicholas C. DiPiazza, Christina A. Parry, Glendale, Attorneys for Defendants/Appellees.
Gust Rosenfeld P.L.C. By David A. Pennartz, Phoenix, Attorneys for Amicus Curiae.
OPINION
WINTHROP, Judge.
¶ 1 The Tohono O'odham Nation ("Nation") appeals the grant of summary judgment to the City of Glendale ("Glendale") on Nation's challenge to Glendale's purported annexation of real property owned by Nation. For the reasons that follow, we hold that when the validity of a municipality's annexation ordinance is timely challenged in court, the annexation does not automatically become final thirty days after the ordinance was adopted. Accordingly, we reverse the grant of summary judgment in favor of Glendale and remand *633 for entry of judgment in favor of Nation.
BACKGROUND
¶ 2 On November 27, 2001, Glendale adopted Ordinance No. 2229 annexing certain property referred to as "Annexation Area 137." On December 27, 2001, an owner of land within Area 137 timely filed a petition in superior court to set aside the annexation. See Ariz.Rev.Stat. ("A.R.S.") § 9-471(C) (Supp. 2010).[1] On May 28, 2002, Glendale adopted an ordinance repealing Ordinance No. 2229 and thereby abandoned "the attempted annexation of . . . Area No. 137."[2] The court dismissed the annexation challenge from the inactive calendar on October 7, 2002. Nation subsequently purchased the parcel within Area 137 that was owned by the party who filed the 2001 annexation challenge.
¶ 3 On June 23, 2009, Glendale adopted Ordinance No. 2688, which deemed Glendale's "interior boundary to have been extended and increased inclusive of the territory described as Annexation Area No. 137 as of December 27, 2001." Ordinance No. 2688 also announced that because Glendale did not have the statutory authority to "abandon its annexation," its attempt to repeal Ordinance No. 2229 in 2002 was "ineffective and a nullity."[3]
¶ 4 On July 22, 2009, Nation commenced this action, alleging Ordinance No. 2688 violated A.R.S. § 9-471, the statute that sets forth the procedures a city or town must follow when increasing its limits by annexation. Specifically, Nation argued that, because Ordinance No. 2229 was timely challenged and the annexation effort subsequently repealed by Glendale before the court addressed the merits of the challenge, the 2001 annexation never became final or effective.[4]See A.R.S. § 9-471(D) (annexation becomes final thirty days after ordinance that annexes territory is adopted, subject to judicial review if an objection was filed).
¶ 5 Nation moved for summary judgment. Glendale opposed and filed a cross-motion for summary judgment. The parties did not dispute any material facts, and they agreed that summary disposition of the case hinged on the court's interpretation of § 9-471(D). The court ultimately denied Nation's motion and granted Glendale's. This appeal was timely filed, and we have jurisdiction pursuant to A.R.S. § 12-2101(B) (2003).
ANALYSIS
¶ 6 Subsections (C) and (D) of A.R.S. § 9-471 provide, in relevant part:
C. Any . . . interested party may upon verified petition move to question the validity of the annexation for failure to comply with this section [outlining procedures for instituting annexation proposal, notice of public hearing and map of area to be annexed] . . . No action shall be brought to question the validity of an annexation ordinance unless brought within the time and for the reasons provided in this subsection.. . .
D. The annexation shall become final after the expiration of thirty days from the adoption of the ordinance annexing the territory by the city or town governing body, provided the annexation ordinance has been finally adopted in accordance with procedures established by statute, charter provisions or local ordinances, whichever is applicable, subject to the review of the court to determine the validity *634 thereof if petitions in objection have been filed.
(Emphases added.)
¶ 7 As it did below, Nation argues that, pursuant to § 9-471(D), a timely challenge to a city's annexation ordinance delays the finality of the annexation until the court has completed its review of the challenge. The basis for Nation's position is the language in subsection (D) providing that an annexation shall become final "subject to the review of the court to determine the validity thereof if petitions in objection have been filed." A.R.S. § 9-471(D) (emphasis added). Thus, Nation argues, the 2001 annexation was never final because Ordinance No. 2229 was timely challenged on December 27, 2001 and Glendale repealed the annexation attempt in 2002 before the court ruled on the challenge. In response, Glendale argues, as it did in support of its cross motion for summary judgment, that the language in A.R.S. § 9-471 "[t]he annexation shall become final after the expiration of thirty days from the adoption of the ordinance annexing the territory []" (emphasis added) means that an annexation automatically becomes final thirty days after the annexation ordinance was adopted regardless of whether the ordinance is challenged before the thirty-day period expires. Thus, Glendale contends, although the 2001 challenge to Ordinance No. 2229 caused the annexation to be subject to judicial review, the challenge did not prevent the annexation from becoming final on December 27, 2001, thirty days after the ordinance was adopted.[5] No court opinion in Arizona squarely addresses whether § 9-471(D) renders municipal annexations final thirty days after they are adopted regardless of whether a challenge is timely filed.[6]
¶ 8 We review de novo the superior court's decision to grant summary judgment on statutory construction grounds. See Copper Hills Enterprises, 214 Ariz. at 388, ¶ 6, 153 P.3d at 409. In construing statutes, our main objective is to determine and give effect to the legislative intent. Hobson v. Mid-Century Ins. Co., 199 Ariz. 525, 529, ¶ 8, 19 P.3d 1241, 1245 (App.2001). We first examine the language of the relevant statute because the language provides the most reliable evidence of legislative intent. Id. In doing so, we must give meaning to each word in a statute to avoid rendering any part of the statute void, redundant, or meaningless. See Walker v. City of Scottsdale, 163 Ariz. 206, 210, 786 P.2d 1057, 1061 (App.1989).
¶ 9 We agree with Nation's interpretation of A.R.S. § 9-471(D). The legislature's use of the "subject to" clause in the statute unambiguously evidences an intent that the finality of a timely challenged annexation is conditional upon a court's determination that the annexation is valid. Glendale's argument that "[t]he only condition required for an annexation to become final is the passage of 30 days" improperly fails to give effect to the "subject to judicial review" condition that the legislature expressly included in the statute. See Airport Properties v. Maricopa County, 195 Ariz. 89, 96, ¶ 23, 985 *635 P.2d 574, 581 (App.1999) (stating that "We presume that the legislature does not intend to draft statutory provisions that are redundant, void, inert, trivial, superfluous or contradictory"). According to Glendale, the "subject to" clause merely affords the court authority to overturn a timely challenged annexation that, if thirty days have passed since adoption, has become final. We find this interpretation to be unpersuasive; Glendale's construction of the statute ignores the plain meaning of "subject [to]" which is defined as "dependent upon or exposed to esp. as a prelude to finalizatiori[.]" Webster's New Collegiate Dictionary 921, 1150 (1980); see also Black's Law Dictionary 993 (Abr. 7th ed. 2000). We therefore hold that A.R.S. § 9-471(D) evidences the legislature's intent that a timely challenged annexation does not automatically become final thirty days after the annexation ordinance was adopted; rather, the annexation becomes final when a judicial determination has been made as to the challenged annexation's validity.[7]
¶ 10 In light of our holding, Ordinance No. 2229 did not become final before Glendale repealed it. Accordingly, Nation is entitled to summary judgment on its claim that Ordinance No. 2229 did not annex Area 137. Ariz. R. Civ. P. 56(c)(1) (summary judgment appropriate when moving party entitled to judgment as a matter of law). We therefore remand for entry of judgment in favor of Nation. See Anderson v. Country Life Ins. Co., 180 Ariz. 625, 628, 886 P.2d 1381, 1384 (App.1994) (stating that "where the issues can be decided as a matter of law, we have the authority both to vacate the trial court's grant of summary judgment in favor of one party and to enter summary judgment for the other party if appropriate").
CONCLUSION
¶ 11 We reverse summary judgment in favor of Glendale and direct entry of judgment for Nation on remand. Pursuant to A.R.S. § 9-471(P), we grant Nation's request for attorneys' fees and costs incurred on appeal subject to compliance with ARCAP 21.
CONCURRING: PHILIP HALL, Presiding Judge and JON W. THOMPSON, Judge.
NOTES
[1] Unless a statute has been revised in a manner material to our analysis, we cite its current version.
[2] Glendale apparently abandoned the annexation because the pending challenge thereto would delay and possibly threaten development of parcels of Area No. 137 owned by supporters of the annexation. Glendale thereafter annexed the supporters' parcels separately.
[3] "[T]o the extent necessary," Glendale also repealed the 2002 ordinance that had repealed Ordinance No. 2229.
[4] Nation also alleged Glendale did not follow the necessary statutory procedures before adopting Ordinance No. 2688, and therefore, Ordinance No. 2688 itself could not effectively annex Area 137.
[5] Accordingly, Glendale now claims its attempt in 2002 to repeal the finalized annexation was a "mistake of law" and ineffective. Because of our resolution of the central statutory issue, we need not address Glendale's contention.
[6] The cases relied upon by the parties to support their respective positions are distinguishable. See, e.g., Salt River Project Agric. Improvement and Power Dist. v. City of St. Johns, 149 Ariz. 282, 285, 718 P.2d 184, 187 (1986) (finding that in light of thirty-day "waiting period" in A.R.S. § 9-471(D), a municipality cannot invoke its statutory emergency powers to give immediate effect to annexation ordinance); Copper Hills Enterprises, Ltd. v. Ariz. Dep't of Revenue, 214 Ariz. 386, 153 P.3d 407 (App.2007) (noting that municipal annexation was not final pursuant to § 9-471(D) and null and void for taxation purposes because city's annexation procedure was flawed); City of Phoenix v. Town of Cave Creek, 167 Ariz. 227, 805 P.2d 1048 (App.1990) (noting that A.R.S. § 9-471(D) does not require party challenging annexation to request a stay, and therefore rejecting appellee's argument that, because appellant did not seek a second stay after the superior court quashed "initial stay" in § 9-471 proceeding, appeal was moot); Rural/Metro Fire Dept., Inc. v. Pima County, 122 Ariz. 554, 596 P.2d 389 (App.1979) (finding that the fire district's annexation pursuant to A.R.S. § 9-1006 (currently A.R.S. § 48-262 (2000)) was final and therefore could not be challenged); Gieszl v. Town of Gilbert, 22 Ariz.App. 543, 529 P.2d 255 (1974) (finding that the town cannot use emergency measures power to thwart citizen's right under § 9-471(D) to challenge annexation within thirty days after annexation ordinance adopted).
[7] Because we find the statute unambiguous on this point, we need not resort to additional tools of construction. See Automatic Registering Mach. Co. v. Pima County, 36 Ariz. 367, 370-71, 285 P. 1034, 1035 (1930) (stating that when the plain language of a statute is unambiguous and conveys a clear and definite meaning, the plain and obvious meaning must be followed without resort to the rules of statutory construction). Nonetheless, even were we to find ambiguity in the statute's language, we agree with Nation, as well as the City of Tolleson, which filed an amicus curiae brief in this matter, that the statute evinces the legislature's intent to delay the finality of annexations for the duration of judicial review. Glendale argues that, in the event that a court finds an annexation to be invalid, the statute requires that the court engage in a form of judicial de-annexation. As both Nation and the City of Tolleson point out, such a process would be chaotic; requiring the court to engage in multiple actions such as voiding election results, ordering the return of tax revenue, and overturning criminal violations of now inapplicable city codes and ordinances. The legislature surely considered these and other burdensome acts that would necessarily follow the creation of a judicial de-annexation process as proposed by Glendale. Neither § 9-471(D) nor any other statute cited by Glendale provides guidance, let alone authorization, for the courts to be involved in deannexation. Accordingly, we agree with Nation and the City of Tolleson that the legislature intended to favor certainty over finality in making annexation "subject to the review of the courts" before it becomes final rather than having the courts supervise the complicated process of unwinding the annexation after the fact.
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https://www.courtlistener.com/api/rest/v3/opinions/2542650/
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148 P.3d 1273 (2006)
STATE of Idaho, Plaintiff-Respondent,
v.
David SANTISTEVAN, Defendant-Appellant.
No. 31918.
Court of Appeals of Idaho.
October 2, 2006.
Roark Law Firm, LLP, Hailey, for appellant.
Hon. Lawrence G. Wasden, Attorney General; Thomas R. Tharp, Deputy Attorney General, Boise, for respondent.
LANSING, Judge.
A jury found David Santistevan guilty of two counts of attempted murder in the second degree. He appeals his conviction, contending that the district court violated Santistevan's Fifth Amendment privilege against self-incrimination and his psychotherapist-patient privilege when it compelled him to submit to a mental examination by a psychologist for the State.
I.
FACTS AND PROCEDURAL BACKGROUND
Santistevan was charged with two counts of attempted murder in the second degree, Idaho Code §§ 18-4001, -4003(g), -306(1), with an enhancement for use of a firearm, I.C. § 19-2520, after he shot two young men during an altercation in an alley in Bellevue, Idaho. Prior to trial he employed, at state *1274 expense, a psychiatrist who examined Santistevan for purposes of aiding in his defense. Initially, defense counsel was undecided as to whether the psychiatrist, Dr. Worst, would testify at trial. Three weeks before trial, however, defense counsel sent the prosecutor a letter stating that Dr. Worst would be called as an expert witness to present evidence of Santistevan's mental condition. The letter included a synopsis of Dr. Worst's expected testimony. The State filed a motion to exclude Dr. Worst's testimony for non-compliance with the notice requirements prescribed by I.C. § 18-207(4) or, in the alternative, seeking leave for a mental examination of the defendant by a State expert.
The district court denied the State's motion to prevent Dr. Worst from testifying, holding that the defendant's interest in a fair trial was paramount and should not be impaired as a consequence of defense counsel's late disclosure. Instead, the district court postponed the trial and ordered that Santistevan submit to an examination by a psychologist for the State, Dr. Robert Engle, in order to allow the State to meet the defense evidence. This order imposed a number of procedural requirements and restrictions on the conduct of Dr. Engle's examination and on the use of the resulting evidence, with the purpose of protecting the defendant.[1] An examination by Dr. Engle was performed in accordance with the order. At trial, Dr. Worst testified for the defense, but the State did not call Dr. Engle to testify. The jury returned verdicts of guilty.
Santistevan appeals. He asserts that the order compelling him to submit to the examination by Dr. Engle violated his Fifth Amendment privilege against self-incrimination[2] and his psychotherapist-patient privilege under Idaho Rule of Evidence 503.
*1275 II.
ANALYSIS
A. Privilege Against Self-Incrimination
The Fifth Amendment to the United States Constitution provides that "no person . . . shall be compelled in any criminal case to be a witness against himself." Santistevan argues that a compelled mental examination is a per se violation of this constitutional privilege against self-incrimination.
We disagree. Although neither the United States Supreme Court nor the Idaho appellate courts have directly addressed the issue, virtually all federal circuit courts and state appellate courts considering the matter have held that if a defendant announces an intention to introduce psychiatric evidence to support a claim of mental defect, a court-ordered mental examination of the defendant by an expert for the State does not violate the privilege against self-incrimination. See United States v. Byers, 740 F.2d 1104, 1115 (D.C.Cir.1984); United States v. Halbert, 712 F.2d 388, 390 (9th Cir.1983); United States v. Madrid, 673 F.2d 1114, 1121 (10th Cir.1982); United States v. Cohen, 530 F.2d 43, 47-48 (5th Cir.1976); United States v. Handy, 454 F.2d 885, 888-89 (9th Cir.1971); United States v. Bohle, 445 F.2d 54, 66-67 (7th Cir. 1971), overruled on other grounds, United States v. Lawson, 653 F.2d 299 (7th Cir. 1981); United States v. Baird, 414 F.2d 700, 708-09 (2d Cir.1969); United States v. Albright, 388 F.2d 719, 724-25 (4th Cir.1968); Pope v. United States, 372 F.2d 710, 720-21 (8th Cir.1967), vacated and remanded on other grounds, 392 U.S. 651, 88 S. Ct. 2145, 20 L. Ed. 2d 1317 (1968); United States v. White, 21 F. Supp. 2d 1197, 1200 (E.D.Cal.1998); State v. Schackart, 175 Ariz. 494, 858 P.2d 639, 645 (1993); State v. Fair, 197 Conn. 106, 496 A.2d 461, 463 (1985); White v. United States, 451 A.2d 848, 852 (D.C.1982); State v. Whitlow, 45 N.J. 3, 210 A.2d 763, 767 (1965); State v. Martin, 950 S.W.2d 20 (Tenn.1997); State v. Cerar, 60 Utah 208, 207 P. 597, 602 (1922).
While the grounds for the decisions vary, see Byers, 740 F.2d at 1111-13 (analyzing various justifications advanced by the courts), the overarching rationale can be described as one of fundamental fairness and judicial common sense, taking practical considerations into account in determining the reach of the Fifth Amendment privilege against self-incrimination. As the Byers court explained, when a defendant introduced psychiatric testimony to show why he should not be punished for a crime, "the state must be able to follow where he has led." Id. at 1113. To hold that the Fifth Amendment prevents a compelled examination in this circumstance would deprive the State of the only adequate means to meet the defense expert's testimony.
This rationale finds support in United States Supreme Court decisions addressing the privilege against self-incrimination. In Fitzpatrick v. United States, 178 U.S. 304, 315-16, 20 S. Ct. 944, 948-49, 44 L. Ed. 1078, 1083-84 (1900), for example, the Court held that a criminal defendant may not testify at trial on his own behalf and then assert a Fifth Amendment privilege to be free from cross-examination on matters raised by his own testimony on direct examination. And in Estelle v. Smith, 451 U.S. 454, 465, 101 S. Ct. 1866, 1874, 68 L. Ed. 2d 359, 370 (1981), the Court noted, "When a defendant asserts the insanity defense and introduces supporting psychiatric testimony, his silence may deprive the State of the only effective means it has of controverting his proof on an issue that he interjected into the case." See also Brown v. United States, 356 U.S. 148, 155-56, 78 S. Ct. 622, 626-27, 2 L. Ed. 2d 589, 596-98 (1958).
Under Idaho law, insanity or other mental condition is not a defense to a crime, I.C. § 18-207(1), but expert evidence is admissible "on the issue of any state of mind *1276 which is an element of the offense." I.C. § 18-207(3).[3] That is, a defendant may present evidence of a mental disease or defect to negate the intent or other mens rea element of the charged crime. State v. Searcy, 118 Idaho 632, 635-36, 798 P.2d 914, 917-18 (1990); State v. Beam, 109 Idaho 616, 621, 710 P.2d 526, 531 (1985); State v. Patterson, 126 Idaho 227, 229, 880 P.2d 257, 259 (Ct. App.1994). It was apparently on this basis that Santistevan proffered the expert testimony of Dr. Worst. Having thus elected to rely upon expert testimony concerning his mental health to negate an element of the charged offenses, Santistevan was correctly foreclosed by the trial court from relying upon the privilege against self-incrimination to avoid a mental health examination by the State's expert.
Santistevan relies upon a single decision, State v. Odiaga, 125 Idaho 384, 871 P.2d 801 (1994), in support of his proposition that the compelled examination violated his privilege against self-incrimination. In Odiaga, in response to the defendant's indication that he intended to present evidence of his mental illness, the State moved to compel a psychiatric evaluation, and the district court granted the motion. On appeal, the Idaho Supreme Court held that the district court had erred. As the basis for its ruling the Supreme Court said:
The Fifth Amendment to the United States Constitution and article I, section 13 of the Idaho Constitution prohibit compelling a criminal defendant to be a witness against himself or herself. Following Idaho's repeal of the insanity defense, no statutory *1277 scheme remains through which a psychological evaluation can be compelled without threatening the rights guaranteed under both of those constitutions.
Id. at 391, 871 P.2d at 808. The Court also declined to hold that the district court had inherent authority to compel a psychiatric evaluation. Id.[4] Lastly, the Court stated that the procedure employed, in the absence of a statutory scheme through which a psychological evaluation could be compelled, "implicated" the psychotherapist-patient privilege under I.R.E. 503. Id.
We understand Odiaga to be a statutorily-based decision recognizing that in repealing statutes that authorized an insanity defense, the Idaho legislature had also repealed the statutes that had provided authority for the State to compel a psychological examination. Because the Idaho legislature subsequently enacted I.C. § 18-207(4), which authorizes the trial courts to order a defendant to submit to examination by a state's expert if the defendant has raised an issue of mental condition, the portion of Odiaga upon which Santistevan relies appears to have no present applicability. That is, Odiaga was based upon a statutory void that no longer exists.
We therefore adhere to the common sense rule, adopted by virtually every other jurisdiction in this country, that as a general proposition, if a defendant has indicated an intent to introduce psychiatric evidence in his defense, a compelled mental examination of the defendant by a state's expert does not violate the Fifth Amendment privilege against self-incrimination.
B. Idaho Rule of Evidence 503
Santistevan also argues that the compelled mental examination violated the psychotherapist-patient privilege under I.R.E. 503(b)(2), which creates a privilege in a criminal action to refuse disclosure of confidential communications that were made to a person's psychotherapist for purposes of diagnosis or treatment of a mental or emotional condition.[5] We can discern no merit in this claim of error, for Santistevan's communications to Dr. Engle plainly were not subject to the Rule 503 privilege.
First, Rule 503(d)(3) provides that no privilege attaches "to a communication relevant to an issue of the physical, mental or emotional condition of the patient in any proceeding in which he relies upon the condition as an element of his claim or defense. . . ." (Emphasis added.) Here, Santistevan's defense was based, in part, on his mental condition. Therefore, his communications to Dr. Engle were not within the privilege. Rule 503(d)(2) also specifies that "[i]f the court orders an examination of the physical, mental or emotional condition of a patient, whether a party or a witness, communications made in the course thereof are not privileged under this rule with respect to the particular purpose for which the examination is ordered unless the court orders otherwise." Here, the district court did order some limitations on the prosecution's use of Santistevan's statements to Dr. Engle, but it is not contended that these restrictions were violated. Lastly, Rule 503(a)(4) states: "A communication is `confidential' if not intended to be disclosed to third persons. . . ." Santistevan's communications to Dr. Engle, subject to the parameters set by the district court, were not intended to be confidential.
III.
CONCLUSION
The district court's order requiring Santistevan to participate in a mental examination by the State's expert did not violate Santistevan's Fifth Amendment privilege against self-incrimination nor his psychotherapist-patient *1278 privilege. The judgment of conviction is therefore affirmed.
Chief Judge PERRY and Judge GUTIERREZ concur.
NOTES
[1] The district court ordered:
1) That defendant David Santistevan may forthwith be examined by the State's experts concerning his mental state. This examination and testing by the State may include, but is not limited to examination of defendant's mental processes, his IQ, his memory, his recall of events unrelated to the charge, and his childhood/history. In addition, the State's experts may inquire of defendant as to his memory/recall and or his mental condition at the time of the alleged events for which he is charged. See Park v. Montana 6th Judicial District Court, 289 Mont. 367, 961 P.2d 1267 (1998).
2) Defendant's attorney Douglas Nelson may be present during any and all such examinations and or testing.
3) Any evidence obtained by the State's experts during and in the course of such examination may only be used by the State for rebuttal purposes as outlined further below. The State may not present any such evidence on their case in chief. Any statements or evidence obtained by the State's experts during the course of this examination shall be disclosed ONLY TO THE STATE'S ATTORNEYS AND NO ONE ELSE. The State's attorneys may not disclose to any police officer or any other agent of the state, (other than an attorney employed directly by the State for purposes of this case), any evidence obtained by the State's experts during the course of this examination The State will bear the burden of showing that any evidence discovered by the State after this mental examination of the defendant by the State's expert was not connected in any fashion to any statement made by the defendant to the State's experts.
4) The State's right to conduct a mental examination of the defendant is not contingent on the [sic] whether the defendant elects to call Dr. Worst to testify at trial. Defendant has already elected to put his mental status an [sic] issue, which in and of itself invokes the State's right to conduct the foregoing examination.
5) During the course of any examination by the State's experts, defendant does have a constitutional right to remain silent when asked by the State's experts about the events surrounding the alleged offense. Estelle v. Smith, 451 U.S. 454, 101 S. Ct. 1866, 68 L. Ed. 2d 359 (1981); Park v. Montana 6th Judicial District Court, 289 Mont. 367, 961 P.2d 1267 (1998). Defendant shall also be advised, and is hereby advised, that any incriminating statements he makes to the State's experts could be used against him at trial, in the event defendant places his mental status in issue at trial. In addition, defendant shall be advised, and is hereby advised that any incriminating statements he makes to the State's experts might be used against him at sentencing, even if not used at trial, and even if not placed an [sic] issue by the defense at sentencing.
6) The State may not use Dr. Worst's notes or any information the defendant gave Dr. Worst about the alleged incident in their case in chief nor can the State's expert use any information gleaned from Dr. Worst's reports or notes except in rebuttal.
7) If defendant Santistevan refuses to discuss the events related to the charges against with the State's expert, then . . . defendant will be precluded from offering testimony on the issue of his mental state as it relates to an element of the offense.
[2] Santistevan also asserts that his privilege against self-incrimination under Article I, section 13 of the Idaho Constitution was violated. Because he has not argued that the corresponding state constitutional provision affords greater or different protections than the Fifth Amendment, we will not separately address the state constitutional claim. See State v. Ross, 129 Idaho 380, 381, 924 P.2d 1224, 1225 (1996); State v. Jordan, 122 Idaho 771, 772 n. 2, 839 P.2d 38, 39 n. 2 (Ct.App.1992).
[3] Idaho Code § 18-207 states:
(1) Mental condition shall not be a defense to any charge of criminal conduct.
(2) If by the provisions of section 19-2523, Idaho Code, the court finds that one convicted of crime suffers from any mental condition requiring treatment, such person shall be committed to the board of correction or such city or county official as provided by law for placement in an appropriate facility for treatment, having regard for such conditions of security as the case may require. In the event a sentence of incarceration has been imposed, the defendant shall receive treatment in a facility which provides for incarceration or less restrictive confinement. In the event that a course of treatment thus commenced shall be concluded prior to the expiration of the sentence imposed, the offender shall remain liable for the remainder of such sentence, but shall have credit for time incarcerated for treatment.
(3) Nothing herein is intended to prevent the admission of expert evidence on the issue of any state of mind which is an element of the offense, subject to the rules of evidence.
(4) No court shall, over the objection of any party, receive the evidence of any expert witness on any issue of mental condition, or permit such evidence to be placed before a jury, unless such evidence is fully subject to the adversarial process in at least the following particulars:
(a) Notice must be given at least ninety (90) days in advance of trial, or such other period as justice may require, that a party intends to raise any issue of mental condition and to call expert witnesses concerning such issue, failing which such witness shall not be permitted to testify until such time as the opposing party has a complete opportunity to consider the substance of such testimony and prepare for rebuttal through such opposing expert(s) as the party may choose.
(b) A party who expects to call an expert witness to testify on an issue of mental condition must, on a schedule to be set by the court, furnish to the opposing party a written synopsis of the findings of such expert, or a copy of a written report. The court may authorize the taking of depositions to inquire further into the substance of such reports or synopses.
(c) Raising an issue of mental condition in a criminal proceeding shall constitute a waiver of any privilege that might otherwise be interposed to bar the production of evidence on the subject and, upon request, the court shall order that the state's experts shall have access to the defendant in such cases for the purpose of having its own experts conduct an examination in preparation for any legal proceeding at which the defendant's mental condition may be in issue.
(d) The court is authorized to appoint at least one (1) expert at public expense upon a showing by an indigent defendant that there is a need to inquire into questions of the defendant's mental condition. The costs of examination shall be paid by the defendant if he is financially able. The determination of ability to pay shall be made in accordance with chapter 8, title 19, Idaho Code.
(e) If an examination cannot be conducted by reason of the unwillingness of the defendant to cooperate, the examiner shall so advise the court in writing. In such cases the court may deny the party refusing to cooperate the right to present evidence in support of a mental status claim unless the interest of justice requires otherwise and shall instruct the jury that it may consider the party's lack of cooperation for its effect on the credibility of the party's mental status claim.
[4] But see State v. Gerdau, 96 Idaho 516, 518, 531 P.2d 1161, 1163 (1975) ("The court has inherent power to order a psychiatric examination when mental condition is in issue.").
[5] Rule 503(b)(2) provides:
Criminal Action. A patient has a privilege in a criminal action to refuse to disclose and to prevent any other person from disclosing confidential communications made for the purpose of diagnosis or treatment of the patient's mental or emotional condition, including alcohol or drug addiction, among the patient, the patient's psychotherapist, and persons who are participating in the diagnosis or treatment under the direction of the psychotherapist, including members of the patient's family.
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01-03-2023
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10-30-2013
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https://www.courtlistener.com/api/rest/v3/opinions/2542689/
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148 P.3d 235 (2006)
The PEOPLE of the State of Colorado, Plaintiff-Appellee,
v.
Michael William CONNER, Defendant-Appellant.
No. 03CA2476.
Colorado Court of Appeals, Div. II.
May 4, 2006.
Certiorari Denied November 6, 2006.[*]
*237 John W. Suthers, Attorney General, Elizabeth Rohrbough, Assistant Attorney General, Denver, Colorado, for Plaintiff-Appellee.
David S. Kaplan, Colorado State Public Defender, Joan E. Mounteer, Deputy State Public Defender, Denver, Colorado, for Defendant-Appellant.
GRAHAM, J.
Defendant, Michael William Conner, appeals the trial court's order denying his Crim. P. 35(c) motion. We affirm.
Defendant pleaded guilty to attempted second degree assault pursuant to §§ 18-2-101 and 18-3-203, C.R.S.2005. On April 26, 1994, the court imposed four years of intensive supervision probation and ordered defendant to pay costs, including $1,125.30 in restitution.
Between 1995 and 1997, defendant's probation officer filed three complaints alleging probation violations, two of which progressed to probation revocation hearings and resulted in the revocation and the regranting of defendant's probation.
On September 22, 2000, seven days before the termination date of his probation, defendant's probation officer filed a request to extend the term of his probation for one year, because he had failed to pay restitution. The extension was signed by defendant and stated:
I, [defendant], have read the above motion to extend the term of probation, understand its contents, and admit to not having met the above listed condition(s) of probation. I hereby request the Court to extend my probation until the date listed to allow more time to meet said condition(s). I have been advised and understand that Colorado law gives the right to request a hearing before the term of probation is modified. I waive the right to have such a hearing conducted.
The court extended defendant's probationary term to September 21, 2001.
On February 12, 2001, defendant's probation officer filed a fourth complaint alleging probation violations based on defendant's guilty pleas to driving without a valid license and to escape, failure to report to his probation officer, and failure to pay restitution. Defendant's probation officer filed a fifth complaint prior to the revocation hearing alleging an additional probation violation based on charges filed against defendant for unlawful distribution of a schedule II controlled substance and theft.
At the revocation hearing, defendant admitted that he violated the terms of his probation. The court sentenced defendant to three years to be served in the Department of Corrections (DOC), plus two years of mandatory parole.
At the same hearing, defendant also pleaded guilty to attempted distribution or sale of methamphetamine, and the court sentenced him to eight years in the DOC, plus three years of mandatory parole, to be served concurrently with the sentence imposed for his probation violation.
Defendant then filed a pro se motion for postconviction relief under Crim. P. 35(c), asserting that (1) his probation officer illegally obtained his consent to extend his probation by threatening that his probation would be revoked and that he would go to prison if he did not sign the consent; (2) his failure to pay restitution did not automatically extend his probation and the court could not revoke his probation without first considering whether he was able to pay restitution and finding that he had willfully failed to pay restitution; and (3) the sentence is illegal because his probationary period had already expired when the court sentenced him.
The court denied defendant's motion and found that his allegations had no basis in fact, because he had consented to the extension. The court concluded that because *238 defendant was still on probation when his probation officer filed the fourth and fifth complaints alleging probation violations, the sentence imposed upon him was legal. Defendant then filed this appeal and obtained a limited remand for an evidentiary hearing.
In a subsequent hearing on the issue of whether defendant knowingly and voluntarily consented to the extension of his probation, defendant admitted that he knew he had the right to have the court decide whether his probation should be revoked and to request that he be represented by an attorney.
Defendant testified that his probation officer told him that if he did not sign the request to extend his probation, she would file a motion to revoke his probation, that he would go in front of the judge, and that he would probably go to prison. Defendant further testified that he had been through the probation revocation process twice before he signed the request to extend his probation. Defendant acknowledged that his probation officer had not threatened him.
Defendant's probation officer did not materially dispute defendant's testimony.
At the conclusion of the hearing, the court found no evidence that defendant had a diminished mental capacity or lacked the ability to read, understand, and write English. The court further found that the probation officer did not exert any improper influence over defendant; that defendant's will was not overborne in any way; that defendant was well acquainted with probation revocation hearing procedures; and that he was aware of his right to have a hearing in front of a judge.
The court found that defendant's consent to the extension of his probation was made knowingly and voluntarily and resulted from defendant's choice to extend his probation rather than have a hearing before the judge on that issue. The court further concluded that a court's extension of probation with a defendant's consent did not require the application of the same standards as a probation revocation hearing; that Crim. P. 11 was not applicable to the consensual extension of probation; and that defendant's consent to the extension did not amount to an admission of a probation violation.
I. Standard of Review
In reviewing the denial of a Crim. P. 35 motion, we will not disturb the trial court's determination on appeal if the record supports its findings and judgment. See Kailey v. Colo. State Dep't of Corr., 807 P.2d 563 (Colo.1991). It is within "the province of the court, as the trier of fact, to determine the credibility of the witnesses and the weight to be given their testimony." Kailey v. Colo. State Dep't of Corr., supra, 807 P.2d at 567.
II. Extension of Probation
Defendant first contends that he was denied due process because his consent to an extension of probation was not knowing and voluntary. He contends here that, at a minimum, the full scope of due process required a hearing with notice, disclosure of evidence, an opportunity to be heard and present evidence, and the right to cross-examine adverse witnesses. He also contends that due process required the probation officer to disclose to him that he could have requested termination of probation based on his inability to pay restitution. We are not persuaded.
We are not aware of any standard for measuring the process that is due to a probationer who is asked to consent to an extension of probation. The examination of the due process rights that must be afforded to a defendant when the court extends his probation is an issue of first impression in Colorado.
Defendant urges that there is no practical difference between his situation and those circumstances attending searches and seizures, confessions, guilty pleas, or waivers of constitutional rights. Defendant suggests that the due process protections afforded in a probation revocation hearing should also apply to the extension of probation. We disagree.
Colorado's statutory scheme suggests that while due process must be accorded to defendants in probation revocation and probation extension proceedings, where a defendant *239 consents to an extension, there is no requirement for a hearing or other proceedings designed to assure that a defendant is making a knowing and voluntary decision.
The trial court has the authority to "grant the defendant probation for such period and upon such terms and conditions as it deems best." Section 18-1.3-202(1), C.R.S.2005. The court may thereafter extend a defendant's probationary term "[f]or good cause shown and after notice to the defendant, the district attorney, and the probation officer, and after a hearing if the defendant or the district attorney requests it." Section 18-1.3-204(4), C.R.S.2005 (emphasis added). But the provisions of the statute concerning notice, a hearing, and a showing of good cause are not applicable if the defendant consents to the extension. See People v. Blackorby, 41 Colo. App. 251, 583 P.2d 949 (1978).
In contrast, a parole revocation hearing must meet the following minimum due process requirements:
(a) written notice of the claimed violations of parole; (b) disclosure to the parolee of evidence against him; (c) opportunity to be heard in person and to present witnesses and documentary evidence; (d) the right to confront and cross-examine adverse witnesses (unless the hearing officer specifically finds good cause for not allowing confrontation); (e) a "neutral and detached" hearing body such as a traditional parole board, members of which need not be judicial officers or lawyers; and (f) a written statement by the factfinders as to the evidence relied on and reasons for revoking parole.
Morrissey v. Brewer, 408 U.S. 471, 489, 92 S. Ct. 2593, 2604, 33 L. Ed. 2d 484 (1972); see also § 16-11-206, C.R.S.2005; People v. Atencio, 186 Colo. 76, 525 P.2d 461 (1974).
In reaching our conclusion that due process rights are less significant in probation extension proceedings than they are in probation revocation proceedings, we find Skipworth v. United States, 508 F.2d 598 (3d Cir.1975), instructive.
In Skipworth, the court reasoned that whether any procedural protections are due in probation extension cases is dependent upon the extent to which an individual will be "condemned to suffer grievous loss." Skipworth v. United States, supra, 508 F.2d at 601 (quoting Morrissey v. Brewer, supra, 408 U.S. at 481, 92 S. Ct. at 2600). An extension of probation clearly does not entail as grievous a loss as that at stake in revocation proceedings.
In fact, the primary "loss" suffered by an individual whose probation has been extended lies not in the continuing restrictions themselves, but in the possibility of future revocation. While such a loss is indeed serious, it is merely potential at the time of extension, and the due process clause clearly provides the protection of a hearing in the event that revocation proceedings should subsequently occur.
Skipworth v. United States, supra, 508 F.2d at 601-02; see State v. McDonald, 272 Kan. 222, 32 P.3d 1167 (2001) (ex parte order extending the defendant's probation did not violate due process; the extension of probation is not equivalent to the "grievous loss" of liberty arising from probation revocation proceedings); see also United States v. Ortiz, 733 F.2d 1416, 1418 (10th Cir.1984) (the extension of the defendant's probation based on his failure to pay a fine did not violate fundamental fairness, but rather "appears to have been contemplated by the Supreme Court when it required that alternative forms of punishment be considered, specifically, `extending the time for payments'" in Bearden v. Georgia, 461 U.S. 660, 674, 103 S. Ct. 2064, 2073, 76 L. Ed. 2d 221 (1983)).
Thus, we conclude that due process did not require that the court hold a hearing before extending defendant's probation. In any event, defendant received such a hearing on remand, and the court properly determined that his consent to the extension was valid.
The record indicates that defendant was familiar with the probation revocation process and had already participated in two probation revocation hearings when he signed the request to extend his probation. The request advised defendant that he was entitled to a hearing before his probation was extended. The probation officer testified that she read the request to defendant, and *240 there is no evidence that defendant was unable to read the request himself. There is also no evidence that the probation officer threatened or coerced defendant into signing the request. Defendant admitted at the hearing on remand that his probation officer did not threaten him in any way. Further, there is no evidence that defendant was a minor or under any disability.
Defendant also asserts that his consent to the extension was not knowingly and voluntarily made because his probation officer did not advise him that he could request termination of his probation based on his financial inability to pay or that the unpaid restitution could be turned over to a collection agency if he were released from probation. Although probation officers have a duty to the court pursuant to probation orders and statutes, see, e.g., Davenport v. Cmty. Corr., Inc., 962 P.2d 963 (Colo.1998), a probation officer does not have any corresponding duty to a probationer. We have found no authority, statutory or otherwise, that imposes such a duty upon a probation officer.
We conclude that the evidence supports the trial court's finding that defendant's consent to extend his probation term was made knowingly and voluntarily. Under the circumstances presented here, defendant was accorded sufficient due process by the trial court in reaching that conclusion. The record suggests that defendant chose to extend his probation rather than proceed to a revocation hearing, which could have resulted in the revocation of his probation. It was for the trial court to determine the credibility of defendant and his probation officer and the weight to be given their testimony. Accordingly, we decline to disturb the trial court's determination on appeal. See Kailey v. Colo. State Dep't of Corr., supra.
III. Restitution
Defendant next argues that the court erred when it did not make a determination of his ability to pay restitution when it revoked his probation. We disagree.
"Probation is a privilege, not a right, and may be revoked if a probationer violates any condition of an order of probation." People v. Moses, 64 P.3d 904, 906 (Colo.App.2002). There is a presumption that a probationer knows that violating any term of his probation could result in revocation. See People v. Zimmerman, 616 P.2d 997 (Colo.App.1980). The standard of proof required to prove a violation of probation is the preponderance of the evidence even though the breaching conduct may also be a criminal offense. See People v. Moses, supra.
Before revoking a defendant's probation based on his failure to pay restitution, a court must first make a finding that the defendant has the present ability to pay. See People v. Romero, 192 Colo. 106, 559 P.2d 1101 (1976); see also People v. Gore, 774 P.2d 877 (Colo.1989) (failure to make restitution payments does not automatically result in the revocation of probation). The requirement that the defendant have the present ability to pay "contemplates that (1) a job for which the probationer is qualified is available; (2) the job would produce an income adequate to meet his obligations; and (3) the probationer unjustifiably refuses to take it." People v. Romero, supra, 192 Colo. at 108, 559 P.2d at 1102.
"The reason for requiring that ability to pay be established before probation can be revoked is to allow revocation only where the probationer unreasonably or willfully fails to comply with the terms of his probation." Strickland v. People, 197 Colo. 488, 490, 594 P.2d 578, 579 (1979). The trial court must "find that the defendant had the ability to pay at the time the payments should have been made." Strickland v. People, supra, 197 Colo. at 490, 594 P.2d at 579; see also People v. Gore, supra.
Here, the court did not revoke defendant's probation based on his failure to pay restitution. Defendant pleaded guilty to the attempted distribution or sale of methamphetamine, which violated the terms of his probation. He acknowledged that he understood that, by entering his guilty plea, he was confessing to the probation violation. Because it was proved that defendant violated his probation by a preponderance of the evidence, it was not necessary for the trial court to make a finding that defendant unreasonably *241 or willfully failed to pay restitution.
Accordingly, we will not disturb the trial court's denial of defendant's Crim. P. 35(c) motion on appeal. See Kailey v. Colo. State Dep't of Corr., supra.
The order is affirmed.
Judge ROTHENBERG and Judge CARPARELLI concur.
NOTES
[*] Justice EID does not participate.
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2006 UT 68.
State of Utah, in the interest of B.A.P., and A.S.P., persons under eighteen years of age.
C.P. and A.P., Petitioners,
v.
State of Utah, Respondent.
State of Utah, in the interest of T.L. and A.L., persons under eighteen years of age.
J.L., Petitioner,
v.
State of Utah,
Nos. 20050892, 20051035
Supreme Court of Utah.
November 7, 2006.
This opinion is subject to revision before final publication in the Pacific Reporter.
Mark L. Shurtleff, Att'y Gen., Carol L.C. Verdoia, John M. Peterson, Asst Att'ys Gen., Salt Lake City, for respondent.
William L. Schultz, Moab, for petitioners.
Connie L. Mower, Martha Peirce, Salt Lake City, for amicus guardian ad litem.
WILKINS, Associate Chief Justice:
¶1 On appeal to the Utah Court of Appeals, Petitioners in these two cases challenged the termination of their parental rights. Acting pursuant to recently adopted rules of appellate procedure, the court of appeals affirmed the termination orders in both cases based exclusively on a review of the records and the petitions on appeal. On certiorari, Petitioners now argue that the expedited procedures outlined in the appellate rules, and applied by the court of appeals, denied them their constitutional right to a meaningful appeal by precluding full presentation of legal argument to the appellate court. Because these two cases present identical legal issues, we address them both together in this single opinion. We now reject Petitioners' constitutional challenges to the new appellate rules and affirm the decisions of the court of appeals.
BACKGROUND
¶2 Both of these cases involve appeals from the termination of the parental rights of the Petitioners. In the first case, C.P. and A.P., the natural parents of two minor children, had their parental rights terminated by court order on March 25, 2005. The parents have a history of domestic violence, extramarital relationships, and unstable employment and housing. In addition, the mother has a history of drug abuse and attempted suicide, and the father has been incarcerated several times. The juvenile court found that the behavior of both parents endangered the emotional and physical welfare of their children and that the parents' rights should be terminated based on unfitness, incompetence, neglect, failure to remedy the circumstances for the children's removal, and failure of parental adjustment.
¶3 In the second case, J.L., the natural father of two minor children, was convicted of aggravated assault and attempted murder for domestic violence against the children's mother. He was subsequently sentenced to one 0-to-5-year term and one 1-to-15-year term, to be served consecutively. In view of his violence and incarceration, the State filed a petition to terminate his parental rights. On July 7, 2005, the juvenile court entered a termination order based on his extended incarceration, history of violent behavior, and general unfitness and neglect.
¶4 The parents in each case timely appealed the termination order to the Utah Court of Appeals, challenging, among other things, the sufficiency of the evidence. Pursuant to rule 55 of the Utah Rules of Appellate Procedure, the parents then filed a Petition on Appeal, which, similar to a docketing statement, sets forth the facts, issues, and legal authorities relevant to the appeal. In each case, the court of appeals, acting pursuant to rule 58, affirmed the juvenile court's termination order after reviewing the record and the petition on appeal, but without ordering full briefing.
¶5 The parents now argue that the rules of appellate procedure, which prescribe an expedited procedure in child welfare appeals, denied them their constitutional right to a meaningful appeal by precluding adequate presentation of legal arguments to the appellate court. We granted certiorari in these cases to determine (1) whether the appellate rules governing appeals in child welfare proceedings are facially unconstitutional, in that they deny appellants the right to a meaningful appeal by precluding full presentation of legal argument and analysis; and (2) whether the court of appeals applied these rules in a manner that deprived Petitioners of their right to a meaningful appeal.
ANALYSIS
¶6 On certiorari, we review the decision of the court of appeals, not that of the trial court. Brown v. Glover, 2000 UT 89, ¶ 15, 16 P.3d 540. Constitutional challenges to the validity of rules of appellate procedure are questions of law reviewed for correctness. Id.
¶7 The Utah Constitution guarantees a right to appeal. Utah Const. art. VIII, § 5. Although the federal constitution includes no such right, the United States Supreme Court has stated that when a state provides such a right, due process demands that it be provided fairly and equally. See Smith v. Robbins, 528 U.S. 259, 270 & n.5 (2000). In addition, we have held that to satisfy this right, an appeal must be meaningful. See, e.g., State v. Rees, 2005 UT 69, ¶¶ 17-18, 125 P.3d 874. Petitioners in these cases argue that the recently adopted rules of appellate procedure, which prescribe expedited procedures in child welfare appeals, effectively denied them their constitutional right to a meaningful appeal. We begin by briefly explaining the salient features of the new rules, which should clarify the issues in these cases.
¶8 In 2004, this court adopted rules 52 to 59 of the Utah Rules of Appellate Procedure in an effort to expedite child welfare proceedings. Under the new rules, appellantsin this case, parents seeking to overturn the termination of their parental rights-must file a notice of appeal within fifteen days of the termination order, Utah R. App. P. 52(a), and have fifteen days from that time to file the petition on appeal, id. R. 55(a). Extensions are limited to ten days. Id. R. 59. Appellants must also order transcripts within four days after filing the notice of appeal. Id. R. 54(a). Because of these abbreviated time frames, transcripts of the trial proceedings typically are not available to counsel by the time the petition on appeal is due.
¶9 Under the new rules, an appellant files a petition on appeal, which is substantially equivalent to a docketing statement. The petition on appeal must be prepared by trial counsel, id. R. 55(b), and is limited to fifteen pages, id. R. 55(c). According to rule 55, the petition on appeal must include, among other things, (1) a "statement of the nature of the case and the relief sought"; (2) a "concise statement of the material adjudicated facts"; (3) a "statement of the legal issues presented for appeal," which must set forth "specific legal questions," not "[g]eneral, conclusory statements"; and (4) "supporting statutes, case law, and other legal authority for each issue raised." Id. R. 55(d). Any response to the petition on appeal from an appellee is voluntary but must be filed within fifteen days and is also limited to fifteen pages. Id. R. 56.
¶10 Finally, under rule 58, the court of appeals, "after reviewing the petition on appeal, any response, and the record,. . . may issue a decision or may set the case for full. briefing." Id. R. 58. In both of the cases before us, the court of appeals chose to render a decision based solely on the petition on appeal and the record without ordering full briefing.
¶11 Petitioners preface their challenge to the validity of these rules by arguing that the right to a meaningful appeal necessarily includes the opportunity to present legal arguments to the appellate court. Petitioners then argue that the new rules effectively deny them that opportunity. They claim that several features of the rules, taken together, prevent an appellant from adequately presenting an argument. We find that assertion, however, to be unavailing.
¶12 Petitioners first point out that rule 55, which outlines what the petition on appeal must include, makes no provision for an "argument" section. However, rule 55 in no way forbids the inclusion of an argument, and in fact, as Utah courts have interpreted that rule, it requires one. In the case of In re J.E., another parental rights termination case, the Utah Court of Appeals held that a petition that raised only "broad, conclusory, and ambiguous, rather than specific and exact," issues and that contained "no legal authority or legal analysis" was "noncompliant with rule 55(d)(6)." 2005 UT App 382, ¶ 18 & n.9, 122 P.3d 679 (emphasis added). Because rule 58 makes clear that the court of appeals may render a decision based on the petition without full briefing, counsel would be remiss to omit arguments from that petition, albeit argument in specific, exact, and concise form.
¶13 Petitioners nevertheless contend that although the rules do not expressly forbid the inclusion of an argument in the petition on appeal, the restrictive page limits, combined with the list of items that must be included in the petition, leave too little space to develop an argument. However, they were unable, when asked at oral argument, to offer any suggestion of how to determine what number of pages would be necessary to vindicate their right to a meaningful appeal. If an appellant finds fifteen pages to be inadequate, then wisdom dictates use of some of those pages to persuade the court of appeals that full briefing is needed. Otherwise, the page limit is just a matter of convenience and uniformity; it has nothing to do with limiting the scope of the appeal.
¶14 Petitioners next argue that the condensed time frames prescribed in the rules allow insufficient time to review the record and transcript and that the typical unavailability of transcripts by the filing deadline makes it difficult to formulate a legal argument. The rules recognize and mitigate this problem, however, by requiring that the attorney who acted as counsel at trial also prepare the petition, presumably ensuring that counsel will be "familiar with the legal file, trial exhibits, trial testimony, and court rulings relevant to the appeal." J.E., 2005 UT App 382, ¶ 16. In addition, as Petitioners' counsel acknowledged at oral argument, audio recordings of trial proceedings in juvenile court are available almost immediately at nominal cost. Counsel may easily use these recordings to refresh their recollection and to review the course of the trial proceedings.
¶15 It is the prerogative and obligation of this court to set time limits for appellate proceedings.[1] Counsel for Petitioners candidly admitted at oral argument that, given fifteen days to file a petition, he would get it filed within the fifteen days, and that if he were given sixty days to file, he would probably start to work on it around day fifty. We are not persuaded that a fifteen-day limit provides inadequate time to file a petition.
¶16 Finally, Petitioners assert that the court of appeals applied the rules in an unconstitutional manner. They base this contention on the notion that deciding a case on its merits without an unfettered presentation of legal argument is equivalent to refusing to fully hear the case. We have made clear, however, that an appellate court may properly render a decision in the absence of full presentation of arguments without offending the appellant's constitutional right to a meaningful appeal.
¶17 In State v. Clayton, 639 P.2d 168 (Utah 1981), we adopted the procedures outlined in Anders v. California, 386 U.S. 738, for criminal appeals. Under Anders, counsel who believes his client's claims on appeal to be wholly frivolous must state so to the court and request to withdraw, but must also present the court with the claims and anything in the record that arguably supports them. The court must then review the record and independently decide whether the case has any merit. The Utah Court of Appeals applied these procedures specifically to child welfare cases in In re D.C., 963 P.2d 761, 764 (Utah Ct. App. 1998), which that court later confirmed in light of the new appellate rules in In re J.E. We agree. In proper circumstances, a complete articulation of legal theories and analysis that litigants believe to be important to the case may actually have little impact on the decision dictated by law.
¶18 As in the cases before us here, an appellate court may decide a case on the merits with only a presentation of the issues along with an appropriate examination of the record. Furthermore, if an appellant in a termination case wishes to claim ineffective assistance of counsel, the petition on appeal may effectively become an Anders-type brief, asking the court of appeals to appoint new counsel and order a full briefing on the claims under rule 58.
¶19 We recognize that the appeal process is rarely perfect for the appellants. In any given case, if counsel is neglectful or incompetent and if the party fails to recognize that fact in time to correct it, their situation is even less satisfying. Such problems, when they exist, may be exacerbated by the expedited time frames, page limits, and other features of these rules. However, as a constitutional matter, and as a matter of rule interpretation, these rules do nothing to preclude either a presentation of appropriate legal arguments or a meaningful appeal.
CONCLUSION
¶20 We find Petitioners' challenges to the constitutionality of the rules governing child welfare appeals to be unpersuasive. While we acknowledge that the expedited procedures outlined in the rules impose certain burdens on appellants to meet shorter deadlines and page limits, those restrictions are consistent with the policy of providing children and parents with swifter resolution and permanency in their family relations. There is nothing in the rules that precludes an appellant from presenting cogent, concise legal arguments to an appellate court or that precludes a meaningful appeal. We thus affirm the decisions of the court of appeals.
¶21 Chief Justice Durham, Justice Durrant, Justice Parrish, and Justice Nehring concur in Associate Chief Justice Wilkins' opinion.
NOTES
[1] "The Supreme Court shall adopt rules of procedure . . . and shall by rule manage the appellate process." Utah Const. art. VIII, § 4.
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53 So.3d 814 (2010)
Christine LANG, Appellant/Cross-Appellee
v.
MISSISSIPPI BAPTIST MEDICAL CENTER and Reciprocal of America (Mississippi Insurance Guaranty Association a/k/a "MIGA"), Appellees/Cross-Appellants.
No. 2009-WC-01540-COA.
Court of Appeals of Mississippi.
November 2, 2010.
*815 John Hunter Stevens, Jackson, attorney for appellant.
Douglas R. Duke, Jackson, attorney for appellees.
Before KING, C.J., GRIFFIS and ISHEE, JJ.
ISHEE, J., for the Court:
¶ 1. Christine Lang, a long-term licensed practical nurse (LPN), was injured on the job at Baptist Medical Center (Baptist) in Jackson, Mississippi, and the Mississippi Workers' Compensation Commission (Commission) awarded her temporary total disability benefits, found that she suffered a 20% diminishment of her wage-earning capacity, and awarded her permanent partial disability benefits. Baptist and Baptist's insurance carrier, Reciprocal of America, (collectively, the employer and carrier), along with Lang, appealed the Commission's order to the Circuit Court for the First Judicial District of Hinds County, which affirmed the Commission's decision. Lang and the employer and carrier now appeal to this Court. Lang seeks to have the more generous ruling of the administrative judge (AJ) restored, claiming the Commission's decision was not supported by substantial evidence. The employer and carrier base their appeal primarily on their position that the Commission should not have ordered permanent partial disability benefits after finding that Lang had not made the required work-search effort to return to work. They also argue Lang did not sustain an on-the-job injury.
¶ 2. Finding no error, we affirm.
FACTS
¶ 3. In 1979, after earning her GED and an LPN, Lang began her employment with Baptist and continually worked there until she was disabled in 2002. Lang, who was fifty-two years old at the time of the accident, was earning a wage of $641 per week when the subject accident occurred. Lang stated that prior to the accident, it was her intention to work three more years at Baptist and take early retirement at age fifty-five.
¶ 4. Lang testified that on January 31, 2002, she was assisting a 300-pound patient who was awaiting a procedure at Baptist. The patient was scheduled to be next in line for the procedure, but suddenly, the patient needed to use the restroom and required assistance. Lang said Baptist *816 had a lift team, but it sometimes took them an hour to respond to a call. Accordingly, she decided to take the patient to the restroom so the patient would not lose her place in the treatment line. Lang said she asked the patient how many people usually helped her to the bathroom. The patient replied that only one person usually assisted her, and Lang stated that she believed the patient was being truthful.
¶ 5. Lang took the patient to the restroom and was assisting the patient in undressing when the patient lost her balance and fell onto Lang's shoulder. Lang said she heard her back pop after the patient landed on her. Lang testified that at first she did not realize that she had been injured because she felt no immediate pain. However, she did fill out a report regarding the injury and noted that her back had popped when the patient landed on her shoulder.[1]
¶ 6. After the 2002 accident, Lang eventually experienced lower-back pain from the initial shoulder injury. She was seen by Dr. John Neill[2] who tried conservative treatment, removing her from work for several days and giving her pain medication. Dr. Neill testified that Lang had leg and back pain which could have been caused by the work accident. In Dr. Neill's deposition, he stated: "I think that her statements that she was lifting a 300-pound patient and had back pain develop after that with radiation into her legs, I think it is perfectly reasonable and true to say that an event like that could precipitate [her injuries]."
¶ 7. Receiving no relief, Lang was referred to another doctor who gave her three steroid pain injections. When the injections did not relieve her pain, she was referred to Dr. Rahul Vohra in March 2003. Dr. Vohra, a physician who specializes in physical medicine and rehabilitation, diagnosed Lang's pain as originating from lumbar spasms with a decreased lumbar range of motion, tenderness over her sacroiliac joints, and some age-related spondylosis. He placed her on medication and ordered her to participate in physical therapy, which she did. Dr. Vohra continued *817 to treat her once every three months for pain-medication management. A functional-capacity evaluation was performed on Lang, which Dr. Vohra testified showed that she needed to be restricted to sedentary light duty work. Dr. Vohra testified that light duty meant she could lift only up to twenty pounds, could kneel frequently, could crouch occasionally, and would be able to sit and stand for up to thirty minutes at a time. He said she reached maximum medical improvement on July 28, 2003, and he assigned a 5% permanent partial medical impairment to the body as a whole. Other medical proof came from a pain-management anesthesiologist who testified by affidavit that upon examination, he diagnosed Lang with bilateral radicular pain, but since Lang had received several steroid injections with little success, he did not perform any more injections. At the time of the hearing before the Commission in January 2007, Lang was still being treated by Dr. Vohra every month for pain management, and she was taking a variety of medications.
¶ 8. The testimony conflicted regarding Lang's attempt to regain her former job. Lang testified that after reaching maximum medical improvement, she went back to Baptist in the summer of 2003 and interviewed with her former supervisor, Libby Lampley, who knew Lang for most of her working years. Lang testified that Lampley reviewed her restrictions and told her that Baptist did not have any employment for her at that time. Lang said she never heard from Baptist again. However, Lampley testified that when Lang was interviewed, Lampley reviewed Lang's restrictions and made her the offer of her former job at the same salary, stating that Baptist would "be glad to work with her in any way [it] could" regarding her restrictions of sitting and standing. However, Lampley stated that Lang turned down the offer. The net result of both testimonies is that Lampley offered Lang her job back at Baptist with modifications included for Lang's injuries, but Lang declined the offer because she could not sit or stand for any length of time without discomfort.
¶ 9. A vocational rehabilitation professional, Jennifer Oubre, was hired by the employer and carrier to assist Lang in finding employment. Oubre testified regarding her job-search efforts on behalf of Lang. She stated that during a three-year period she found sixteen jobs with eight employers which fit Lang's qualifications and restrictions. She provided this information to Lang through Lang's attorney. It was Oubre's opinion that Lang had not made a reasonable effort to find employment. However, it was Lang's testimony that she applied for every job that Oubre had referred to her. Lang said she had one job offer from the University of Mississippi Medical Center for a full-time LPN, but after she told the employer of her restrictions, the offer was withdrawn. On cross-examination, Oubre admitted that in formulating her opinion about Lang's lacking job-search efforts, she did not take into account approximately fifty jobs which Lang had applied for on her own without the assistance of Oubre.
¶ 10. The AJ found that Lang had incurred a compensable work-related injury as a result of the January 31, 2002, incident. Further, the AJ ruled Lang had suffered a 50% loss of wage-earning capacity and awarded indemnity and medical benefits. The AJ ordered the employer and carrier to pay temporary total disability benefits in the amount of $322.90 per week commencing on January 31, 2002, until July 28, 2003, and permanent partial disability benefits in the amount of $213.68 per week beginning July 23, 2003, and concluding after the statutory maximum of 450 weeks. The employer and carrier *818 were given credit for all the wages and benefits already paid to Lang.
¶ 11. The employer and carrier appealed to the Commission, which upheld the AJ's finding of compensability for the injury, as well as the award of temporary total disability benefits and payment for the medical treatment. However, the Commission reduced Lang's loss of wage-earning capacity from the AJ's determination of 50% to 20% after finding that Lang's job-search efforts were "limited in both time and in scope." However, the Commission recognized that as a result of the injury, Lang had lost some of the functions necessary "to carry out 100% of her previous duties as an LPN." Further, the Commission credited Lang's twenty-three years of employment as an LPN with Baptist and noted that she continues to suffer from chronic pain for which she takes medications that have a sedating effect. The Commission reduced the amount of the benefit and ordered the employer and carrier to pay permanent partial disability benefits in the amount of $85.47 per week beginning on July 29, 2003, and continuing for 450 weeks. In the meantime, Lang began receiving social-security disability benefits.
¶ 12. After the circuit court upheld the Commission's decision, both Lang and the employer and carrier appealed to the Mississippi Supreme Court which deflected the appeal to this Court.
I. Lang's Appeal
¶ 13. Lang raises three issues on appeal:
1. Whether the Commission's decision is contrary to law and against the overwhelming weight of the evidence.
2. Whether the Commission erred in failing to award disability benefits and in failing to affirm the AJ's order.
3. Whether the Commission's decision is against the intent and purpose of the Workers' Compensation Act inasmuch as it ignores the liberal construction in favor of compensation.
II. The Employer and Carrier's Cross-Appeal
¶ 14. The employer and carrier raise two issues on cross-appeal:
1. Whether the claimant made reasonable attempts at employment following her reaching maximum medical improvement.
2. Whether the claimant's condition is related to a work-related injury.
STANDARD OF REVIEW
¶ 15. Our analysis begins by noting our limited standard of review in workers' compensation appeals. The Commission is the fact-finder in a workers' compensation case. Lott v. Hudspeth Ctr., 26 So.3d 1044, 1048 (¶ 12) (Miss.2010). An appellate court will overturn the Commission's decision only for an error of law or an unsupported finding of fact. Total Transp., Inc. of Miss. v. Shores, 968 So.2d 400, 403-04 (¶ 15) (Miss.2007). Reversal is proper only when a Commission's decision is not based on substantial evidence, or it is based on an erroneous application of the law. Smith v. Jackson Constr. Co., 607 So.2d 1119, 1124 (Miss.1992). Our duty on appeal is to determine if there is a quantum of credible evidence that supports the Commission's decision. Id. However, "[we] will reverse when the findings of the Commission are based on a mere scintilla of evidence that goes against the overwhelming weight of evidence." DiGrazia v. Park Place Entm't, 914 So.2d 1232, 1236 (¶ 8) (Miss.Ct.App.2005) (citing Johnson v. *819 Ferguson, 435 So.2d 1191, 1194-95 (Miss. 1983)).
DISCUSSION
I. Wage-Earning Capacity
¶ 16. The crux of Lang's appeal is that the AJ was correct when she found that Lang had sustained a 50% loss of wage-earning capacity as a result of the injury and that the Commission erred by lowering the loss of wage-earning capacity to 20%. Lang argues the Commission indiscriminately created the 20% figure and had no basis for making such an award. Lang argues the jobs that Oubre, the vocational therapist, presented to Lang averaged $7.48 an hour or roughly $300 per forty-hour work week. Lang argues that roughly $300 per week represents a loss in her wages of more than 50%-53.3%, to be exact. Lang further argues that Oubre failed to find any jobs for Lang which were anywhere near the $12.82 per-hour wage or 20% loss of wage-earning capacity to which the Commission found she was entitled. Lang testified that she applied for all of the jobs presented to her by Oubre, but she was not hired for any of them. The only authority Lang cites in support of her position are cases for the general proposition that doubtful workers' compensation cases should be resolved in favor of compensation to satisfy the beneficial and remedial purpose of the workers' compensation law. See, e.g., Big "2" Engine Rebuilders v. Freeman, 379 So.2d 888, 889-890 (Miss.1980).
¶ 17. The employer and carrier on cross-appeal claim it was error for the Commission to award Lang permanent partial benefits because it found she had failed to make reasonable efforts to find employment following her release at maximum medical improvement. Since Lang's issue and the employer and carrier's issue are interrelated, we will address them together.
¶ 18. Disability, for purposes of workers' compensation cases, is defined as "incapacity because of injury to earn the wages which the employee was receiving at the time of injury in the same or other employment, which incapacity and extent thereof must be supported by medical findings." Miss.Code Ann. § 71-3-3(i) (Rev. 2000). The Commission's determination of disability involves a finding of fact; thus, the appellate court uses the "substantial evidence" standard of review. Ga. Pac. Corp. v. Taplin, 586 So.2d 823, 828 (Miss. 1991). "A conclusion that the employee is disabled rests on a finding that the claimant could not obtain work in similar or other jobs and that the claimant's unemployability was due to the injury in question." Id. (citing V. Dunn, Mississippi Workmen's Compensation § 72.1 (3d ed.1982)). The claimant has the burden of proof to make out a prima facie case of disability by showing she made a reasonable effort to find other employment. Id. When this is done, the focus shifts to the question of whether the effort was reasonable under the prevailing circumstances. Id. The employer then assumes the burden to rebut or refute the claimant's evidence by proving that the claimant's job-search efforts were a "mere sham or [an] unreasonable effort." Id.
¶ 19. Thus, the claimant must show there has been a diminishment in her wage-earning capacity. Lott, 26 So.3d at 1049 (¶ 16). From the earliest interpretations of workers' compensation law, the supreme court has avoided the comparison of actual earnings before the injury to post-injury earnings as a means to determine wage-earning capacity. Karr v. Armstrong Tire & Rubber Co., 216 Miss. 132, 137, 61 So.2d 789, 791 (1953). "Our statute does not test the earning *820 capacity by the comparative wages received by [an] applicant before and after the injury. It is not a comparison of actual wage with actual wage." Id. Instead the amount of the benefit is figured on a percentage of the claimant's weekly wages at the time of the injury as compared to her wage-earning capacity in similar or other jobs thereafter. Id. In determining the "reasonableness" of a claimant's efforts in seeking employment, the following are considered: "job availability, economics of the community, the claimant's skills and background, and the nature of the disability." Lott, 26 So.3d at 1049 (¶ 15). Said another way, the factors which are considered in determining loss of wage-earning capacity include "the amount of education and training which the claimant has had, his inability to work, his failure to be hired elsewhere, the continuance of pain, and any other related circumstances." McGowan v. Orleans Furniture Inc., 586 So.2d 163, 167 (Miss.1991). "In other words, the determination should be made only after considering the evidence as a whole." Id. With these principles in mind, we turn to the facts of Lang's appeal.
¶ 20. The Commission found that Lang's job-search efforts were limited, but it decided in her favor based upon the extent that the on-the-job injury had on her wage-earning capacity. The Commission said that Lang could no longer expect to earn her pre-injury wage of $641 per week because the pre-injury wage resulted from the fact that she was a twenty-three-year employee of Baptist. The Commission noted the difficulty Lang would have in obtaining employment "starting anew in the labor market at her age, with a GED and an LPN license, and [with the] restrictions which limit her to light[-]duty [work]."
¶ 21. As to the requirement of continuing pain, the Commission said Lang's testimony provided credibility that she continues to suffer with chronic back pain, for which she takes pain medication that often has a sedating effect. The Commission took notice of the fact that Lang had rejected her old job when it was offered to her in the summer of 2003 at the same pay and with the employer willing to make accommodations. Lang's former supervisor, Lampley, testified that she told Lang, after reviewing her restrictions, that Baptist would accommodate those restrictions when required and that Lang would be rehired at her former pay. However, Lang told Lampley she did not think she was physically able to do her old job. The Commission found that Lang had testified "credibly" that her condition at the time prevented her from assuming her old job duties. Lang said, at that time, her pain was not under control, and she had extreme difficulty walking through the hallways or sitting or standing for any length of time. Lampley, who had testified earlier that she had known Lang for some time and that Lang was a quality LPN, testified that she observed that Lang was uncomfortable sitting and standing.
¶ 22. Lang made an effort to find other employment. The record shows she applied with twenty-four employers for thirty jobs, and she was registered with the job-seeker services of the Mississippi Department of Employment Security, but she had no success. While Lang made some effort to find other employment, the Commission, as the fact-finder, found that her efforts were insufficient to warrant a 50% loss of wage-earning capacity and reduced the figure to 20%. The Commission, thus, cut the amount of the benefit and ordered that Lang be paid permanent partial disability benefits in the amount of $85.47 per week from July 29, 2003, and continuing for a period of 450 weeks. The Commission *821 applied the factors of wage-earning capacity by reviewing Lang's education and training as an LPN and her inability to work and be hired elsewhere and noted that she had continuing pain which required her to take strong pain medications, which had a sedating effect upon her. When the Commission considered this evidence as a whole, it found only a 20% diminishment in wage-earning capacity. We find the Commission's decision on this issue is supported by substantial evidence and that the Commission correctly applied the law. Therefore, we find no error regarding this issue on direct or cross-appeal.
II. Work-Related Injury
¶ 23. Lang's and the employer and carrier's other arguments are essentially the same and ask us to determine if there was substantial evidence to support the finding that Lang had suffered an on-the-job injury. The employer and carrier claim Lang failed to prove that her injury was the result of the patient falling on her and causing her back to pop. We find this argument without merit.
¶ 24. Workers' compensation benefits shall be payable for a disability from an injury "arising out of and in the course of employment, without regard to fault as to the cause of the injury." Miss.Code Ann. § 71-3-7 (Rev.2000). For the disability to be compensable, it must arise out of and in the course of employment. Miss.Code Ann. § 71-3-3(b) (Rev.2000). Thus, we must determine if substantial evidence supports a finding that Lang's claimed disability is work-related. The supreme court stated:
The words ... used in the statute: "arising out of and in the course of" have been held to present an inquiry whether the risk which has given rise to the injury is "reasonably incident to the employment," not whether the work was the proximate cause of the injury. The injury arises out of and in the course of the employment if the employment aggravates, accelerates, or contributes to the disability as opposed to being the sole or principal cause.
Fought v. Stuart C. Irby Co., 523 So.2d 314, 318 (Miss.1988) (internal citations omitted).
¶ 25. The evidence shows that Lang heard her back pop after a patient fell on her shoulder while she was assisting the patient to use the restroom. Although she did not immediately experience pain, she did realize the seriousness of the blow and filed an incident report with her supervisor. Gradually, she began experiencing back and leg pain. She returned to Dr. Neill, the neurosurgeon who had performed a previous back surgery on her in 2001. He prescribed rest and pain medications, which did not help. She was then referred to Dr. Vohra, another pain-management specialist, who diagnosed her with lumbar spasms and a decreased lumbar range of motion. He had her perform a functional-capacity test, which showed she should restrict her work to sedentary light-duty work. Dr. Neill was asked by the attorney for the employer and carrier if he could make a causal relationship between Lang's injuries and the incident wherein a patient had landed on Lang's shoulder. Dr. Neill replied:
I don't know and have no way to say that it's not related to her injury in January. I can only take what the patient says as to how this all started. She certainly has a degenerative disk and other reasons she could have back pain, and they are playing a part in this. But is her disabling problem, was it triggered by this injury in January? She says it was. I don't have any way to dispute that.
*822 ¶ 26. On cross-examination, Dr. Neill was asked within a reasonable degree of medical probability if he would concur with the association of the event and the onset of Lang's symptoms. He replied:
I have no reason on the basis of my history and exam to dispute anything that she says. Was there an event that occurred at work? Only Ms. Lang knows. I don't know. But I have nothingI can't sit here and say this didn't happen. And an event like that, with her back, with her degenerative disk disease and other changes, could certainly precipitate a pain like this.
¶ 27. Dr. Vohra treated her for months with physical therapy and pain-medication management and was still managing her pain at the time of the hearing before the Commission in January 2007.
¶ 28. Dr. Vohra was questioned by Lang's counsel as follows:
Q. Dr. Vohra, was the history obtained by you from Ms. Lang and the injury mechanism consistent with your diagnosis?
A. Yes, sir.
Q. Based upon the history and the injury of mechanism, would you state that your diagnosis was caused or aggravated or accelerated by the lifting incident within a reasonable degree of medical probability?
A. Based on the history, yes, sir.
A claimant does not have to prove with absolute medical certainty that her work-related injuries were the cause of her disability. The medical evidence is sufficient if it supports, even if it does not fully prove, a finding of disability. The Mississippi Supreme Court has held that "disability need not be proved by medical testimony as long as there is medical testimony which will support a finding of disability." Hall of Miss., Inc. v. Green, 467 So.2d 935, 938 (Miss.1985).
¶ 29. A medical doctor will rarely, if ever, be able to confirm as a witness that an on-the-job injury happened to a claimant in the manner the claimant states. The doctor will not be present at the time of injury. Instead what the doctor's testimony does is confirm that the injury, which he has diagnosed the patient with, is consistent with the trauma the patient has described to the physician.
¶ 30. Both of Lang's doctors testified that Lang's injuries were consistent with the injury she described wherein the patient fell onto her shoulder, her back popped, and pain occurred afterwards in her hip, leg, and back. The employer and carrier offered no medical testimony to prove otherwise. Therefore, we find substantial support for the Commission's decision that Lang suffered an accident on the job which caused her to have a compensable disability. Thus, there is no merit to this assignment of error.
¶ 31. THE JUDGMENT OF THE CIRCUIT COURT OF HINDS COUNTY IS AFFIRMED ON DIRECT AND CROSS-APPEAL. ALL COSTS OF THIS APPEAL ARE ASSESSED ONE-HALF TO THE APPELLANT/CROSS-APPELLEE AND ONE-HALF TO THE APPELLEES/CROSS-APPELLANTS.
KING, C.J., LEE AND MYERS, P.JJ., IRVING, GRIFFIS, BARNES, ROBERTS, CARLTON AND MAXWELL, JJ., CONCUR.
NOTES
[1] The employer lost this documented report. Lang completed another copy relaying how she suffered leg and back injuries after the patient fell on her shoulder. The employer and carrier investigated and accepted the claim as compensable and paid temporary disability benefits from May 13, 2002, to February 24, 2004. Lang's medical treatment bills were also paid by the carrier.
[2] In the AJ's decision portion of her Summary and Evaluation of Relevant Evidence, the AJ states that after the injury from the falling patient, Lang "underwent surgery by the esteemed neurosurgeon, John Chalmers Neill." This is an erroneous statement of fact. Dr. Neill performed a previous back surgery on Lang in June 2001, several months before she suffered the on-the-job injury that is at issue in this case. Lang stated that the back surgery was not related to her work and that she was released to go back to work without restrictions. She testified that she had no problems doing her job until the subject accident, when the patient fell on her. The testimony of Lang and Dr. Neill was that she sought his help with the injury at issue and that he tried conservative treatment by removing her from work and giving her pain medication, which proved unsuccessful. The Commission did not directly correct the factual error of the AJ, but instead, the Commission described Lang's treatment in a way that corrected the error. The Commission stated in part: "The Claimant in this matter sustained a compensable back injury on or about January 31, 2002. . . . She was treated by Dr. John Neill, Dr. Rahul Vohra, and others, and was placed at maximum medical improvement by Dr. Vohra on July 28, 2003[,] with a 5% function impairment rating." While Lang was treated by Dr. Neill for the injury in question, he did not perform surgery as a result of the injury in question, and the Commission's decision corrects the earlier misstatement of facts by the AJ.
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148 P.3d 1098 (2006)
STATE of Washington, Respondent,
v.
Tyler PARKS, Appellant.
No. 56220-7-I.
Court of Appeals of Washington, Division 1.
December 18, 2006.
*1099 Gregory Charles Link, Washington Appellate Project, Attorney at Law, Seattle, WA, for Appellant.
Tyler Joseph Parks, Marysville, WA, pro se.
Mary Kathleen Webber, Snohomish County Prosecutors Office, Everett, WA, for Respondent.
BECKER. J.
¶ 1 Tyler Parks failed to appear as promised at a scheduled hearing in municipal court on the charge of minor in possession of alcohol. The court ordered the issuance of a bench warrant for his arrest. During a search incident to the arrest on the bench warrant, the police found cocaine in his pocket. Parks was convicted of possession of a controlled substance after an unsuccessful motion to suppress. Because the record does not show that a court ever found probable cause to support the underlying offense, the bench warrant for his arrest was invalid and the fruits of the search incident to arrest should have been suppressed. The conviction is reversed.
¶ 2 According to the records of the Marysville Municipal Court, Tyler Parks was cited for minor in possession of alcohol, a gross misdemeanor, on January 5, 2003. Filing of the citation the next day initiated the case. The docket shows that Parks, appearing pro se, was arraigned on the charge at a hearing on January 14, 2003. He pled not guilty and waived his right to a jury trial.
¶ 3 At a scheduled pre-trial hearing, Parks confirmed that the case was set for a March 24 trial date. He failed to appear for trial on March 24. The municipal court ordered a bench warrant for failure to appear and set bail at $1,000. Parks was informed of the warrant by telephone. The next day, he came to the clerk's counter and signed a promise to appear on April 1, 2003, for a show cause hearing on the outstanding warrant. When he appeared on April 1, the case was reset for a pre-trial hearing on May 12 and a bench trial on May 19. The bench warrant was recalled.
¶ 4 Parks failed to appear for the May 12 hearing and the process repeated itself. Over the next year, there were several more occasions when Parks failed to appear despite new bench warrants, new bail settings, new promises to appear, and recalling of the warrants. New dates for a pre-trial hearing and trial were set at least three more times.
¶ 5 Finally, when Parks failed to appear on January 12, 2004, for a scheduled pre-trial hearing, the court ordered a no recall bench warrant for failure to appear and set bail at $5,000. The municipal court docket shows no further activity on the case for almost a year. Then, on November 23, 2004, Parks was arrested on the warrant. The arrest occurred when a police officer responded to a report of a fight in front of a residence. At the scene the officer detained Parks, checked his driver's license, discovered the Marysville bench warrant, and took Parks into custody. A search incident to arrest turned up cocaine in his pocket.
¶ 6 Charged in superior court with felony possession, Parks moved to suppress. He *1100 argued that the police lacked authority to arrest and search him on November 23, 2004. According to Parks, the bench warrant was invalid because there had never been a judicial determination of probable cause on the underlying charge of minor in possession. Counsel for Parks stated that in her experience, some district courts made it a practice to find probable cause on the underlying charge, but Marysville Municipal Court did not. The State responded that the warrant was valid because it was issued under CrRLJ 2.5, a rule that authorizes issuance of a bench warrant for a defendant who fails to appear after promising to do so or otherwise having notice to appear. The rule does not explicitly require a finding of probable cause preliminary to issuance of a bench warrant for failure to appear:
The court may order the issuance of a bench warrant for the arrest of any defendant who has failed to appear before the court, either in person or by a lawyer, in answer to a citation and notice, or an order of the court, upon which the defendant has promised in writing to appear, or of which the defendant has otherwise received notice to appear, if the sentence for the offense charged may include confinement in jail.
CrRLJ 2.5.
¶ 7 The superior court judge observed that "the lower courts are somewhat inconsistent on how they procedurally do this" and recalled her own experience in a lower court "where it was our policy to make a finding of probable cause before the issuance of warrants." While expressing a belief that "the best practice for a lower court is to make a finding of probable cause prior to the issuance of a warrant", the court nevertheless agreed with the State that CrRLJ 2.5 was the controlling rule and its requisites had been satisfied.[1] The court denied the motion to suppress and convicted Parks of cocaine possession on stipulated facts. Parks appeals.
¶ 8 The State does not dispute that if the warrant was invalid, the motion to suppress should have been granted. Therefore, our analysis is limited to a single question: Did the municipal court, at some point, have to make a finding of probable cause on the underlying minor in possession charge in order to issue a valid bench warrant for failure to appear? We answer "yes" to that question.
¶ 9 The United States Constitution commands that "no warrants shall issue, but upon probable cause, supported by oath or affirmation". U.S. Const. amend. IV.
¶ 10 It is undisputed that the municipal court did not make a finding of probable cause on the underlying charge at any time during the two years preceding the issuance of the bench warrant. The prosecutor conceded as much below: "there doesn't seem to be any indication that there was ever a specific probable cause finding made by a judge regarding the underlying charge, but the State's argument is that that's not required."[2]
¶ 11 One basis for the State's argument that a judicial finding of probable cause was not required is State v. Walker, 101 Wash. App. 1, 11, 999 P.2d 1296 (2000). The State relies on our language in Walker to the effect that CrRLJ 2.5 can supply the "authority of law" required by Art. I, § 7 of the state constitution as a prerequisite for the invasion of privacy that occurs when an arrest warrant is served. As in Walker, the State here offers CrRLJ 2.5 as a source of lawful authority for the issuance of the bench warrant. But while the facts of Walker are similar to our case, the issue there did not turn on the probable cause requirement of the Fourth Amendment. The arrest warrant in Walker for failure to appear had been issued by a clerk who rubber-stamped a court commissioner's facsimile signature on the warrant's signature line. The narrow holding was that CrRLJ 2.5 does not authorize a clerk to issue such a warrant without judicial participation; the word "court" means judge or commissioner. Walker does not address the Fourth Amendment issue we face whether a warrant, even one that nominally satisfies *1101 CrRLJ 2.5, is invalid if there has never been a judicial finding of probable cause on the underlying charge.
¶ 12 Below, the State acknowledged the Constitutional requirement for probable cause before an arrest, and argued the requirement was satisfied because the issuing court obviously had probable cause to believe the defendant had failed to appear. But failure to appear is not a crime. Walker, 101 Wash.App. at 6, 999 P.2d 1296. Probable cause for arrest as it is normally understood is defined in terms of circumstances sufficient to warrant a prudent person in believing that the suspect had committed or was committing a crime. See, e.g., Gerstein v. Pugh, 420 U.S. 103, 111, 95 S. Ct. 854, 43 L. Ed. 2d 54 (1974). "An arrest warrant is issued by a magistrate upon a showing that probable cause exists to believe that the subject of the warrant has committed an offense and thus the warrant primarily serves to protect an individual from an unreasonable seizure." Steagald v. United States, 451 U.S. 204, 213, 101 S. Ct. 1642, 68 L. Ed. 2d 38 (1981).
¶ 13 On appeal, the State does not contend that probable cause in the context of this case means anything other than cause to believe the subject of the warrant has committed a crime. Having abandoned the argument that it is enough to show probable cause for failing to appear, the State now argues that under CrRLJ 2.2, a probable cause finding as to the underlying charge would have already been made at an earlier point in the history of the case and therefore, the Municipal Court did need to not make a new finding of probable cause at the time the bench warrant was issued.
¶ 14 We agree with the State that if in fact there had been an earlier probable cause finding as to the minor in possession charge against Parks, it would not be necessary for the court to make a new finding of probable cause to support issuance of a bench warrant for Parks' failure to appear. In fact, according to comments of the task force that drafted the present rules for courts of limited jurisdiction in 1987, the task force explicitly denominated the warrant referred to in CrRLJ 2.5 as a "bench warrant" in order to eliminate the need for an affidavit of probable cause. "Thus, failure to appear after signing a promise to appear would in itself be a sufficient basis for issuance of the warrant." 4B Karl B. Tegland, Washington Practice: Rules Practice, CrRLJ 2.5, task force cmt. at 447 (6th ed.2002).
¶ 15 The problem here is that, as the State conceded in superior court, there simply is nothing in the record documenting an earlier finding of probable cause. Other rules do require a judicial determination of probable cause in situations that may arise at the beginning of a case. For example, the rules require a judicial determination of probable cause before a warrant of arrest can be issued upon an initial complaint, CrRLJ 2.2(a)(2), or upon a failure to appear in response to a summons issued in lieu of an arrest warrant, CrRLJ 2.2(c). Because Parks initially appeared in court voluntarily in response to an officer's citation, he was not in the situations covered by these sections of CrRLJ 2.2, and therefore we cannot infer that there must have been an earlier finding of probable cause. And in any event it is doubtful that without documentation of some kind we would infer that a probable cause finding was made earlier, merely on a showing that the rules required it to be made.
¶ 16 The State also argues that even if there never was a finding of probable cause to believe that Parks was guilty of the charged crime, the undisputed fact that he did not appear when he was supposed to automatically established probable cause to believe he was guilty of two other crimes, namely contempt or bail jumping. The face of the warrant undermines this claim, as it states "Failure to Appear for Hearing" as the reason for the issuance of the warrant. Further, just as the court's docket contains no record of a judicial finding of probable cause for the underlying charge, it also contains no record of a judicial finding of probable cause for contempt or bail jumping. And finally, the State's cursory argument has not demonstrated that Parks' breach of his promise to appear constituted probable cause to believe him guilty of contempt or bail jumping. There is no showing of a lawful court order that he disobeyed, the foundation *1102 for the crime of contempt. RCW 7.21.010(1)(b). Similarly, there is no showing that Parks was "released by court order or admitted to bail", as is required to establish the crime of bail jumping. RCW 9A.76.170(1). Parks could not have been released by court order or properly admitted to bail because there had never a judicial finding of probable cause on the underlying charge. When there has been no finding of probable cause, an accused must be released without conditions. CrRLJ 3.2.
¶ 17 Nothing in the comments of the task force suggest that the task force intended CrRLJ 2.5 to do away altogether with the fundamental necessity of probable cause as a prerequisite for authorizing the arrest of a person whose guilt has not yet been adjudicated. Taken as a whole, the criminal rules for the courts of limited jurisdiction are designed to enforce, not evade, the constitutional requirement that warrants shall not issue except upon probable cause. CrRLJ 2.5 must be interpreted in light of the constitutional command. There should have been a judicial finding of probable cause made on the record before the court attempted to force Parks to appear in court. We hold that making such a finding is not only a "best practice" but also a constitutional obligation of the issuing court.
¶ 18 Under CrRLJ 2.5, it is not necessary that a probable cause finding be made at the time of issuing the bench warrant. But the bench warrant will not be valid unless the record establishes that the court made a finding of probable cause at some earlier point in the history of the case.
¶ 19 Because in this case there was no judicial determination that probable cause existed to believe Parks guilty of the charge of minor in possession of alcohol, the bench warrant for his arrest should have been held invalid and the motion to suppress granted.
¶ 20 Reversed.
WE CONCUR: DWYER and BAKER, JJ.
NOTES
[1] Report of Proceedings, Motion to Suppress (March 18, 2005) at 14-15.
[2] Report of Proceedings at 8.
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351 S.W.3d 588 (2011)
PUBLIC UTILITY COMMISSION of Texas; Luminant Energy Company LLC f/k/a TXU Portfolio Management Company LP; Luminant Generation Company LLC f/k/a TXU Generation Company LP; City of Austin d/b/a Austin Energy; City of San Antonio d/b/a/ CPS Energy, Reliant Energy Power Supply, LLC; and Lower Colorado River Authority, Appellants,
v.
CONSTELLATION ENERGY COMMODITIES GROUP, INC., Appellee.
No. 03-09-00417-CV.
Court of Appeals of Texas, Austin.
September 28, 2011.
*590 Andy Perny, Division Chief, Assistant City Attorney, Nathan M. Bigbee, Assistant Attorney General, Environmental Protection & Administrative Law Division, Patrick J. Pearsall, Marnie A. McCormick, David C. Duggins, Duggins, Wren, Mann & Romero, L.L.P., Chad V. Seely, Corporate Counsel, Stephen H. Burger, Lower Colorado River Authority Manager, Legal Services, Cynthia Hayes, Assistant City Attorney Austin, TX, Kathleen M. Lavalle, Joshua A. Romero, Jackson Walker, L.L.P., Dallas, TX, Patricia Ann Garcia Escobedo, San Antonio, TX, Jonathan L. Heller, Associate General Counsel, Houston, TX, for Appellants.
Chris Reeder, Elizabeth G. (Heidi) Bloch, Brown McCarroll, L.L.P., Austin, TX, for Appellee.
Before Chief Justice JONES, Justices PURYEAR and PEMBERTON.
OPINION
DAVID PURYEAR, Justice.
On November 14, 2006, Constellation Energy Commodities Group, Inc. ("Constellation") filed a complaint with the Public Utility Commission of Texas ("the Commission") against the Electric Reliability Council of Texas ("ERCOT") alleging that two of ERCOT's protocols[1] were contradictory and inconsistent and that ERCOT had improperly assessed charges against Constellation from April 10, 2006, to September 27, 2006, using the inconsistent protocols. Luminant Energy Company *591 LLC f/k/a TXU Portfolio Management Company LP and Luminant Generation Company LLC f/k/a TXU Generation Company LP ("Luminant"), as well as City of Austin d/b/a Austin Energy, City of San Antonio d/b/a CPS Energy, Reliant Energy Power Supply, LLC, and Lower Colorado River Authority ("Joint Intervenors") intervened in the proceeding in support of ERCOT. After the Commission referred the case to the State Office of Administrative Hearings ("SOAH"), the administrative law judge ("ALJ") agreed with Constellation that the protocols in question were inconsistent and recommended the Commission require ERCOT to resettle the charges. The Commission rejected the ALJ's recommendation, determining instead that ERCOT had correctly settled the capacity insufficiency charges in accordance with the protocols then in effect. Constellation filed suit for judicial review in district court, which reversed the Commission's determination that ERCOT had correctly assessed the charges against Constellation. This appeal followed.
Luminant, the Joint Intervenors, and the Commission argue the district court erred by failing to defer to the Commission's construction of the protocols and its conclusion that ERCOT properly assessed charges. Luminant and the Joint Intervenors further contend Constellation's case is an impermissible collateral attack on a final Commission order. As a conditional cross-point, Constellation asserts ERCOT cannot assess an under-scheduling charge that is over and above its actual procurement costs.
For the reasons set forth below, we reverse the trial court's judgment and render judgment affirming the Commission's final order.
FACTUAL AND PROCEDURAL BACKGROUND
Since the implementation of retail choice in Texas in 2002, retail providers of electricity, in general, meet their customers' demand by entering into bilateral contracts with generation owners and power marketers. ERCOT is the independent organization the Commission has certified as responsible for, among other things, ensuring the reliability and adequacy of the electric grid, as well as establishing, scheduling, and overseeing transaction settlement procedures. See Tex. Util.Code Ann. § 39.151 (West 2007).
Under ERCOT rules ("protocols") in effect on the disputed trade days, a qualified scheduling entity ("QSE") on the retailer's behalf engaged in bilateral contracts with generation owners and power marketers and submitted a schedule to ERCOT demonstrating that its expected demand was equal to the amount of generation it had procured to meet that demand. When the QSE's scheduled demand exceeded its scheduled supply or when its actual demand exceeded the amount of generation it had procured, the QSE was "under scheduled." QSEs under scheduled for several reasons: inaccurate load forecasting, a change in real-time conditions, or a strategic decision to rely upon ERCOT as a Resource to cover a portion of a QSE's Load.[2]
*592 Consumption rarely matches generation exactly, so ERCOT's protocols authorized it to procure "ancillary service" to address actual or anticipated imbalances.[3] Ancillary services consist of various forms of "capacity"the commitment of generation resources to be available for production in a given operating periodand "energy" the real-time provision of electricity. When a QSE under scheduled, ERCOT obtained ancillary services to address anticipated generation shortfalls.
QSEs were permitted to schedule purchases of power from generators located far from the demand or Load scheduled by the QSE. When too many of those transactions occurred, transmission routes between major consumption centers could become "congested."[4] The most commonly congested transmission routes effectively determined geographic "zones," usually identified by ERCOT as the North, West, South, and Houston zones, which required separate balancing by ERCOT. Congestion also prevented some inter-zonal transactions from occurring, which obligated ERCOT to procure expensive power in the zone where the load was scheduled to ensure that sufficient electricity existed to meet demand. Thus, when a QSE submitted a schedule that was balanced on a system-wide basis but unbalanced within one or more zones, ERCOT still might have incurred costs for ancillary services to resolve that intra-zonal capacity imbalance.
One of the ancillary services ERCOT used to resolve projected imbalances was a form of capacity called "replacement reserve service" ("RPRS"), which required an owner of an off-line generation resource to make that unit available for ERCOT's use, if necessary, during a particular hour of market operation. ERCOT procured RPRS through a day-ahead auction for each operating hour, and winning bidders were paid the market-clearing price for electricity.
Different ERCOT protocols controlled the procurement, compensation, and settlement of RPRS. Section 6.6, entitled "Selection Methodology," governed ERCOT's acquisition of various ancillary services. See ERCOT Zonal Protocols § 6.6 (March 2006 Protocols Update 2, March 21, 2006), available at http://www.ercot.com/ mktrules/protocols/library/2006.[5] Section 6.6.3.2.1, "Specific Procurement Process Requirements for [RPRS] in the Adjustment Period" (hereinafter the "RPRS procurement protocol"), detailed the circumstances and process under which ERCOT obtained RPRS for each operating hour. See id. § 6.6.3.2.1. That protocol required ERCOT to procure RPRS to rectify capacity insufficiency, zonal transmission congestion, and local transmission congestion.
Because it costs a generator money to start up a unit and keep it running at the minimum level necessary to ensure that power could be delivered if customer load demanded more energy, ERCOT's procurement of RPRS capacity resulted in costs, regardless of whether any energy from the committed Resource was actually *593 sold on the market. Even though a QSE submitted a schedule that was balanced on a system-wide basis, ERCOT may also have incurred costs if the schedule was imbalanced within one or more zones. Those costs occurred because, to balance a particular zone, ERCOT may have procured power from a generator within that zone that was more expensive than if a generator from outside the zone had been utilized. If ERCOT procured RPRS, it made a payment to the QSE providing the service according to the methods and formulas specified in section 6.8, "Compensation for Services Provided." See id. § 6.8.
Section 6.9, "Settlement for ERCOT-Provided Ancillary Services," contained the mathematical formulas ERCOT utilized to calculate RPRS settlement, that is, the charges ERCOT levied against the QSEs for procuring RPRS. See id. § 6.9. Protocol 6.9.2.1, entitled "Settlement for RPRS," set forth formulas for two different charges related to RPRS: an under-scheduling charge and an uplift charge. See id. §§ 6.9.2.1, 6.9.2.1.1, 6.9.2.1.2. Before being amended in October 2006, the formula set forth in section 6.9.2.1.1, entitled "Replacement Reserve Under-Scheduled Capacity" (hereinafter, the "RPRS under-scheduled settlement protocol"), required a direct assessment of charges to a QSE that scheduled short in any zone if ERCOT actually procured RPRS. See id. § 6.9.2.1.1. Although the formula sometimes resulted in an under-scheduling charge that was less than ERCOT's total RPRS procurement costs, often the charge was greater than the cost that ERCOT had incurred in procuring RPRS to remedy the projected capacity insufficiency. See id.
The second part of the RPRS settlement protocol, section 6.9.2.1.2 (entitled "Replacement Reserve Uplift Charge"), provided the formula that "uplifted" (or "socialized") any remaining RPRS costs (or any over-recovered balance) among all QSEs.[6]See id. § 6.9.2.1.2. The protocol calculated the uplift charge by (1) summing the costs of RPRS for local congestion, zonal congestion, and capacity insufficiency and then (2) subtracting out the payments received through the under-scheduling charge and the zonal congestion charge. See id. The remaining cost balance, whether positive or negative, was uplifted to all QSEs according to load-ratio share. The uplift charge formula provided that, whenever the total amount of under-scheduling charges in section 6.9.2.1.1 was less than ERCOT's costs for providing RPRS, the remaining costs were socialized among QSEs by load-ratio share. See id. Likewise, whenever the total amount of under-scheduling charges was greater than ERCOT's costs, the excess recovery was distributed among the QSEs by load-ratio share. See id.
ERCOT assessed under-scheduling charges of approximately $3.8 million against Constellation for the trade days in question, in accordance with the formula set forth in section 6.9.2.1.1. See id. § 6.9.2.1.1. Constellation disputed the charges. After ERCOT denied Constellation's complaint, Constellation appealed to the Commission, alleging that ERCOT had erroneously calculated the under-scheduling charges based on Constellation's zonal-capacity insufficiency instead of its system-wide shortfall. Constellation conceded that section 6.9.2.1.1 required calculation of under-scheduling charges on a zonal basis, but argued the RPRS procurement protocol (section 6.6.3.2.1) indicated that QSEs were intended to incur RPRS costs for capacity insufficiency only if they *594 were system-wide, not merely in a zone. See §§ 6.6.3.2.1, 6.9.2.1.1. Constellation proposed that, in order to calculate the "correct" charges, the Commission should ignore the RPRS under-scheduled settlement protocol (section 6.9.2.1.1) and uplift the cost of capacity insufficiency to the entire market on a load-ratio share basis as set forth in section 6.6.3.2.1(9) (the "uplift solution"). See id.
After the Commission referred the matter to SOAH, the ALJ granted summary disposition in Constellation's favor, agreeing that the under-scheduling charges should have been calculated using the uplift solution. The ALJ found that the RPRS procurement protocol (section 6.6.3.2.1) and the RPRS under-scheduled settlement protocol (section 6.9.2.1.1) were "inconsistent and contradictory" and that the RPRS procurement protocol should have been applied strictly as written, that is, the cost of allocation uplifted to all QSEs based on load-ratio share. The ALJ noted that, although ERCOT had made no mathematical errors in applying the formula set forth in the RPRS under-scheduled settlement protocol, "that formula was incorrectly written to charge RPRS capacity insufficiency costs on a zonal basis rather than on a Load Share [basis]" as the RPRS procurement protocol required. The ALJ recommended the Commission order ERCOT to resettle the contested trade days by uplifting on a load-ratio share basis the RPRS cost for capacity inadequacy as "all other costs" [sic] in subsection (9) of the RPRS procurement protocol, section 6.6.3.2.1. See id. § 6.6.3.2.1(9). Section 6.6.3.2.1(9) read as follows:
If all of the cost of RPRS is not allocated by one of the above methods, then the allocation will be uplifted to all QSEs based on the Load Ratio Share for the relevant period. If ERCOT collects more RPRS costs in this manner than are necessary, the excess funds collected by ERCOT will be credited to all QSEs based on the Load Ratio Share for the relevant period.
Id. § 6.6.3.2.1(9).
The Commission disagreed with the ALJ's analysis. It concluded the protocols were harmonious and not in conflict. It further stated that "ERCOT correctly settled the capacity insufficiency charges for the disputed operating dates in accordance with the Protocols then in effect and that no resettlement should occur." The Commission also determined that "ERCOT correctly applied the formula as written at that time and that a protocol revision request (PRR) was later utilized to modify the protocol to avoid the consequences of applying the zonal factor as the formula previously required."
Constellation sought judicial review. The district court found that the RPRS under-scheduled settlement protocol (section 6.9.2.1.1) and the RPRS procurement protocol (section 6.6.3.2.1) were in "irreconcilable conflict" and that the RPRS procurement protocol was the "special or specific Protocol that must be given controlling effect in this case." See id. §§ 6.6.3.2.1, 6.9.2.1.1. The court reversed the Commission's order, concluding that, because ERCOT did not give controlling effect to the RPRS procurement protocol but instead calculated Constellation's RPRS charges using the RPRS under-scheduled settlement protocol, ERCOT failed to correctly settle the RPRS charges. This appeal followed.
DISCUSSION
Commission's Interpretation of ERCOT Protocols
ERCOT protocols are rules that provide the framework for the administration *595 of the Texas electricity market. BP Chemicals, Inc. v. AEP Tex. Cent. Co., 198 S.W.3d 449, 452 (Tex.App.-Corpus Christi 2006, no pet.). ERCOT protocols, however, are subject to Commission oversight and review. Tex. Util.Code Ann. § 39.151(d); see also id. (g) (Commission must approve protocols and protocols must reflect Commission's input). An agency's interpretation of a rule becomes part of the rule itself and represents the view of the regulatory body that must administer it. H.G. Sledge, Inc. v. Prospective Inv. & Trading Co., 36 S.W.3d 597, 604 (Tex.App.-Austin 2000, pet. denied).
Statutory construction presents a question of law that we review de novo. State v. Shumake, 199 S.W.3d 279, 284 (Tex.2006). Because they have the force and effect of statutes, we construe administrative rules in the same manner as statutes. Rodriguez v. Service Lloyds Ins. Co., 997 S.W.2d 248, 254 (Tex.1999). "Unless the rule is ambiguous, we follow the rule's clear language." Shumake, 199 S.W.3d at 284.
We also must give "serious consideration" to the construction of a statute by the administrative agency charged with its enforcement. Railroad Comm'n v. Texas Citizens for a Safe Future & Clean Water, 336 S.W.3d 619, 624 (Tex.2011). In our "serious consideration inquiry," we will generally uphold an agency's interpretation of its own rules unless that interpretation is plainly erroneous or inconsistent with the text of the rule. See id. at 625.
The supreme court has observed that deference to an agency's interpretation is "tempered" by several considerations. See id. First, deference "applies to formal opinions adopted after formal proceedings, not isolated comments during a hearing or opinions [in a brief]." Id. (quoting Fiess v. State Farm Lloyds, 202 S.W.3d 744, 747 (Tex.2006). Second, the language at issue must be ambiguous. Fiess, 202 S.W.3d at 747. Third, the agency's construction must be reasonable. Id. at 747-48.
When a statutory scheme is subject to multiple understandings, that is, ambiguous, we must uphold the enforcing agency's construction of its statutory scheme if is reasonable and in harmony with the statute. See Texas Citizens, 336 S.W.3d at 629. This deference is particularly important in a complex regulatory scheme like the Public Utility Regulatory Act. See id. at 629-30.
Accordingly, we must determine whether the Commission's interpretation of the ERCOT protocols in question is plainly erroneous or inconsistent with the text of the protocols and defer to the Commission's construction of its regulatory scheme if is reasonable and in harmony with the statute.
The Commission, the Joint Intervenors, and Luminant (collectively, "appellants") assert the district court erred in rejecting the Commission's conclusion that ERCOT properly assessed RPRS under-scheduling charges to Constellation in accordance with the under-scheduled capacity formula set forth in section 6.9.2.1.1, the RPRS under-scheduled settlement protocol. See ERCOT Zonal Protocols § 6.9.2.1.1. Appellants contend the district court failed to give deference to the Commission's construction of the RPRS procurement protocol (section 6.6.3.2.1) and the RPRS under-scheduled settlement protocol, as well as the Commission's conclusion that the two protocols were not in conflict but were harmonious. See id. §§ 6.6.3.2.1, 6.9.2.1.1.
Contrary to Constellation's assertion that ERCOT erroneously calculated under-scheduling charges based on Constellation's zonal-capacity insufficiency instead of its system-wide shortfall and that the RPRS procurement protocol (section *596 6.6.3.2.1) indicated that QSEs were intended to incur RPRS costs for capacity insufficiency only if they were system-wide, Luminant argues the version of the RPRS under-scheduled settlement protocol in effect during the relevant market days required measurement of under-scheduling charges on a zonal, not on a system-wide, basis. See id. It asserts that no other ERCOT protocol addressed the imposition of charges to a QSE that under scheduled, either in a zone or otherwise.
Luminant contends that, contrary to what the district court found, the RPRS procurement protocol said nothing about the consequences to a QSE for under scheduling capacity in a zone. See id. § 6.6.3.2.1. The Joint Intervenors likewise argue that section 6.6.3.2.1 neither prohibited ERCOT from imposing under-scheduling charges, nor did that protocol even address the obligations of capacity-short QSEs. See id. Rather, Luminant contends, section 6.6.3.2.1 merely specified when and how ERCOT had to procure RPRS in the first place and summarized ERCOT's duty to uplift (or "socialize") any under- or over-collected RPRS costs. See id. Luminant argues that, because the under-scheduled capacity formula in section 6.9.2.1.1 was the only provision that specified the economic consequences of under scheduling capacity in a zone and that provision was clear and unambiguous, the district court erred in looking beyond the RPRS under-scheduled settlement protocol. See id. § 6.9.2.1.1.
The Commission also argues that the protocol that most specifically addressed the issue of the appropriate means of RPRS settlement was section 6.9.2.1.1. See id. Only the RPRS under-scheduled settlement protocol included the precise details of how RPRS settlement was to be carried out. Indeed, notes the Commission, section 6.9.2.1.1 contained three pages of equations and variables determining the method of settlement, compared with one sentence in subsection 9 in the RPRS procurement protocol.[7]See id. §§ 6.6.3.2.1(9), 6.9.2.1.1.
In response, Constellation asserts that the formula in section 6.9.2.1.1 conflicted with the RPRS procurement protocol. Constellation contends that, because subsection (9) of the RPRS procurement protocol (section 6.6.3.2.1) required an uplift of RPRS insufficiency costs on a load-ratio share basis, whereas the RPRS under-scheduled charge formula in section 6.9.2.1.1 directly assigned a charge to QSEs under-scheduled in any zone, the two protocols conflicted. See id.
However, the Joint Intervenors argue no inconsistency existed between ERCOT uplifting remaining RPRS costs on a load-ratio share basis and imposing a charge on capacity-short QSEs that had benefitted from under scheduling.[8] They contend that, because a distinction exists between "charges" and "costs," the district court failed to understand that the RPRS under-scheduled settlement protocol and the RPRS procurement protocol harmoniously *597 coexisted. The Joint Intervenors assert the RPRS settlement protocol, section 6.9.2.1, had two parts: section 6.9.2.1.1, which described and calculated under-scheduled capacity charges to capacity-short QSEs, charges not intended to match ERCOT's exact procurement costs; and section 6.9.2.1.2, which contained the uplift formula through which ERCOT's RPRS procurement costs and under-scheduled capacity charges were netted. See id. §§ 6.9.2.1, 6.9.2.1.1, 6.9.2.1.2.
Subpart 10 of section 6.3.1, entitled "ERCOT Responsibilities," read, in pertinent part, as follows: "ERCOT will not profit financially from the market." Id. § 6.3.1(10). Because that protocol required ERCOT to be a revenue-neutral entity, the Joint Intervenors point out that all costs and revenues had to be returned to market participants. They assert the formula in section 6.9.2.1.2 incorporated the RPRS procurement costs that ERCOT incurred and the RPRS under-scheduling charges that ERCOT collected. See id. § 6.9.2.1.2. The Joint Intervenors contend that, pursuant to the formula in section 6.9.2.1.2, ERCOT netted the cost of RPRS procurement with any RPRS under-scheduling charges collected, and the uplift charge to each QSE was calculated based on its own load-ratio share. See id. Thus, the uplift charge achieved the socialized distribution of excess costs or receipts referenced in subsection (9) of section 6.6.3.2.1, the RPRS procurement protocol. See id. §§ 6.6.3.2.1, 6.9.2.1.2.
We hold that the Commission's interpretation of section 6.9.2.1.1, the RPRS under-scheduled settlement protocol, was consistent with the protocol's plain language. See id. § 6.9.2.1.1. Section 6.9.2.1.1 specifically authorized ERCOT to impose under-scheduling charges on a QSE that scheduled short in any zone, and the Commission's order accurately concluded that ERCOT settled the capacity insufficiency charges assessed to Constellation in accordance with the text and formula set forth in section 6.9.2.1.1. See id.
We further hold the district court erred in finding that the RPRS procurement protocol and the RPRS under-scheduled settlement protocol were in irreconcilable conflict. See id. §§ 6.6.3.2.1, 6.9.2.1.1. As Luminant pointed out, the under-scheduling charge was based, in part, on the market clearing price for capacity ("MCPC") for insufficiency defined in subsection (6)(a) of the RPRS procurement protocol, which read as follows:
The marginal cost (Shadow Price of the power balance constraint) to solve system insufficiency defines MCPC for insufficiency.
Id. § 6.6.3.2.1(6)(a); see also § 2.1 (definition of "market clearing price for capacity"). The Commission in its order noted that "subsection (6) of Protocol § 6.6.3.2.1 [the RPRS procurement protocol] speaks to capacity insufficiencies and provides a factor for insufficiency that is included in the formula for calculating charges to under-scheduled [QSEs] on a zonal basis in Protocol [section 6.9.2.1.1]." See id. §§ 6.6.3.2.1, 6.9.2.1.1. The Commission thus harmonized the RPRS procurement protocol and the formula in the RPRS under-scheduled settlement protocol and concluded the protocols did not conflict. See id. Finding that the Commission's construction of this regulatory scheme is reasonable and in harmony with the statute, we hold the district court erred in failing to defer to the Commission's interpretation.
Finding that the Commission's order accurately concluded that ERCOT settled the capacity insufficiency charges assessed to Constellation in accordance with the text and formula set forth in section 6.9.2.1.1, the RPRS under-scheduled settlement *598 protocol, and that the RPRS procurement protocol and the RPRS under-scheduled settlement protocol did not conflict, we sustain appellants' first issue.
Having sustained appellants' first issue, we need not reach Luminant's and the Joint Intervenors' second issue.
Constellation's Cross-Point
The district court concluded that "[the Commission] and ERCOT did not act outside the scope of their statutory authority by overcharging for RPRS procurement." As a conditional cross-point, Constellation asserts that, if the court's conclusion is interpreted to mean that ERCOT had the authority to intentionally impose a charge over and above ERCOT's actual procurement costs, that conclusion is in error. Constellation argues ERCOT only had authority to charge QSEs for ERCOT's actual costs of procuring RPRS to resolve capacity insufficiency. It contends that the formula in the RPRS under-scheduled settlement protocol "cannot, as a matter of law, be interpreted to allow ERCOT to assess a charge over and above its actual costs." See id. § 6.9.2.1.1. We disagree.
As the Commission has noted, no statute, rule, or protocol demanded that ERCOT's under-scheduling charges correlate exactly with its costs in procuring RPRS. Although it often assessed an under-scheduling charge that was greater than its procurement costs, ERCOT retained no cost excess from the under-scheduling charge. Rather, as required by section 6.9.2.1.2, ERCOT uplifted any excess to the market, thus remaining revenue neutral as required by section 6.3.1(10). See id. §§ 6.3.1(10), 6.9.2.1.2. Constellation's cross-point is overruled.
CONCLUSION
Having sustained appellants' first issue, we reverse the district court's judgment and render judgment affirming the Commission's order that determined ERCOT had correctly assessed under-scheduling charges against Constellation for the period April 10, 2006, to September 27, 2006.
NOTES
[1] ERCOT protocols are rules that provide the framework for the administration of the Texas electricity market. BP Chemicals, Inc. v. AEP Tex. Cent. Co., 198 S.W.3d 449, 452 (Tex.App.-Corpus Christi 2006, no pet.).
[2] "Resource" is defined as "facilities capable of providing electrical energy or Load capable of reducing, or increasing the need for electrical energy or providing Ancillary Services to the ERCOT System, as described in Section 6, Ancillary Services. This includes Generation Resources and Loads acting as Resources." ERCOT Zonal Protocols § 2.1 (March 1, 2006), available at http://www.ercot.com/ mktrules/protocols/library/2006. "Load" is "the amount of electric power delivered at any specified point or points on a system." Id.
[3] "Ancillary services" are services "necessary to support the transmission of energy from Resources to Loads while maintaining reliable operation of transmission provider's transmission systems in accordance with Good Utility Practice." Id.
[4] "Congestion" is defined as "the situation that exists when requests for power transfers across a Transmission Facility element or set of elements, when netted, exceed the transfer capability of such elements." Id. Congestion can be either local (within a zone) or zonal (between two or more zones).
[5] All subsequent citations to section 6 of ERCOT Zonal Protocols, entitled "Ancillary Services," were effective March 21, 2006.
[6] "Uplift" is defined as "the process of allocating costs to QSEs based on Loads and exports within the ERCOT Region." ERCOT Zonal Protocols § 2.1 (March 1, 2006).
[7] "If all of the cost of RPRS is not allocated by one of the above methods, then the allocation will be uplifted to all QSEs based on the Load Ratio Share for the relevant period." ERCOT Zonal Protocols § 6.6.3.2.1(9).
[8] A QSE could decide if the economic benefit of likely achieving a lower price in the real-time market made under-scheduling worth its known risks, that is, under-scheduled charges. QSEs knew that, if other QSEs scheduled "long," that is, scheduled capacity in excess of what was required to meet their delivery obligations, ERCOT might not need to procure RPRS. And if ERCOT did not procure RPRS, then no under-scheduling charges would be assessed against those QSEs that intentionally scheduled less capacity than needed to meet their delivery obligations.
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362 S.W.3d 331 (2012)
Russell W. BURGIN, Movant,
v.
KENTUCKY BAR ASSOCIATION, Respondent.
No. 2011-SC-000778-KB.
Supreme Court of Kentucky.
March 22, 2012.
OPINION AND ORDER
Movant Russell Burgin, pursuant to SCR 3.480(2), moves this Court to enter an Order resolving the pending disciplinary proceedings against him (KBA File No. 18048) by imposing a 30-day suspension to be probated on the condition that he complies with certain conditions. This motion is the result of an agreement with Bar Counsel for the Kentucky Bar Association. For the following reasons, the motion is granted.
I. Background
Movant was admitted to the practice of law in the Commonwealth of Kentucky on May 1, 2001; his KBA member number is 88688. Movant's bar roster address is 1249 S. Main St., Suite 3, London, Kentucky 40741.
Damien Taylor hired Movant in August 2008 to represent him in a divorce proceeding. Movant was paid $3,000 for the representation, though no written fee agreement was entered into. Movant did not deposit the $3,000 into an escrow account.
Mr. Taylor's wife filed for divorce first and was awarded temporary sole custody of their children. Mr. Taylor asked Movant to take steps for Mr. Taylor to have access to his children, but Movant failed to do so.
Mr. Taylor believed Movant would appear with him at a child support hearing in October 2008, but Movant never appeared, and the hearing was held without Movant's presence. Movant admits in his motion that after the hearing, he "failed to diligently proceed with the matter and failed to adequately communicate with Mr. Taylor." The latter admission is shown by Movant's failure to respond to numerous attempts at contact by Mr. Taylor.
In March 2009, Mr. Taylor fired Movant. Nevertheless, Movant continued to add charges to Mr. Taylor's bill against the advance of $3,000. These charges involved no substantive work on Mr. Taylor's behalf and provided him with no substantial benefit. After Mr. Taylor made him aware of the continued billing after the termination of representation, Movant offered to refund $360 of the fee.
*332 Eventually, Mr. Taylor filed a bar complaint against Movant, which resulted in a five-count charge from the Inquiry Commission. The charges were as follows:
1) A violation of SCR 3.130-1.3 for failing to diligently proceed with the client's case;
2) A violation of SCR 3.130-1.4(a) for failing to keep his client reasonably informed about the status of his divorce matter;
3) A violation of SCR 3.130-1.15(a) for failing to deposit the $3,000 advance into an escrow account;
4) A violation of SCR 3.130-1.16(d) for failing to timely refund any unearned portion of the fee; and
5) A violation of SCR 3.130-3.2 for failing to take reasonable steps to expedite the client's divorce proceeding.
Movant admits violating the Rules of Professional Conduct as charged. He now asks this Court to enter an order in conformity with his negotiations with the KBA Office of Bar Counsel, which has no objection and asks that the motion be granted. According to the KBA, the Chair of the Inquiry Commission and a Past President of the KBA have reviewed and approved the sanction proposed by Movant.
II. Discussion
The negotiated sanction rule provides that "[t]he Court may consider negotiated sanctions of disciplinary investigations, complaints or charges if the parties agree." SCR 3.480(2). Specifically, "the member and Bar Counsel [must] agree upon the specifics of the facts, the rules violated, and the appropriate sanction." Id. Upon receiving a motion under this Rule, "[t]he Court may approve the sanction agreed to by the parties, or may remand the case for hearing or other proceedings specified in the order of remand." Id. Thus, acceptance of the proposed negotiated sanction still falls within the discretion of the Court. After reviewing the allegations, and Movant's disciplinary record, which includes a private admonition in March 2011 but no public reprimands or suspensions, this Court concludes that the discipline proposed by Movant is adequate.
ORDER
ACCORDINGLY, IT IS ORDERED THAT:
1. Movant Russell W. Burgin is found guilty of the above-described and admitted violations of the Rules of Professional Conduct.
2. Movant is suspended from the practice of law for 30 days, with that suspension probated for one year on the condition that he comply with the remainder of this order.
3. Movant shall attend and successfully complete the KBA's Ethics and Professionalism Enhancement Program, successful completion of which requires receiving a passing score on the exam given at the end of the program, within one year of this order. The requirement to attend this program is separate from and in addition to any other CLE requirements imposed by Court rule or order.
4. Movant may not apply for CLE credit of any kind for the KBA's ethics program. Movant must furnish a release and waiver to the Office of Bar Counsel to review his records in the CLE department that might otherwise be confidential, with such release to continue in effect for one year after completion of the ethics program to allow the Office of Bar Counsel to verify that none of the hours are reported for CLE credit.
*333 5. Within 10 days of this order, Movant shall refund $360 to Damien Taylor, if he has not done so already, and provide proof in writing to the Office of Bar Counsel.
6. As a condition to probation of the suspension, Movant shall not engage in any other unethical behavior or be charged with professional misconduct within one year of entry of this order. Any such misconduct or charge of professional misconduct within that period, in addition to possibly resulting in an independent sanction, shall result in revocation of Movant's probation and service of the 30-day suspension.
7. If Movant fails to comply with any of these terms, the probated suspension will be imposed upon motion of the Office of Bar Counsel to this Court.
8. In accordance with SCR 3.450, Movant is directed to pay all costs associated with these disciplinary proceedings against him, said sum being $284.52, for which execution may issue from this Court upon finality of this Opinion and Order.
All sitting. All concur.
ENTERED: March 22, 2012.
/s/ John D. Minton
/s/ CHIEF JUSTICE
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51 So.3d 1246 (2011)
Roy VEAL, as representative of the class certified at No. 8:04-CF0-0323 (U.S.D.C.M.D.Fla.), assignees of certain rights of Crown Auto Dealerships, Inc., Appellant,
v.
VOYAGER PROPERTY AND CASUALTY INSURANCE COMPANY; Voyager Service Programs, Inc.; and Pro-Tec Dealer Services, Inc., Appellees.
No. 2D09-2672.
District Court of Appeal of Florida, Second District.
January 21, 2011.
*1247 Daniel Clark of Clark & Martino, P.A., Tampa, and Craig E. Rothburd of Craig E. Rothburd, P.A., Tampa, and Raymond T. Elligett, Jr., of Buell & Elligett, P.A., Tampa, and Scott R. Jeeves of Jeeves Law Group, P.A., St. Petersburg, for Appellant.
Michael S. Hooker of Glenn Rasmussen Fogarty & Hooker, P.A., Tampa, for Appellees Voyager Property and Casualty Insurance Company and Voyager Service Programs, Inc.
No appearance for Appellee Pro-Tec Dealer Services, Inc.
DAVIS, Judge.
Roy Veal, as representative of a certified class, challenges the trial court's order dismissing with prejudice his indemnification action against Voyager Property & Casualty Insurance, Co.; Voyager Service Programs, Inc.; and Pro-Tec Services, Inc. (collectively "Appellees"). We affirm.
Veal was the named representative of a class certified in federal court to bring an action against Crown Auto Dealerships, Inc., for damages sustained by each class member as a result of his or her purchasing a Trac Guard vehicle antitheft product from Crown in conjunction with the purchase of a car from a Crown dealership.
The class members filed a five-count complaint against Crown in the United States District Court for the Middle District of Florida, alleging violations of the Truth in Lending Act, the Florida Motor Vehicle Retail Sales Finance Act, the Florida Deceptive and Unfair Trade Practices Act, and the Warranties Association Act. The complaint also sought restitution and damages for unjust enrichment.
The antitheft product at issue was purchased by Crown from Pro-Tech Services, Inc. Pro-Tech had represented to Crown that Voyager Property & Casualty Insurance Co. and/or Voyager Services Programs, Inc., would provide a warranty insurance policy for each Trac Guard product sold. Each warranty would guarantee the car owner a cash benefit should he or she experience the loss of his or her automobile by theft and either the car was not returned or, if returned, was a total loss. The warranty further provided that if the car was stolen and returned, the owner would receive up to $1000 to pay any deductible required by the owner's automobile insurance policy to repair damages sustained.
During the class action litigation, Crown learned that it had been misled by Pro-Tech in that not only had no warranty policies been registered with the State of Florida, as required by statute, but also that no warranty policies even existed.
The federal class action lawsuit was resolved with Crown agreeing to a settlement involving a payment of monetary damages to the class members but no admission of liability on the part of Crown. As part of that settlement, the class members also received
a full assignment of all rights to indemnification by Crown against the following companies, including parents, affiliates, and subsidiaries, as it relates to the sale of the Trac Guard product: Pro Tech Dealer Services, Inc.[;] Voyager Group, Inc.[;] Voyager Service Programs, Inc.[;] Voyager Property & Casualty *1248 Insurance Company[;] Voyager Service Warranties, Inc.[;] and Voyager Insurance Company (collectively "Third Party Entities").
(Emphasis added.)
Veal subsequently brought suit against Appellees in state court, alleging one count of indemnification. Although Veal never sought to have a class certified in state court, he brought this action "as representative of the class certified at No. 8:04-CV-0323 (U.S.D.C.M.D.Fla.), assignees of certain rights of Crown Auto Dealerships, Inc." In the complaint for indemnification, Veal alleged that "in its effort to induce Crown to market and sell Pro-Tec's anti-theft [sic] warranty product, Pro-Tec informed Crown . . . that the Pro-Tec anti-theft [sic] `programs are insured by Voyager Insurance Companies.'" Veal further alleged, however, that "[a]t no time did Voyager provide insurance coverage for customer claims under the Trac Guard etch product." Veal maintained that Voyager "willfully and intentionally participated in a scheme to share the profits from the sale of Pro-Tech's product to Crown by misrepresenting insurance coverage to make the unregistered product more attractive to Crown and its customers." Finally, Veal asserted that Crown had no duty to record the insurance product but rather that section 634.1216, Florida Statutes (2008), imposes that duty on Pro-Tech and Voyager.
According to the complaint, Crown relied on Pro-Tec's assertions regarding the insurance, resulting in Crown agreeing to sell the product at its dealerships. As a result of these sales and the subsequent federal law suit, Crown paid more than $1 million to its customers for actual damages, prejudgment and postjudgment interest, costs, and attorney's fees. Based on these facts, Veal, on behalf of the class members who were acting as Crown's assignees, sought indemnification, arguing that since Crown had no statutory or legal duty to register Trac Guard with the Florida Department of Insurance or to file with the State the rates and premiums to be paid by its customers on the product, Crown's liability to the class of customers was not due to any act or omission on its part. Rather, Veal maintained that those duties belonged to the insurer, Voyager, and that
[a]s a result of the deceptive activity of Pro-Tec and Voyager in failing to register the Trac Guard product . . ., in failing to file its rates, and in failing to back [Trac Guard] with the reserves of a licensed insurer, Crown was required to pay to Veal and class members in the class action case their damages and costs.
As such, Veal, on behalf of the class and standing in the place of Crown, sought "indemnity for Crown's losses against Voyager and Pro-Tec."
In response, Voyager Property & Casualty Insurance and Voyager Service Programs (collectively "Voyager")[1] moved to dismiss the complaint for failure to state a claim upon which relief could be granted, arguing that Veal could not maintain a claim for common law indemnification because to do so, he would have to argue that Crown was wholly without fault. Voyager maintained that because Veal argued in the federal case that Crown was at fault, he could not argue the opposite position in state court. Voyager also argued in its motion (1) that Veal's complaint failed to state a claim on behalf of the class members whose rights Veal sought to enforce because a class was never certified in state *1249 court and (2) that Veal failed to comply with the presuit notice requirements of section 634.433.
Following a hearing, the trial court entered an order granting Voyager's motion, concluding that "Veal's complaint fails to state a valid indemnity claim against Defendants." Specifically, the court stated:
Simply put, if Crown is precluded from suing Defendants for indemnification, then Crown's assignees are likewise barred. A review of the complaint shows that Plaintiff Veal failed to allege any conduct of the Voyager Defendants for which the assignor Crown could be held vicariously or derivatively liable. It appears that all of Plaintiff's allegations are based upon alleged direct wrongdoing by the Voyager Defendants against Crown. According to the pleadings, Crown only assigned indemnification claims. Thus, Plaintiff Veal's complaint fails to state a valid indemnity claim against the Defendants.
"For a party to prevail on a claim of common law indemnity, the party must satisfy a two-prong test." Dade Cnty. Sch. Bd. v. Radio Station WQBA, 731 So.2d 638, 642 (Fla.1999). "First, the party seeking indemnification must be without fault, and its liability must be vicarious and solely for the wrong of another. Second, indemnification can only come from a party who was at fault." Id. (citation omitted). Here, Veal is seeking indemnity against Voyager as if he (and the other class members) were Crown. He has alleged that Crown is wholly without fault but that based on its contractual relationship with its customers, it was forced to pay more than $1 million to its customers for the actions of Voyager. On the face of the complaint, this satisfies the two-prong test for a claim of common law indemnification.
However, Voyager attached to its motion to dismiss a copy of the settlement agreement that was accepted by the federal trial court to resolve the class action lawsuit. By the terms of that settlement agreement, the damages paid by Crown to the class members were related to the disclosure violations alleged to have occurred on the face of the sales contract between Crown and its customers. Nowhere in the settlement agreement does it state that damages were being paid by Crown for the failure to register the warranties as required by chapter 634 of the Florida Statutes or for damages incurred because no warranty policies were issued. Since there is no allegation that either Voyager or Pro-Tech was responsible for the preparation of the sales agreements, Crown would have no cause of action against them for damages paid pursuant to the settlement. Thus Crown had no indemnification claim to assign. As such, by accepting the assignment of indemnification rights, Veal and the class members did not receive a cause of action that they could pursue. This was the conclusion reached by the trial court.
Veal argues on appeal that the trial court erred by considering the contents of the settlement agreement. He correctly argues that, as a general rule, in deciding a motion to dismiss, the trial court is limited to the contents of the pleadings. See Belcher Ctr. LLC v. Belcher Ctr., Inc., 883 So.2d 338, 339 (Fla. 2d DCA 2004) ("On a motion to dismiss for failure to state a cause of action, a trial court is confined to the four corners of the complaint. . . ."). However, in this case, the complaint refers to the settlement agreement, and in fact, Veal's standing to bring suit is premised on the terms of that agreement. Accordingly, since the complaint impliedly incorporates the terms of the agreement by reference, the trial court was entitled to review the terms of that agreement to determine the nature of the claim being *1250 alleged. Upon such review, the trial court not only found that Veal failed to allege a claim under which indemnification could be sought, but also found that based on the settlement agreement, Crown had no indemnification rights to assign and that the dismissal should be with prejudice.
Because based on the terms of the settlement agreement, Veal cannot allege a claim of common law indemnity against Voyager as Crown's assignee, we affirm the trial court's order.
Affirmed.
CRENSHAW and MORRIS, JJ., Concur.
NOTES
[1] The record before this court indicates that after Pro-Tech Services filed its answer to the complaint, it had no further involvement in the case below, and Pro-Tech makes no appearance in this appeal.
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55 So.3d 941 (2011)
Adolph Charles SUHREN, III
v.
Cheryl B. GIBERT, Wife of Douglas Hock, Eugene J. Gibert, III, Joel Suhren Gibert, and Nerhus Properties, Inc.
No. 2010-CA-0767.
Court of Appeal of Louisiana, Fourth Circuit.
January 12, 2011.
*942 Henry W. Kinney, III, Michael L. DeShazo, Kinney & Ellinghausen, New Orleans, LA, for Plaintiff/Appellant.
Joseph N. Mole, Benjamin M. Castoriano, Frilot L.L.C., New Orleans, LA, Edward F. Kohnke, IV, Preis & Roy, PLC, New Orleans, LA for Eugene J. Gibert III and Sandra Hamblin.
James A. Brown, Liskow & Lewis, PLC, New Orleans, LA, for Cheryl B. Gibert.
Patrick J. Fanning, Gretna, LA, for Joel Suhren Gibert.
Avery B. Pardee, Jones Walker Waechter Poitevent Carrere & Denegre, LLP, New Orleans, LA, Thomas K. Potter, III, Burr & Forman LLP, Nashville, TN, for Nerhus Properties, Inc.
(Court composed of Judge CHARLES R. JONES, Judge PATRICIA RIVET MURRAY, and Judge EDWIN A. LOMBARD).
CHARLES R. JONES, Judge.
The Appellant, Adolph Charles Suhren, III, seeks review of the district court judgment granting summary judgment in favor of Appellees Cheryl Gibert, Eugene Gibert, III, and Joel Suhren Gibert, and finding that the claims of Mr. Suhren were perempted. Under our de novo review, we reverse, finding that the claims of Mr. Suhren are not perempted. Furthermore, we remand this matter to the district court to determine whether any of the claims of Mr. Suhren are not prescribed.
This case involves an inter-family dispute between Mr. Suhren and his relatives regarding the administration of a family owned and run business, Nerhus Properties, Inc. ("Nerhus"). Mr. Suhren owns a portion of the shares of stock in Nerhus. His half-sister Sarah Suhren Hamblin, and his two first cousins Cheryl Gibert and Eugene J. Gibert, III, ("Mr. Gibert"), also each own shares of stock in Nerhus.[1] Since 1987 to the present, Ms. Hamblin, Ms. Cheryl Gibert, Mr. Gibert, and Mr. Gibert's mother, Joel Suhren Gibert (who is also Mr. Suhren's aunt), have comprised the Board of Directors of Nerhus. Mr. Suhren has a strained relationship with the above referenced members of the Board of Directors, and became suspicious of their management of Nerhus by the late 1990s.
In November 2004, Mr. Suhren sued Cheryl Gibert, Mr. Gibert, and Joel Suhren Gibertin their capacities as directors of Nerhusfor allegedly breaching their fiduciary duties as administrators over Nerhus. Mr. Suhren also sued Nerhus itself. All four defendants will be referred to as the "Appellees" herein. Mr. Suhren specifically alleges the following: that the Appellees purposely tried to dilute the value of his share of stock; that they paid themselves for jobs they were not performing; that they collaborated to force him out of Nerhus; and that they diverted a corporate opportunity in Colorado from Nerhus. Mr. Suhren further alleged that the Appellees breached duties of care and loyalty, and sought a ruling to set aside the issuance of unauthorized shares of stock by the Appellees. Mr. Suhren maintains that the alleged wrongdoing by the Appellees continues to the present.
*943 Mr. Suhren amended his petition for damages twice. Initially, he amended his petition for damages to include additional claims against Mr. Gibert, alleging that Mr. Gibert usurped business opportunities which belonged to Nerhus. Furthermore, Mr. Suhren sought a declaratory judgment arguing that the Appellees' efforts to allegedly "ratify" their alleged prior illegal stock issuances were null and void. In his second amended petition, Mr. Suhren added additional facts and alleged usurpation of an investment opportunity in Colorado by the Giberts, and added Ms. Hamblin as a defendant.
The Appellees filed a joint motion for a peremptory exception of prescription, and Nerhus filed a separate exception of prescription, peremption, no cause of action, and no right of action, which the district court deferred consideration of until trial on the merits.
Additionally, in response to being sued in the second amended petition, Ms. Hamblin filed an exception of prescription, which was granted on July 20, 2008. The claims against Ms. Hamblin were dismissed with prejudice. Subsequently, Mr. Suhren filed a Motion for New Trial. Additionally, Mr. Gibert individually and the Appellees filed a motion for summary judgment, raising an exception of peremption against Mr. Suhren in September of 2008. The district court heard both the motion for summary judgment and the motion for new trial on the same date in March 2009.
The district court rendered judgment granting the Appellees' Motion for Summary Judgment, finding, sua sponte, that Mr. Suhren's claims were perempted under La. R.S. 12:1502. The motion for summary judgment of Mr. Gibert was granted as well. Furthermore, the court denied Mr. Suhren's Motion for New Trial as moot. The district court dismissed all of the claims of Mr. Suhren with prejudice, and ordered the parties to bear their own costs. A signed judgment was rendered by the court in April 2009.
Thereafter, the Appellees filed a "Motion to Tax Costs and Expenses Based on Offer of Judgment Ordering Each Party to Bear Its Own Costs", which the district court treated as a motion for new trial. The district court denied the motion.
Mr. Suhren timely filed the instant appeal and seeks review of the April 2009 judgment. Additionally, the Appellees have filed a cross-appeal seeking a reversal of the determination of the district court that they were to pay their own costs, and requesting that this court award them damages for the costs of the instant appeal.
Mr. Suhren raises five issues on appeal:
1. Is the limitation period contained within La. R.S. 12:1502 a hybrid liberative prescriptive period, as was determined by the First Circuit in Wooley v. Lucksinger, 2006-1140 (La.App. 1 Cir. 12/30/08); 14 So.3d 311, writ granted, 2009-0571 (La.12/18/09); 23 So.3d 953, or is that limitation period peremptive in nature?
2. If this Court disagrees with the First Circuit's finding that La. R.S. 12:1502 is not peremptive, are claims against the Appellees which arose within three years of the filing of the Petition, and those which arose after the filing of suit, still viable?
3. Do genuine issues of material fact exist with respect to Mr. Suhren's claims that the Appellees have engaged in a scheme whereby they have taken excessive salaries and personal benefits to drain Nerhus of all its profits, while also engaging in *944 sham stock offerings designed solely to dilute his interest in the corporation and usurping business opportunities that rightfully belonged to Nerhus?
4. Under Louisiana law, is the intentional breach of a fiduciary duty a tort?
5. Should the district court have allowed him the opportunity to amend his suit under La. C.C.P. art. 934 after granting an exception of prescription, where the grounds for granting the exception can be cured by amendment?
Appellate courts review of a summary judgment is de novo. Dominio v. Folger Coffee Co., 2005-0357 (La.App. 4 Cir. 2/15/06), 926 So.2d 16. Furthermore, a motion for summary judgment will be granted if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to material fact, and that the mover is entitled to judgment as a matter of law. La. C.C.P. art. 966(B). However, if the movant will not bear the burden of proof at trial, the movant's burden on the motion does not require him to negate all essential elements of the adverse party's claim, action, or defense, but rather to point out to the court that there is an absence of factual support for one or more elements essential to the adverse party's claim, action, or defense. La. C.C.P. art. 966(C)(2). Thereafter, if the adverse party fails to produce factual support sufficient to establish that he will be able to satisfy his evidentiary burden of proof at trial, there is no genuine issue of material fact. Id.
Albeit that Mr. Suhren raises five issues on appeal, we find that addressing the first assignment of error is dispositive of the entire appeal. The outcome of this case depends upon whether we determine that La. R.S. 12:1502 sets forth a peremptive time limitation or a prescriptive one. La. R.S. 12:1502, entitled Actions against persons who control business organizations, states in pertinent part:
A. The provisions of this Section shall apply to all business organizations formed under the laws of this state and shall be applicable to actions against any officer, director, shareholder, member, manager, general partner, limited partner, managing partner, or other person similarly situated.
B. The term "business organization" includes any entity formed under the laws of this state engaged in any trade, occupation, profession, or other commercial activity including but not limited to professions licensed by a state or other governmental agency. This Section shall apply without limitation to corporations, incorporated or unincorporated associations, partnerships, limited liability partnerships, partnerships in commendam, limited liability companies, or cooperative associations or other entities formed under the laws of this state.
C. No action for damages against any person described in Subsection A of this Section for an unlawful distribution, return of an unlawful distribution, or for breach of fiduciary duty, including without limitation an action for gross negligence, but excluding any action covered by the provisions of Subsection D of this Section, shall be brought unless it is filed in a court of competent jurisdiction and proper venue within one year from the date of the alleged act, omission, or neglect, or within one year from the date that the alleged act, omission, or neglect is discovered or should have been discovered, but in no event shall an action covered by the provisions of this Subsection be brought more than three *945 years from the date of the alleged act, omission, or neglect.
D. No action for damages against any person listed in Subsection A of this Section for intentional tortious misconduct, or for an intentional breach of a duty of loyalty, or for an intentional unlawful distribution, or for acts or omissions in bad faith, or involving fraud, or a knowing and intentional violation of law, shall be brought unless it is filed in a court of competent jurisdiction and proper venue within two years from the date of the alleged act or omission, or within two years from the date the alleged act or omission is discovered or should have been discovered, but in no event shall an action covered by the provisions of this Subsection be brought more than three years from the date of the alleged act or omission.
E. The time limitations provided in this Section shall not be subject to suspension on any grounds or interruption except by timely suit filed in a court of competent jurisdiction and proper venue.
This statute recognizes two separate time limitations to file suit against business organizations, and "officers, directors, shareholders, members, managers, general partners, limited partners, managing partners, or other persons similarly situated" for non-intentional and intentional tortious actions.
Non-intentional actions [i.e. actions for unlawful distributions, return of unlawful distributions, or breaches of fiduciary duty (including without limitation actions for gross negligence)] must be brought within one year from the date of the alleged act, omission or neglect, or within one year of the time it was or should have been discovered, but in all events such actions must be brought within three years of the act, omission, or neglect. However, if the alleged conduct involves intentional tortious misconduct, intentional breach of a duty of loyalty, an intentional unlawful distribution, acts or omissions in bad faith, fraud or a knowing and intentional violation of law, then any action must be brought within two years of the act or omission, or two years from the time it was or should have been discovered, but in all events within three years of the act or omission. La. R.S. 12:1502 states that said time limitations are not subject to suspension or interruption except by timely suit in a court of competent jurisdiction and proper venue. Thus, the time limitation contained within the statute appears to be peremptive.
Mr. Suhren's principal argument is that his claims against the Appellees are not perempted. He relies on a First Circuit case entitled Wooley v. Lucksinger, 2006-1140 (La.App. 1 Cir. 12/30/08), 14 So.3d 311, wherein the First Circuit held that La. R.S. 12:1502 is a hybrid liberative prescription and peremption statute in that it provides a liberative prescriptive period that is subject to the qualifications that the prescriptive period is not subject to interruption or suspension. See Borel v. Young, 2007-0419, pp. 28-29 (La.11/27/07)(on reh'g), 989 So.2d 42, 69.
The Appellees argue that the analysis of the First Circuit is patently flawed because the appellate court illogically abandoned its acknowledgment that the periods of La. R.S. 12:1502 cannot be suspended. The Appellees further argue that this Court should be particularly concerned about applying the analysis of Wooley in the instant case because there are three writs of certiorari pending before the Louisiana Supreme Court in Wooley.[2]
*946 We agree with both the First Circuit in Wooley, and the Appellees in part. Liberative prescription is a mode of barring actions as a result of inaction for a period of time. La. C.C. art. 3447. Peremption is a period of time fixed by law for the existence of a right, and, unless timely exercised, the right is extinguished upon the expiration of the peremptive period. La. C.C. art. 3458. Liberative prescription can be renounced, interrupted, and suspended. La. C.C. arts. 3449-3451, 3462-3472. Peremption may not be renounced, interrupted, or suspended. La. C.C. art. 3461.
In its analysis of La. R.S. 12:1502, the First Circuit in Wooley reasoned that if the Legislature wanted the imposed time limit to be peremptive, the Legislature would have included wording to that effect within the statute. Additionally, the First Circuit reviewed the intent of the legislature in enacting the statute. Our brethren explained that the legislative history of the statute revealed that when enacted the title of La. R.S. 12:1502 was "PRESCRIPTIVE PERIODS APPLICABLE TO BUSINESS ORGANIZATIONS." Wooley v. Lucksinger, 2006-1140, p. 217 (La. App. 1 Cir. 12/30/08), 14 So.3d 311, 461. That court found that this title was indicative of the object of the legislature to enact the statute. Id. (citing LA. CONST. art. III, § 15(A)). And that court also observed that in another statute, La. R.S. 49:112, similar language regarding time limitations had been examined previously by their court in Conerly v. State of Louisiana Through the Louisiana State Penitentiary & the Department of Corrections, 2002-1852 (La.App. 1 Cir. 6/27/03), 858 So.2d 636. The Wooley court explained:
La. R.S. 12:1502 E provides that "The time limitations provided in this Section shall not be subject to suspension on any grounds or interruption except by timely suit filed in a court of competent jurisdiction and proper venue." Language similar to this was interpreted by this Court in Conerly, XXXX-XXXX at p. 8, 858 So.2d at 644:
The period of limitation contained in LSA-R.S. 49:112 clearly has some aspects of a peremptive period. Most notably, as the State points out in its brief to this court, the statute provides that there will be no interruption or suspension of the time period. The Louisiana Supreme Court has recognized this * *219 as a characteristic of peremption. Flowers v. Rausch, 364 So.2d 928, 931 (La.1978). However, the Legislature is free to enact statutes containing prescriptive periods and to dispense with exceptions to those prescriptive periods. See Hebert [v. Doctors Memorial Hosp.], 486 So.2d [717] at 724 [La. 1986]. Moreover, had the Legislature meant for the time period to be peremptive, it could have expressed its intent in the title or text of the act enacting LSA-R.S. 49:112 or in the language of LSA-R.S. 49:112 itself. Basically, LSA-R.S. 49:112 creates a hybrid time period as concerns actions against the State. Despite having some characteristics in common with peremptive time periods, we find that the time period set forth in LSA-R.S. 49:112 is, as the legislature described it, a prescriptive period, with the qualifications that the prescriptive period is not subject to interruption or suspension. (Emphasis added; footnote deleted).
2006-1140, pp. 218-19, 14 So.3d at 462.
We agree with the reasoning of the First Circuit as to the hybrid prescriptive *947 and peremptive nature of La. R.S. 12:1502. This statute is a prescriptive statute that is subject to time limitations that have peremptive attributes. Nevertheless, the time limitations contained within this statute do not allow for plaintiffs, such as Mr. Suhren, to levy claims under the continuous tort doctrine.
Albeit that the statute at issue is not a strictly peremptive statute, the peremptive elements of the subject liberative prescription statute still do not permit the application of a continuing tort theory. A continuing tort is a "jurisprudentially recognized doctrine that provides continuous tortious conduct and continuous damages that may suspend prescription." Brumfield v. McElwee, 2007-0548, p. 8 (La.App. 4 Cir. 1/16/08), 976 So.2d 234, 240-41 (citing Scott v. American Tobacco, 04-2095, pp. 17-18 (La.App. 4 Cir. 2/7/07), 949 So.2d 1266, 1279-80; Bustamento v. Tucker, 607 So.2d 532, 537 (La.1992)). The application of this doctrine stands in direct opposition, however, to the specific wording of this statute, which provides in La. R.S. 12:1502(E) that actions brought under La. R.S. 12:1502 are not subject to suspension or interruption, unless a suit is timely filed. The continuing tort doctrine is a suspension principle based on contra non valentem. Brumfield, 2007-0548, p. 9, 976 So.2d at 241 (citing Scott v. American Tobacco, 949 So.2d at 1280). The continuing tort doctrine is not applicable to statutory claims that bar suspension of the prescriptive period as that would only serve to subvert the ban in the first place. Thus, the continuing tort doctrine is not applicable to this case.
Additionally, we find that La. R.S. 12:96, entitled Actions against directors and officers, is also applicable to the case sub judice because it also establishes prescriptive periods for suing directors and officers. Regarding claims for breach of duty against directors and officers, this statute mandates that plaintiffs must file suit within one year from either the date of the alleged act, omission, or neglect; or, from the date that the alleged act, omission, or neglect is discovered or should have been discovered. For claims involving intentional tortious misconduct, intentional breach of a director's or officer's duty of loyalty, or for acts or omissions in bad faith, or involving fraud, or a knowing and intentional violation of law, plaintiffs must file suit within two years from the date of the alleged act or omission; or, within two years from the date the alleged act or omission is discovered or should have been discovered. La. R.S. 12:96, states in pertinent part:
A. No action for damages against any director or officer for breach of his duty as a director or officer, including without limitation an action for gross negligence, but excluding any action covered by the provisions of Subsection B of this Section, shall be brought unless filed in a court of competent jurisdiction and proper venue within one year from the date of the alleged act, omission, or neglect, or within one year from the date that the alleged act, omission, or neglect is discovered or should have been discovered.
B. No action for damages against any director or officer for intentional tortious misconduct, or for an intentional breach of the director's or officer's duty of loyalty, or for acts or omissions in bad faith, or involving fraud, or a knowing and intentional violation of law, shall be brought unless filed in a court of competent jurisdiction and proper venue within two years from the date of the alleged act or omission, or within two years from the date the alleged act or omission is discovered or should have been discovered.
*948 Thus, the claims of Mr. Suhren against the Appellees under La. R.S. 12:1502 are subject to similar prescriptive periods under La. R.S. 12:96.
Lastly, recognizing that La. R.S. 12:1502 is a prescriptive statute with peremptive time limitations, Mr. Suhren would be entitled to pursue claims against the Appellees for claims that have not prescribed. It appears from the record that by the late 1990s, Mr. Suhren was concerned about some of the transactions of the Board of Directors. The record shows that between 1998 and the end of 1999, Mr. Suhren corresponded and met with Mr. Gibert regarding certain business ventures and offerings to purchase additional stock. The two men as well as the first wife of Mr. Suhren, who was a CPA, also had a meeting in 1999, where it appears that a business venture in Colorado was discussed. Furthermore, within that same time frame, Mr. Suhren also met with a bookkeeper for Nerhus, and at several other occasions had access to Nerhus financial records for either his review or that of his counsel. He did not pursue any claims against the Appellees at that time nor immediately thereafter. Nevertheless, in his petition for damages, Mr. Suhren maintains that the alleged wrongdoing by the Appellees continues to the present.
Considering that under these facts it is very possible for some of the claims of Mr. Suhren have prescribed, we remand this matter to the district court to distinguish which claims of Mr. Suhren are not prescribed pursuant to La. R.S. 12:1502, and thus, are still viable for him to pursue. Furthermore, we note that, on remand, Mr. Suhren is entitled to amend his petition under La. C.C. P. art. 934, should the district court determine that prescription can be cured by an amendment.[3]
Answer to Appeal
Lastly, Eugene J. Gibert filed an answer to the appeal of Mr. Suhren. In his answer, Mr. Gibert requests that:
(1) the Judgment appealed from be modified to provide that all costs are assessed against Mr. Suhren, and
(2) that Mr. Suhren be condemned to pay the costs and expenses of this appeal.
"The trial court has great discretion in assigning costs and an award will not be reversed unless there is an abuse of discretion." Buffman Inc. v. Lafayette Co., 2009-0870, p. 38 (La.App. 4 Cir. 4/14/10), 36 So.3d 1004, 1030 (citing Sanderford v. Lombard, 96-1171(La. App. 4 Cir.1996), 685 So.2d 1162, 1168; D'Angelo v. New Orleans Public Service, Inc., 405 So.2d 1262, 1271(La.App. 4 Cir.1981)). The district did not abuse its discretion in declining to assess costs against Mr. Suhren. Furthermore, we decline to assess the costs of the instant appeal to Mr. Suhren.
DECREE
For the foregoing reasons, the judgment of the district court, granting summary judgment against Adolf Charles Suhren, III, and therein finding that his claims were preempted, is hereby reversed. We remand to the district court for further proceedings, consistent with our decree herein.
*949 REVERSED AND REMANDED; CROSS APPEAL DISMISSED.
NOTES
[1] Mr. Suhren alleges that he, Ms. Hamblin, Ms. Cheryl Gibert and Mr. Eugene Gibert each own a quarter of the shares of stock in Nerhus.
[2] The three pending writ applications before the Supreme Court are: Wooley v. Lucksinger, 2009-0585 (La. 12/18/09), 23 So.3d 951; Wooley v. Lucksinger, 2009-0584 (La. 12/18/09), 23 So.3d 952, and Wooley v. Lucksinger, 2009-0571 (La. 12/18/09), 23 So.3d 953.
[3] La. C.C. P. art. 934, entitled Effect of sustaining peremptory exception, provides:
When the grounds of the objection pleaded by the peremptory exception may be removed by amendment of the petition, the judgment sustaining the exception shall order such amendment within the delay allowed by the court. If the grounds of the objection raised through the exception cannot be so removed, or if the plaintiff fails to comply with the order to amend, the action, claim, demand, issue, or theory shall be dismissed.
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10-30-2013
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https://www.courtlistener.com/api/rest/v3/opinions/2543157/
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148 P.3d 1081 (2006)
Carolyn E. KORST and Steven G. Korst, wife and husband, Appellants,
v.
Phillip R. McMAHON, Sr. and Mona D. McMahon, husband and wife, Respondents.
No. 32684-1-II.
Court of Appeals of Washington, Division 2.
December 12, 2006.
Stephen D. Cramer, Attorney at Law, Federal Way, WA, for Appellants.
Phillip R. Sr. McMahon (Appearing Pro Se), Mona D. McMahon (Appearing Pro Se).
BRIDGEWATER, P.J.
¶ 1 Carolyn Korst appeals from a bench trial that dismissed her claims against her father for childhood sexual abuse on statute of limitations grounds. We reverse and remand the matter for trial.
¶ 2 Beginning when she was eight years old, Carolyn Korst's father, Phillip McMahon, sexually abused her. When she was 14, she told her mother that her father had been raping her, and her mother called Child Protective Services (CPS). McMahon admitted to CPS that he had raped his daughter, but CPS allowed him to return home after only one night in jail.
¶ 3 Many years later, in 1995, Korst wrote a letter to her father complaining that she felt her father had mistreated her on a number of instances. Among her list of grievances, she complained that her father raped her when she was a child. Korst sent copies of the letter to her parents and each of her siblings.
¶ 4 Seven years later, in January 2002, Korst started seeing a counselor, Josephine Karla, because of problems with her son. During her five sessions with Karla, Korst *1083 disclosed that she had been sexually abused as a child. During these sessions, Korst learned that the sexual abuse had probably caused some of her problems.
¶ 5 Korst also started seeing Dr. Walter Teachout, a clinical psychologist, who diagnosed her with post traumatic stress disorder (PTSD) due to the childhood sexual abuse. Dr. Teachout noted that Korst was experiencing many physical and emotional symptoms consistent with PTSD, including: (1) severe self-esteem issues, (2) shame and guilt, (3) emotional fatigue, (4) difficulty maintaining friendships, (5) early promiscuity, (6) panic attacks, (7) gastro-intestinal symptoms, (8) paranoia, (9) depression, (10) anxiety, (11) nightmares, (12) flashbacks, (13) teeth grinding, (14) crying spells, (15) social withdrawal, (16) insomnia, and (17) others. Dr. Teachout believed that Korst's childhood sexual abuse had caused these symptoms.
¶ 6 After this counseling, Korst sued her father and mother, alleging: (1) sexual abuse, (2) assault and battery, (3) outrage, (4) intentional tort, (5) gross negligence, and (6) intentional and/or negligent infliction of emotional distress. The McMahons denied Korst's allegations and asserted the statute of limitations as an affirmative defense.
¶ 7 At the bench trial, the McMahons moved for a directed verdict after Korst rested her case. Based on Korst's 1995 letter, the McMahons contended that they were entitled to a directed verdict because the statute of limitations on Korst's claims had expired. The trial court agreed and dismissed Korst's claims with prejudice, entering findings of facts and conclusions of law.
ANALYSIS
¶ 8 Korst contends that the trial court erred in finding that she knew in 1995 that her father's sexual abuse had caused her symptoms. Specifically, she assigns error to findings of fact 19 through 23.[1] She further contends that, because of the erroneous factual finding, the trial court mistakenly concluded that the statute of limitations barred her claim.
¶ 9 We must first determine how to construe the trial court's decision. Even though the McMahons moved for a directed verdict, because this was a bench trial, the trial court correctly interpreted their motion as one for involuntary dismissal under CR 41(b)(3). CR 41(b)(3) permits the trial court to render a judgment on the merits against the plaintiff and enter findings of fact as provided in CR 52(a) to support its decision. Postema v. Pollution Control Hearings Bd., 142 Wash.2d 68, 120, 11 P.3d 726 (2000). Thus, in granting the McMahons' motion, the trial court considered all of the evidence and the credibility of the witnesses. Because the trial court rendered a judgment, complete with findings and conclusions, we review the trial court's findings of fact and conclusions of law.
¶ 10 We review a trial court's findings of fact and conclusions of law in two steps. First, we review findings of fact under a "substantial evidence standard, defined as a quantum of evidence sufficient to persuade a rational fair-minded person the premise is true." Sunnyside Valley Irrigation Dist. v. Dickie, 149 Wash.2d 873, 879, 73 P.3d 369 (2003). Applying this deferential standard, we view all reasonable inferences from the evidence in the light most favorable to the prevailing party. Sunderland Family Treatment Servs. v. City of Pasco, 127 Wash.2d 782, 788, 903 P.2d 986 (1995). Where there is substantial evidence, we will not substitute our judgment for that of the trial court even though we might have resolved a factual dispute differently. Sunnyside, 149 Wash.2d at 879-80, 73 P.3d 369. Second, we determine whether the findings of fact support the conclusions of law. Landmark Dev., Inc. v. City of Roy, 138 Wash.2d 561, 573, 980 P.2d 1234 (1999). We review the conclusions de novo. Sunnyside, 149 Wash.2d at 880, 73 P.3d 369.
¶ 11 The specific issue in this case is whether the trial court's properly determined that the statute of limitations applied to bar *1084 Korst's suit. Before examining the evidence to determine if it is sufficient to support the trial court's findings, we turn first to an analysis of the unique statute of limitations for childhood sexual abuse:
All claims or causes of action based on intentional conduct brought by any person for recovery of damages for injury suffered as a result of childhood sexual abuse shall be commenced within the later of the following periods:
. . . .
(c) Within three years of the time the victim discovered that the act caused the injury for which the claim is brought.
RCW 4.16.340(1)(c)[2] (emphasis added).
¶ 12 Most statutes of limitations impose a duty on the plaintiff to discover injuries. But this subsection is unique in that it omits the language "or reasonably should have discovered." In fact, the legislature included a "Findings Intent" section, with this statute, to explain why childhood sexual abuse cases arising from intentional conduct warrant a unique statute of limitations. As Division Three of this court noted in Hollmann v. Corcoran, 89 Wash.App. 323, 334, 949 P.2d 386 (1997), legislative findings (4) and (5) explain this specific omission:
(4) The victim of childhood sexual abuse may be unable to understand or make the connection between childhood sexual abuse and emotional harm or damage until many years after the abuse occurs.
(5) Even though victims may be aware of injuries related to the childhood sexual abuse, more serious injuries may be discovered many years later.
RCW 4.16.340. When the legislature amended RCW 4.16.340 in 1991, it "intend[ed] that the earlier discovery of less serious injuries should not affect the statute of limitations for injuries that are discovered later." Laws of 1991, ch. 212, § 1. In light of the legislature's findings, the Hollmann court interpreted the plain language of RCW 4.16.340(1)(c) as not imposing a duty on the plaintiff to discover her injuries in childhood sexual abuse cases. Hollmann, 89 Wash.App. at 334, 949 P.2d 386.
¶ 13 Moreover, this special statute of limitations is unique in that it does not begin running when the victim discovers an injury. Instead, it specifically focuses on when a victim of sexual abuse discovers the causal link between the abuse and the injury for which the suit is brought. RCW 4.16.340(1)(c). The legislature specifically anticipated that victims may know they are suffering emotional harm or damage, but not be able to understand the connection between those symptoms and the abuse. We are bound to follow the legislature's intent. Born v. Thompson, 154 Wash.2d 749, 776, 117 P.3d 1098 (2005).
¶ 14 Finally, we note that the defendant bears the burden of proof as to the statute of limitations. Haslund v. City of Seattle, 86 Wash.2d 607, 620-21, 547 P.2d 1221 (1976). In the context of this statute of limitations, the McMahons needed to prove that Korst actually knew that the sexual abuse caused her symptoms and that she failed to bring her claim before the statute of limitations had expired.
¶ 15 We hold that insufficient evidence supported the trial court's finding that Korst knew of the causal connection between her abuse and her injuries. In finding against Korst, the trial court relied on the 1995 letter that she wrote to her father. Impressed by the letter, the trial court found:
But for the writings of Plaintiff Carolyn E. Korst (Trial Exhibits 1, 7, and 8) the Court would have agreed with Dr. Teachout and Plaintiff Carolyn E. Korst, as well as with Plaintiffs' other witnesses, and found in favor of the Plaintiffs on the issue of when Plaintiff Carolyn E, (sic) Korst knew or should have known of the causal connection between the childhood sexual abuse and the symptoms experienced by Plaintiff Carolyn E. Korst after she left the McMahon household.
Clerk's Papers (CP) at 29.
¶ 16 These writings, which consisted primarily *1085 of Korst's 1995 letter to her father,[3] do not provide substantial evidence to support the trial court's finding that Korst knew of the causal connection between her abuse and her symptoms. The letter begins with Korst telling her father that she is angry because he sold Korst and her husband a water bed pedestal, but McMahon thought that the Korsts had defaulted on the payments. In fact, Korst testified that the primary purpose of the letter was to confront her father about the water bed pedestal. After addressing the pedestal issue, Korst took the opportunity to list a few other grievances that she had with her father. First, she told her father,
I was just a kid, what 13-14 when I was raped by Dad. Do you know for the victim (me) Its [sic] something that never goes away. How do you feel about that Dad? You have haunted me for 20-22 years. You have never even once said you were sorry. I don't think you are.
I have tried to forgive you in my heart & mind, but the fact is I can't. Each time something happens it disgusts me in the way you treat people + it brings all the feelings back.
It's just constant hurts, like the harmonica issue. . . .
Ex. 1 at 2. In the letter, Korst continued to complain about her father telling her brothers and sisters that she stole a harmonica. She also complained in general that her father thought she was a "trouble maker" and that he did not spend enough time with his grandchildren. Ex. 1 at 3. The trial court found that this letter proved that Korst knew in 1995 that her father's sexual abuse had caused her varied physical and emotional problems.
¶ 17 We disagree. Korst's letter does not suggest that she knew that her father's abuse had caused her many injuries. The letter simply indicates that she resented her father for sexually abusing her, not that Korst understood the effects of that abuse. This is especially true as the letter seems to equate her reaction to her father's accusations about a stolen harmonica with her feelings about the rape. From Korst's admissions that the abuse is "something that never goes away" and that McMahon had "haunted" her for over 20 years, a reasonable person could not infer more than the abuse haunted her. Ex. 1 at 2.
¶ 18 But that is not the same as inferring she knew her injuries were caused by the rape. Presumably, victims of childhood sexual abuse know that they have been hurt, but RCW 4.16.340 makes it clear that a plaintiff's cause of action does not accrue until she knows that the sexual abuse has caused her more serious injuries. Laws of 1991, ch. 212 § 1. This letter merely states that the original pain of being abused has not gone away, but it does not prove that Korst knew her father's sexual abuse had caused her more serious physical and emotional symptoms. Therefore, this letter does not support a finding that Korst "discovered that the act caused the injury for which the claim is brought." RCW 4.16.340(1)(c).
¶ 19 Furthermore, none of the testimony at trial provided sufficient evidence to support the trial court's finding. On cross-examination, Korst admitted that she knew for many years that she was angry at her father, in part, for raping her. But RCW 4.16.340(1)(c) requires Korst to have known for more than three years before filing her claim that her father's abuse had caused her injurious symptoms. Even with her admission, a reasonable person could not infer that she knew that her father's abuse had caused her ulcers or had caused her to grind her teeth at night. Therefore, Korst's testimony is not substantial evidence to support the trial court's finding.
¶ 20 Steven Korst admitted that he wondered about Korst's irritability after a night of intimacy, but he never discussed it with his wife. But this admission indicates nothing other than he suspected she had emotional injuries. His testimony cannot support an inference that Korst knew in 1995 that her father's sexual abuse had caused all her emotional and physical symptoms.
*1086 ¶ 21 Korst's three sisters also testified, but all three denied that Korst knew of a causal link between her suffering and the rape. In fact, Merri Pomeroy testified that Korst first associated her emotional and physical problems to the sexual abuse during counseling in 2002. And that date was within the statute of limitations.
¶ 22 Dr. Teachout's testimony also failed to establish that Korst knew in 1995 that her rape caused her symptoms. Dr. Teachout testified that, in his professional opinion, Korst did not understand that her father's abuse had caused her symptoms before 2002. In fact, he opined that a person with no psychology background would "simply not have the capacity to link these varied miscellaneous feelings to posttraumatic stress." 1 Report of Proceedings (RP) (Sept. 9, 2004) at 144.
¶ 23 From this evidence, the trial court could not reasonably infer that Korst already knew in 1995 that her father's sexual abuse caused her physical and emotional symptoms. Therefore, substantial evidence does not support the trial court's finding.
¶ 24 In this case, because substantial evidence did not support a finding that Korst knew earlier than 2002 that her father's sexual abuse had caused her symptoms, the trial court's legal conclusion that the statute of limitations barred this suit is incorrect and the trial court erred in granting McMahon's motion for an involuntary dismissal.
¶ 25 Reversed and remanded for new trial.
We concur: ARMSTRONG and HUNT, JJ.
NOTES
[1] Findings of fact 19 through 23 are essentially one finding: that Korst knew in 1995 that her father's sexual abuse caused her physical and emotional injuries. For the purposes of this analysis, all five findings will be collectively referred to as the trial court's finding.
[2] RCW 4.16.340, as amended in 1991, applies to this case even though McMahon sexually abused Korst before the legislature passed this statute. See C.J.C. v. Corp. of the Catholic Bishop of Yakima, 138 Wash.2d 699, 705-07, 985 P.2d 262 (1999) (applying a 1988 version of the statute to claims based on intentional sexual abuse occurring in the 1970s).
[3] Exhibit 7 is a letter Carolyn wrote to her parents in 2002, making it irrelevant to the present analysis. Exhibit 8 is merely Carolyn's declaration stating that she did not know about the connection until beginning therapy in 2002.
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01-03-2023
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52 So. 3d 510 (2009)
Carol MAHONEY
v.
LOMA ALTA PROPERTY OWNERS ASSOCIATION, INC.
2080192.
Court of Civil Appeals of Alabama.
March 27, 2009.
Rehearing Denied May 22, 2009.
*511 Richard L. Watters, Mobile, for appellant.
James B. Pittman, Jr., and Jennifer L. Evans of James B. Pittman, Jr., P.C., Daphne, for appellee.
THOMAS, Judge.
Carol Mahoney appeals from a judgment of the Baldwin Circuit Court denying her request for an attorney's fee and costs pursuant to the Alabama Litigation Accountability Act, § 12-19-270 et seq., Ala. Code 1975 ("ALAA"). We reverse.
For an understanding of the facts and procedural history underlying this appeal, we quote from this court's decision in Mahoney v. Loma Alta Property Owners Ass'n, 4 So. 3d 1130, 1131-33 (Ala.Civ.App.2008)("Mahoney"):
"Loma Alta Property Owners Association, Inc. ('LAPOA'), sued Carol Mahoney in the Baldwin District Court, claiming breach of contract, account stated, and a property-owners-association lien on real estate occupied by Mahoney. LAPOA alleged that Ms. Mahoney was the owner of unit C-I in Loma Alta Townhomes; that Ms. Mahoney was, therefore, bound by an agreement contained within the condominium declaration for the Loma Alta subdivision to pay property-owners-association fees, assessments, and late charges; and that Ms. Mahoney had failed to pay those fees, assessments, and charges. LAPOA asserted that it was entitled to recover from Ms. Mahoney damages, including late fees, interest, costs, and an attorney fee, and to have a lien on the real estate occupied by Ms. Mahoney.
*512 "Ms. Mahoney answered the complaint, admitted that she `owe[d] some money, but not the total amount claimed by [LAPOA],' and asserted that she was entitled to a setoff because LAPOA had failed to make needed repairs on the unit. On April 11, 2006, the district court entered a judgment in favor of LAPOA in the amount of $5,390, plus costs and an attorney fee of $500. Ms. Mahoney appealed that judgment to the Baldwin Circuit Court on April 25, 2006, for a trial de novo.
"On May 19, 2006, Ms. Mahoney filed an amended answer in the circuit court, generally denying the allegations of LAPOA's complaint and asserting, among other things, that she did not have a contract with LAPOA. In addition, Ms. Mahoney asserted a claim under the Alabama Litigation Accountability Act ('ALAA'), § 12-19-270 et seq., Ala.Code 1975. On December 21, 2006, LAPOA amended its complaint, naming Ms. Mahoney's former husband, Joseph Mahoney, as a defendant. LAPOA alleged that Mr. Mahoney was the `owner' of unit C-1 in Loma Alta Townhomes and that Ms. Mahoney was a `resident' of the unit. LAPOA also added a claim alleging that, by virtue of the foreclosure of its property-owners-association lien, it was entitled to have Ms. Mahoney `evicted' from unit C-1.
"The circuit court conducted a bench trial on January 26, 2007, at which only one witnessMary Garey, the secretary/treasurer of LAPOAtestified. Garey explained that the property-owners-association fees and assessments represent the unit owners' proportionate share of the cost of maintaining and preserving the common areas of the condominium. Garey testified that Ms. Mahoney had resided in unit C-1 of the condominium since March 2000 and that she had paid some of the fees and assessments but that she had stopped paying, contending that she was entitled to set off against the balance the cost of needed repairs that LAPOA had failed to make on the unit Ms. Mahoney was occupying. Garey stated that, according to the condominium declaration, repairs to a unit are the responsibility of the individual unit owner, not LAPOA. Garey identified a document showing the past-due fees and assessments that, LAPOA claimed, were owed by Ms. Mahoney. Garey testified that Ms. Mahoney had never returned the invoices for fees and assessments to Garey with a request that the invoices be forwarded to someone else. Nor, according to Garey, had Ms. Mahoney ever informed LAPOA that she was not the owner of the unit in which she resided. Garey testified that LAPOA, by virtue of its contract with the owner of each unit, has a lien on any unit for which there are unpaid fees and assessments. Garey said that LAPOA had foreclosed its lien on unit C-1.1
"On cross-examination, Garey acknowledged that the owner of each unit is solely responsible for payment of the property-owners-association fees and assessments. Garey admitted that LAPOA had no deed showing that Ms. Mahoney was the owner of the unit in which she resided, that LAPOA had no contract with Ms. Mahoney, and that LAPOA had no document stating that someone other than the owner of the unit was responsible for payment of the fees and assessments on the unit that Ms. Mahoney occupied. On redirect examination, Garey affirmed the truth of the following inquiry by LAPOA's counsel: `We're simply asking [the circuit court] to confirm that we've got a judgment on this unit, whether it's owned [by] Ms. Mahoney or whoever it is, because *513 that unit has not paid any dues and assessments, is that right?'
"The circuit court admitted the following documentary evidence offered by LAPOA: (1) the condominium declaration for the Loma Alta subdivision; (2) a statement of fees, assessments, and late charges sent by LAPOA to Ms. Mahoney on January 24, 2007, indicating a balance due of $6,150; and (3) a `Statement of Lien' filed in the Baldwin Probate Court on October 4, 2004, naming Carol Mahoney as the owner of `Lot C-1, Loma Alta, as recorded in Map Book 11, Page 176, in the Office of the Judge of Probate, Baldwin County, Alabama.'
"At the conclusion of Garey's testimony, LAPOA rested and Ms. Mahoney's counsel moved for a `directed verdict,'2 arguing:
"`[T]here's been no proof of ownership [by] my client, Carol Mahoney,... or that she's bound by any contract that they have failed to present in court showing that she's responsible for anything ....
"`[LAPOA has] gone against the wrong person, and that's why we move for a directed verdict and ask for award of reasonable attorney's fees for having to fight this.'
"The circuit court denied the motion. On April 13, 2007, the court entered a judgment in favor of LAPOA and against Ms. Mahoney in the amount of $6,279.10 and awarded LAPOA an attorney's fee of $5,000. The court did not rule on Ms. Mahoney's ALAA counterclaim, but we conclude that it was implicitly denied. See Harris v. Cook, 944 So. 2d 977, 981 (Ala.Civ.App.2006). On the same day, the circuit court entered a default judgment for the same amount in favor of LAPOA and against Joseph Mahoney. Ms. Mahoney filed a timely notice of appeal to this court on May 15, 2007.
1 "Section 35-8-17(4), Ala.Code 1975, a part of a chapter entitled `Condominium Ownership,' provides that `[l]iens for unpaid assessments may be foreclosed by an action brought in the name of the [property owners'] association in the same manner as a foreclosure of a mortgage on real property.'
2 In actions tried without a jury, the proper motion is one for a judgment on partial findings, pursuant to Rule 52(c), Ala. R. Civ. P."
This court reversed the judgment in favor of Loma Alta Property Owners Association, Inc. ("LAPOA"), holding that LAPOA had wholly failed to prove that Ms. Mahoney was bound to pay the fees, assessments, and late charges claimed by LAPOA because LAPOA's contract obligated the owner of the condominium unit to pay those charges and the evidence conclusively established that Ms. Mahoney was not the owner of the unit. This court remanded the cause to the circuit court with instructions to adjudicate Ms. Mahoney's ALAA claim.
On remand, the circuit court vacated its judgment in favor of LAPOA, entered a judgment in favor of Ms. Mahoney, and summarily denied Ms. Mahoney's ALAA claim on September 17, 2008. Ms. Mahoney filed a postjudgment motion on October 2, 2008, complaining that the circuit court had, "without evidence or testimony entered a verdict for [LAPOA] as to the ALAA claim." She attached to her motion a foreclosure deed executed by LAPOA's attorney on October 10, 2006, and filed in the Baldwin Probate Court on October 16, 2006, averring that Joseph Mahoney had been the record title owner of the subject property since May 10, 2005.
Ms. Mahoney specifically requested a hearing on her postjudgment motion. The circuit court set the motion for a hearing on October 21, 2008. The record before us *514 contains no transcript of the hearing. The parties agree, however, that Ms. Mahoney did not appear, that no evidence was presented, and that counsel for both parties presented oral argument to the trial court at the hearing. On October 28, 2008, the circuit court denied Ms. Mahoney's postjudgment motion. Ms. Mahoney timely appealed on November 13, 2008.
Discussion
Section 12-19-272(a), Ala.Code 1975, provides that a trial court "shall award" an attorney's fee against any party "who has brought a civil action, or asserted a claim therein, or interposed a defense, that a court determines to be without substantial justification, either in whole or part." In Pacific Enterprises Oil Co. (USA) v. Howell Petroleum Corp., 614 So. 2d 409, 417 (Ala. 1993), our supreme court held that the determination that an action, claim, or defense is without substantial justification "may be either a factual or a legal determination, depending on the grounds upon which the trial court bases its determination." The court further explained:
"Section 12-19-271(1), Ala.Code 1975, states:
"`The phrase "without substantial justification," when used with reference to any action, claim, defense or appeal, including without limitation any motion, means that such action, claim, defense or appeal (including any motion) is frivolous, groundless in fact or in law, or vexatious, or interposed for any improper purpose, including without limitation, to cause unnecessary delay or needless increase in the cost of litigation, as determined by the court.'
". . . .
"The clear terms of § 12-19-271(1) require that for an action, claim, or defense to be `without substantial justification' it must be either `frivolous,' `groundless in fact,' `groundless in law,' `vexatious,' or `interposed for any improper purpose.' We conclude that the terms or phrases `frivolous,' `groundless in fact,' `vexatious,' and `interposed for any improper purpose' require factual determinations that will be entitled to deference on appeal. See, Smith v. Smith, 551 So. 2d 1024 (Ala.1989). Thus, if a trial court determines that a party's action, claim, or defense is `without substantial justification,' based on the applicability of any one of these terms or phrases, that determination will not be disturbed on appeal `unless it is clearly erroneous, without supporting evidence, manifestly unjust, or against the great weight of the evidence.' Cove Creek Development Corp. v. APAC-Alabama, Inc., 588 So. 2d 458, 461 (Ala.1991).
"However, we conclude that the phrase `groundless in law' clearly calls for a legal determination. Therefore, if the trial court determines that a party's action, claim, or defense is `without substantial justification' because it is 'groundless in law,' that determination will not be entitled to a presumption of correctness. Rather, the appellate courts of this State will test the validity of the trial court's legal conclusion."
614 So.2d at 417-18 (emphasis omitted). When a trial court grants an attorney's fee under the ALAA, it must "specifically set forth the reasons for such award." § 12-19-273, Ala.Code 1975. See Pacific Enters., 614 So.2d at 418.
Referring to the standard of review in ALAA cases, this court, in Sanderson Group, Inc. v. Smith, 809 So. 2d 823, 831 (Ala.Civ.App.2001), stated:
"The supreme court has never discussed the standard of review applicable to the denial of an award of fees under the ALAA. However, this court has indicated *515 that the requirement that the trial court expressly state the reasons behind its decision does not apply to the denial of a motion pursuant to the ALAA, but only to the grant of such a motion. See Brashear v. Spinks, 623 So. 2d 321, 323 (Ala.Civ.App.1993)."
Because our supreme court has never set out the applicable standard for appellate review of the denial of an ALAA claim, we will discuss Sanderson Group, Inc. v. Smith, supra; Sam v. Beaird, 685 So. 2d 742 (Ala.Civ.App.1996); Warner v. Bullington, 624 So. 2d 594 (Ala.Civ.App. 1993); and Brashear v. Spinks, 623 So. 2d 321 (Ala.Civ.App.1993)our own opinions that have addressed a trial court's denial of an ALAA claimin order to determine what standard of review has been applied.
In Brashear v. Spinks, supra, a former wife filed a contempt petition against a former husband, alleging that the former husband had failed and refused to comply with the terms of the divorce judgment, which incorporated an agreement by the parties to retain joint ownership of two houses, one in Alabama and one in Indiana. The agreement provided that the former wife could live in the Alabama house and that the former husband would be responsible for paying the mortgage payments on both houses. The former wife's contempt petition alleged that the former husband had refused to allow her to live in the Alabama house and had failed to pay the mortgage payments on the Indiana house, resulting in the foreclosure of the mortgage on that house. The parties later stipulated that the former wife's petition should be dismissed. The former wife submitted an affidavit acknowledging that the allegations of her petition were untrue; the former husband moved for an attorney's fee and costs pursuant to the ALAA. The trial court dismissed the former wife's petition and summarily denied the former husband's ALAA claim. This court reversed the trial court's denial of the ALAA claim and instructed the trial court, on remand, to award the former husband an attorney's fee. We stated:
"The record is comprised solely of the clerk's record. There was no hearing on the complaint. Even from a review of the record before us, however, it appears that the [former] husband's request for attorney fees was well grounded. The [former] wife admitted in her affidavit that the allegations of the complaint were untrue. She stated in deposition that she brought the action, over twenty-five years after the divorce decree, because the [former] husband's `mother treated her like a dog.' It appears that if the [former] wife's attorney had investigated his client's charges by a simple title search of the property in question, he would have found that there was no validity to her complaint. Counsel for the [former] husband, by letters and pleading, informed the [former] wife's counsel of the falseness of her charges soon after the complaint was filed."
623 So.2d at 323.
In Warner v. Bullington, supra, a buyer and a seller entered into an installment sales contract for the purchase of real property. The buyer defaulted on the payments and was notified by the seller to vacate the property. The buyer then sued the seller, alleging a violation of federal Truth-in-Lending Act and state Mini-Code disclosure requirements and seeking rescission of the contract, damages, and an attorney's fee. The seller complied with the buyer's request for a rescission of the contract, refunded the payments made by the buyer, and requested that the buyer vacate the premises. The seller also moved to dismiss the buyer's complaint on the ground that the action was "without *516 substantial justification" and requested an attorney's fee. The trial court dismissed the buyer's complaint and denied the seller's claim for an attorney's fee.
This court affirmed, holding that, because the seller acknowledged that the contract lacked certain disclosures required by the Truth-in-Lending Act, it could not say that the buyer's action was "without substantial justification," 624 So. 2d at 595, and, thus, we held that the trial court had not "abused its discretion" in denying the ALAA claim, 624 So. 2d at 596.
In Sam v. Beaird, supra, this court affirmed a trial court's denial of an ALAA claim. In that case, a tenant sued her landlord, alleging, among other things, a violation of the Alabama Deceptive Trade Practices Act, § 8-19-1 et seq., Ala.Code 1975. The trial court entered a judgment in favor of the landlord but denied the landlord's motion to assess an attorney's fee under the ALAA. The tenant appealed, and the landlord cross-appealed the denial of his ALAA claim. This court held that, although Alabama law regarding the scope of the deceptive trade practices outlined in § 8-19-5 was not clear, the statutory language left no doubt that "some knowledge of false or deceptive conduct on the part of the wrongdoer" was required, 685 So. 2d at 744, and, we held, the evidence would not have supported a finding that the landlord had engaged in knowingly false or deceptive conduct. Nevertheless, we affirmed the denial of the landlord's ALAA claim because, "[a]lthough [the tenant] did not prevail, her claims were not so lacking in merit as to be frivolous. Further there [was] no evidence that [the tenant] pursued her claims in bad faith or with malicious intent." 685 So. 2d at 745.
In Sanderson Group v. Inc. v. Smith, supra, the credit company that had financed a buyer's purchase of a mobile home filed an action to repossess the mobile home after the buyer had rejected the home upon delivery and had stopped payments. The buyer counterclaimed against the credit company, alleging fraud, and asserted claims against the seller and its agent, alleging fraud, breach of contract, and conversion. The credit company, the seller, and the seller's agent moved to compel arbitration, and an arbitrator issued an order denying the buyer's conversion claim but awarding the buyer damages for mental anguish. The seller appealed to the circuit court, and the buyer moved for an attorney's fee pursuant to the ALAA. The circuit court confirmed the award but denied the buyer's request for an attorney's fee. The seller appealed and the buyer cross-appealed.
The ALAA claim at issue in Sanderson Group depended upon the correctness of the arbitrator's award to the buyer of mental-anguish damages.
"The arbitrator stated that his award was based on his conclusion that `[the seller's] late delivery [of the mobile home], coupled with its promises of delivery by Christmas and its insistence that the [buyer] vacate the trade-in, led to substantial disruption of the [buyer's] famil[y's] lives for six to eight weeks, with accompanying severe emotional distress to ... [the buyer].' [The seller] argues that the arbitrator manifestly disregarded the law, which, it says, does not provide for the recovery of mental-anguish damages without either proof that [the buyer] was physically injured or proof that [the buyer] was placed in immediate risk of physical injury."
809 So.2d at 828. This court noted that the seller's argumentthat the arbitrator did not have the authority to award mental-anguish damages for a tort because such damages are not recoverable in the absence of physical injury or the immediate *517 risk of physical injury"completely disregard[ed] the well-established law that permits the award of mental-anguish damages in breach-of-contract cases involving homes." 809 So. 2d at 831. See Liberty Homes, Inc. v. Epperson, 581 So. 2d 449, 454 (Ala.1991) (stating that, under Alabama law, "[d]amages for mental anguish can be recovered ... `where the contractual duty or obligation is so coupled with matters of mental concern or solicitude, or with the feelings of the party to whom the duty is owed, that a breach of that duty will necessarily or reasonably result in mental anguish or suffering'" (quoting B & M Homes, Inc. v. Hogan, 376 So. 2d 667, 671 (Ala.1979))). Holding that the seller's argument with respect to mental-anguish damages was groundless in law, this court reversed the circuit court's judgment denying the buyer's ALAA claim and remanded the cause for the circuit court to determine an appropriate award. 809 So. 2d at 832.
A review of the foregoing cases convinces us that the standard of review on appeal from the denial of an ALAA claim is no different from the standard of review on appeal from the grant of an ALAA claim, except that the denial of an ALAA claim is not required to be (and is usually not) accompanied by any statement of reasons by the trial court. Therefore, when the trial court denies an ALAA claim without stating its reasons, this court will reverse only when the record shows indisputably that the "action, claim, or defense" is either "groundless in fact," see Brashear v. Spinks, supra, or "groundless in law," see Sanderson Group, supra.
In the present case, as in Sanderson Group, the record shows indisputably that LAPOA's action against Ms. Mahoney was groundless in law. All four of LAPOA's claims against Ms. Mahoney breach of contract, account stated, property owner's lien, and evictionhinged upon its proving that Ms. Mahoney was the owner of the property. LAPOA not only failed to prove that Ms. Mahoney was the owner, but it also presented as its only witness at the circuit-court trial someone who acknowledged "that LAPOA had no deed showing that Ms. Mahoney was the owner" of the property. Mahoney, 4 So.3d at 1132. LAPOA had access to its own condominium declaration, which
"makes it clear that LAPOA's remedy is strictly against the owner. As Article VII, Section 7, of the declaration, entitled `Effect of Nonpayment of Assessments: Remedies of the Association,' states: `No owner may waive or otherwise escape liability for the assessments provided for herein by non-use of the Common Area or abandonment of his lot.'"
Mahoney, 4 So.3d at 1134. In addition, the record conclusively demonstrates that LAPOA knew, before December 21, 2006, when it amended its complaint in the circuit court, that Ms. Mahoney's former husband, Joseph Mahoney, was the owner of the property because LAPOA's attorney had, on October 16, 2006, filed in the Baldwin Probate Court a foreclosure deed averring that Joseph Mahoney had been the record title owner of the subject property since May 10, 2005.
To paraphrase what this court held in Brashear v. Spinks, 623 So.2d at 323:
"It appears that if [LAPOA's] attorney had investigated his client's charges by a simple title search of the property in question, he would have found that there was no validity to [LAPOA's] complaint."
Because LAPOA's claims against Ms. Mahoney were groundless in law, the trial court's order denying Ms. Mahoney's ALAA claim is reversed, and the cause is *518 remanded for the trial court to determine an appropriate award.
Ms. Mahoney's request for an attorney's fee on appeal is granted in the amount of $500.
REVERSED AND REMANDED.
THOMPSON, P.J., and PITTMAN, BRYAN, and MOORE, JJ., concur.
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51 So.3d 530 (2010)
Alicia ARCE, Appellant,
v.
Raymond A. HAAS, Individually; Raymond A. Haas, P.A.; Haas, Dutton, Blackburn, Lewis & Longley, P.A.; George A. Vaka, Individually; and Vaka, Larson & Johnson, P.L., Appellees.
No. 2D09-5801.
District Court of Appeal of Florida, Second District.
December 15, 2010.
*531 Robert C. Widman of Morris & Widman, P.A., Venice, for Appellant.
James H. Wyman of Hinshaw & Culbertson, LLP, Fort Lauderdale; and Philip Crowley of Hinshaw & Culbertson, Tampa, for Appellees Raymond A. Haas; Raymond A. Haas, P.A.; and Haas, Dutton, Blackburn, Lewis & Longley, P.L.
No appearance for Appellees George A. Vaka and Vaka, Larson & Johnson, P.L.
VILLANTI, Judge.
Alicia Arce appeals the final summary judgment entered in favor of Raymond A. Haas; Raymond A. Haas, P.A.; and Haas, Dutton, Blackburn, Lewis & Longley, P.A. (collectively "Haas"), in Arce's action against them for legal malpractice. The alleged malpractice arose in the context of an action for personal injuries brought against Arce by one Joy Beaufort following an automobile accident. Haas was retained by Arce's automobile insurance carrier, GEICO, to defend Arce in the personal injury action.
After a stipulated judgment was entered in favor of Beaufort and against Arce for $450,000, Arce brought this legal malpractice action against Haas based on events surrounding the negotiation and implementation of an alleged settlement agreement between Beaufort and Arce. After minimal discovery, the trial court entered final summary judgment in favor of Haas, finding that "the facts clearly and unequivocally convince this Court that legal malpractice was not committed." Arce then brought this appeal from the final summary judgment.
"A movant is entitled to summary judgment `if the pleadings, depositions, answers to interrogatories, admissions, affidavits, and other materials as would be admissible in evidence on file show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.'" Estate of Githens ex rel. Seaman v. Bon Secours-Maria Manor Nursing Care Ctr., Inc., 928 So.2d 1272, 1274 (Fla. 2d DCA 2006) (quoting Fla. R. Civ. P. 1.510(c)); see also Bermont Lakes, LLC v. Rooney, 980 So.2d 580, 586 (Fla. 2d DCA 2008). When considering a motion for summary judgment, the trial court may not weigh the credibility of witnesses or resolve disputed issues of fact. See Jones v. Stoutenburgh, 91 So.2d 299, 302 (Fla.1957); Williams v. Bd. of Pub. Instruction of Flagler Cnty., 61 So.2d 493, 493 (Fla.1952); Strickland v. Strickland, 456 So.2d 583, 584 (Fla. 2d DCA 1984). Instead, if the record reflects any disputed issue of material fact, a motion for summary judgment must be denied.
Having carefully reviewed the record on appeal in this case and having considered the well-presented arguments made at oral argument, we agree with Arce that there are disputed issues of material fact concerning the scope of the alleged settlement agreement between Arce and Beaufort and the timing of certain events leading up to the entry of the judgment against Arce. The trial court was not permitted to resolve these disputed issues or weigh the evidence to determine whether legal malpractice was committed. And these disputed issues of material fact precluded entry of final summary judgment in favor of Haas.
We also note that it appears that the trial court applied the incorrect legal standard when considering Haas's motion. In its order granting summary judgment, the court stated that the facts "clearly and unequivocally convince this Court" that legal *532 malpractice had not occurred. However, the trial court's opinion of the weight of the evidence and its speculation as to the case's ultimate outcome are immaterial at the summary judgment stage. See Bishop v. City of Clearwater, 258 So.2d 337, 339 (Fla. 2d DCA 1972) (noting that the trial court's consideration of a motion for summary judgment "`may not be influenced by the chances of success which [the court] considers either party may have on the trial'" (quoting Benson v. Atwood, 177 So.2d 380, 383 (Fla. 1st DCA 1965))). Instead, the court's focus must be limited to whether disputed issues of material fact exist and, if not, whether the moving party is entitled to judgment in their favor as a matter of law, not as a matter of fact. Thus, even if the record had not reflected disputed issues of material fact, we would have been compelled to reverse the final summary judgment and remand for the trial court to reconsider Haas's motion in light of the proper legal standard.
Reversed and remanded for further proceedings.
ALTENBERND and DAVIS, JJ., Concur.
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44 P.3d 714 (2002)
2001 UT 23
WWC HOLDING CO., INC., Petitioner,
v.
PUBLIC SERVICE COMMISSION OF UTAH, Stephen F. Mecham, Clark D. Jones and Constance B. White, Commissioners of the Public Service Commission of Utah, Respondents.
No. 20000835.
Supreme Court of Utah.
March 5, 2002.
*716 Matthew F. McNulty, III, Salt Lake City, and Mark J. Ayotte, Philip R. Schenkenberg, Saint Paul, MN, for petitioner.
Sander J. Mooy, Gregory B. Monson, Joni Dickson Seko, Jerry D. Fenn, Salt Lake City, for respondents.
*717 WILKINS, Justice.
¶ 1 WWC Holding Co., Inc. ("WWC") petitions us to review the Public Service Commission's order denying it rural Eligible Telecommunications Carrier status and requiring it to price its universal service offerings at or below the Affordable Base Rates. We affirm.
BACKGROUND
¶ 2 Because the party seeking review of an agency's order following a formal administrative proceeding has the burden to prove that the agency's factual findings are not supported by substantial evidence, we state the facts and all legitimate inferences to be drawn from them in the light most favorable to the agency's findings. Utah Code Ann. § 63-46b-16(4)(g)(1997); Hales Sand & Gravel v. Audit Div., 842 P.2d 887, 888 (Utah 1992).
¶ 3 Promoting universal servicethat is, ensuring that all Americans have access to affordable phone servicehas long been a fundamental goal of telecommunications regulation. See, e.g., 47 U.S.C. § 151 (2001)(creating the Federal Communications Commission and stating that its purpose is to make available affordable communications services to all citizens). In furtherance of this goal, federal and state subsidies ("universal service support") are available to encourage providers of telecommunications services ("common carriers") to provide service to rural areas and low-income consumers. See 47 U.S.C. § 214(e)(2001); Utah Code Ann. § 54-8b-15 (2000). These subsidized telecommunications services are known as universal service offerings. Only Eligible Telecommunications Carriers ("ETCs") are eligible to receive universal service support, 47 U.S.C. § 214(e)(1), Utah Admin. Code R746-360-6(A), and state commissions have been given the authority to designate common carriers as ETCs. 47 U.S.C. § 214(e)(2). Although there are multiple requirements for ETC designation and receipt of universal service support funds, only two are at issue in this case: (1) the federal requirement that a state commission must find that designating an additional ETC in a rural area is in the public interest, 47 U.S.C. § 214(e)(2), and (2) the state requirement that to be eligible for state universal service support, a telecommunications corporation may not charge retail rates in excess of the Affordable Base Rates for basic telecommunications service as determined by the Utah Public Service Commission ("PSC"). Utah R746-360-6(B).
¶ 4 WWC is a common carrier that provides telecommunications services using commercial mobile radio, or wireless, technology. WWC filed a petition with the PSC seeking designation as an ETC in Utah and eligibility to receive state and federal universal service support. In its petition WWC represented that it met the requirements for becoming an ETC and advocated that designation of it as an ETC in rural areas would serve the public interest. The PSC held a hearing on WWC's petition at which WWC presented one witness in favor of its petition. Six witnesses, testifying on behalf of two state organizations, the Division of Public Utilities and the Committee of Consumer Services, and two private organizations, the Utah Rural Telecom Association and U.S. West, testified against the petition.
¶ 5 After these formal proceedings, the PSC issued an order ("Order") designating WWC as an ETC in non-rural areas served by U.S. West. WWC's eligibility to receive state universal service support for service in these areas was contingent, among other things, on WWC charging no more than the Affordable Base Rates, defined by the Order as the rates previously set by the PSC for U.S. West for the areas at issue, for its universal service offerings. The PSC found that it would not be in the public interest to designate WWC as an additional ETC in rural areas served by incumbent carriers. It found that designation of WWC as an ETC in these areas would increase demands on the state universal service fund without any offsetting benefits and consequently declined to designate WWC as an ETC in these areas. We have jurisdiction to review the PSC's final order pursuant to section 78-2-2(3)(e)(i) of the Utah Code. This review followed.
ISSUES PRESENTED AND STANDARDS OF REVIEW
¶ 6 WWC disputes the PSC's finding that granting it ETC status in the applied-for *718 rural areas would not be in the public interest. WWC also disputes the PSC's requirement that in order to receive state universal service support for the areas in which it was designated an ETC, it must price its universal service offering at or below the Affordable Base Rates.
¶ 7 Review of administrative decisions is governed by the Utah Administrative Procedures Act ("UAPA"), Utah Code Ann. §§ 63-46b-0.5 to -23 (1997 & Supp.2001). Administrative decisions based on formal administrative proceedings are reviewed under section 63-46b-16. For a reviewing court to grant relief under UAPA, it must determine, on the basis of the agency's record, that the party has been "substantially prejudiced" by the agency action. Utah Code Ann. § 63-46b-16(4)(1997). A party has been substantially prejudiced if "the alleged error was not harmless." Mountain Fuel Supply Co. v. Pub. Serv. Comm'n, 861 P.2d 414, 423 (Utah 1993). In making this determination, the court will apply different standards of review depending on whether the issue is one of fact, law, or legal discretion. See § 63-46b-16(4).
¶ 8 We uphold an agency's factual findings if supported by substantial evidence. § 63-46b-16(4)(g). As we explained in Harken Southwest Corp. v. Bd. of Oil, Gas and Mining:
Substantial evidence is that quantum and quality of relevant evidence that is adequate to convince a reasonable mind to support a conclusion. This standard does not require or specify a quantity of evidence but requires only such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Nonetheless, in evaluating the sufficiency of the evidence, we will not sustain a decision which ignores uncontradicted, competent, credible evidence to the contrary.
920 P.2d 1176, 1180 (Utah 1996) (citations and internal quotation marks omitted). When challenging factual findings, the appellant has the burden of "marshaling all of the evidence supporting the findings and then, despite the supporting facts, showing that the findings are not supported by substantial evidence." Kennecott Corp. v. Utah State Tax Comm'n, 858 P.2d 1381, 1385 (Utah 1993). Issues of legal discretion may be challenged only by showing that "the agency action is ... an abuse of the discretion delegated to the agency by statute." § 63-46b-16(h)(i); see also Morton Int'l, Inc. v. Auditing Div., 814 P.2d 581, 587-89 (Utah 1991)(construing § 63-46b-16(h)(i)). "[A]n agency has abused its discretion when the agency's action, viewed in the context of the language and purpose of the governing statute, is unreasonable." Morton Int'l, 814 P.2d at 587. Finally, absent a grant of discretion, legal issues are reviewed under a correction-of-error standard. § 63-46b-16(4)(d); see also Morton Int'l, 814 P.2d at 588-89. This standard is especially appropriate where the agency possesses no special expertise which would place it in a better position than the court to decide the issue. See Morton Int'l, 814 P.2d at 586-87.
ANALYSIS
I. PUBLIC INTEREST ANALYSIS
¶ 9 We first address WWC's public interest arguments. As discussed above, the PSC is required by 47 U.S.C. § 214(e)(2) to make a public interest finding prior to designating an additional ETC in a rural area. After a formal administrative proceeding, the PSC found that designation of WWC as an ETC in rural areas already served would not be in the public interest. As explained in the Order, this finding appears to be based on two sub-findings: (1) that designation of an additional ETC in rural areas already served would increase burdens on the state universal service fund ("State Fund"), and (2) that this increased burden would not be offset by the corresponding public benefits of lower cost service or service in areas which are currently unserved.
¶ 10 WWC argues that the PSC should not have considered the effect of ETC designation on the State Fund as a matter of law. WWC also argues that it presented evidence to the PSC showing that designating it as an ETC would result in the public interest benefits of increased competition, choice, mobility, and a larger local calling area, that the PSC erred by "ignoring" these benefits, and that, *719 had these benefits been considered, the public interest test would have been tipped in WWC's favor.
¶ 11 Because the challenge to the Order's public interest findings deals with several different issues, we apply two different standards of review. What, exactly, constitutes "public interest" for purposes of ETC designation is a question, the resolution of which has been granted to the discretion of the PSC. 47 U.S.C. § 214(e)(2). Because the PSC is granted authority and discretion by statute to determine what constitutes public interest, we review the question of whether or not the PSC could legally consider particular factors in determining public interest under the abuse of discretion standard. See id.; Utah Code Ann. § 63-46b-16(h)(i)(1997). How the PSC weighs these factors to arrive at its ultimate conclusion is an issue we also review for abuse of discretion. Id. The question of whether public interest factors are met is a question of fact, limiting our review to determining whether or not there is substantial evidence in the record to support the PSC's findings. § 63-46b-16(4)(g).
A. Consideration of Impact on State Fund
¶ 12 WWC argues that the PSC should not have considered impact on the State Fund in making the public interest determination. It contends that by considering impact on the State Fund, the PSC's Order holds that the State Fund is per se incompatible with competition and that the Order, therefore, violates federal and state law.
¶ 13 WWC's argument mischaracterizes the PSC's findings. The Order does find that designating an additional ETC in rural areasor, as WWC expresses it, allowing competition in rural areasmay increase burdens on the State Fund. The Order does not, however, say that because of this the PSC will never allow competition in rural areas by refusing to designate additional rural ETCs. Rather, the Order says that in the absence of corresponding public benefits, increasing the burdens on the State Fund is not in the public interest. Moreover, the Order leaves open the possibility that if incumbent ETCs can reduce costs sufficiently such that even with additional common carriers receiving rural ETC designation, no additional burdens are placed on the State Fund, additional ETC designations could be in the public interest, regardless of whether corresponding public benefits accompanied the ETC designation. Thus, the PSC's Order is not against competition per se, but, rather, merely recognizes that in some instances competition in rural areas by multiple ETCs receiving state universal service support may not be in the public interest. This, in the opinion of the PSC, is one such instance.
¶ 14 The statutory language that "the State commission shall find that the designation is in the public interest," 47 U.S.C. § 214(e)(2), gives the PSC authority and thereby discretion to determine what is in the public interest. Aside from alleging a congressional preference for promoting competition, an issue which we need not address today, WWC has not cited any authority which explicitly limits the factors the PSC can consider in determining what is, or is not, in the public interest. Having been given the discretion to determine what is, or is not, in the public interest for ETC designation purposes, we see no indication that the PSC has abused its discretion in relying on impact on the State Fund as a public interest factor. We can find an abuse of discretion only if "the [PSC's] action, viewed in the context of the language and purpose of the governing statute, [47 U.S.C. § 214(e)(2),] is unreasonable." Morton Int'l, Inc. v. Auditing Div., 814 P.2d 581, 587 (Utah 1991). As discussed above, WWC's sole argument is that the context and purpose of 47 U.S.C. § 214(e)(2) mandates competition. However, as the Order is not against competition per se, WWC's argument fails. WWC has not presented any other grounds to justify a finding that consideration of the impact on the State Fund is unreasonable given the context and purpose of 47 U.S.C. § 214(e)(2). We therefore hold that the PSC did not abuse its discretion in determining that impact on the State Fund was a proper public interest factor.
¶ 15 Having concluded that the PSC could legitimately consider impact on the *720 State Fund in determining public interest, the question then becomes whether the PSC's factual determination that the State Fund would be negatively impacted is supported by substantial evidence in the record. Utah Code Ann. § 63-46b-16(4)(g) (1997). WWC has not met its burden of "marshaling all of the evidence supporting the findings" of the PSC and "showing that the findings are not supported by substantial evidence." Kennecott Corp. v. Utah State Tax Comm'n, 858 P.2d 1381, 1385 (Utah 1993). Instead, WWC has simply pointed to testimony in the record favorable to its position without dealing with the testimony unfavorable to its position upon which the PSC based its findings.
¶ 16 The record contains expert testimony stating that there was a strong probability that designating a second ETC in many areas would reduce revenues to all ETCs. This, in turn, could result in either (1) an increase in the total costs of providing universal service support, or (2) a reduction in funding to ETCs, resulting in rate increases, decreases in infrastructure investment and/or service. The likely effect of either scenario would be to increase financial demands on the State Fund. This testimony in the record is sufficiently substantial to support the PSC's finding on this issue. See Harken Southwest Corp. v. Bd. of Oil, Gas and Mining, 920 P.2d 1176, 1180 (Utah 1996).
B. Absence of Public Benefits
¶ 17 As discussed above, the fact that the State Fund could be negatively impacted by designation of WWC as an additional ETC was not fatal to WWC's application. The PSC declined to grant WWC rural ETC status based on the combination of the possibility that the State Fund might be negatively impacted along with its finding that this likely detriment would not be offset by public benefits. The PSC's Order specifically identified two public benefitslower cost service and new service to currently unserved areaswhich, had they been present, presumably would have been enough to overcome the State Fund detriment. Because WWC does not contest the consideration of these public interest factors, we need not address whether the PSC abused its discretion in considering these factors. We therefore focus solely on whether the PSC's factual findings that designation would not provide these benefits are supported by substantial evidence in the record. See Utah Code Ann. § 63-46b-16(4)(g)(1997); Harken, 920 P.2d at 1180.
¶ 18 The record contains testimony supporting the conclusion that designation would not provide public benefits, specifically, that it would not result in lower prices or service to currently unserved areas. In regard to lower prices, the record contains testimony that competition in rural areas with little customer growth could result in higher average costs for rural telephone companies. These higher costs could result in higher prices for consumers. Additionally, WWC did not provide the PSC with information on the specific rates it intended to charge customers for its services. Although WWC said rates would be comparable to competitors', it did not know what rural telephone companies presently charge and admitted it had not determined what its rates would be. Ultimately, based on this testimony, the PSC found that WWC's prices "may well be higher than the incumbent prices." This testimony is sufficiently substantial to support the PSC's finding, see Harken, 920 P.2d at 1180, and we defer to the PSC's expertise in this area in reaching this conclusion.
¶ 19 With regard to serving currently unserved areas, it appears that there was significant ambiguity about the precise geographic area WWC would service. The record shows that WWC acknowledged it could have "gaps" in service (areas where cellular phone service is unavailable), that it may need to enhance signal strength in areas, and that it would not know of signal strength until it visited customers. WWC provided a map showing its signal coverage area which it believed to be sufficient for the PSC to conclude that it would serve all customers in the service area. However, WWC did not provide any technical information about cell sites, capacities, transmitter power, or tower locations, information which would have enabled the PSC to verify its service area claims, even though a *721 wireless telecommunications company such as WWC would typically have such information. WWC admitted it had a tower location map but did not provide it to the PSC. WWC testified that ensuring adequate signal strength for customers is an ongoing process requiring analysis of tower locations, but did not provide any specific information about the results of such analysis in Utah. WWC also provided no specific information about the possible costs of ensuring that all customers had an adequate signal. The record also contains testimony that there are gaps in WWC's coverage and anecdotal accounts of gaps in coverage. This testimony is sufficiently substantial to support the PSC's finding that currently unserved areas would not be served by WWC. See Harken, 920 P.2d at 1180.
¶ 20 Thus, the PSC's conclusion that designation of WWC as a rural ETC would be detrimental to the State Fund and would not result in lower prices or new service to currently unserved areas is supported by substantial evidence in the record, as required by section 63-46b-16(4)(g) of the Utah Code. We therefore affirm these findings in the PSC's Order.
¶ 21 WWC further argues that the PSC's Order did not recognize other undisputed benefits, and that had these benefits been considered, the PSC's public interest determination would have been tipped in WWC's favor. Specifically, WWC argues that it proved that designating it as an additional rural ETC would result in the public benefits of increased competition, choice, mobility, and a larger local calling area. Regardless of the possible existence of these benefits, however, WWC has not cited any authority which requires the PSC to consider these specific factors in determining public interest. As discussed above, the PSC has been given statutory authority to determine which factors to consider in determining public interest, and how those factors should be weighed to arrive at the ultimate conclusion. The PSC "is in a better position than the courts to give effect to the regulatory objective to be achieved," Morton Int'l, Inc. v. Auditing Div., 814 P.2d 581, 586 (Utah 1991), that is, to determine what is, or is not, in the public interest with regard to rural ETC designation. As the PSC has been given this authority, and possesses "`expertise gleaned from its accumulated practical, first-hand experience with the subject matter,'" id. at 587 (quoting Bennett v. Indus. Comm'n, 726 P.2d 427, 429 (Utah 1986)), we see no reason to require the PSC to consider specific factors, or to require that factors be given specific weights.
¶ 22 Furthermore, it appears that the PSC gave considerable weight to its finding that designation of WWC as an ETC would not result in service to currently unserved areas. The Order designates this benefit as "the primary potential benefit," suggesting that it was the principal consideration in concluding that designating WWC as an ETC would not bring offsetting public benefits. Given this, we see no reason to think that the result of the Order would have been any different, even if the PSC had been required to consider the public interest factors which WWC argues it ignored.[1] Thus, WWC has not been "substantially prejudiced" by the PSC's Order as required by section 63-46b-16(4).
¶ 23 The PSC appeared to be hindered throughout its decision-making process by the general problem that it had to determine public benefit by relying on WWC's assertions and promises rather than on objective documentation. For example, WWC did not provide specific documentation detailing service and equipment it intended to offer. WWC also did not provide service area coverage *722 details, signal-strength models, projected costs for service, or sufficient documentation to enable the PSC to determine whether WWC would provide an adequate level of service at an affordable rate. It merely gave assurances that it would provide adequate service.
¶ 24 After a careful review of the record, we conclude that the PSC did not abuse its discretion in determining that impact on the State Fund was a public interest factor and that the PSC's findings of fact on this point are supported by substantial evidence in the record as detailed above. We further conclude that the PSC did not abuse its discretion in focusing only on certain public interest factors. Because we find that the PSC did not abuse its discretion in reaching its ultimate conclusion, we affirm the findings in the Order that it is not in the public interest to designate WWC as an additional ETC in rural areas currently served by incumbent ETCs.
II. AFFORDABLE BASE RATES
¶ 25 We next address WWC's argument that the PSC should not have required WWC to price its universal service offering at or below the Affordable Base Rates in order to receive state universal service funds. Rule 746-360-6(B)[2] of the Utah Administrative Code requires that a carrier receiving state universal service support "may not charge retail rates in excess of the [PSC] determined Affordable Base Rates for basic telecommunications service...." The PSC's Order noted that WWC must meet this requirement to receive state universal service support funds and stated that it presumed that the Affordable Base Rates were represented by the rates previously set by the PSC for U.S. West in the relevant areas. WWC argues that this price cap requirement should be reversed because (1) Utah R746-360-6(B) is preempted by federal statute, and (2) the PSC should have established Affordable Base Rates through a rulemaking proceeding, rather than simply presuming that the U.S. West rates represented the Affordable Base Rates.
¶ 26 Whether a state administrative rule is preempted by a federal statute is a question of law which we review under a correction of error standard. See Utah Code Ann. § 63-46b-16(4)(d)(1997). Whether a state administrative agency engaged in an unlawful decision-making process is also a question of law we review under the same standard. See §§ 63-46b-16(4)(e), -16(4)(d).
A. No Federal Preemption
¶ 27 47 U.S.C. § 332(c)(3)(A) states, in relevant part, that "no State or local government shall have any authority to regulate the entry of or rates charged by any commercial mobile service...." WWC argues that this language preempts rule 746-360-6(B) of the Utah Administrative Code and that the PSC cannot, therefore, require WWC to price its universal service offering at or below specific rates. The PSC counters that § 332(c)(1)(A) provides that commercial mobile services are to be treated as common carriers and that, therefore, § 332(c)(3)(A) prohibits state entry or rate regulation only when a commercial mobile service is acting as a common carrier. The PSC asserts that ETC status is separate from common carrier status and that, therefore, § 332(c)(3)(A) is not applicable when a common carrier is acting as an ETC. We conclude that Utah R746-360-6(B) does not regulate entry or rates as contemplated by 47 U.S.C. § 332(e)(3)(A).
¶ 28 The term "regulate" is not defined by the statute. "`This silence compels us to "start with the assumption that the legislative purpose is expressed by the ordinary meaning of the words used."'" Sec. Indus. Ass'n v. Bd. of Governors of the Fed. Reserve Sys., 468 U.S. 137, 149, 104 S. Ct. 2979, 82 L. Ed. 2d 107 (1984) (quoting Russello v. United States, 464 U.S. 16, 21, 104 S. Ct. 296, 78 L. Ed. 2d 17 (1983) (quoting Richards v. United States, 369 U.S. 1, 9, 82 S. Ct. 585, 7 L. Ed. 2d 492 (1962))). The ordinary meaning *723 of the verb "regulate" in the context of administrative regulation embodies the concept of unilateral restriction or control. See, e.g., Black's Law Dictionary 1286 (6th ed.1990)("Regulate: To fix, establish, or control; to adjust by rule, method, or established mode; to direct by rule or restriction; to subject to governing principles or laws."); Black's Law Dictionary 1289 (7th ed. 1999)("regulation: The act or process of controlling by rule or restriction.") Based on our understanding of the term "regulate," Utah R746-360-6(B) does not regulate WWC's rates.
¶ 29 While Utah R746-360-6(B) certainly has some effect on universal service offering rates, it does not unilaterally restrict or control the rates a commercial mobile service can charge for its servicesthe very essence of rate regulation. By requiring that an ETC receiving state universal service support price its universal service offering at or below the Affordable Base Rates, Utah R746-360-6(B) seeks to ensure that state funds are used to subsidize high-cost or low-income telecommunications service, rather than provide a windfall for the ETC receiving the support. Utah R746-360-6(B) concerns eligibility for state financial assistance and safeguarding state funds, not regulating rates. To achieve this end, Utah R746-360-6(B) is narrowly applicable only to telecommunications carriers who voluntarily seek ETC status and who voluntarily receive state funding. The rule is not a factor in determining ETC status or in eligibility for federal universal service support. Only if an ETC wishes to receive state universal service funds must it comply with Utah R746-360-6(B). An ETC becomes subject to the rate requirement only after it chooses to seek state funding. Because Utah R746-360-6(B) becomes applicable only under discrete, voluntary circumstances, the element of restriction or control is absent. It is therefore not rate regulation.
¶ 30 In this case the PSC is not regulating WWC's rates. WWC is free to set its rates without any state interference. Even after its voluntary decision to seek ETC status, WWC is still free to set its rates without state intervention. Only in the narrow instance of WWC's voluntary decision to receive state universal service support must it set the price of its universal service offering at or below a specified level. And, even while receiving state universal support, WWC is free to set the rates for other services without state intervention. Thus, Utah R746-360-6(B) is a condition imposed on the receipt of state funds rather than outright rate regulation. Because this condition does not constitute rate regulation, we hold that § 332(c)(3)(A) does not preempt Utah R746-360-6(B). The PSC may require WWC to price its universal service offering at or below the Affordable Base Rates under Utah R746-360-6(B) in order to be eligible for state financial subsidies.[3]
B. Establishment of Affordable Base Rates
¶ 31 WWC argues that the PSC erred in presuming that the rates previously set by the PSC for the U.S. West telephone exchanges in the Order represented the Affordable Base Rates, and that the PSC should have established this rate through a formal rulemaking proceeding under the Utah Administrative Rulemaking Act ("UARA"), sections 63-46a-1 to -16 of the Utah Code. The allegation that the PSC "has engaged in an unlawful procedure or decision making process" is sufficient to allow us to review the agency's action. Utah Code Ann. § 63-46b-16(4)(e)(1997). However, because the UARA does not apply in this instance, we affirm the PSC's Order to the extent it equates the Affordable Base Rates with the rates previously set by the PSC for U.S. West.
¶ 32 WWC has not convinced us that the PSC engaged in rulemaking when it ordered that the Affordable Base Rates were represented by previously set rates. The UARA dictates when rulemaking is required and exempts "rulings by an agency in adjudicative proceedings." § 63-46a-2(17)(c)(vii)(Supp.2001). Such rulings are excluded from the UARA's definition of "rule" and are therefore not subject to the UARA. While WWC has argued that this portion of the PSC's Order is similar to a rule, it has not addressed the statutory exemption which *724 appears to be directly applicable here. This exemption for agency rulings comes with the proviso that "[e]ach agency shall enact rules incorporating the principles of law not already in its rules that are established by final adjudicative decisions within 120 days after the decision is announced in its cases." § 63-46a-3(6)(Supp.2001); see also § 63-46a-2(17)(c)(vii)(Supp. 2001). We need not address the issue of the PSC's compliance with section 63-46a-3(6), however, as nothing in the record, the parties' briefs, or at oral argument addresses or mentions compliance with section 63-46a-3(6). See, e.g., Springville Citizens for a Better Cmty. v. City of Springville, 1999 UT 25, ¶ 20 n. 2, 979 P.2d 332 ("We do not address these issues because plaintiffs have failed to brief them adequately"). Thus, because the PSC's Order is a "ruling by an agency in [an] adjudicative proceeding[]," § 63-46a-2(17)(c)(vii)(Supp. 2001), this portion of the Order is not a rule and, therefore, need not comply with the UARA. As this is the only ground upon which WWC attacks the PSC's presumption that the previously-set rates represent the Affordable Base Rates, we affirm the Order in this regard.
CONCLUSION
¶ 33 The PSC did not abuse its discretion in considering impact on the State Fund in determining whether designation of WWC as an ETC would be in the public interest under 47 U.S.C. § 214(e)(2), and we defer to the PSC's expertise in the factors it chose to consider in determining what constitutes public interest. Because the PSC's findings are supported by substantial evidence in the record, we affirm its findings. Additionally, the PSC could properly require that WWC price its universal service offerings at or below the Affordable Base Rates as a prerequisite to receiving state universal service funds, and the PSC did not need to engage in a formal rulemaking proceeding to establish that rate. The PSC's Order is affirmed.
¶ 34 Chief Justice Howe, Associate Chief Justice Russon, Justice Durham, and Justice Durrant concur in Justice Wilkins' opinion.
NOTES
[1] Even if the PSC were required to consider these alleged benefits of WWC's designation as an ETC, they are not wholly uncontradicted in the record as WWC suggests. WWC asserted it would provide the public benefit of a larger local calling area than current phone companies. But WWC had not determined the local calling areas it would offer, had no knowledge of current local calling areas, and could not describe how or where WWC's local calling areas would be larger. Likewise, WWC's assertion that the benefits of competition and choice were ignored can be overcome by the substantial evidence in the record supporting a conclusion that designating additional ETCs in rural areas, with no offsetting public benefits, which results in increased burdens on the State Fund, is not in the public interest. As for the claimed benefit of mobility, the record contains little for or against mobility as a benefit.
[2] The rule cited by the PSC in its Order and by the parties in their briefs, Utah Admin. Code R746-360-7(B), was renumbered effective September 1, 2001 and is now Utah R746-360-6(B). We refer to the renumbered citation.
[3] Because Utah R746-460-6(B) does not constitute rate regulation, we need not reach the issue of whether ETC status is different from common carrier status.
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44 P.3d 41 (2002)
2002 WY 53
Andina Marie STANG, a/k/a Andina Marie Ramsey and Kevin Ramsey, Appellants (Defendants),
v.
Timothy McVANEY, as Guardian for Shannon McVaney, and Kristopher McYaney, Appellees (Plaintiffs).
No. 01-107.
Supreme Court of Wyoming.
April 10, 2002.
*43 Fred W. Phifer, Wheatland, WY., Representing Appellants.
Kendal R. Hoopes of Yonkee & Toner, Sheridan, WY., Representing Appellees.
Before LEHMAN, C.J., and GOLDEN, HILL, KITE, and VOIGT, JJ.
*42 VOIGT, Justice.
[¶ 1] The First Interstate Bank of Sheridan (the Bank) filed an interpleader action on December 7, 2000, to determine the ownership of a payable on death certificate of deposit (CD). Mike Keeler (Keeler), the CD's purchaser, had named his great niece and nephew, Shannon and Kristopher McVaney (the appellees), as payees under the CD. Keeler committed suicide on November 4, 2000. An undated letter purportedly written by Keeler changing the names of the payable on death payees to Andina Marie Stang and Kevin Ivan Ramsey (the appellants) arrived at the Bank two days after Keeler's death. The McVaneys, Stang, and Ramsey all claim ownership of the CD. Stang and Ramsey appeal the district court's granting of the appellees' motion for summary judgment. We affirm.
ISSUES
[¶ 2] The appellants state the issues as:
1. Was the delivery of the request for change of beneficiary on the Certificate of Deposit complete when it was mailed with the original Certificate of Deposit one day prior to the owner of the CD committing suicide and was received by First Interstate Bank of Sheridan on the first business day after it was mailed?
2. Did the trial court err in granting Appellees' Motion for Summary Judgment?
3. Did the trial court err in awarding the Certificate of Deposit to the Appellees?
4. Did the depositor and owner of the Time Certificate of Deposit, Mike Keeler, have the right and the authority to change the "Payable on Death" names at any time during his lifetime?
The appellees present the following issues:
1. Whether Shannon and Kristopher McVaney, who were the payable-on-death payees on the certificate of deposit at the time of death of Mike Keeler, are the owners of the funds represented by the certificate of deposit.
2. Whether the request for a change of the payable-on-death payees on the certificate of deposit was effective in changing the terms of the account when it was not received by First Interstate Bank until after the death of Mike Keeler.
*44 3. Whether Mike Keeler's request for a change of the payable-on-death payees constitutes an inter vivos gift or a gift causa mortis.[1]
FACTS
[¶ 3] The Bank filed an interpleader action in the District Court of the Fourth Judicial District to determine the ownership of approximately $30,000.00 held as a CD by the Bank. The action named Shannon McVaney, Kristopher McVaney, Andina Marie Stang, and Kevin Ivan Ramsey as defendants. Because Shannon McVaney was a minor, the district court appointed her father, Timothy McVaney, as her guardian for purposes of the lawsuit.
[¶ 4] Keeler had obtained a CD at the Bank of Commerce, now First Interstate Bank, on May 10, 1982. At that time, Keeler named his sister, Velta Schaefer, as the payable on death beneficiary. On December 3, 1998, Keeler gave the Bank written instructions to reissue the CD making it payable on death to the appellees. The Bank complied with those instructions.
[¶ 5] The relevant facts in this case are not complex. Keeler met Stang, a waitress, at the Breakfast Inn restaurant in Wheatland where he went for breakfast every day at 5:00 a.m. They became friends. When he failed to show for breakfast one morning, Stang went to check on him. He was ill, and she rushed him to a hospital. Stang began taking care of Keeler on a daily basis starting in February 1995. She took him to doctors' appointments, picked up his prescriptions, took him to the hospital, took him shopping, cleaned his house, did his laundry, cooked him dinner, and occasionally made him breakfast. Stang also provided home health care pursuant to his doctors' and nurses' instructions. Stang received no compensation for her services during the first four years she cared for Keeler. The last two years before his death, she received between $600.00 and $700.00 per month, depending upon the amount Keeler could afford.
[¶ 6] During August 2000, Keeler allegedly requested that Stang prepare a letter to the Bank to change the payable on death beneficiaries from the McVaneys to Stang and her husband, Kevin Ramsey. Stang stated in an affidavit that she did not write the letter because she did not want to cause problems between Keeler and his family. Stang further stated in her affidavit that on November 3, 2000, Keeler insisted that Stang write the letter, and insisted that she take him to the post office that day to mail it. The next day, Keeler, age 77, shot and killed himself.
[¶ 7] Two days after his death, on November 6, 2000, the Bank received an undated typed letter purportedly from Keeler, directing the Bank to change the payable on death beneficiaries from the McVaneys to Stang and Ramsey. Without knowledge of Keeler's death, the Bank issued a new CD naming Stang and Ramsey as the payable on death beneficiaries. Stang notified the Bank of Keeler's death on November 10, 2000. Because there were multiple claims to the CD, the Bank filed an Interpleader Complaint to determine ownership of the CD.
[¶ 8] The McVaneys answered the Interpleader Complaint and filed a cross-claim against Stang and Ramsey on January 11, 2001. The cross-claim alleged that the McVaneys were the rightful owners of the CD. Stang and Ramsey filed an answer to the cross-claim and also brought a cross-claim against the McVaneys. Both cross-claims sought the district court's determination of the CD's ownership. The district court dismissed the Bank from the action without prejudice on May 3, 2001. The district court then realigned the parties; McVaneys as plaintiffs, Stang and Ramsey as defendants.
DISCUSSION
[¶ 9] The appellants' first issue is whether delivery of the letter requesting the change in beneficiary was completed when it, along with the original CD, was mailed to the Bank. The appellants argue that delivery was *45 effective when Keeler placed the written request with the original CD in a properly addressed envelope, with correct postage, and placed it in the mail. The appellants assert that this created a gift causa mortis, and title to the CD passed to the appellants upon Keeler's death.
[¶ 10] CDs are inherently contractual, and if they are non-negotiable, as in the instant case, they are to be construed in light of general contract law principles. Rose v. Rose, 849 P.2d 1321, 1324-25 (Wyo.1993). A change in title to a CD in effect terminates the existing account and replaces it with a new one. Washington County Mercantile Bank v. Kennedy, 855 S.W.2d 520, 523 (Mo.App.1993). Therefore, changing the payable on death beneficiaries from the McVaneys to the appellants would have terminated the existing account and created a new contract between the parties. Keeler's request to alter the terms of the CD was an offer for a new contract, which the Bank had yet to accept at the time of Keeler's death.
[¶ 11] In contract law, the mailbox rule provides that unless otherwise agreed to or provided by law, an offer is accepted when the acceptance is properly addressed and placed in the mail. Liquorama, Inc. v. American Nat. Bank and Trust Co. of Chicago, 86 Ill.App.3d 974, 41 Ill.Dec. 951, 408 N.E.2d 373, 375 (1980); Black's Law Dictionary 964 (7th ed.1999). In the situation before this Court, the mailbox rule would apply not to Keeler's letter, but to the Bank's response, if such had been mailed. Keeler mailed an offer to the Bank. A new contract could not be created until acceptance by the Bank.
[¶ 12] We do not believe that a gift causa mortis was created. A gift causa mortis is effected if the following conditions are met: "There must be a clear and manifest intention of the owner to give, a subject capable of passing by delivery, and an actual delivery at the time, in contemplation of death." Hecht v. Shaffer, 15 Wyo. 34, 85 P. 1056, 1057 (1906). The burden of proving a gift causa mortis is on the alleged donee, and it must be shown by clear and convincing evidence. Where the donee is not a relative, positive and unequivocal proof is necessary. In re King's Estate, 49 Wyo. 453, 57 P.2d 675, 678 (1936). This Court has stated:
[I]t does not follow that gifts causa mortis can be made more easily than the other gifts, for an additional compensating requirement becomes necessary in connection with the former not found in connection of the latter, and that is the showing that the gift was made in contemplation of death, so as to lend credibility to the making of the gift.
Begovich v. Kruljac, 38 Wyo. 365, 267 P. 426, 430 (1928).
[¶ 13] Whether Stang and Ramsey sustained their burden of proof was for the district court to determine. We will not reverse such a finding unless it was manifestly against the weight of the evidence. Produit v. Produit, 2001 WY 123, ¶ 18, 35 P.3d 1240, 1245 (Wyo.2001). Other than the fact that he killed himself the next day, there is nothing in the record of the instant case to indicate that Keeler's "gift" of the CD to the appellants, if such it was meant to be, was made in contemplation of death. The first indication that Keeler was thinking about suicide occurred on November 4, 2000, the day after the letter was written. Stang stated in her affidavit:
At approx. 10:45 when I got to Mike's [the decedent] house he had his gun in his hand, I told him to put the gun away. He told me the pain wouldn't stop and I asked him to please take the pain pill like Dr. Thalkin told him to do, I broke his percocet in half and gave him one half to take. I asked Mike again to put the gun away and I told him that I would leave if he didn't. Mike ignored me and I turned to leave and he shot himself.
[¶ 14] With nothing more in the record, the district court could reasonably conclude that there was no contemplation of death on November 3, 2000, meaning that this element of a gift causa mortis was not sufficiently proved. Unless all of the elements of a gift causa mortis are met, the gift fails.
[¶ 15] The next issue raised by the appellants is whether the district court erred in granting the appellees' motion for summary *46 judgment.[2] Summary judgment motions are determined under the following language from W.R.C.P. 56(c):
The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
[¶ 16] The purpose of summary judgment is to eliminate the necessity of formal trials where only questions of law are involved. Blagrove v. JB Mechanical, Inc., 934 P.2d 1273, 1275 (Wyo.1997). The initial burden is upon the movant to demonstrate that there is no genuine issue of material fact. Hronek v. St. Joseph's Children's Home, 866 P.2d 1305, 1307 (Wyo.1994). A fact is material if proof of that fact would have the effect of establishing or refuting an essential element of the cause of action or a defense. Id. If a prima facie showing is made that there is no genuine issue of material fact, and that the movant is entitled to judgment as a matter of law, the burden then shifts to the party opposing the motion to present specific facts showing that a genuine issue of material fact exists. Boehm v. Cody Country Chamber of Commerce, 748 P.2d 704, 710 (Wyo.1987).
[¶ 17] Where a party has made a prima facie showing in favor of summary judgment, it takes more than "`a scintilla of evidence in support of the [other party's] position ... to defeat a properly supported motion for summary judgment.'" Moncrief v. Williston Basin Interstate Pipeline Co., 880 F.Supp. 1495, 1505 (D.Wyo.1995), aff'd in part, rev'd in part, and remanded on other grounds, 174 F.3d 1150 (10th Cir.1999) (quoting Moya v. United States, 35 F.3d 501, 503 (10th Cir.1994)). "A party must affirmatively set forth material facts in opposition to a motion for summary judgment. He cannot rely only on his allegations and pleadings." Hyatt v. Big Horn School Dist. No. 4, 636 P.2d 525, 530 (Wyo.1981). Pleading allegations do not create an issue as against a motion for summary judgment supported by affidavits. W.R.C.P. 56(e); Vipont Min. Co. v. Uranium Research & Development Co., 376 P.2d 868, 870 (Wyo.1962).
[¶ 18] Upon hearing the respective summary judgment arguments of counsel and upon review of the record, the district court found that there was no genuine issue as to any material fact and that the appellees were entitled to judgment as a matter of law. The appellants argue that there are genuine issues of fact concerning ownership, intent, and delivery of the CD. There is no doubt that Keeler owned the CD, and during his lifetime he could change the beneficiaries, as he did from his sister to the McVaneys in 1998, with written notification to the Bank. It is well established in contract law, on the other hand, that the death of either party before acceptance is communicated causes an offer to lapse. 17 C.J.S. Contracts § 65(c) at 527-28 (1999); First Home Sav. Bank, FSB v. Nernberg, 436 Pa.Super. 377, 648 A.2d 9, 15 (1994). In the instant case, while it might have been Keeler's intent to change the names of the beneficiaries, the offer to do so had not even been received by the Bank, so the Bank had certainly not communicated its acceptance of the offer, and the offer lapsed upon Keeler's death on November 4, 2000.
[¶ 19] The appellants rely on the mailbox rule to argue that the offer was effectively delivered when it was mailed. We earlier discussed the mailbox rule, and need not address it again. However, even if this constituted effective delivery, as a matter of law, the purported request to change the payable on death beneficiaries to the appellants is not enforceable because it was received by the Bank after Keeler's death.
A party may alter the terms of the account by a notice signed by the party and given to the financial institution to change the terms of the account or to stop or vary payment under the terms of the account. To be effective, the notice must be received by the financial institution during the party's lifetime. *47 Uniform Multiple-Person Accounts Act § 13(a), 8B U.L.A. 22-23 (2001) (emphasis added). An account may be altered "`by written order given by a party to the financial institution to change the form of the account.' . . . The request must be signed by a party and received by the bank during a party's lifetime." In re Conservatorship of Gobernatz, 603 N.W.2d 357, 360 (Minn.App. 1999) (quoting Minn.Stat. § 524.6-205). We agree with the district court that summary judgment was appropriate and the funds represented by the CD should be awarded to the appellees.
CONCLUSION
[¶ 20] Under the contract existing between Keeler and the Bank, ownership of the CD vested in the appellees upon Keeler's death. That contract was not amended by Keeler's unilateral action prior to his death. Further, there was insufficient proof that Keeler's conduct was in contemplation of death, so the elements of a gift causa mortis were not proven. The decision of the district court is affirmed.
NOTES
[1] The appellants have not argued that this was addressed. an inter vivos gift, so that theory will not be addressed.
[2] In large part, this is the same issue that has just been addressed. Because the appellants treat the matter as two separate issues, we will do likewise.
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01-03-2023
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10-30-2013
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https://www.courtlistener.com/api/rest/v3/opinions/2543198/
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55 So.3d 796 (2010)
Kim Colvin BIRCH, Plaintiff-Appellee & Defendant-In-Reconvention
v.
Gilford Raymond BIRCH, Defendant-Appellant & Plaintiff-In-Reconvention.
No. 45,702-CA.
Court of Appeal of Louisiana, Second Circuit.
November 3, 2010.
*797 William A. Jones, Jr., for Appellant.
Gary A. Bowers, for Appellee.
Before WILLIAMS, MOORE and LOLLEY, JJ.
MOORE, J.
Gilford Raymond Birch ("Gil") appeals a judgment that rejected his claim for the return of separate funds given to or taken by his former wife, Kim Colvin Birch ("Kim"), during their marriage and under a matrimonial agreement that established a separate property regime. Kim answers the appeal, contesting the portion of the judgment that denied her exceptions of prescription and no right of action. We affirm in part, reverse in part and remand.
The Matrimonial Agreement
Gil and Kim got married on October 26, 1991. Gil was a pharmacist who owned The Corner Drug Store in Ruston, and Kim was an employee there. One day before the wedding, they executed a Matrimonial Agreement Before Marriage ("the agreement") which rejected the community property regime established a separate property regime. In pertinent part, the agreement stated:
1.
All property now owned by either of said appearers shall remain the separate property of that one of the appearers to whom such property belongs, and all revenues, fruits and increases arising from such respective properties shall also be considered, and remain, the separate property of the respective appearer[.] * * *
2.
The provisions of the preceding paragraph shall apply regardless of which of the appearers shall administer or manage the revenues, fruits, increases, property or proceeds in question; that is to say, the question as to which appearer administered or managed * * * the revenues, fruits, increases, property or proceeds of any property, shall in no way affect or modify the provisions of the *798 preceding paragraph, and in no way create a community interest there; the fact that either appearer may assist the other in the administration or management of the property of the other shall not create the presumption of a claim for remuneration in favor of that appearer assisting the other, but all such services shall be considered and held as gratuitously rendered to each other.
3.
More particularly but not by way of limitation, all accretions or increases in the value of separate property during the marriage, however same shall occur, shall be the separate property of the appearer to whom the separate property that has increased belongs and no claim for remuneration or reimbursement should exist in favor of the appearer to whom the property does not belong.
4.
Any increases or improvement of the separate property of either appearer, as separate property is set forth in this agreement, arising or made during the marriage of the appearers through the result of the common labor, expense, or industry of the appearers, shall not create any right to a reward in favor of that appearer * * * to whom the property which has been increased or improved does not belong. * * *
6.
All property acquired or wages earned by either appearer following their marriage, shall be considered separate property.
Procedural Background
The parties separated in late December 2002. In February 2003, Kim filed for an Art. 102 divorce; Gil reconvened for an Art. 103 divorce. Final judgment of divorce was rendered in February 2004.
Gil filed a reconventional demand in February 2004, seeking to settle claims arising from the separate property regime. This was not immediately addressed, however, as the parties litigated custody and support issues that are not before the court on appeal.[1] It transpired that because of his own drug abuse and irregularities in the handling of controlled dangerous substances at The Corner Drug Store, Gil's pharmacy license was suspended indefinitely in 2008 and the store's pharmacy permit placed on five years' probation.
Gil filed a second supplemental reconventional demand in March 2009, demanding "recovery of Gil's separate funds used by Kim, and * * * the recovery of the fruits of Gil's separate funds." He alleged that during the marriage, he ran the drugstore and made plenty of money, all of which went into the couple's joint checking account, which Kim balanced and managed. Kim earned a small amount of money from running a gift shop called "Kim's Corner" in, or connected with, the drugstore, but always placed her wages in one of her separate accounts. Kim also bought three pieces of real estate in her own name: (1) in 1995, she bought the office adjacent to the drugstore ("the South Trenton Street property"), for $65,000, and rented this to the drugstore for $800 a month; (2) in September 1995, she bought a house ("the Hilly property") for $242,000, renovated it for $30,000, and this became the couple's home; (3) in August 1999, she bought a store on North Bonner Street *799 ("the Townsend House") for $93,500, renovated it for $28,000, and this became her free-standing gift shop. Gil alleged that the vast majority of money to buy and maintain these properties came from the parties' joint checking account, which contained only his wages and was thus his separate property. He itemized these funds and demanded a total of $778,692.05.
Kim's answer consisted of general denials, but she also raised several exceptions. By an exception of no right of action, she argued that "many or most" of the claims involved money paid not by Gil but by his corporation, Cupp Drug Store Inc. d/b/a The Corner Drug Store, and hence only the corporation could assert them. By an exception of prescription, she argued that Gil's claims were essentially for conversion and hence subject to the one-year limitation for torts.
Overview of Trial Testimony
At trial in August 2009, three witnesses testified. Gil confirmed the facts outlined above, identifying one-by-one many of the checks drawn on the couple's joint account and signed by Kim, to pay for the mortgages, renovations, property tax, inventory for her gift shop, and other expenses arising from her separate property. He also testified that when they got married, Kim had a net worth of about $100,000; during the marriage, working at the drugstore or running the gift shop, she never made more than $3,000 a month; now her net worth is about $900,000. He felt that this simply could not have occurred without the infusion of enormous amounts of his separate property, which he now wanted returned.
Gil's CPA, James D. Johnson, testified that he had handled the drugstore's taxes since 1989. He confirmed that several of the checks drawn on the couple's joint account, and signed by Kim, covered payroll, property taxes and renovations to her separate property.
On cross-examination, Kim conceded much of Gil's testimony, including that Gil always put his wages in the couple's joint checking account, which she used to pay the mortgages on her separate property. However, she would not agree that the drugstore was Gil's separate property and was unable to recall whether her wages ever exceeded $3,000 a month. When asked if she "did not always deposit" her own salary checks into the joint account, she replied, "Not always. No." She did not dispute that the mortgages, taxes, inventory and other expenses vastly exceeded her income, but insisted that she built up a large reserve because "you save, you save, you save."
Gil also offered the deposition of a forensic CPA, Susan Whitelaw, who testified that even though Kim never provided all her financial information, the available records showed that from 1996 to 2004, she reported total income of $124,000, but at the end of the same period she had a net worth of $970,000.
Kim presented no testimony except her cross-examination of Gil and of Mr. Johnson.
Neither of Gil's experts, Mr. Johnson nor Ms. Whitelaw, summarized all his claims, but by post trial brief he itemized the financial records into (1) separate funds used to buy real estate, (2) separate funds paid by the drugstore to Kim or for her benefit, (3) gift shop funds diverted into Kim's separate account, and (4) rent paid by the drugstore to Kim. These items totaled $793,722.
Kim reiterated her exceptions, and then contested each item on Gil's list. She asserted that he failed to prove that the money from the couple's joint account was truly his separate funds; because certain *800 records were missing, he failed to prove the source of various transfers; because he never objected to paying the mortgage notes from the joint account, he is now estopped from contesting it; and the parties were actually co-owners of the Hilly property.
Action of the District Court
The district court rendered oral reasons, first rejecting Kim's peremptory exceptions. The court held that a claim for reimbursement is subject to 10-year prescription, so Gil's claim was timely, and that as the sole proprietor of the corporation, Gil had the right to pursue the claim.
On the merits, the court noted that the financial records were complex, but found sua sponte that the agreement itself waived either party's right to seek reimbursement. The court cited ¶ 2 ("the fact that either appearer may assist the other in the administration or management of the property of the other shall not create the presumption of a claim for remuneration"), ¶ 3 ("all accretions or increases in the value of the separate property during the marriage, however same shall occur, shall be the separate property of the appearer * * * and no claim for remuneration or reimbursement should exist"), and ¶ 4 ("any increases or improvements of the separate property of either appearer * * * through the result of common labor, expense, or industry of the appearers, shall not create any right to a reward in favor of that appearer") as disallowing Gil's claims. Finally, the court rejected the theory of unjust enrichment as inapplicable when the claims are properly resolved by contract.
The court rendered judgment denying Kim's exceptions, rejecting Gil's claims, and assessing costs one-half to each. Gil has appealed and Kim has answered the appeal.
Discussion: Peremptory Exceptions
By answer to appeal, Kim urges the district court erred in denying her peremptory exception of prescription. Because Gil alleged that she "took from his separate estate" substantial sums, she argues the claim is for conversion, a tort subject to one-year prescription, regardless of how Gil labeled it. Northern Assur. Co. v. Waguespack, 304 So.2d 865 (La.App. 4 Cir.1974). Gil responds that because the claim is based on an agreement, it is subject to the 10-year prescriptive period of La. C.C. art. 3499.
The 10-year liberative prescription period applicable to personal actions under Art. 3499 applies to a claim for reimbursement of property used to enhance the other spouse's separate estate. LeBlanc v. LeBlanc, 2005-212 (La.App. 3 Cir. 11/2/05), 915 So.2d 966, and citations therein. By contrast, the tort of conversion is "an act in derogation of a plaintiff's possessory rights, and any wrongful exercise or assumption of authority over another's goods, depriving him of the possession, permanently or for an indefinite time"; lack of consent by the owner is a prerequisite. Quealy v. Paine, Webber, Jackson & Curtis Inc., 475 So.2d 756 (La. 1985); Fuller v. XTO Energy Inc., 43,454 (La.App. 2 Cir. 8/13/08), 989 So.2d 298, writ denied, 2008-2227 (La.11/21/08), 996 So.2d 1107. As Kim's "taking" was obviously with Gil's consent, the claim is not one for conversion but, as the district court found, one for reimbursement. This assignment lacks merit.
Kim also contends that the court erred in denying her exception of no right of action. She argues that many of the transfers of cash came directly from the corporation, not from Gil, ergo only the corporation can sue to recover. Wall v. First National Bank of Shreveport, 482 So.2d 865 (La.App. 2 Cir.1986). Gil responds *801 that ¶ 1 of the agreement defined all revenues from the parties' separate property as separate property, and the corporation was admittedly his separate property; hence he was entitled to recover corporate revenues paid to Kim.
The exception of no right of action tests whether the plaintiff has a legal interest in judicially enforcing the right asserted. La. C.C.P. art. 927 A(6); Skannal v. Bamburg, 44,820 (La.App. 2 Cir. 1/27/10), 33 So.3d 227, writ denied, 2010-0707 (La.5/28/10), 36 So.3d 254. The personality of a corporation is distinct from that of its members, even if the member is a sole shareholder. La. C.C. art. 24; Skannal v. Bamburg, supra, and citations therein. The district court was technically wrong when it said that Gil could pursue the claim "as the sole proprietor of the corporation." Nevertheless, ¶ 1 of the agreement expressly defines "all revenues, fruits and increases" from each party's separate property as separate property. The parties plainly intended to treat corporate revenue as Gil's separate property. For purposes of his reimbursement claims, Gil is the proper party to assert those claims. This assignment of error lacks merit.
Interpretation of Agreement
By seven assignments of error, Gil urges that the district court erred in reading the agreement as barring all claims for reimbursement between the parties. He suggests that the court misread the agreement in an effort to skirt the harsh result, but that the provisions waiving reimbursement are limited to narrow situations simply not present in this case. He also argues that the court's reading, which denied any and all forms of reimbursement, completely negated the purpose of the agreement, which was to preserve the parties' respective estates. Finally, he submits that the court fashioned a "novel theory" that neither party advanced and does not withstand minimal scrutiny.
Kim does not directly address the district court's reasons for judgment, but states in passing that the conclusion was correct. She mainly asserts failure of proof and factual issues unrelated to the interpretation of the agreement.
In interpreting contracts, courts are guided by the general rules stated in La. C.C. arts. 2045-2057. The cardinal rule is that the interpretation of a contract is the determination of the common intent of the parties. La. C.C. art. 2045; Amend v. McCabe, 95-0316 (La.12/1/95), 664 So.2d 1183. When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent. La. C.C. art. 2046. The words of a contract must be given their generally prevailing meaning; however, words of art and technical terms must be given their technical meaning when the contract involves a technical matter. La. C.C. art. 2047; Amend v. McCabe, supra; Hollenshead Oil & Gas LLC v. Gemini Explorations Inc., 45,389 (La.App. 2 Cir. 7/21/10), 44 So.3d 809. Each provision in a contract must be interpreted in light of the other provisions so that each is given the meaning suggested by the contract as a whole. La. C.C. art. 2050; Hollenshead Oil & Gas v. Gemini Explorations, supra. A doubtful provision must be interpreted in light of the nature of the contract, equity, usages, the conduct of the parties before and after the formation of the contract, and of other contracts of a like nature between the same parties. La. C.C. art. 2053; Campbell v. Melton, 2001-2578 (La.5/14/02), 817 So.2d 69.
In the absence of specific contractual terms, a separate property agreement preserves the parties' right to be reimbursed for separate property that was *802 used to improve the other party's separate property. Lee v. Lee, 2003-1483 (La.App. 3 Cir. 3/17/04), 868 So.2d 316; Katherine S. Spaht & W. Lee Hargrave, 16 La. Civ. Law Treatise, Matrimonial Regimes, § 7.17 (3d ed.2007). A matrimonial agreement may establish a separate property regime and waive all rights of reimbursement. In Sharpe v. Sharpe, 536 So.2d 434 (La.App. 4 Cir.), writ denied, 540 So.2d 332 (1989), the contract provided as to the "intended husband and wife, that neither shall have any economic claim upon the other[.]" The court found that this waived not only reimbursement of loans to the wife, but also tort claims for damages to the husband's separate property.
A plain reading of Gil and Kim's agreement shows, by contrast, that reimbursement is waived only for certain claims. Specifically, ¶ 2 states that "administration or management of the property of the other shall not create a claim for remuneration" and "all such services shall be considered and held as gratuitously rendered[.]" This waiver obviously applies only to the value of administration and management services.
Next, ¶ 3 refers to "all accretions or increases in the value of separate property" and states that "no claim for remuneration or reimbursement should exist[.]" Accretion means gradual and imperceptible addition to riparian land by water to which the land is contiguous. La. C.C. art. 499; Walker Lands Inc. v. East Carroll Parish Police Jury, 38,376 (La.App. 2 Cir. 4/14/04), 871 So.2d 1258. This case does not involve either riparian accretion or its analog, the incremental growth of an asset by interest, dividends or stock splits.
Similar to ¶ 3's "increases in the value of separate property" is ¶ 4's "increases or improvement of the separate property of either appearer[.]" The phrase "increases in the value of separate property" echoes La. C.C. art. 2368, which allows reimbursement when separate property increases in value "as a result of the uncompensated labor or industry of the spouses," as by changed market conditions or inflation. See, e.g., St. Marie v. Roy, 09-953 (La. App. 3 Cir. 2/3/10), 29 So.3d 708, writ denied, 2010-0517 (La.4/30/10), 34 So.3d 291. The thrust of these provisions is to waive reimbursement for increases which Art. 2368 would allow.
On close examination, we find that the fairly narrow waivers stated in these provisions do not express a general waiver of all claims. By their own terms, they apply only to management fees, accretions, inflationary growth and market fluctuations. Nothing in the agreement waives reimbursement, upon termination of the marriage, of one spouse's separate funds which were used to improve the other spouse's separate property. Moreover, a general waiver would utterly defeat the purpose of the agreement, which is to preserve each party's separate estate.
This court is cognizant of the recent case of Barber v. Barber, 2009-0780 (La.App. 1 Cir. 5/7/10), 38 So.3d 1046, which held that a contract provision virtually identical to ¶ 4 effected a waiver of the wife's right of reimbursement. However, that opinion mainly addressed the wife's attempt to nullify the matrimonial agreement for vices of consent; it did not state the basis of her reimbursement claim. On the limited facts presented, we cannot read Barber v. Barber as authorizing a blanket waiver of reimbursement.
The district court committed legal error in finding a general waiver. Gil did not waive his right to seek reimbursement of capital. The judgment will be reversed.
Order of Relief
By his final assignment of error, Gil argues that this court should either enter *803 judgment for him on the record or remand the matter to the district court for a determination of the amount of reimbursement.
The appellate court should conduct an independent de novo review only when one or more trial court legal errors interdict the fact-finding process and the appellate record is otherwise complete. S.J. v. Lafayette Parish School Bd., 2009-2195 (La.7/6/10), 41 So.3d 1119, 259 Ed. L. Rep. 353; RJAM Inc. v. Miletello, 45,176 (La. App. 2 Cir. 4/14/10), 44 So.3d 283. The district court committed legal error in ruling that the agreement waived all reimbursement claims; however, this did not completely interdict the court's fact-finding process. In the face of conflicting testimony and sketchy documentation, the court found that Kim "often deposited her check into her separate account," implying that she sometimes deposited her separate funds into the joint account; the court also found that Gil never objected to Kim's paying the mortgage on the Hilly property from the joint account. While these findings barely scratch the surface of this complex case, they underscore the crucial role of credibility determinations in any possible resolution. The district court is in the superior position to make those credibility calls and complete the fact-finding task it has begun.
We therefore remand the case to the district court for such proceedings as that court may deem appropriate to determine the proper amount of reimbursement. On remand, the parties and court are reminded that Ms. Whitelaw's methodology was uncontradicted by any other expert evidence, but her calculations must reflect any missing check stubs or deposit slips which might possibly prove how much of Kim's separate funds were applied to her separate property. Also, as to the Hilly property, the claim is subject to La. C.C. art. 2373, in that each spouse must contribute to the expenses of the marriage; in the absence of a specific provision, "each spouse contributes in proportion to his means." Bergeon v. Bergeon, 02-158 (La. App. 5 Cir. 5/29/02), 817 So.2d 1280, writ denied, 2002-2083 (La.11/1/02), 828 So.2d 574. Gil is not entitled to reimbursement of this expense of the marriage which the law requires him to pay.
Conclusion
For the reasons expressed, the judgment is affirmed insofar as it denied the exceptions of prescription and no cause of action; it is reversed insofar as it found the agreement waived all reimbursement claims between the parties. The case is remanded for further proceedings in accordance with this opinion and the law. Trial and appellate costs are to be paid by the appellee, Kim Colvin Birch.
AFFIRMED IN PART, REVERSED IN PART, REMANDED.
NOTES
[1] The couple had two daughters, born in April 1993 and in September 1996.
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342 S.W.3d 96 (2011)
WYTHE II CORPORATION, Appellant,
v.
John D. STONE, Appellee.
No. 09-09-00397-CV.
Court of Appeals of Texas, Beaumont.
Submitted on September 9, 2010.
Decided March 10, 2011.
Opinion Denying Rehearing May 5, 2011.
*101 Mark W. Stevens, Galveston, for appellant.
Robert J. Rose, Sr., Dana Timaeus, Timaeus & Rose, L.L.P., Beaumont, for appellee.
Before McKEITHEN, C.J., GAULTNEY and KREGER, JJ.
OPINION
DAVID GAULTNEY, Justice.
In this appeal by Wythe II Corporation involving a fee dispute with attorney John D. Stone, Wythe presents eleven issues and Stone presents one cross-issue. We affirm in part the judgment in favor of Stone on the contingent-fee contract. We set aside the sanctions penalty awarded to Stone and associated attorney fees. We conclude that the jury award of attorney fees to pursue the breach of the written contract action is not supported by sufficient evidence; we reverse that part of the judgment. We remand the case to the trial court to determine that remaining issue between the parties.
*102 THE DISPUTE
Stone represented Wythe in a claim against its insurer, XL Lloyds Insurance Company, Inc., on a $1.625 million policy. Hurricane Rita damaged apartments owned by Wythe. At the time the insurance dispute arose, Stone represented Wythe and its president, Waleed Khan, in the defense of litigation brought by a holder of the mortgage on the apartment complex. Represented by separate counsel skilled in bankruptcy law, Wythe filed a voluntary bankruptcy petition. The bankruptcy court approved Stone's representation of Wythe in the claim against XL Lloyds. Wythe satisfied the mortgage holder, and dismissed the bankruptcy proceeding. Stone subsequently negotiated a $1,975,000 settlement agreement between Wythe and XL Lloyds that supplemented a previous payment of $800,000 on the insurance policy. At the end, the carrier had paid $2,775,000 on a $1,625,000 policy.
A fee dispute arose between Stone and Wythe. Stone intervened in the insurance lawsuit to collect his fee, and moved to withdraw as counsel for Wythe. Wythe counterclaimed for fraud and breach of fiduciary duty. XL Lloyds paid the entire settlement proceeds into the registry of the trial court.
THE PROCEEDINGS BELOW
The trial court denied Wythe's motion for summary judgment, granted partial summary judgment for Stone, and submitted to a jury Stone's derivative claim to recover attorney fees incurred in pursuit of the claim for breach of the written attorney fee contract. The jury found that a reasonable fee for Stone's attorney would be $314,420, with additional fees in the event of an appeal. The trial court signed a judgment against Wythe in the amount of $1,138,694.47.
Stone then filed a motion for sanctions. Stone alleged that Wythe and its new counsel submitted false testimony in response to Stone's motion for summary judgment. The trial court ordered Wythe to pay Stone a penalty of one percent of the amount in the registry of the court plus attorney fees incurred in pursuing the motion for sanctions, and additional fees in the event of an appeal.
THE CHALLENGED CONTRACT PROVISIONS
Wythe contends that the attorney fee contract is unenforceable as a matter of law. The first provision Wythe challenges provides as follows:
As an optional alternative to the hourly bill basis, and at the sole option of said attorney, the attorney may elect to receive compensation for attorney's time on the basis of a specified contingency fee calculated as a percentage of the total recovery achieved by virtue of the undertaking which forms the basis of this agreement. . . . The attorney may designate this contingency fee option at any time during the representation.
The second provision challenged by Wythe states:
In the event the attorney has elected to be compensated on the basis of the contingency fee option, and subsequently withdraws from this representation, then said attorney shall receive an assigned interest equal to the contingency fee percentage that would have applied at the time of such withdrawal the same as if the matter had been settled in its entirety on the date of withdrawal.
Wythe claims that the unilateral option is unconscionable, and that the termination provision fails to distinguish between terminations occurring with or without cause. See Hoover Slovacek LLP v. Walton, 206 S.W.3d 557, 562 (Tex.2006).
*103 TERMINATION
In Hoover, the Texas Supreme Court held that a termination provision in a contingent-fee contract violated public policy because it imposed an undue burden on the client's ability to change counsel. Id. at 563. Further, by requiring the client to pay the same contingent fee regardless of whether the client eventually prevailed, the termination fee provision shifted the risk to the client while the attorney retained the benefit. Id. at 564. The Court severed the unconscionable termination provision and remanded the case to the intermediate appellate court to consider whether to enforce the contingent-fee contract under the holding in Mandell & Wright v. Thomas, 441 S.W.2d 841, 847 (Tex.1969). See Hoover, 206 S.W.3d at 566. Similarly, the termination provision in this case is severable and does not preclude recovery of a fee. It was not Stone's withdrawal from the representation that triggered Stone's right to payment in this case, but rather his successful settlement of the insurance claim prior to his withdrawal.
THE OPTION PROVISION
Wythe complains that the contract failed to state the method by which the fee would be determined. The representation agreement provided that the fee would be calculated at an hourly billing rate unless the attorney exercised an option to convert the contract to a contingent-fee basis. The agreement provides that Wythe would be responsible for court costs and expenses of litigation.
A contingent-fee contract is permissible in Texas in part because the potential for a greater fee compensates the attorney for assuming the risk that the attorney will receive no fee if the case is lost, while the client is largely protected from incurring a net financial loss in the event of an unfavorable outcome. Hoover, 206 S.W.3d at 561 (citing Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex.1997)). If the attorney could earn a reasonable fee on an hourly basis until recovery is assured and the work complete, but later exercise a unilateral option to collect a percentage of the client's recovery, the fee would no longer be "contingent" on anythingin effect, the client could be required to pay regardless of recovery. Shifting the risk of non-recovery to the client through the unilateral option provision would undermine one significant justification for the higher compensation sometimes received under a contingent-fee contract. Id. Simply stated, when an attorney bears no risk of going unpaid, risk of non-recovery is not a factor in assessing the reasonableness of the fee.
THE BANKRUPTCY COURT ORDER
The record reflects the contingency fee representation was initially authorized by the bankruptcy judge. The contract did not grant the attorney an option to later convert the case to an hourly rate contract. Wythe commenced a Chapter 11 bankruptcy on December 29, 2006. The parties signed the contract on February 1, 2007. A letter from Stone to Wythe's president signed the same day notified Wythe that the representation agreement must be presented to the bankruptcy judge for approval. The contract would become effective only after the approval. Stone stated in the letter that he anticipated that the percentages used in the representation agreement would be acceptable to the bankruptcy judge. In April 2007, acting through separate bankruptcy counsel, Wythe filed an application and a motion to retain Stone for "reasonable compensation for services rendered on an optional contingency basis, described as: . . . 40 percent of total recovry *104 if collection or settlement is made after suit is filed and prior to appeal[.]" The bankruptcy court approved the employment of Stone in May 2007. When Stone billed Wythe in July 2007 for its other ongoing litigation regarding the mortgage, Stone described the work he performed in the XL Lloyds litigation with the notation that the 21.75 hours spent working on the XL Lloyds litigation was "N/C Contingency Fee Matter." Wythe and XL Lloyds reached a mediated settlement agreement in September 2008. According to the carrier's attorney, the agreed settlement included consideration of attorney fees in addition to the remaining $800,000 policy proceeds, a penalty, and possibly some interest.
Essentially, the bankruptcy application and order made the contract solely a contingent-fee contract from the beginning of the representation on the bankrupt's claim. We conclude the unenforceability of the unilateral option provision does not render the contingency fee arrangement approved by the bankruptcy court unenforceable under the circumstances presented here.
Finally, Wythe also suggests in its first issue that the representation agreement was unconscionable because it required Wythe to bear all expenses of litigation. An attorney is not required to bear all litigation costs, but a contingent-fee contract must state the litigation expenses to be deducted from the client's recovery. See Tex. Disciplinary Rules Prof'l Conduct R. 1.04(d), reprinted in Tex. Gov't Code Ann., tit. 2, subtit. G, app. A (West Supp. 2010) (Tex. State Bar R. art. X, § 9). The contract here identified the expenses that were the client's responsibility. We overrule issue one.
FEE FORFEITURE
Wythe contends that Stone breached his fiduciary duty to Wythe and that the trial court erred in failing to order that Stone forfeit all fees. Wythe does not argue on appeal that its claim of breach of fiduciary duty should have been submitted to a jury, but argues instead that this Court should order forfeiture.
The equitable remedy of fee forfeiture "is to protect relationships of trust by discouraging agents' disloyalty." Burrow v. Arce, 997 S.W.2d 229, 238 (Tex. 1999). The remedy is restricted to "`clear and serious'" violations of duty. Id. at 241; Restatement (Third) of the Law Governing Lawyers § 49 (2000). A "`clear'" violation occurs "`if a reasonable lawyer, knowing the relevant facts and law reasonably accessible to the lawyer, would have known that the conduct was wrongful.'" Burrow, 997 S.W.2d at 241 (quoting Restatement (Third) of the Law Governing Lawyers § 49, cmt. d (Proposed Final Draft No. 1, 1996)). The "serious" requirement takes into consideration "`the gravity and timing of the violation, its willfulness, its effect on the value of the lawyer's work for the client, any other threatened or actual harm to the client, and the adequacy of other remedies.'" Id. at 243; see also Restatement (Third) of the Law Governing Lawyers § 49.
In his summary judgment affidavit, Khan stated that Stone only showed him the signature page on the fee agreement at the time of execution. Stone provided Khan with a copy of the representation agreement and a cover letter that disclosed the proposed new contingent-fee agreement. Stone delivered the proposed contract to Wythe's bankruptcy attorney, who prepared and presented Wythe's bankruptcy application to retain Stone. The application disclosed the rate of the contingency fee.
Wythe complains that Stone acquired information about the claim during his representation *105 of Wythe in the litigation with the mortgage holder, then used that information to his own advantage by suggesting representation on a contingent-fee basis. If a contingent-fee contract provided a means by which Wythe could secure representation while in bankruptcy, the knowledge Stone acquired in the other litigation regarding the potential value of the lawsuit would not necessarily have been to the client's detriment. Stone did not operate in secret but informed Wythe's independent bankruptcy counsel, Wythe, and the bankruptcy court of his intended arrangement with Wythe.
Wythe argues that Stone failed to withdraw as counsel for Wythe before he asserted his attorney fee claim in the trial court against Wythe, and that Stone refused to turn over his litigation files when requested. Stone filed his petition in intervention on November 26, 2008. At that time, the settlement agreement had been executed, and XL Lloyds had tendered the settlement check. The transition was not without difficulty. By December 8, 2008, Stone had filed a motion to withdraw as counsel and new counsel had entered a formal appearance on behalf of Wythe. During a hearing conducted on December 12, 2008, counsel for Wythe asked Stone if he had any objection to producing his files from the XL Lloyds litigation. Stone referred Wythe's counsel to Stone's counsel. Counsel for Stone then explained that the previous week Stone's counsel had declined to give the files to Wythe's new counsel because that counsel did not yet represent Wythe.
Wythe also argues that Stone attempted to withdraw his fee before Wythe could obtain a stay order from this Court. See In re Khan, No. 09-08-00539-CV, 2008 WL 5622698, at *1 (Tex.App.-Beaumont Feb. 12, 2009, orig. proceeding [mand. denied]) (noting entry of order staying proceedings in the trial court). At that point, Wythe was represented by other counsel, and Stone had counsel.
The decision whether to forfeit the fee is initially that of the trial court. Burrow, 997 S.W.2d at 246; see also Wagner & Brown, Ltd. v. Sheppard, 282 S.W.3d 419, 428-29 (Tex.2008). The trial court's primary consideration is "whether forfeiture is necessary to satisfy the public's interest in protecting the attorney-client relationship." Burrow, 997 S.W.2d at 246. The trial court could reasonably conclude that the actions of the attorney did not affect the value of the lawyer's work for the client or harm the client. Under the circumstances presented in this case, the trial court was not required to order the fee forfeited. See Burrow, 997 S.W.2d at 243. We overrule issue two.
FRAUD
In issue three, Wythe argues its claim of fraudulent inducement. Again, Wythe does not argue that a disputed fact issue must be determined by a jury. Instead, Wythe asks this Court to hold that Stone committed fraud as a matter of law.
A contract procured by fraud may be avoided. See Formosa Plastics Corp. U.S.A. v. Presidio Eng'rs & Contrs., 960 S.W.2d 41, 46 (Tex.1998); Amouri v. Southwest Toyota, Inc., 20 S.W.3d 165, 169 (Tex.App.-Texarkana 2000, pet. denied). Wythe argues Stone procured the contract through fraud by showing Khan only the signature page and telling Khan that the contract was "`just for the bankruptcy[.]'"
Wythe's separate bankruptcy counsel prepared an application and submitted the documents to the bankruptcy court. Stone gave Khan a copy of the contract, along with a letter that explained that the prior contract for legal services was with Khan individually, not Wythe. As a result of the *106 mortgage litigation, Stone and Wythe had an established attorney-client relationship when Khan signed the new contract on behalf of Wythe. The letter explained that the representation agreement with Wythe would have to be presented to the bankruptcy court and would be subject to the bankruptcy court's approval. Although Khan concedes he received a copy of the letter, he states that Stone did not draw his attention to it. Khan asserts he did not read the documents. Regardless, Stone's conduct does not establish the elements of fraud as a matter of law. The only argument Wythe makes in issue three is without merit. The issue is overruled.
CONDITION PRECEDENT
Wythe contends in issue four that Stone failed to demonstrate the fulfillment of a condition precedent. Wythe claims that Stone failed to establish the bankruptcy court's final approval. The representation agreement states that "[o]ur representation of you begins when . . . notice of any required approvals of this agreement has been received by the attorney." The summary judgment record includes an order of the bankruptcy court. The order states that "the employment of [Stone] as special counsel, nunc pro tunc, for the purposes set out in the Motion [to Retain Stone as Special Counsel] is hereby APPROVED, which such compensation as may be awarded by the Court upon proper application. . . ." See 11 U.S.C.A. § 327(e) (West 2004). Essentially, the order authorized the employment of Stone during the bankruptcy proceeding under a contingent-fee arrangement, and required a further application to the bankruptcy court for final approval of the amount to be paid.
While the bankruptcy court maintained jurisdiction over the case, Stone's receipt of payment required the prior approval of the bankruptcy court. See U.S.C.A. § 330(a)(1) (West Supp. 2010). The bankruptcy court approved the employment of Stone by Wythe. See U.S.C.A. § 327(e). After the bankruptcy court approved Stone's employment, the bankruptcy proceeding was dismissed. See U.S.C.A. § 349(b)(3) (West 2004) (dismissal revests the property of the estate in the entity in which such property was vested immediately before commencement of the case). The dismissal occurred before the insurance claim was settled and before the amount of the fee could be calculated. Under these circumstances, obtaining the bankruptcy court's final approval of the amount of the fee to be paid after completed performance was not possible, because the bankruptcy proceeding was no longer pending. That impossibility does not defeat payment of a fee in this case. When a condition would impose an impossible result, it generally is not treated as a condition precedent. See generally Hohenberg Bros. Co. v. George E. Gibbons & Co., 537 S.W.2d 1, 3 (Tex.1976) ("an absurd or impossible result"). We overrule issue four.
ATTORNEY FEES FOR BREACH OF CONTRACT
In issue five, Wythe contends the trial court erred in overruling Wythe's motion for directed verdict as to Stone's claim for attorney fees for breach of the contract. See Tex. Civ. Prac. & Rem.Code Ann. § 38.001(8) (West 2008) (allowing recovery of attorney fees if the claim is for a written contract). Wythe contends that the funds were deposited into the registry of the court through an interpleader, and that attorney fees cannot be recovered by a claimant in an interpleader proceeding.
Wythe fails to distinguish interpleader from the causes of action between the parties. Stone alleged that Wythe, by refusing to perform its obligations under the contract, breached a written contract with Stone. Stone's claim for attorney fees incurred *107 in pursuing the breach of contract claim is based on Section 38.001 of the Texas Civil Practice and Remedies Code, not Rule 43 ("Interpleader"). See Tex. Civ. Prac. & Rem.Code Ann. § 38.001(8); Tex.R. Civ. P. 43. We overrule issue five-B.
The jury found a reasonable fee for Stone's attorneys would be $314,420 through the trial, and made additional findings applicable in the event of appeal. Wythe argues that the evidence of a contingent-fee agreement, taken alone, is not sufficient evidence that the attorney fee was reasonable and necessary.
The contract for legal services between Stone and Stone's counsel provided for a contingent fee. Stone was to be responsible for payment of fees on an hourly basis for the defense of any affirmative claim against Stone. Stone testified that he chose to pursue his claim through a contingent-fee agreement because the amount of money involved in the claim increased the likelihood that the case would be fully litigated, and he could not afford to pay a retainer of hundreds of thousands of dollars.
By itself, however, the contingent-fee agreement does not provide a sufficient evidentiary basis for the jury's award. See Arthur Andersen, 945 S.W.2d at 818. A contingent-fee contract allows a plaintiff who cannot afford to pay an attorney up-front to pay the attorney out of any recovery, and compensates the attorney for the risk that the attorney will receive no fee whatsoever if the case is lost. Id. While a contingent fee may be "a reasonable fee from the standpoint of the parties to the contract[,]" that alone does not make the fee "reasonable for purposes of shifting that fee to the defendant." Id. To recover attorney fees from the defendant, a plaintiff must request a specific sum for the attorney fees, not expressed as a percentage of the damages. Id. at 819. The non-exclusive factors the jury may consider when determining the reasonableness of a fee include:
(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill required to perform the legal service properly;
(2) the likelihood . . . that the acceptance of the particular employment will preclude other employment by the lawyer;
(3) the fee customarily charged in the locality for similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the circumstances;
(6) the nature and length of the professional relationship with the client;
(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and
(8) whether the fee is fixed or contingent on results obtained or uncertainty of collection before the legal services have been rendered.
Id. at 818.
Stone's lead counsel and his counsel's partner both worked on this case, and they testified extensively to the work performed. No depositions were taken. Lead counsel nevertheless expended a total of "over 550 hours" on the case. He did not try to determine a reasonable fee based upon an hourly rate. He testified the XL Lloyds settlement has been "sitting in the bank, waiting for the Court to distribute it or disburse it."
Counsel's partner testified that accepting a contingent-fee case requires a large commitment on the law firm's part, because the firm would not get paid until the end of the case and might not get paid at *108 all. According to the partner, the percentage fee in the contract is a usual and customary contingency fee for Jefferson County. The partner did not keep a detailed log of his hours, but he had expended approximately 160 hours on the case before the trial started.
Although Stone presented evidence regarding the number of hours expended by counsel on the case, Stone's contention that the fee is reasonable is based ultimately on the testimony that 40 percent is the customary contingent-fee rate for the area, and that $314,420 is approximately forty percent of the $790,000 attorney fee awarded to Stone for his work in the XL Lloyds litigation, after minor adjustments.
Stone had possession of the XL Lloyds settlement check when Stone hired his attorney. Khan's refusal to endorse the joint check was immediately circumvented by obtaining a court order to deposit the disputed funds into the registry of the court, including additional funds that belonged to Wythe. Because sufficient funds were in the registry of the court, if Stone obtained a final judgment, collection was a near certainty.
The evidence offered by Stone to support the other Arthur Andersen factors does not provide sufficient justification for shifting the entire amount of the contingent fee to Wythe. Much of the time expended concerned a mandamus proceeding in which Stone was unsuccessful. See In re Khan, 2008 WL 5622698, at *1. The presiding judge denied Stone's request for attorney fees for the recusal proceedings. The fee awarded by the jury is excessive under the circumstances. We sustain issue five-A in part and overrule it in part. We reverse the judgment in part and remand the case for a determination of a reasonable fee based on an hourly rate, not determined as a percentage of damages and not based on a mandamus proceeding in which Stone was unsuccessful. See Smith v. Patrick W.Y. Tam Trust, 296 S.W.3d 545, 548-49 (Tex.2009); Arthur Andersen, 945 S.W.2d at 819.
SANCTIONS
In issue six, Wythe contends the trial court erred in assessing a sanctions penalty to be paid to Stone. The trial court explained its ruling in a thirty-two page order.
In responding to Wythe's claim that Stone breached his fiduciary duty to Wythe, Stone explained that the case was made difficult by the untrustworthiness of Khan. Wythe responded by asserting that Khan's affidavits were truthful. Wythe obtained permission to correct technical defects in Khan's affidavit, but then submitted an amended affidavit which, according to the trial court, made material changes that included "additional falsities[.]" The trial court found that Khan made false statements during the sanctions hearing, including statements concerning his past criminal record. The trial court imposed sanctions pursuant to Chapter 10 of the Civil Practice and Remedies Code, Texas Rules of Civil Procedure 13, 215, and 166a(h), and the court's inherent powers. See generally Tex. Civ. Prac. & Rem.Code Ann. § 10.004(c)(3) (West 2002) (allowing court to order a party to pay to the other party the amount of the reasonable expenses incurred by the other party due to the filing of a frivolous pleading or motion); Tex.R. Civ. P. 13 (allowing imposition of Rule 215 sanction for filing a document in bad faith); Tex.R. Civ. P. 215.3 (allowing court to impose sanction for discovery abuse); Tex.R. Civ. P. 166a(h) (allowing court to order party who presents a summary judgment affidavit in bad faith to pay the other party's reasonable expenses incurred by the filing).
*109 Wythe contends that the trial court erred in assessing a penalty to be paid to a private party. The trial court assessed a penalty of $19,750 (one percent of the XL Lloyds settlement) to be paid to Stone. The Civil Practice and Remedies Code allows a trial court to sanction a party for filing a frivolous pleading, but the permissible sanctions are:
(1) a directive to the violator to perform, or refrain from performing, an act;
(2) an order to pay a penalty into court; and
(3) an order to pay to the other party the amount of the reasonable expenses incurred by the other party because of the filing of the pleading or motion, including reasonable attorney's fees.
Tex. Civ. Prac. & Rem.Code Ann. § 10.004(c). Likewise, Texas Rule of Civil Procedure 13 permits the court to impose an appropriate sanction for signing a frivolous pleading, motion, or other paper, but the permissible sanctions are those available under Texas Rule of Civil Procedure 215. See Tex.R. Civ. P. 13. The sanctions available under Rule 215 include "an order charging all or any portion of the expenses of discovery or taxable court costs or both against the disobedient party or the attorney advising him[,]" and an order to pay "the reasonable expenses, including attorney fees, caused by the failure[ ]" to obey the order of the court. Tex.R. Civ. P. 215.2(b)(2), (8). Rule 215 does not provide for the payment of a one percent penalty to the opposing party.
A similar provision in Texas Rule of Civil Procedure 166a(h) provides that the trial court may require a party who presents a summary judgment affidavit in bad faith "to pay to the other party the amount of the reasonable expenses which the filing of the affidavits caused him to incur, including reasonable attorney's fees[.]" Tex.R. Civ. P. 166a(h). The Rule does not authorize the trial court to assess a fine to be paid to the opposing party. See id.; see also Sterling v. Alexander, 99 S.W.3d 793, 797 (Tex.App.-Houston [14th Dist.] 2003, pet. denied); see also generally Cadle Co. v. Lobingier, 50 S.W.3d 662, 669 (Tex.App.-Fort Worth 2001, pet. denied) (contempt fines). We conclude the trial court erred in ordering that a penalty be paid to Stone.
Wythe argues the trial court erred in ordering Wythe to pay Stone $49,575 in attorney fees to pursue the sanctions penalty. He claims Stone did not incur actual expenses in pursuing the motion.
The order to pay attorney fees for the time expended in correcting the record and addressing the opposing party's misconduct concerns the trial court's exercise of its inherent power. See generally Scott & White Mem'l Hosp. v. Schexnider, 940 S.W.2d 594, 596 (Tex.1996) (A trial court has authority to decide a motion for sanctions while it retains plenary power over the case.). Under the circumstances, however, the amount of the attorney fees awarded for pursuit of the motion is excessive. The sanctions order improperly granted an additional percentage of the funds in the registry in the form of a penalty payable to Stone. We have concluded that the penalty recovery is impermissible. We further conclude the attorney fee awarded is excessive, and the trial court should reconsider the reasonableness of the fee awarded to pursue the motion.
Wythe argues that Stone waived his right to seek sanctions, because he knew of the alleged perjured testimony and did not seek a remedy before the summary judgment hearing. The case relied upon by Wythe involved a pre-trial discovery dispute. See Meyer v. Cathey, 167 S.W.3d 327, 333 (Tex.2005). The sanctions *110 order here addresses misconduct that occurred in connection with a summary judgment hearing. See Remington Arms Co. v. Caldwell, 850 S.W.2d 167, 170 (Tex. 1993) (Failure to obtain a pretrial ruling waives a claim for sanctions only on discovery disputes that exist before commencement of trial.). The trial court heard the motion for summary judgment on June 29, 2009, signed a partial summary judgment on July 10, 2009, and retained plenary jurisdiction over the case when Stone filed his motion for sanctions.
Wythe contends that the sanctions order impermissibly allows a litigant to file an action for civil damages based solely on allegations of false testimony. See Kale v. Palmer, 791 S.W.2d 628, 632-33 (Tex.App.-Beaumont 1990, writ denied). The claims asserted in Kale v. Palmer were in the nature of malicious prosecution, and the jury's findings in the first action precluded the losing party from asserting that claim in subsequent litigation. Id. at 632. Stone was the successful party in the fee dispute. The partial summary judgment did not preclude Stone from bringing false testimony to the attention of the trial court. While he is not entitled to a double recovery of the same fees, we are confident that on remand, the trial court will limit any recovery to reasonable fees incurred and not otherwise awarded.
Because the trial court erred in assessing a penalty to be paid to Stone, we delete that award from the sanctions order. The award to Stone of attorney fees in the amount of $49,575 to present the motion is excessive. We reverse that part of the sanctions order, and remand the issue for reconsideration. Issue six is sustained in part and overruled in part.
MOTION TO RECUSE
In issues seven and eight Wythe challenges the denial of Wythe's motion to recuse the trial judge. Wythe relied upon the judge's involvement in Stone's attempt to obtain the check as evidence of either personal bias or prejudice of the trial judge or personal knowledge of disputed evidentiary facts concerning the proceeding. Stone's cross-issue contends Wythe filed a tertiary motion to recuse for which Stone is entitled to recover attorney fees. After an evidentiary hearing, the administrative presiding judge denied Wythe's motion to recuse. Stone subsequently filed an application for attorney fees, which the presiding judge denied.
Wythe contends three acts demonstrate antagonism. First, Wythe argues the judge initially set a final hearing on the fee dispute on less than forty-five days' notice. See Tex.R. Civ. P. 245. Consequently, this Court conditionally granted Wythe's mandamus petition, and the trial court heard the matter on Stone's motion for summary judgment. See In re Khan, 2008 WL 5622698, at *1. Second, Wythe contends the trial judge commenced an adversary hearing while Stone was still counsel of record for Wythe. New counsel for Wythe appeared at the hearing, and the trial judge granted Stone's motion to withdraw without objection from Wythe and before the trial court received testimony. Third, Wythe contends that the trial judge walked out into the hallway while a deputy clerk and Stone's wife returned from the auditor's office with a check for the funds released to Stone. The deputy clerk testified that the trial judge told the clerk that she could give the check to Stone. When the clerk informed the judge that she had been instructed to return to the District Clerk's office with the check, the judge told her that if they needed him they could contact him.
The facts relied upon by Wythe do not establish judicial bias. See Dow Chem. Co. v. Francis, 46 S.W.3d 237, 240 (Tex.2001). *111 The record shows that the trial judge heard a contested intervention as a motion, and that once the ruling was overturned the trial judge heard the matter in a manner consistent with this Court's ruling. See In re Khan, 2008 WL 5622698, at *1. The trial judge's handling of Stone's motion to withdraw did not interfere with Wythe's ability to be heard on either Stone's motion to withdraw or his motion to release the disputed funds.
Having heard the evidence concerning the trial judge's alleged bias, the presiding judge could reasonably conclude on this record that the trial judge was within his discretion in enforcing his own orders. See Dow Chem. Co., 46 S.W.3d at 240. The presiding judge's denial of Wythe's recusal motion was not an abuse of discretion. Tex.R. Civ. P. 18a(f). We overrule issue seven.
Wythe contends that the Due Process Clause of the Fourteenth Amendment requires recusal for the mere appearance of bias. See U.S. Const, amend. XIV. Because a judge cannot act as a judge in his own case, due process requires that a judge be recused when his rulings in a case will have "the clear and immediate effect of enhancing both the legal status and the settlement value of his own case." Aetna Life Ins. Co. v. Lavoie, 475 U.S. 813, 824, 106 S.Ct. 1580, 89 L.Ed.2d 823 (1986). Wythe apparently claims that the appearance of impropriety arose from the trial judge's former firm's alleged involvement in the case that resulted in fee forfeiture in Burrow v. Arce, and in litigation by the State of Texas against tobacco companies. See Burrow, 997 S.W.2d at 232; see also Texas v. Real Parties in Interest, 259 F.3d 387, 388 (5th Cir.2001). This alleged potential for future litigation involving a different matter does not rise to the level of personal interest in pending litigation like that present in Lavoie. See Lavoie, 475 U.S. at 816-17, 822, 106 S.Ct. 1580. Wythe has not shown that the trial judge was disqualified. We overrule issue eight.
In his sole cross-issue, Stone contends the presiding judge erred in refusing his application for attorney fees for responding to the motion to recuse. Stone contends the motion to recuse filed by Wythe in the trial court was an unsuccessful tertiary motion for which attorney fees are mandatory. See Tex. Civ. Prac. & Rem.Code Ann. § 30.016(c) (West 2008). Stone argues that the unsuccessful mandamus petitions filed in this Court and in the Supreme Court qualified as the first and second motions to recuse, so that the single motion to recuse that Wythe filed in the trial court was a tertiary motion for purposes of Section 30.016 of the Texas Civil Practice and Remedies Code. Id.
By Stone's construction of the statute, if a party files a motion to recuse the trial judge and then unsuccessfully challenges that ruling in the Court of Appeals and in the Supreme Court, the opposing party will always be entitled to attorney fees. See Id. 30.016(a). An appeal or mandamus petition is not the functional equivalent of a motion to recuse in the trial court. We overrule Stone's cross-issue.
OBJECTIONS TO EVIDENCE
In issue nine, Wythe contends the trial court erred in sustaining Stone's objections to Wythe's summary judgment evidence. For six of the eleven objections, Wythe either quotes the paragraphs in Khan's amended affidavit to which Stone objected, identifies the exhibit at issue, mentions Stone's objection, and either explains why the statement in the affidavit should not have been objectionable for the reason raised by Stone or notes that Stone included the same exhibit in his own summary judgment evidence.
*112 The statement regarding the absence of the bankruptcy lawyer at the signing of Stone's representation agreement is, as Wythe notes, contained elsewhere in the summary judgment record and is not a disputed matter. Stone objected to the other statements on grounds that the statements were conclusory, hearsay, and speculation. Wythe provides no authority to establish that Stone's objections had no legal basis and should have been overruled. See Tex.R.App. P. 44.1.
Similarly, Wythe complains that the trial court sustained Stone's objection to Khan's original affidavit. Stone's objection claimed Khan's affidavit "is not based upon personal knowledge and thus is hearsay and inadmissible." On appeal, Wythe argues that it cured the defect in Khan's original affidavit by submitting an amended affidavit that included "the ritual words concerning personal knowledge and `true and correct.'" Wythe supplies no argument or supporting authority that Stone's objection was invalid, or any supporting authority for arguing that Wythe was harmed by the trial court's sustaining of an objection to an affidavit that was amended in a subsequent filing.
A letter from Stone with an enclosed bill was the subject of an objection that the document was immaterial and irrelevant. On appeal, Wythe notes that Stone submitted the same document in his own summary judgment evidence. Nothing prevents Wythe from relying on a document attached to Stone's motion for summary judgment. See Wilson v. Burford, 904 S.W.2d 628, 629 (Tex.1995) (Both parties may rely on summary judgment evidence submitted by one of the parties.); Perry v. Houston Indep. Sch. Dist., 902 S.W.2d 544, 547-48 (Tex.App.-Houston [1st Dist.] 1995, writ dism'd w.o.j.) ("A nonmovant may use a movant's own exhibit against the movant to establish the existence of a fact question.").
Wythe also complains the trial court sustained Stone's objection that Khan "is incompetent to give a legal opinion and the proper predicate has not been provided for him to give any kind of a legal opinion." Wythe argues that this objection "does not even identify which statement, if any, is challenged, and never should have been dignified with a ruling, much less one which `sustained' it." Although the order ruling on Stone's objections states that "[t]he evidence for each objection that is sustained is hereby stricken[,]" it is not apparent what evidence was stricken as a result of this particular ruling. Wythe does not contend that the trial court struck his entire affidavit, and does not direct this Court's attention to any statements in the affidavit that were affected by this particular ruling.
It does not appear that the trial court's rulings on the objections require a reversal of the judgment. See Tex.R.App. P. 44.1. We overrule issue nine.
In issue ten, Wythe contends the trial court erred in striking the "addendums" to paragraphs seven through nine of Khan's amended reply affidavit. After the summary judgment hearing, Wythe filed a motion for leave to file an amended reply affidavit. The motion explained in part as follows:
[A]t least one statement[ ] of Mr. Khan['s] obviously was incorrect, albeit on points of fact irrelevant and not material to the issues before the court, i.e., the statement to the effect that Khan submitted "estimates", and either stating or implying that he did not provide Mr. Stone with "invoices.["] Mr. Khan obviously did supply Mr. Stone with invoices or billsbut the invoices produced on June 29 by Mr. Stone obviously had nothing to do with the apartment *113 complex which was the apparent focus of the Lloyds XL litigation. The larger items submitted (e.g., a bill for installation of Gilbarco equipment for c. $75k; a bill for installation of coolers; and one for metalwork) obviously were for work at the "Touchdown", a convenience store/gas station located on Twin Cities in Nederland.
Thus, the Court's ruling apparently is an invitation for Khanin order to preserve some statements to the extent that they might be materialto knowingly file a false affidavit. This Wythe and its counsel cannot do.
Accordingly, an amended Affidavit of Waleed Khan, attached hereto. Leave is requested to file this Affidavit late and with the corrections existing in the interest of justice.
Stone objected to the amended affidavit because the trial court "granted Wythe leave to correct an error of form in Waleed Khan's previously filed statement so that Waleed Khan could execute and file a document that comports with Texas affidavit procedure[,]" and argued that pursuant to the trial court's ruling "Khan was to sign a properly sworn and notarized affidavit in the exact form as his previously filed statement with no changes in the content of the statement." Stone objected on the ground that the "newly filed affidavit exceeds the Court's authorization." The trial court ordered that "the addendum language at paragraphs 7, 8, and 9 of the Reply Affidavit of Waleed Khan (amended July, 2009) are stricken and will be disregarded for purposes of the determination of summary judgment motions filed by John D. Stone and by Wythe II Corporation."
In arguing that the trial court abused its discretion, Wythe complains that by excluding the added portions of the affidavit, the trial court deprived Wythe of its right to controvert Stone's summary judgment evidence, and the court also improperly imposed sanctions after refusing to allow Wythe to correct Khan's affidavit. Assuming the changes to the affidavit exceeded the trial court's directive, Wythe nonetheless unequivocally requested permission to correct the record. The issue is whether the trial court abused its discretion by denying that leave.
The trial court has the inherent power to sanction "to the extent necessary to deter, alleviate, and counteract bad faith abuse of the judicial process." IFC Credit Corp. v. Specialty Optical Sys., Inc., 252 S.W.3d 761, 772 (Tex.App.-Dallas 2008, pet. denied). "The inherent powers of a court are those which it may call upon to aid in the exercise of its jurisdiction, in the administration of justice, and in the preservation of its independence and integrity." Eichelberger v. Eichelberger, 582 S.W.2d 395, 398-99 (Tex. 1979). It is not clear how the trial court's integrity is preserved, in this instance, by its refusal of leave to correct a misstatement in the record. Wythe admitted that statements in Khan's affidavit had to be corrected to comply with Khan's statement that the matters contained in the affidavit were true and correct, and it was not reasonable to refuse to permit Wythe to do so, particularly under circumstances where Stone was asking that Wythe be sanctioned for making the statements in the affidavit. Wythe would not have necessarily escaped any sanction for making the statements in the earlier affidavit, but a trial court's denial of a party's request to correct the record may prevent the party from mitigating wrongful conduct.
The statements Wythe sought to correct related to Stone's lack of trust in Khan. Distrust of a client would not excuse an unconscionable legal services agreement. See generally Tex. Disciplinary Rules Prof'l Conduct R. 1.04, reprinted in Tex. *114 Gov't Code Ann., tit. 2, subtit. G, app. A (Tex. State Bar R. art. X, § 9) (describing factors that may be considered in determining reasonableness of a fee). The evidence excluded by the trial court did not concern an issue determinative of the case. See Allen v. United of Omaha Life Ins. Co., 236 S.W.3d 315, 324-25 (Tex.App.-Fort Worth 2007, pet. denied) (Erroneous refusal to allow correction of false affidavit not shown to have been offered in bad faith was harmless where the case did not turn on the excluded affidavit.). Although Stone, in seeking sanctions against Wythe, used the statements the court had refused permission to correct, we have vacated the trial court's penalty order on other grounds, and we have reversed the trial court's award of attorney fees. We are confident the court will proceed on remand in conformance with this opinion. Issue ten is overruled in part and sustained in part.
In issue eleven Wythe contends the trial court erred in overruling four of Wythe's objections to Stone's affidavit. Stone's affidavit included Stone's construction of the "option" language in the contingent-fee contract. Wythe objected to the paragraph on the ground that it violated the parol evidence rule. See David J. Sacks, P.C. v. Haden, 266 S.W.3d 447, 450 (Tex. 2008). The part of Stone's affidavit concerning the import of the terms contained within the contract does not contain inadmissible evidence of a parol agreement. Wythe objected to the same paragraph on the ground that Stone is not competent to testify as to the meaning or effect of a written contract. See Akin v. Santa Clara Land Co., Ltd., 34 S.W.3d 334, 339 (Tex. App.-San Antonio.2000, pet. denied) ("Expert testimony regarding the legal interpretation of an unambiguous contract encroaches upon the trial court's province to determine the correct legal interpretation."). Wythe does not suggest how the trial court's failure to strike the paragraph containing Stone's understanding of the legal representation agreement resulted in an improper judgment, however. See Tex. R.App. P. 44.1.
Wythe also objected to paragraph 28 of Stone's affidavit, in which Stone stated that Khan is an experienced, clever, and sophisticated businessman, on the ground that Stone was making an unsupported lay opinion. See Tex.R. Evid. 701. The remainder of the paragraph set forth the basis of Stone's opinion, namely, that Khan is the chief executive officer of several corporations, and Stone was aware that Khan personally participated in "a variety of contentious business and legal matters[.]"
Finally, Wythe objected to a statement in paragraph 46 of Stone's affidavit, that Stone was "operating exclusively under the contingency fee provisions in the Representation Agreement[,]" on the ground that the statement violates the parol evidence rule. Wythe argues this statement purports "to give [Stone's] own interpretation of how the contract `worked'" in the absence of objective evidence that Stone elected to proceed on a contingent-fee basis. The particular statement precedes Stone's description of the documentary evidence that corroborates Stone's claim, and, if untrue, could be readily controverted by reference to the documents described in paragraph 46. See Wise v. Dallas Sw. Media Corp., 596 S.W.2d 533, 536 (Tex. Civ.App.-Beaumont 1979, writ ref'd n.r.e.). Regardless, this case is controlled by the bankruptcy court's order approving the representation from the outset on a contingent-fee basis. We overrule issue eleven.
CONCLUSION
The trial court did not err in granting summary judgment in favor of Stone on *115 the contingent-fee contract for legal services. We affirm that part of the judgment. The trial court erred in assessing a penalty to be paid to Stone, and in the amount of attorney fees awarded for pursuit of that order. We vacate the part of the sanctions order that assessed a penalty of $19,750, and the part of the sanctions order that assessed attorney fees. The jury's verdict is not supported by sufficient evidence. Accordingly, we reverse the part of the judgment that awarded Stone attorney fees for the development of Stone's breach of contract claims. We remand the case to the trial court for a new hearing solely on the remaining issue of the reasonable amount of attorney fees necessary to enforce the contract.
AFFIRMED IN PART; REVERSED AND REMANDED IN PART.
OPINION ON MOTION FOR REHEARING
In a motion for rehearing, Stone contends that this Court addressed factual sufficiency in issue five-A as unpreserved and unassigned error. This contention is not correct. The Court sustained the no evidence issue presented.
Wythe challenged the legal sufficiency of the evidence supporting the jury's award of attorney fees. In particular, Wythe urged that Stone "never introduced contemporaneous billing records or any testimony regarding reasonable hourly fee rates." As explained in the opinion, this Court remanded the case for a determination of a reasonable fee based on an hourly rate. The Court's opinion addressed the issue that was preserved, raised, and briefed: that is, the legal sufficiency of the evidence supporting the award of attorney fees. This Court held that the evidence offered by Stone did not provide sufficient justification for shifting the amount of the contingent fee to Wythe. The evidence presented was legally insufficient to support a fee in the amount awarded by the jury. See City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex.2005).
It is correct that "[g]enerally we render judgment when a no evidence issue is sustained following a trial on the merits." Guevara v. Ferrer, 247 S.W.3d 662, 670 (Tex.2007). That possibility has been considered by the Court. But there are limited exceptions. It is not always appropriate for an appellate court to render judgment when a no evidence issue is sustained following a trial. See id. When there is no legally sufficient evidence to support the amount awarded by the jury, and there is no legitimate question that some amount of attorney fees are owed under a correct measure, remand to the trial court may be appropriate to determine a reasonable fee. See, generally, Formosa Plastics Corp. USA v. Presidio Eng'rs and Contractors, Inc., 960 S.W.2d 41, 51 (Tex.1998) (remanding where there is "no legally sufficient evidence to support the entire amount of damages, but there is some evidence of the correct measure of damages"); see also Guevara, 247 S.W.3d at 670 ("However, when there is evidence to support some damages it is not appropriate to render judgment."). Also, the possibility of a suggestion of remittitur has been considered by this Court, but the record in this case does not permit that action. See id. Although Stone had the burden of offering evidence but failed to present legally sufficient evidence, the Court concluded that a remand to the trial court for the determination of a reasonable fee would be the appropriate judgment under the circumstances. We see no reason to grant the motion for rehearing to reconsider the decision.
Although Stone raises other issues in his motion for rehearing, and Wythe also filed a motion for rehearing and a reply to *116 Stone's motion, none of the other issues raised by the parties require clarification of the Court's opinion or a rehearing by the Court. The motions for rehearing are overruled.
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51 So.3d 974 (2010)
Ricky RYALS a/k/a Ricky B. Ryals, Appellant
v.
STATE of Mississippi, Appellee.
No. 2009-CP-00839-COA.
Court of Appeals of Mississippi.
June 1, 2010.
Rehearing Denied October 12, 2010.
Certiorari Denied January 20, 2011.
Ricky Ryals, pro se, appellant.
Office of the Attorney General by Ladonna C. Holland, attorney for appellee.
Before KING, C.J., ROBERTS and CARLTON, JJ.
KING, C.J., for the Court:
¶ 1. On July 23, 2008, Ricky Ryals filed a pro se motion to vacate and set aside his conviction of capital murder and sentence. The Forrest County Circuit Court summarily dismissed Ryals's motion as a successive writ and as time-barred. Aggrieved, Ryals appeals. On appeal, Ryals raises the following issues: (1) whether the trial court erred in summarily dismissing *975 the motion for post-conviction relief; (2) whether the trial court erred in holding that the motion to amend Ryals's pleadings asserting that Mississippi Code Annotated sections 97-3-21 (Rev.2006), XX-XX-XXX (Rev.2007), and 47-7-3 (Supp.2009) are inconsistent and void subjecting Ryals to an unconstitutional sentence, was barred by Mississippi Code Annotated sections 99-39-5 (Supp.2009) and 99-39-27(9) (Supp.2009); (3) whether the trial court erred in dismissing the motion for post-conviction relief under the erroneous standard of clear and convincing evidence; (4) whether the trial court erred in dismissing the motion for post-conviction relief holding that Ryals's guilty plea was knowing, intelligent, and voluntary; (5) whether Ryals was denied effective assistance of counsel during the guilty-plea process, and (6) whether the trial court erred in limiting the appellate record to those pleadings and orders necessary for review of the court's dismissal of Ryals's motion for post-conviction relief. Finding no error, we affirm the judgment of the trial court.
FACTS
¶ 2. On December 2, 1997, Ryals was indicted for capital murder and manslaughter for killing his wife, Judy Ryals, and her unborn child during the commission of a robbery. On June 30, 1998, Ryals pled guilty to capital murder. The manslaughter charge was dismissed and the State waived the death penalty. Thereafter, Ryals was sentenced to life in the custody of the Mississippi Department of Corrections without the possibility of parole.
¶ 3. On June 25, 2001, Ryals filed his first motion for post-conviction relief. The trial court denied relief on January 18, 2003. This Court affirmed the trial court's denial of post-conviction relief on September 7, 2004. Ryals v. State, 881 So.2d 933 (Miss.Ct.App.2004). On July 23, 2008, Ryals filed a second motion to vacate and set aside his conviction and sentence. On May 1, 2009, the trial court dismissed his motion for post-conviction relief. On May 27, 2009, Ryals timely appealed.
STANDARD OF REVIEW
¶ 4. When the appellate court reviews a trial court's dismissal of a motion for post-conviction relief it will not disturb that decision unless the trial court's factual findings are clearly erroneous. Phillips v. State, 25 So.3d 404, 406 (¶ 4) (Miss.Ct.App. 2010). "However, where questions of law are raised the applicable standard of review is de novo." Callins v. State, 975 So.2d 219, 222 (¶ 8) (Miss.2008).
DISCUSSION
¶ 5. Ryals raises six issues on appeal; however, the threshold question before this Court is whether the trial court erred in summarily dismissing Ryals's motion for post-conviction relief. We find that the trial court did not err in summarily dismissing Ryals's motion for post-conviction relief.
¶ 6. The record indicates that Ryals filed his first motion for post-conviction relief in 2001. In his first motion for post-conviction relief, Ryals alleged that the evidence was insufficient to convict him, his guilty plea was not voluntarily and intelligently entered, and he received ineffective assistance from counsel. Ryals, 881 So.2d at 934. Accordingly, we find that Ryals's motion for post-conviction relief presently before the Court is barred as a successive writ as Ryals's previous motion for post-conviction relief raised these same arguments. In addition, these arguments do not fall within the purview of the exceptions *976 to the successive-writ bar. Miss. Code Ann. § 99-39-23(6) (Supp.2009)[1].
¶ 7. In addition, Ryals raises three issues in his second motion for post-conviction relief that were not raised in his first motion for post-conviction relief. In his second motion, Ryals also alleges that the trial court erred in holding that Ryals's motion to amend was barred by Mississippi Code Annotated sections 99-39-5 and 99-39-27(9) because: (1) Mississippi Code Annotated sections 97-3-21, XX-XX-XXX, and 47-7-3 are inconsistent and subject him to an unconstitutional sentence; (2) the trial court applied the wrong standard of proof, clear and convincing evidence, in dismissing his motion for post-conviction relief; and (3) the trial court erred in limiting the appellate record to those pleadings and orders necessary for review by the appellate court. According to Mississippi Code Annotated section 99-39-5(1), the grounds for granting post-conviction relief are stated as follows:
(a) That the conviction or the sentence was imposed in violation of the Constitution of the United States or the Constitution or laws of Mississippi;
(b) That the trial court was without jurisdiction to impose sentence;
(c) That the statute under which the conviction and/or sentence was obtained is unconstitutional;
(d) That the sentence exceeds the maximum authorized by law;
(e) That there exists evidence of material facts, not previously presented and heard, that requires vacation of the conviction or sentence in the interest of justice;
(f) That there exists biological evidence secured in relation to the investigation or prosecution attendant to the petitioner's conviction not tested, or, if previously tested, that can be subjected to additional DNA testing, that would provide a reasonable likelihood of more probative results, and that testing would demonstrate by reasonable probability that the petitioner would not have been convicted or would have received a lesser sentence if favorable results had been obtained through such forensic DNA testing at the time of the original prosecution.
*977 (g) That his plea was made involuntarily;
(h) That his sentence has expired; his probation, parole or conditional release unlawfully revoked; or he is otherwise unlawfully held in custody;
(i) That he is entitled to an out-of-time appeal; or
(j) That the conviction or sentence is otherwise subject to collateral attack upon any grounds of alleged error heretofore available under any common law, statutory or other writ, motion, petition, proceeding or remedy.
¶ 8. Furthermore, "[p]ost-conviction relief is not granted upon facts and issues which could or should have been litigated at trial or on appeal." Williams v. State, 669 So.2d 44, 52 (Miss.1996). Because the three new issues do not fall within the purview of the grounds for post-conviction relief, and they could have been raised in Ryals's first motion for post-conviction relief, we find that Ryals is procedurally barred from raising them now. Therefore, we affirm the judgment of the trial court dismissing Ryals's motion for post-conviction relief because it is both time-barred and successive-writ barred.
¶ 9. THE JUDGMENT OF THE FORREST COUNTY CIRCUIT COURT DISMISSING THE MOTION FOR POST-CONVICTION COLLATERAL RELIEF IS AFFIRMED. ALL COSTS OF THIS APPEAL ARE ASSESSED TO FORREST COUNTY.
LEE AND MYERS, P.JJ., GRIFFIS, BARNES, ISHEE, ROBERTS, CARLTON AND MAXWELL, JJ., CONCUR. IRVING, J., CONCURS IN PART AND IN THE RESULT.
NOTES
[1] Mississippi Code Annotated section 99-39-23(6) states that:
The order as provided in subsection (5) of this section or any order dismissing the petitioner's motion or otherwise denying relief under this article is a final judgment and shall be conclusive until reversed. It shall be a bar to a second or successive motion under this article. Excepted from this prohibition is a motion filed under Section 99-19-57(2), raising the issue of the convict's supervening mental illness before the execution of a sentence of death. A dismissal or denial of a motion relating to mental illness under Section 99-19-57(2) shall be res judicata on the issue and shall likewise bar any second or successive motions on the issue. Likewise excepted from this prohibition are those cases in which the petitioner can demonstrate either that there has been an intervening decision of the Supreme Court of either the State of Mississippi or the United States which would have actually adversely affected the outcome of his conviction or sentence or that he has evidence, not reasonably discoverable at the time of trial, which is of such nature that it would be practically conclusive that, if it had been introduced at trial, it would have caused a different result in the conviction or sentence. Likewise excepted are those cases in which the petitioner claims that his sentence has expired or his probation, parole or conditional release has been unlawfully revoked. Likewise excepted are those cases in which the petitioner has filed a prior petition and has requested DNA testing under this article, provided the petitioner asserts new or different grounds for relief related to DNA testing not previously presented or the availability of more advanced DNA technology.
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52 So.3d 570 (2010)
Lugine Capri CAVER
v.
STATE of Alabama.
CR-08-2014.
Court of Criminal Appeals of Alabama.
April 30, 2010.
Rehearing Denied June 18, 2010.
*571 Glenn L. Davidson, Mobile, for appellant.
Troy King, atty. gen., and Madeline H. Lewis, asst. atty. gen., for appellee.
MAIN, Judge.
Lugine Capri Caver was convicted of third-degree burglary, a violation of § 13A-7-7, Ala.Code 1975. Pursuant to Alabama's Habitual Felony Offender Act, the trial court sentenced him to 20 years' imprisonment. See § 13A-5-9, et seq., Ala.Code 1975. This appeal followed.
On June 12, 2008, at 3:15 a.m., an individual broke the drive-through window at the McDonald's fast-food restaurant located on St. Stephens Road in Mobile County and removed the cash-register drawer. A surveillance camera recorded the incident. The cash-register drawer that was taken from the cash register reportedly did not contain any money. However, it was not located. Law-enforcement officials attempted to recover fingerprints from the broken glass. However, they were unable to obtain any fingerprints because the glass was in such small pieces.
Sean Black, a detective with the City of Mobile Police Department, testified that he was in charge of the investigation of this burglary. He received the surveillance video-tape on June 26, 2008, from Lance Williams, the owner and operator of the McDonald's restaurant, and he viewed the tape that same day. He recognized *572 the person in the video tape as Caver because he had seen him several times in photographs and in person. Detective Black testified, over objection, that he had seen Caver on the day of the burglary because Caver had been brought to the police station on other charges. Caver did not testify, and the defense presented no evidence.
On appeal, Caver argues that the trial court reversibly erred by reopening the case and allowing the jury to view his arms after the jury had begun its deliberations. Specifically, he asserts that: "in allowing additional physical evidence against Caver to be admitted into evidence, after the jury had begun its deliberations, denied him a fair trial and is therefore reversible error." (Appellant's brief, at 9.)[1]
"Due process guarantees that a criminal defendant will be treated with `that fundamental fairness essential to the very concept of justice. In order to declare a denial of it we must find that the absence of that fairness fatally infected the trial; the acts complained of must be of such quality as necessarily prevents a fair trial.' Lisenba v. California, 314 U.S. 219, 236 (1941)." United States v. Valenzuela-Bernal, 458 U.S. 858, 872 (1982). In state criminal prosecutions, due process "secures the accused in those certain basic and fundamental rights which are an integral part of the American system of criminal jurisprudence." Application of Stecker, 271 F.Supp. 406, 409 (D.N.J.1966), aff'd, 381 F.2d 379 (3d Cir.), cert, denied, 389 U.S. 929 (1967). "[W]hen a case is reopened for the reception of further evidence, it must be done in such a manner that the rights of all parties will be protected and ample opportunity afforded them for cross examination or rebuttal, and even for requesting additional instructions, if the matters introduced should reasonably require them." Perkins v. State, 253 Miss. 652, 655, 178 So.2d 694, 696 (1965) (holding that it was reversible error for the trial court to allow the jury to view the victim's scars once deliberations had begun).
The record reveals that, while the jury was deliberating, it returned to the courtroom several times to view the surveillance video-tape of the burglary. After viewing the surveillance tape for a third time, the jury returned to the jury room to deliberate and then presented the following question to the circuit court judge: "Can we see his arms?" (C. 24; R. 137.) The following exchange transpired:
"THE COURT: Over the objection of the defendant, I'm going to allow the jury to view the defendant's arms. They've asked a question of can they see his arms, after watching the videotape numerous times.
"[DEFENSE COUNSEL]: Judge, here's another thing I'm going to say. That it really bothers me. I can't argue to the jury now. I can't make any argument at all to the jury concerning what they see on his arms; where, if it had happened during the trial, I could have, and I would have. He's got tattoos on him that should be able to be seen in that video that now I can't argue to the jury: Look, folks, look at this right here. Do you see this? You could have seen this on the video.
"THE COURT: All right. Well
*573 "[DEFENSE COUNSEL]: Then it gets into a situation where he wants tohe wants to cross-examine him or he wants to argue about it.
"[PROSECUTOR]: We don't know why they want to see it, though. We don't know why they want to see his arms.
"THE COURT: Let's go ahead.
"[DEFENSE COUNSEL]: Where do you want to put him. Judge?
"THE COURT: What do you think? Just right where you're at [sic] ?
"[DEFENSE COUNSEL]: Yeah, I think right here.
"THE COURT: Go ahead and bring them on out. We'll let them
"(The jury enters the courtroom at 3:45 p.m.)
"THE COURT: All right. The question was asked whether you could see his arms, and I'm going to allow that in this case. If you would, Mr. Caver, go ahead and put your arms out so the jury members can see it.
"[DEFENSE COUNSEL]: Make sure they see the top of your hands?
"THE COURT: No comments by anybody on anything of this. Just let them see it, and we'll send y'all back in when y'all are ready. Are y'all ready? See what you need to see?
"(Jurors respond affirmatively.)
"THE COURT: All right. Go ahead and go back in."
(R. 137-38.) The record indicates that approximately 13 minutes later the jury announced it had reached a verdict; the jury found Caver guilty as charged in the indictment.
We turn to Caver's claim that because no evidence was presented at trial on the issue whether he had markings on his arms, the view given to the jury of his arms constituted new evidence and amounted to an improper reopening of the case. Section 15-14-4, Code of Alabama 1975 gives a trial court permission to allow the introduction of additional evidence "at any time before the conclusion of argument . . . ." § 15-14-4, Ala.Code 1975 (emphasis added). Further, "[b]efore the jury retires to begin deliberation of the case, the court, upon a showing of good cause, may allow the case to be reopened." Rule 19.1(h), Ala.R.Crim.P. (emphasis added). See Charles W. Gamble, McElroy's Alabama Evidence § 436.01(2) (5th ed. 1996). "Although it is within the discretion of the trial court to reopen the case after the close of evidence, it is clear that cases construing § 15-14-4 have consistently held it to be error to do so after submission of the case to the jury." Harris v. State, 371 So.2d 979, 983 (Ala.Crim. App.), cert, denied, 371 So.2d 984 (Ala. 1979), and cases cited therein. See also Reed v. State, 475 So.2d 641 (Ala.Crim. App. 1985) (holding that the trial court improperly allowed the jury to have three additional pages of a report after only one page of the report had been referred to during the trial). Cf. Jolly v. State, 405 So.2d 76 (Ala.Crim.App.1981) (finding no error where the trial judge allowed in a photographic negatives, which the jury requested to see after it had begun its deliberations, which depicted a tag appearing on the automobile used by the robbers because, during the course of the trial, there had been oral testimony about the negatives).
In Ex parte Batteaste, 449 So.2d 798 (Ala. 1984), the Supreme Court of Alabama held that it was error for the trial court to permit "the jury, over objection of the defendant, to view the defendant's face to see if he had a scar on it." 449 So.2d at 799. In Harnage v. State, 290 Ala. 142, 274 So.2d 352 (1972), this Court ruled that a jury request to view the hands of a *574 defendant who was charged with murder by strangulation came too late because the case had already been submitted to the jury and any member of the jury had the opportunity to observe the defendant's hands during the trial, particularly while the defendant was testifying in his own behalf. 290 Ala. at 144, 274 So.2d at 354. Accord United States v. Santana, 175 F.3d 57 (1st Cir.1999) (holding that the district court improperly allowed the jury, during its deliberations, to return to the courtroom to observe the defendant's ears, which had been covered during the trial by headphones used for language translation); Scott v. State, 664 So.2d 3, 4 (Fla.Dist.Ct. App.1995) (finding error in a prosecution for an undercover drug transaction, where the jury requested, after the close of evidence and during its deliberations, "to view the defendant's right profile," which had not been viewed at trial).
The trial court erred in requiring Caver to display his arms to the jurors after the jury had retired for deliberations. The display of his arms constitutes non testimonial physical evidence the jury had not seen during the trial, and the presentation of this new evidence after the court submitted the case to the jury was improper. See Batteaste, supra; Harris, supra; Harnage, supra. Because the sole issue at trial was whether Caver was the person depicted in the surveillance video-tape of the burglary of the McDonald's restaurant and the jury requested additional information in resolving that issue, we hold that the error was not harmless. For these reasons, we reverse the judgment. The judgment is reversed and the case remanded for a new trial.
REVERSED AND REMANDED.
WELCH and WINDOM, JJ., concur. KELLUM, J., concurs in the result. WISE, P.J., recuses herself.
NOTES
[1] The State submits that Caver failed to preserve this issue for review. However, we believe that, although Caver's objection was not a model of clarity, it is clear that the trial court understood his objections, and that his arguments on appeal are challenging the trial court's ruling on the same or similar grounds.
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712 A.2d 1050 (1998)
1998 ME 146
David L. BROOKS
v.
TOWN OF NORTH BERWICK, et al.
Supreme Judicial Court of Maine.
Argued March 4, 1998.
Decided June 10, 1998.
*1051 David L. Brooks (orally), North Berwick, for plaintiff.
William L. Plouffe (orally), Drummond, Woodsum & MacMahon, Portland, for Town of North Berwick.
Paul W. Cadigan (orally), Reagan, Adams & Cadigan, Kennebunk, for plaintiffs.
Before WATHEN, C.J., and ROBERTS, CLIFFORD, RUDMAN, DANA, LIPEZ, and SAUFLEY, JJ.
PER CURIAM.
[¶ 1] David L. Brooks appeals from a judgment entered in the Superior Court (York County, Fritzsche, J.) affirming the North Berwick Zoning Board of Appeals' (ZBA's) decision to vacate the Code Enforcement Officer's approval of a nonconforming use of abutting property. Brooks, whose personal residence and place of employment are adjacent to the subject property, argues that the court erred by failing to find that the ZBA had a duty to determine whether the subject property's grandfathered status for nonconforming uses had been discontinued. Because we conclude that Brooks lacks standing to seek judicial review of the ZBA's decision, *1052 we vacate the judgment and remand with instructions to dismiss the appeal.
I.
[¶ 2] Brooks is an attorney whose home and law office are adjacent to a five-acre property in North Berwick owned by Sara and Fred Perkins. The Perkins property is located partly in a limited commercial zone and partly in a residential zone, and includes six separate buildings.
[¶ 3] The Perkinses purchased the subject property in 1996 from Tilcon, Inc., a paving and construction contractor. Tilcon, whose ownership and use of the property predated the enactment of the Town's zoning ordinance, used the property's six buildings primarily for storage and maintenance of its trucks and equipment from 1979 until 1989 as a grandfathered nonconforming use.[1] In late 1988 and 1989, Tilcon ceased its North Berwick operations and began to lease portions of the property to various tenants, in part as an effort to preserve the property's grandfathered status pursuant to the Town's zoning ordinance.[2]
[¶ 4] In August 1996 a prospective tenant of the Perkins property became interested in establishing a machine shop on the premises. The Town's Code Enforcement Officer (CEO) advised the prospective tenant that the proposed machine shop, although not expressly permitted by the ordinance, was authorized as a change to the existing nonconforming use of the property, which he apparently concluded had retained its grandfathered status. The ordinance, however, vests the Planning Board, not the CEO, with the authority to approve changes in existing nonconforming uses:
Change of Use. An existing non-conforming use may be changed to another nonconforming use provided that the proposed use is equally or more appropriate to the district than the existing non-conforming use, and the impact of the former use [sic] as determined by the Planning Board.
ORDINANCE, § 1.4.4(e) (emphasis added). In September 1996 Brooks filed an administrative appeal of the CEO's decision with the ZBA, requesting the ZBA to "reverse the [CEO's] decision and direct any Application for change of any legally existing non-conforming use of the property be sent to the Planning Board for review," in accordance with section 1.4.4(e) of the zoning ordinance.
[¶ 5] The ZBA considered Brooks' administrative appeal at a public hearing in October 1996. Brooks and the Defendants presented conflicting evidence regarding the duration and character of the tenancies which occurred between late 1988 and 1996. The ZBA determined that only the Planning Board, not the CEO, had the authority to approve changes in existing nonconforming uses. Accordingly, it issued a Notice of Decision approving Brooks' administrative appeal and concluding that the "CEO should send any future commercial enterprises to the Planning Board. . . ."[3]
[¶ 6] Pursuant to M.R.Civ.P. 80B, Brooks filed an appeal with the Superior Court, which affirmed the ZBA's decision based on its conclusion that Brooks "got what he sought and has no basis to appeal. . . ." This appeal followed.
*1053 II.
[¶ 7] Brooks argues that the ZBA, having properly vacated the CEO's decision, also had to determine whether the property's grandfathered status had been discontinued pursuant to section 1.4.4(a) of the zoning ordinance as a result of the intermittent nature of the 1989-1996 tenancies and the dissimilarities between Tilcon's use of the property and the tenants' uses of the property.[4] The ZBA was required to make this determination, he argues, before referring the case to the Planning Board.
[¶ 8] We begin by considering the preliminary question of Brooks' standing to challenge the ZBA's decision. Pursuant to 30-A M.R.S.A. § 2691(3)(G) (1996), any party may appeal the decision of a local zoning board of appeals in accordance with Maine Rule of Civil Procedure 80B. To achieve "party" status within the meaning of section 2691, one must have participated in the ZBA hearing and must demonstrate a particularized injury as a result of the ZBA's action or inaction. See Brooks v. Cumberland Farms, Inc., 1997 ME 203, ¶¶ 8-11, 703 A.2d 844, 847; Forester v. City of Westbrook, 604 A.2d 31, 32 (Me.1992); Harrington v. City of Biddeford, 583 A.2d 695, 696 (Me.1990); Singal v. City of Bangor, 440 A.2d 1048, 1050 (Me. 1982).
[¶ 9] In his application for an administrative appeal, Brooks expressly requested that the ZBA "reverse the Decision [of the CEO] and direct that any Application for change of any legally existing non-conforming use of the property be sent to the Planning Board for review." Brooks' application set forth several legal arguments to support this specific request, including (1) that the property's grandfathered status had been discontinued as a result of the 1989-1996 tenancies, pursuant to section 1.4.4(a) of the ordinance; and (2) that only the Planning Board, not the CEO, had the authority to approve a change to an existing nonconforming use, pursuant to section 1.4.4(e) of the ordinance.
[¶ 10] Following a public meeting, the ZBA agreed that the CEO acted without authority and vacated his decision. This is precisely the relief that Brooks requested. Although Brooks might have preferred that the ZBA base its decision on the alternative rationale that the property was no longer grandfathered, he nonetheless received exactly what he asked for from the ZBA: an invalidation of the CEO's decision. Brooks' dissatisfaction with the ZBA's reason for invalidating the CEO's approval of the proposed machine shop does not constitute a "particularized injury" sufficient to confer standing for judicial review. See Geer v. Kadera, 173 Ill.2d 398, 219 Ill.Dec. 525, 671 N.E.2d 692, 699 (1996) ("[I]t is fundamental that the forum of courts of appeal should not be afforded to successful parties who may not agree with the reasons, conclusion, or findings below."); ACS Enterprises, Inc. v. Norristown Borough, 659 A.2d 651, 653-54 (Pa.Commw.Ct.1995) (where a party was granted the relief it requested from zoning board, "[the] prevailing party's disagreement with the legal reasoning or basis for a decision does not amount to a cognizable aggrievement necessary to establish standing."), appeal denied, 542 Pa. 674, 668 A.2d 1136 (1995).
[¶ 11] Brooks concedes that the ZBA's decision in no way deprived him of the opportunity to challenge the merits of the machine shop proposal before the Planning Board in accordance with the procedure specified in the ordinance, and to appeal any adverse decision of the Planning Board to the ZBA and, ultimately, to the courts.[5] In fact, Brooks has done exactly that, while simultaneously bringing the instant appeal. See supra note 3. Having received precisely the relief he asked for from the ZBA, Brooks *1054 plainly did not suffer a particularized injury as a result of its decision. In the absence of a particularized injury, he lacks standing to seek judicial review of the ZBA's decision, see Forester, 604 A.2d at 32, and we therefore vacate the Superior Court's judgment and remand with instructions to dismiss the appeal.
III.
[¶ 12] Pursuant to M.R.Civ.P. 76(f), where an appeal is frivolous or instituted primarily for the purpose of delay, the opposing parties or their counsel may be awarded treble costs and reasonable expenses. Although we will not exercise the authority granted to us by Rule 76(f) except in egregious circumstances, we will exercise this power when "an appeal is obviously without any merit and has been taken with no reasonable likelihood of prevailing, and results in delayed implementation of the judgment of the lower court; increased costs of litigation; and dissipation of the time and resources of the Law Court." Auburn Harpswell Ass'n v. Day, 438 A.2d 234, 238-39 (Me.1981). Brooks received from the ZBA precisely the relief he requested, and his efforts to preclude the Planning Board's review of the machine shop proposal by bringing the instant appeal could not have been undertaken with any reasonable expectation of success. We find this appeal to be frivolous, and award to both Defendants treble costs plus $350 each, to be applied to their attorney fees. See 14 M.R.S.A. § 1802 (1980); M.R.Civ.P. 76(f).
The entry is:
Judgment vacated. Remanded to the Superior Court with instructions to dismiss the appeal for lack of standing. Further ordered that plaintiff pay to both defendants treble costs plus $350 each, to be applied to their attorney fees.
NOTES
[1] The Town's zoning ordinance provides in pertinent part:
1.4.3(a). Continuance, Enlargement, Reconstruction. Any use of land, or any building, structure, or parts thereof, legally existing at the time of the adoption of this Ordinance . . . which does not conform to the requirements of this Ordinance or its amendments, may continue, and may not be extended, reconstructed, enlarged or structurally altered except as specified below.
NORTH BERWICK, ME., ZONING ORDINANCE art. 1, § 1.4.3 (1995).
[2] The ordinance provides in pertinent part:
1.4.4(a). Resumption Prohibited. A lot, building, or structure in or on which a non-conforming use is discontinued for a period exceeding one year, or which is superseded by a conforming use, may not again be devoted to a non-conforming use except that the Planning Board may, for good cause shown by the applicant, grant up to a one year extension. . . .
Id. § 1.4.4.
[3] We were advised by the parties at oral argument that Brooks subsequently challenged the machine shop's approval before the Planning Board, and that he appealed the Planning Board's adverse decision to the ZBA and thereafter to the Superior Court.
[4] Alternatively, Brooks argues that the ZBA's decision "implicitly" concluded that the property had retained its grandfathered status, and that the evidence compelled a contrary conclusion.
[5] Although we have recognized that a prevailing party may prosecute an appeal from an ostensibly favorable judgment when "an essential finding on which the judgment is based might otherwise prejudice it through the use of collateral estoppel in a future proceeding," see Sevigny v. Home Builders Ass'n of Maine, Inc., 429 A.2d 197, 202 (Me.1981), Brooks acknowledges that the ZBA's decision had no preclusive effect on the subsequent proceedings before the Planning Board.
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Opinion by
Judge Crumlish, Jr.,
The Rockwood Area School District (Petitioner) appeals to us from a decision of the Workmen’s Compensation Appeal Board (Board) which remanded the case to the referee for a clarification of his findings on two key issues.
Petitioner comes to us alleging that there was competent evidence to support the referee’s findings and that the Board, without taking further evidence, erred by substituting its findings of fact for those of the referee.
*252The decedent, Jack E. Tipton, was the Superintendent of Schools for the Eockwood Area School District, and acting principal for the Eockwood Area High School. On the last day of the 1972-73 school year, Mr. Tipton suffered a fatal heart attack, and his widow (Claimant/Eespondent) thereafter filed for workmen’s compensation benefits alleging a causal relation between decedent’s work and his death. The referee disallowed Claimant’s petition finding that decedent’s death was the result of the natural progression of his pre-existing cardiac condition and was not causally connected with his work. Claimant appealed to the Board contending that the referee’s findings were not based on competent evidence. The Board agreed and remanded the case to the referee for a clarification of his findings on the issues of stress and the cause of death.
Although Eespondent has not challenged our jurisdiction to hear this appeal, we must address that issue, and, in so doing, conclude that Petitioner’s appeal is premature.
As a general rule, a remand order to a referee is interlocutory and therefore not appealable. Exceptions are applied in situations where the remand would serve no judicial purpose. In United Metal Fabricators, Inc. v. Zindash, 8 Pa. Commonwealth Ct. 339, 301 A.2d 708 (1973), we granted an appeal and set aside a remand order of the Board where the record showed that no other conclusion, but that of the referee, could be supported, and the only purpose to be served by a rehearing was delay. In Riley Stoker Corp. v. Workmen’s Compensation Appeal Board, 9 Pa. Commonwealth Ct. 533, 308 A.2d 205 (1973), we vacated a remand order where the record established that the appeal from the referee’s order had not been timely filed.
*253Clearly, the exception noted in Riley Stoker, supra, has no application to this case. As to the exception in Zinclash, supra, a fuller explanation is warranted.
Decedent’s personal physician testified that he treated the decedent on the day he suffered his fatal attack and diagnosed an acute myocardial infarction, caused by the stress of his job. Petitioner’s medical expert, relying on decedent’s medical records and a medical study listing certain factors that tend to make some people more prone to heart attacks than others, offered a contrary opinion as to the nature of decedent’s heart disease and stated that it was not possible to determine the cause of death. Belying on the testimony of Petitioner’s medical expert, the referee found that decedent’s death was not causally related to either his work or emotional stress, but was the result of a natural progression of a pre-existing cardiac condition. A review of this testimony, together with the remaining portions of the record, convinces us that it cannot be said that any other conclusion but that of the referee could be supported on remand, and we therefore hold that this case does not fall within the Zindash exception to the remand rule. The Board’s remand order is therefore interlocutory and not appealable.
Moreover, our disposition is appropriate notwithstanding Bespondent’s failure to raise the motion to quash since our consideration is limited by statute to appeals from final orders of administrative agencies. See Section 403 of the Appellate Court Jurisdiction Act of 1970.1 Therefore, having decided that the order to remand is interlocutory, we are compelled to quash this appeal on our own motion and consideration by us of the issue of the validity of the remand order is unnecessary.
*254Accordingly, we
Order
And Now, this 9th day of January, 1978, this appeal is hereby quashed and the record is remanded to the Workmen’s Compensation Appeal Board for further proceedings not inconsistent with this opinion.
Act of July 31, 1970, P.1,. 673, as .amended, 17 P.S. §211.403.
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349 S.W.3d 174 (2011)
TEXAS WORKFORCE COMMISSION, Appellant,
v.
Maria Elena OLIVAS, Appellee.
No. 08-10-00070-CV.
Court of Appeals of Texas, El Paso.
August 17, 2011.
*175 Laura B. Fountain, Assistant Attorney General, Tort Litigation Division, Austin, TX, for Appellant.
Oscar Mendez, Scherr & Legate, PLLC, El Paso, TX, for Appellee.
Before CHEW, C.J., RIVERA, J., and BARAJAS, C.J. (Ret.).
OPINION
DAVID WELLINGTON CHEW, Chief Justice.
The Texas Workforce Commission (the "Commission") appeals the trial court's denial of its plea to the jurisdiction. The Commission contends the order is in error, and that former Commission employee, Ms. Maria Elena Olivas' suit for retaliatory discharge should be dismissed for lack of jurisdiction. We affirm.
Ms. Olivas worked for the Commission from June 24, 1987 until May 6, 2009 as an account examiner. She developed injuries as a result of her employment duties in March 2008. She subsequently filed a workers' compensation claim. The Commission dismissed her from employment on May 6, 2009.
Ms. Olivas filed suit against the Commission for retaliatory discharge in November 2009. The Commission filed a general denial, and pled sovereign immunity from suit as an affirmative defense. The Commission then filed a plea to the jurisdiction, in which it argued that the trial court lacked subject-matter jurisdiction over this suit due to the Legislature's enactment of Section 311.034 of the Texas Government Code. The Commission argued that by enacting this section, the Legislature unequivocally defined the standard for measuring statutes which purportedly waive sovereign immunity, and that under this standard, there is no waiver within the anti-retaliation provisions of Chapter 451. In response, Ms. Olivas argued that Section 311.034 did not abrogate Texas Supreme Court case law recognizing a waiver of sovereign immunity for anti-retaliation claims. The trial court held a hearing on the Commission's plea on February 25, 2010.
The trial court denied the Commission's plea to the jurisdiction, and the Commission now challenges that ruling by interlocutory appeal. In its sole issue, the Commission contends that sovereign immunity for claims under the anti-retaliation statute has not been "clearly and unambiguously" waived, as required by *176 Section 311.034 of the Texas Government Code.
Governmental entities, such as state agencies, are immune from suit absent a legislative waiver. Kerrville State Hosp. v. Fernandez, 28 S.W.3d 1, 3 (Tex. 2000). To protect the Legislature's authority in this area, a statute must contain "clear and unambiguous language" waiving immunity to permit a suit to proceed against the State. See TEX.GOV'T CODE ANN. § 311.034 (West Supp. 2010); Fernandez, 28 S.W.3d at 3. Absent such a waiver, sovereign immunity deprives a court of subject-matter jurisdiction over claims against the government. See Tex. Dept. of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226-27 (Tex.2004). A plea to the jurisdiction is the mechanism by which a party may challenge a court's jurisdiction. City of Waco v. Kirwan, 298 S.W.3d 618, 621-22 (Tex.2009). When, as in this case, the jurisdictional question is limited to the sufficiency of the plaintiff's pleadings, we will accept as true all factual allegations in the petition to determine if the plaintiff has met her burden to allege facts which affirmatively demonstrate a waiver. Miranda, 133 S.W.3d at 224. As the existence of jurisdiction is a question of law, the ruling on a plea is subject to de novo review. Miranda, 133 S.W.3d at 226.
Ms. Olivas sued the Commission for retaliation following her claim for worker's compensation. Chapter 451 of the Texas Labor Code governs claims for employment discrimination, including retaliation. See TEX.LAB.CODE ANN. § 451.001 (West 2006). Section 451.001 specifically prohibits an employer from retaliating against an employee because the employee files a good faith claim for workers' compensation. See TEX.LAB.CODE ANN. § 451.001(1). An employee who is terminated or discriminated against in violation of Section 451.001, has a cause of action against the employer for damages incurred as a result of the violation. See TEX.LAB.CODE ANN. § 451.002.
As with any other claim against the government, a Chapter 451 cause of action cannot proceed absent Legislative consent to the suit. See Fernandez, 28 S.W.3d at 4. In the case of a state agency such as the Commission, the State Applications Act (SAA) has been held to provide such consent and waive sovereign immunity. Fernandez, 28 S.W.3d at 9. As a general matter, the SAA requires state agencies, such as the Commission, to provide worker's compensation benefits to their employees. See TEX.LAB.CODE ANN. § 501.021. The SAA also specifically incorporates several of the State's worker's compensation laws, including Chapter 451, for application against state agencies. See TEX.LAB.CODE ANN. § 501.002(a). Even more specifically, the SAA provides, "[f]or the purposes of this chapter and Chapter 451, the individual state agency shall be considered the employer." TEX.LAB.CODE ANN. § 501.002(b). Considering the statute as a whole, the Texas Supreme Court concluded that these provisions constituted a "clear and unambiguous" waiver of sovereign immunity for retaliation claims against a state agency. See Fernandez, 28 S.W.3d at 6.
Still, the Commission argues that because Section 311.034 was enacted after the Fernandez decision, the ruling has been abrogated by the Legislature. The Commission continues by arguing that its conclusion has been bolstered by the Supreme Court's recent holding in Travis Central Appraisal District v. Norman, 342 S.W.3d 54, 57-58 (Tex.2011); Fernandez, 28 S.W.3d at 5. In Norman, the Supreme Court concluded that due to amendments to the Political Subdivisions Law (PSL), its prior decision recognizing a waiver of sovereign immunity for retaliatory discharge *177 claims was no longer controlling. See Norman, 342 S.W.3d at 57-59. As the Court discussed in 2005, the Legislature added a new section (Section 504.053) to the PSL. Norman, 342 S.W.3d at 56-57. Within that new section was a "broadly-worded provision" stating that "[n]othing in [the PSL] waives sovereign immunity or creates a new cause of action." Norman, 342 S.W.3d at 57, citing TEX.LAB.CODE ANN. § 504.053(e). Based on this new provision, the Court concluded that the PSL failed to demonstrate a clear and unambiguous waiver as the amendment rendered the statute "too internally inconsistent to satisfy that standard." Norman, 342 S.W.3d at 59, citing TEX.GOV'T CODE ANN. § 311.034. In light of the amendment, the Court concluded sovereign immunity barred a retaliation claim against the political subdivision. See Norman, 342 S.W.3d at 58-59.
Unlike the PSL, the SAA has not been amended since the Supreme Court issued its decision in Fernandez. There is no indication that the rationale which lead the Court to conclude there was a clear and unambiguous waiver of sovereign immunity for retaliation claims under the SAA has been altered in a way that would lead to a different result. See Fernandez, 28 S.W.3d at 5-6. As the Norman decision demonstrates, determining whether a statute contains a clear and unambiguous waiver of sovereign immunity depends on the construction of the language of the statutes implicated by the claim involved. See Norman, 342 S.W.3d at 57-59. The Supreme Court performed such an construction of the SAA in Fernandez, and concluded sovereign immunity was waived. See Fernandez, 28 S.W.3d at 5. As the SAA has not been amended since the Fernandez decision, there is no basis upon which this Court can conclude a different result is warranted in the case before us. Insofar as the Commission contends the Norman opinion abrogated the holding in Fernandez, that argument is overruled.
Norman does provide guidance, however, on the Commission's related argument regarding the effect of Section 311.034 to the Texas Government Code. Section 311.034 provides:
In order to preserve the legislature's intent in managing state fiscal matters through the appropriations process, a statute shall not be construed as a waiver of sovereign immunity unless the waiver is effected by clear and unambiguous language. In a statute, the use of `person,' as defined by Section 311.005 to include governmental entities, does not indicate legislative intent to waive sovereign immunity unless the context of the statute indicates no other reasonable construction. Statutory prerequisites to a suit, including the provision of notice, are jurisdictional requirements in all suits against a governmental entity.
TEX.GOV'T CODE ANN. § 311.034.
The Commission argues that by enacting this statute, the Legislature has replaced the common law "clear and unambiguous" standard with a mandate for even greater clarity regarding waivers of sovereign immunity. We disagree. In its holding in Norman, that the PSL's amended language no longer demonstrated a legislative intent to waive immunity, the Supreme Court cited Section 311.034 simply for the proposition that a waiver of immunity must be "clear and unambiguous." Norman, 342 S.W.3d at 58-59. In reaching its conclusion that the newly-revised PSL no longer met the clear and unambiguous standard, the manner of the legislative intent analysis followed the framework established under the common law standard. Id. 342 S.W.3d at 56-59. Although the Court ultimately concluded that to due to the amendment, the PSL no longer contained a clear and unambiguous *178 waiver, we do not agree that the Norman decision has altered the way in which Texas courts determine whether or not a particular statute meets the clear and unambiguous standard. See Norman, 342 S.W.3d at 56-59. In other words, there is no indication that the Legislature's codification of the "clear and unambiguous" standard has affected the way legislative intent to waive sovereign immunity is analyzed in Texas. See id. As such, the Commission's argument that Section 311.034's enactment has altered or abrogated the analysis to determine whether a particular statute contains a clear and unambiguous waiver is overruled. Having overruled both arguments, we overrule Issue One in its entirety.
Having overruled Appellant's sole issue, we affirm the trial court's order denying the Commission's plea to the jurisdiction.
BARAJAS, C.J. (Ret.) (Sitting by Assignment).
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85 Cal. App. 2d 38 (1948)
Estate of ANNA C. AVILA, Deceased. MARY AVILA, Appellant,
v.
MARIA F. SOUZA, Respondent.
Civ. No. 13676.
California Court of Appeals. First Dist., Div. Two.
Apr. 15, 1948.
Fred B. Hart for Appellant.
Weinmann, Rode, Burnhill & Moffitt and Donald K. Quayle for Respondent.
NOURSE, P. J.
This is a proceeding to interpret the provisions of a will reading: "Third: I hereby give, devise and bequeath unto my sister, Maria F. Souza, of San Leandro, *39 California, my house, lot and improvements, located at No. 156 Estabrook Street, in the said City of San Leandro. ..."
[1] The controversy arises because the testatrix had erected a small cottage for her own use in the rear of the lot and, since appellant is the residuary legatee under the will, she contends that this cottage should go to her as property not specifically devised. The trial court after a full hearing as to the supposed intentions of the testatrix held that the will was not uncertain in its disposition of the lot and all the improvements thereon, and that the devise included the cottage.
The evidence is undisputed that the property involved is a single lot 100X150, enclosed by a single fence or hedge, that the only street number was affixed to the large house, that the only means of egress and ingress from and to the cottage was that provided for use of the main dwelling, that, in addition to the cottage, the lot contained a garage, a pump and tank house, several chicken houses, and similar improvements.
The finding of the trial court is sound and should not be disturbed. The language of the will "my house, lot and improvements" presents no ambiguity or uncertainty calling for judicial interpretation. The word "improvements" means those structures erected on the area noted which tend to enhance the value of the land. It includes the cottage just as surely as it includes the garage, laundry, and chicken houses. This is the clear purport of the language of the will. If the testatrix had intended to exclude the little cottage from the devise, that intention could have been expressed without any difficulty.
[2] Appellant's case rests on the inadmissible evidence of the attorney who drew the will as to what the testatrix had said to him before the will was drafted. Such declarations are of no aid in the interpretation of the plain words of the will. Section 105, Probate Code.
The rule controlling the decision is found in Estate of Blake, 157 Cal. 448, 458 [108 P. 287]: "The cardinal rule in the interpretation of a will is that 'it is to be construed according to the intention of the testator.' (Civ. Code, sec. 1317.) As said in the Estate of Young, 123 Cal. 337 [55 P. 1011], 'the purpose of construction as applied to wills is unquestionably to arrive if possible at the intention of the testator, but the intention to be sought for is not that which existed in the mind of the testator but that which is expressed in the language of the *40 will.' It is not the business of the court to say, in examining the terms of a will, what the testator intended, but what is the meaning to be given to the language which he used. Where the terms of a will are free from ambiguity, the language used must be interpreted according to its ordinary meaning and legal import and the intention of the testator ascertained thereby." See Probate Code, section 106, reading: "The words of a will are to be taken in their ordinary and grammatical sense, unless a clear intention to use them in another sense can be collected, and that other can be ascertained." See also, 26 Cal.Jur., p. 887; Estate of White, 84 Cal. App. 2d 409, 411 [190 P.2d 968]; 28 Am.Jur., p. 260.
Judgment affirmed.
Goodell, J., and Dooling, J., concurred.
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52 So.3d 413 (2010)
Esther ROBERTS, Appellant
v.
The PUBLIC EMPLOYEES' RETIREMENT SYSTEM OF MISSISSIPPI, Appellee.
No. 2009-CC-01028-COA.
Court of Appeals of Mississippi.
July 20, 2010.
Rehearing Denied October 19, 2010.
Certiorari Denied January 27, 2011.
*414 Angela E. Davis-Morris, Hattiesburg, attorney for appellant.
Office of the Attorney General by Mary Margaret Bowers, attorney for appellee.
Before MYERS, P.J., ISHEE and ROBERTS, JJ.
ISHEE, J., for the Court:
¶ 1. Esther Roberts filed an application for disability benefits with the Public Employees' Retirement System (PERS). Roberts appealed to the Disability Appeals Committee of the Board of Trustees (Committee), which recommended to the PERS Board of Trustees (Board) that the benefits be denied because Roberts was not permanently disabled. The Board agreed with the recommendation. Roberts then appealed to the Hinds County Circuit Court, which affirmed the decision of the Board. Aggrieved, Roberts appeals and asserts that: (1) the circuit court erred in finding that PERS's decision to deny her benefits was supported by substantial evidence, and (2) the circuit court erred in affirming PERS's decision because it violates her statutory right.
¶ 2. Finding no reversible error, we affirm the judgment of the circuit court.
FACTS AND PROCEDURAL HISTORY
¶ 3. Roberts was employed as a special-services bookkeeper for the Forrest County Schools. Her employment was terminated on February 2, 2007. At the time she was terminated, Roberts had approximately six and a quarter years of service credit. On March 21, 2007, Roberts filed an application for non-duty related disability benefits. A PERS disability-benefit analyst requested that Dr. David Collipp, a former member of the PERS Medical Board and an expert in the field of physical and rehabilitation medicine, perform an independent medical examination of Roberts.
¶ 4. Dr. Collipp examined Roberts on October 11, 2007. In Dr. Collipp's opinion, Roberts suffered from two neck surgeries, degenerative joint and disc disease, carpal tunnel syndrome, depression, headaches, and chronic pain. He concluded that even with these problems, Roberts was able to perform light-duty work, with a restriction of twenty pounds for lifting.
¶ 5. Thereafter, on March 7, 2008, the Committee denied Roberts's request for disability benefits, finding that "Roberts [was] not disabled as that term is defined and held applicable herein, in order to qualify for disability benefits as provided under Mississippi Code of 1972, as amended, [s]ections XX-XX-XXX and XX-XX-XXX, as applicable[.]" The Committee "recommend[ed] that the claimant's request for [n]on-duty related disability benefits be *415 denied." Roberts then appealed to the Board. Agreeing with the Committee's decision, on April 15, 2008, the Board issued an order approving and adopting the Committee's findings of fact and conclusions of law.
STANDARD OF REVIEW
¶ 6. The standard of review for an appeal involving a PERS appeal is whether the Board's decision was (1) unsupported by substantial evidence, (2) arbitrary and capricious, (3) beyond the powers of the Board to make, or (4) violative of a statutory or constitutional right of the claimant. Rowzee v. Pub. Employees' Retirement Sys., 777 So.2d 664, 666-67 (¶ 12) (Miss.2000). We will not substitute our own judgment for that of the agency which rendered the decision, nor may we reweigh the facts of the case. Miss. Pub. Serv. Comm'n v. Merchs. Truck Line, Inc., 598 So.2d 778, 782 (Miss.1992).
DISCUSSION
¶ 7. Roberts first asserts that the circuit court erred in affirming PERS's decision, contending that the decision is not supported by substantial evidence and is arbitrary and capricious. Roberts argues that the order was based solely on the testimony of Dr. Collipp, who only saw her once. Dr. Collipp testified that Roberts "is physically capable to perform a minimum of light duty per DOT, with a maximum life of 20 pounds."
¶ 8. Substantial evidence is "evidence which affords a substantial basis of fact from which the fact in issue can be reasonably inferred." Johnston v. Pub. Employees' Retirement Sys., 827 So.2d 1, 3 (¶ 7) (Miss.Ct.App.2002). Substantial evidence requires that there be "more than a mere suspicion." Pub. Employees' Retirement Sys. v. Henderson, 867 So.2d 262, 264 (¶ 6) (Miss.Ct.App.2003). After examining the record, we find that substantial evidence exists to support PERS's decision.
¶ 9. Roberts claims that her treating physicians, Dr. Y. Susi Folse; Dr. Michael Patterson; and Dr. Nabih Alsheikh, are all on record with opinions claiming that she cannot return to her job; therefore, the decision by PERS is not supported by substantial evidence. Although these physicians treated Roberts, PERS has the discretion to determine which of the physicians' assessments to consider and how much weight should be given to each assessment. Byrd v. Pub. Employees' Retirement Sys., 774 So.2d 434, 438 (¶ 15) (Miss.2000).
¶ 10. Roberts also claims that PERS's decision to deny her application for disability benefits is a violation of her statutory right under Mississippi Code Annotated section 25-11-113(1)(a) (Supp. 2009), which contains the definition of disability that shall be applied by the Medical Board for the purposes of disability determination. Roberts contends that because she met the statutory definition of disability, PERS failed to comply with the statute when it denied her disability benefits. In support of her contention, Roberts offered the lay opinion of Jennea Escudera, her supervisor. Escudera stated that Roberts could not continue to perform her job duties. Roberts also offered the medical opinions of her treating physicians. The opinions of Roberts's treating physicians were presented to the Committee, and the Committee determined what evidence it would consider and how much weight the evidence should be given. We find that this evidence does not prove that Roberts met the statutory criteria. Therefore, Roberts was not denied any statutory right under Mississippi Code Annotated section 25-11-113.
*416 ¶ 11. For the foregoing reasons, we affirm the judgment of the circuit court.
¶ 12. THE JUDGMENT OF THE HINDS COUNTY CIRCUIT COURT IS AFFIRMED. ALL COSTS OF THIS APPEAL ARE ASSESSED TO THE APPELLANT.
KING, C.J., LEE AND MYERS, P.JJ., IRVING, GRIFFIS, BARNES, ROBERTS AND MAXWELL, JJ., CONCUR. CARLTON, J., NOT PARTICIPATING.
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147 Ariz. 146 (1985)
708 P.2d 1337
The STATE of Arizona, Crossdefendant/Appellant,
v.
The PIMA COUNTY ADULT PROBATION DEPARTMENT: Stephen C. Emslie, Charles R. Moffett, William G. Johnson, Robert E. Long, as employees of the Pima County Adult Probation Department, Crossclaimants/Appellees.
2 CA-CIV 5436.
Court of Appeals of Arizona, Division 2, Department A.
October 31, 1985.
*147 Robert K. Corbin, Atty. Gen. by A. Glenn Reesing, Phoenix, for crossdefendant/appellant.
Jones, Dickerman, Nuckolls, Edwards & Smith, P.C. by Richard M. Rollman, Tucson, for crossclaimants/appellees.
OPINION
HOWARD, Judge.
This appeal arises out of a summary judgment in which the trial court held that probation officers are officers, agents and employees of the judicial department of the state and are entitled to insurance coverage under A.R.S. § 41-621.
On August 30, 1982, various minor plaintiffs initiated a tort action against the Pima County Adult Probation Department, four named adult probation officers, the State of Arizona and Pima County, claiming that they were injured as a result of the probation department's alleged negligence in supervising the probation of Jesse Christopher. Specifically, they alleged that Christopher, while on probation for several convictions arising out of sexual conduct with minors, molested the minor plaintiffs. The trial court granted summary judgment in favor of all the defendants, and we affirmed, ruling that probation officers were immune from liability. Acevedo v. Pima County Adult Probation Department, 142 Ariz. 360, 690 P.2d 79 (App. 1983). On September 25, 1984, the Arizona Supreme Court vacated that opinion, holding that a probation officer cannot claim immunity unless he is acting pursuant to the directions of the court and that, since the sentencing court had specifically prohibited the probationer from having any contact with minors and the probation officers had ignored such specific directions, any possible claim to immunity was lost. Acevedo v. Pima County Adult Probation Department, 142 Ariz. 319, 690 P.2d 38 (1983).
On November 30, 1984, an answer to the complaint was filed on behalf of the probation department and the four probation officers. Additionally, the department cross-claimed against the state and Pima County for declaratory judgment, claiming alternatively that the department and its probation officers were officers, agents and employees of a department of the State of Arizona within the meaning of A.R.S. § 41-621, and therefore entitled to insurance thereunder, or that they were agents and employees of the County of Pima, and therefore within the self-insurance or insurance coverage provided by the county pursuant *148 to A.R.S. § 11-981. The department moved for summary judgment against the state, which was granted on March 8, 1985.
The state raises three issues on appeal:
1. The trial court erred in denying a third extension of time for hearing the motion for summary judgment.
2. The trial court erred in holding that the probation department is part of the judicial department of the state.
3. The defendant probation officers are not entitled to the rights and benefits of insurance pursuant to A.R.S. § 41-621 because they were acting outside the course and scope of their employment.
The state contends that the trial court should have deferred hearing the motion for summary judgment until additional discovery was completed. Specifically, the state argues that additional discovery should have been conducted regarding the workload of probation officers, the sufficiency of funding and the adequacy of work space, equipment and facilities. These factual determinations, however, were not relevant to the issue before the trial court. Indeed, there were no material questions of fact in dispute with regard to this issue, and it was properly heard without further discovery.
The state next contends that the trial court abused its discretion when it decided as a matter of law that the probation department is part of the judicial department of the state. We do not agree.
It is clear from both statute and case law that probation officers are part of the judicial department. A.R.S. §§ 12-251 through 254 provide that the chief adult probation officer is appointed by the presiding judge of the superior court and is under his direction and control. The chief adult probation officer, in turn, with the approval of the presiding judge of the superior court, appoints deputy probation officers to prepare presentence reports and to supervise probationers.
Furthermore, in Broomfield v. Maricopa County, 112 Ariz. 565, 544 P.2d 1080 (1975), the supreme court stated that probation officers are part of the judicial function and that the judiciary has inherent power of control over probation officers. Similarly, in Mann v. County of Maricopa, 104 Ariz. 561, 456 P.2d 931 (1969), the court held that the judicial department must retain the power of control over personnel directly connected with the operation of the courts. The court stated:
"The legislative and executive departments have their functions and their exclusive powers, including the `purse' and the `sword.' The judiciary has its exclusive powers and functions, to wit: it has judgment and the power to enforce its judgments and orders. In their responsibilities and duties, the courts must have complete independence. It is not only exiomatic [sic], it is the genius of our government that the courts must be independent, unfettered, and free from directives, influence, or interference from any extraneous source." 104 Ariz. at 565, 456 P.2d at 935.
Additionally, the record discloses that Pima County considers the adult probation office as a program under the superior court. The chief adult probation officer prepares a budget for the probation department annually and submits it to the presiding judge of the superior court, not to the county board of supervisors. The adult probation department is not part of the county merit system but is part of a separate judicial merit system first established by an administrative order of the superior court in 1976. The department works with and takes directives from administrative officers at the Arizona Supreme Court, and probation officers report directly to the Pima County Superior Court. The payroll for the probation department is first submitted to the superior court. Requirements for hiring employees for the probation department are established by Pima County judges and the Arizona Supreme *149 Court. Finally, the probation department publishes its own annual report which bears the seal of the State of Arizona rather than the seal of Pima County.
The state has placed substantial emphasis on the fact that the county subsidizes the salaries of probation officers in support of its argument that the county and not the state is responsible for probation officers. Recently, the supreme court held that city magistrates are part of the judicial department of the state and are not employees of the city even though the city pays their salary. Winter v. Coor, 144 Ariz. 56, 695 P.2d 1094 (1985). Thus, the fact that the county subsidizes the salaries of probation officers is not determinative of the issue.
In view of the facts, statutes, and case authority, we find that here the trial court properly held that probation officers are officers, agents, and employees of the judicial department of the state.
The state next argues that even if probation officers are part of the judicial department, they are not covered here under A.R.S. § 41-621 because they were acting outside the course and scope of their employment, according to the supreme court's decision in Acevedo. A.R.S. § 41-621 provides in part that:
"A. The department of administration shall obtain insurance against loss ... on the following:
* * *
3. The state and its departments, agencies, boards and commissions and all officers, agents and employees thereof against liability for acts or omissions of any nature while acting in authorized governmental or proprietary capacities and in the course and scope of employment. ..." (Emphasis added.)
Acevedo, however, did not establish that the probation officers were not acting within the course and scope of their employment; rather, it merely established that their actions were not protected by judicial immunity.
In essence, the state's position is that if an employee (in this case, a probation officer) disobeys an order of the employer (in this case the state), the employer cannot be held liable because the employee is acting outside the course and scope of his employment. This court was faced with this issue in Ohio Farmers Insurance Co. v. Norman, 122 Ariz. 330, 594 P.2d 1026 (App. 1979), where we held that:
"The general rule is that an employer may be held accountable for the wrongful act of his employee committed while acting in his employer's business and within the scope of his employment, although his employer had expressly forbidden the act." 122 Ariz. at 332, 594 P.2d at 1028.
Quoting from Tillar v. Reynolds, 96 Ark. 358, 131 S.W. 969 (1910), we adopted the view that:
"This rule is not based on the ground that the agent had authority, expressed or implied, to commit the tort, as is the case with contractual obligations binding on the principal; but is based on the ground that in such cases the agent represents the principal, and all acts done by the agent in the course of his employment are of the principal, and it is also on the ground of public policy that where one of two innocent persons must suffer from the agent's wrongful act, it is just and reasonable that the principal, who has put it in the agent's power to commit such wrong, should bear the loss rather than the innocent third person." 131 S.W. at 971.
Thus, although in this case the probation officer acted contrary to the court's directive, the state may nevertheless be held liable.
In Robarge v. Bechtel Power Corporation, 131 Ariz. 280, 640 P.2d 211 (App. 1980), the court held that in order to hold an employer vicariously liable for the negligent acts of his employee:
"(1) The employee must be subject to the employer's control or right of control;
*150 (2) The employee must be acting in furtherance of the employer's business." 131 Ariz. at 283, 640 P.2d at 214. (Emphasis added.)
Even though the county may have provided the probation officers with funds, facilities, and equipment, the right of control rested with the court, not with the county, and the officers acted in furtherance of the business of the court, not the county.
Similarly, in Yamamoto v. Santa Cruz County Board of Supervisors, 124 Ariz. 538, 606 P.2d 28 (App. 1980), the court held that because the county board of supervisors had no right to control the activities of the justice of the peace, the clerk of the justice of the peace, the superior court or the clerk of the superior court, the county could not be held liable on the theory of respondeat superior for their alleged negligence. The court stated:
"The only acts alleged in the tort counts were those of the clerk and her deputy, and the justice of the peace. Their duties are imposed by law, not by the county. Having no right of control over either, the county cannot be liable for their torts under the doctrine of respondeat superior." 124 Ariz. at 540, 606 P.2d at 30.
See Fridena v. Maricopa County, 18 Ariz. App. 527, 504 P.2d 58 (1972).
This principle was also followed in Hernandez v. Maricopa County, 138 Ariz. 143, 673 P.2d 341 (App. 1983). Relying on Yamamoto, the court held that the doctrine of respondeat superior could not be invoked to impute liability to Maricopa County for the acts of the justice of the peace and his staff because "Maricopa County has no power to control the implementation and execution of those duties." 138 Ariz. at 146, 673 P.2d at 344.
Because the state and not the county had the right to control the allegedly negligent probation officers in their supervision of Jesse Christopher, and because the probation officers acted in furtherance of the state's business of supervising probationers, we find that the probation officers are covered under A.R.S. § 41-621 and therefore the trial court correctly granted summary judgment.
Affirmed.
FERNANDEZ and LIVERMORE, JJ., concur.
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345 S.W.3d 189 (2011)
BIODERM SKIN CARE, LLC and Quan Nguyen, M.D., Appellants,
v.
Veasna "Sandee" SOK, Appellee.
No. 05-10-00044-CV.
Court of Appeals of Texas, Dallas.
June 28, 2011.
Rehearing Overruled August 17, 2011.
*190 R. Scott Fraley, Elizabeth M. Fraley, Casie Rivas, Fraley & Fraley, L.L.P., Dallas, TX, for Appellants.
Matthew Alan Sharp, Coury Matthews Jacocks, The Law Offices of Coury M. Jacocks, Dallas, TX, for Appellee.
Before Justices MORRIS, O'NEILL, and FITZGERALD.
OPINION
Opinion By Justice FITZGERALD.
Appellee Veasna "Sandee" Sok sued Bioderm Skin Care, LLC ("Bioderm") and Quan Nguyen, MD, seeking to recover damages for burns she suffered during a laser hair removal procedure at Bioderm. Bioderm and Nguyen contend Sok's claims are health care liability claims and are subject to Chapter 74 of the Texas Civil Practice and Remedies Code. Accordingly, they moved to dismiss Sok's claims when she did not file an expert report within 120 days of the date her original petition was filed. See TEX. CIV. PRAC. & REM.CODE ANN. § 74.351(a) (West 2011). The trial court denied the motion to dismiss. Bioderm and Nguyen bring this interlocutory appeal. See id. § 51.014(a)(9) (West 2008). We affirm the trial court's order.
Bioderm offered laser hair removal services at its place of business in Garland, Texas. Bioderm is owned by Nguyen, a licensed physician. In October 2006, Sok purchased a package from Bioderm that included a number of visits, during which she would have hair removed from her legs and other parts of her body. She underwent procedures through the remainder of 2006 and the spring of 2007. Sok alleges that, during a procedure on July 15, 2007, she suffered second-degree burns caused by the operator's improper use of the laser. Sok sued Bioderm and Nguyen, alleging they were vicariously liable for the operator's negligence. Specifically, Sok contends Bioderm is vicariously liable as the operator's employer. She contends Nguyen is vicariously liable because the use of the laser is an inherently dangerous activity, the liability for which cannot be delegated.
In their single appellate issue, appellants contend the trial court erred in denying their motion to dismiss Sok's claims. Appellants argue those claims are health care liability claims as that term is defined in Chapter 74 of the civil practice and remedies code. Therefore, according to appellants, when Sok failed to file expert reports by the statutory deadline, the trial court should have dismissed the claims. Sok contends her claims are simple negligence claims that do not fall within the ambit of Chapter 74.
Generally, we review a trial court's order denying a motion to dismiss under an abuse of discretion standard. See Am. Transitional Care Ctrs. of Tex., Inc. v. Palacios, 46 S.W.3d 873, 877 (Tex.2001). However, when the issue is whether the claim is a health care liability claim under Chapter 74, we review the order de novo. *191 Lee v. Boothe, 235 S.W.3d 448, 451 (Tex. App.-Dallas 2007, pet. denied).
We approach the classification of a claim by examining its underlying nature, rather than any characterization given the claim by the pleading. Diversicare Gen. Partner, Inc. v. Rubio, 185 S.W.3d 842, 847 (Tex.2005). The legislature has defined a health care liability claim as:
a cause of action [1] against a health care provider or physician [2] for treatment, lack of treatment, or other claimed departure from accepted standards of medical care, or health care, or safety or professional or administrative services directly related to health care, [3] which proximately results in injury to or death of a claimant, whether the claimant's claim or cause of action sounds in tort or contract.
TEX. CIV. PRAC. & REM.CODE ANN. § 74.001(a)(13) (West Supp. 2011) (emphasis added). This definition encompasses the identity of the defendant, the nature of the plaintiff's claim, and the requirement of causation. Only claims that meet all three elements are subject to Chapter 74's provisions. In this case, our analysis focuses on the second element, emphasized above, which identifies the type of claims that qualify as health care liability claims.[1]
To meet the requirements of that second element, the laser hair removal procedure forming the basis of Sok's claim must fall within Chapter 74's concepts of "medical care" or "health care" or "safety or professional or administrative services directly related to health care." See id. Appellants have not raisedand the facts do not suggestthe possibility that their hair removal process could fall under the ambit of safety, professional, or administrative services they were providing to Sok. And to qualify as "medical care," the conduct at issue must be performed by someone licensed to practice medicine in the State of Texas. Id. § 74.001(a)(19). It is undisputed that Bioderm employee Brooke Danielson performed the hair removal procedure during which Sok was burned; Danielson is not a licensed physician. Thus, Sok's claims can fall within the ambit of Chapter 74 only if they involve "health care," which is defined as "any act or treatment performed or furnished, or that should have been performed or furnished, by any health care provider for, to, or on behalf of a patient during the patient's medical care, treatment, or confinement." Id. § 74.001(a)(10).
In their motion to dismiss, appellants set forth the definitions of a health care liability claim and a health care provider, and then they pronouncewith no explanation or analysisthat Sok's claims are health care liability claims. At the hearing on the motion, counsel for appellants conceded that appellants were not treating Sok for any medical condition; he stated the only condition that was being treated was "unwanted body hair." Sok was not referred to Bioderm by any medical provider, nor was any medication prescribed in connection with the hair removal. Indeed, it is undisputed that Sok did not meet Nguyen until a week after her injury, when he treated the burn on her leg. Nevertheless, appellants contended at the hearing that this was a Chapter 74 case because Nguyen, "as a physician, [was] providing treatment to a patient." Appellants contended *192 that Nguyen had direct involvement with Sok's "treatment" because: (1) a medical history was taken from her; (2) medical records were kept; and (3) Nguyen (a) trains each laser user, and (b) meets with each laser operator each day to determine how the laser should be set for each patient's procedure. These contentions were based on Nguyen's own affidavit and Bioderm's records, which were before the trial court at the hearing.[2]
The affidavit is some evidence that Nguyen had involvement with training and procedures at Bioderm.[3] However, Chapter 74 is not invoked by any act or conduct merely because a physician is involved in some fashion. Instead, "health care" requires the act or conduct at issue to be performed "for, to, or on behalf of a patient during the patient's medical care, treatment, or confinement." Id. Sok was never confined at Bioderm. "Medical care," as we pointed out above, requires that the act at issue be performed by a licensed physician. See id. § 74.001(a)(19). "Treatment" is not defined within the statute, but its accepted meaning in this context is "the care and management of a patient to combat, ameliorate, or prevent a disease, disorder, or injury." Nexus Recovery Ctr., Inc. v. Mathis, 336 S.W.3d 360, 365 n. 3 (Tex.App.-Dallas 2011, no pet.) (citing Tesoro v. Alvarez, 281 S.W.3d 654, 659 (Tex.App.-Corpus Christi 2009, no pet.); quoting MOSBY'S MEDICAL DICTIONARY 1880 (8th ed. 2009)).
Our review of the record establishes that the only time Sok received medical care or treatment at Biodermwithin the meaning of Chapter 74was when Nguyen examined her, diagnosed her burn, and prescribed a cream for the burn. Bioderm's records consistently report Sok's "complaint" as "unwanted hair." At the hearing on the motion to dismiss, appellants conceded they were not treating Sok for any medical condition and her only condition was unwanted hair. Because these laser procedures were not directed at any disease, disorder, or injury, they cannot fall within Chapter 74's understanding of treatment. See Nexus Recovery, 336 S.W.3d at 365 n. 3. Given that the procedures do not relate to medical care, treatment, or confinement, they cannot be classified as health care under the statute.
Given the record before us, we cannot say the use of the laser for hair removal in this case was an inseparable part of the rendition of health care services. We conclude *193 Sok's claims are not health care liability claims. See Diversicare, 185 S.W.3d at 848 ("A cause of action alleges a departure from accepted standards of medical care or health care if the act or omission complained of is an inseparable part of the rendition of medical services."). Our conclusion comports with the careful analysis of the Corpus Christi court in Tesoro v. Alvarez, in which that court concluded a claim based on vicarious liability for the negligence of the operator of a hair removal laser was not a health care liability claim. 281 S.W.3d at 666; see also Ghazali v. Brown, 307 S.W.3d 499, 504 (Tex. App.-Fort Worth 2010, pet. granted).[4]
Because Sok's claims are not health care liability claims, Sok was not required to serve expert reports pursuant to Chapter 74. We affirm the trial court's order denying appellants' motion to dismiss.
NOTES
[1] In an effort to establish the first element of a health care liability claim, appellants contend they are both "physicians" within the meaning of Chapter 74. It is undisputed that Nguyen is a licensed physician, but Sok vigorously disputes appellants' contention that Bioderm qualifies as a physician under the statute. Because we conclude Sok's claims do not fall within the definition of health care liability claims, we need not address this issue concerning the status of the defendants.
[2] In this Court, appellants have also argued that Sok's claims are health care liability claims because the laser involved is a Class II prescription medical device. This theory was not presented to the trial court. It was not raised in appellants' pleadings. It was not raised in the motion to dismiss or the reply brief in that proceeding. The only discussion of the laser itself at the hearing below came in terms of who could acquire it (a physician) and who could use it (anyone). Accordingly, this argument was not preserved for our review. See Greater Fort Worth & Tarrant County Cmty. Action Agency v. Mims, 627 S.W.2d 149, 151 (Tex. 1982). We note, however, that appellants cite no case holding that the involvement of a Class II device renders a claim a health care liability claim. Nor have we found such a case. In fact, the only case we find addressing such an argument rejects it out of hand. See Tesoro v. Alvarez, 281 S.W.3d 654, 661-62 (Tex.App.-Corpus Christi 2009, no pet.) (regulations regarding laser relate to misbranding issues and "form no predicate for a health care liability issue").
[3] Sok contends Nguyen's affidavit is a sham affidavit and should be disregarded. Sok did not object to the affidavit or argue that contention to the trial court, so we will not address it on appeal.
The record does not indicate any involvement by Nguyen with the one page document titled "Medical History Form." We take no position as to whether Bioderm's records are properly classified as "medical records."
[4] We acknowledge that two other courts of appeal have concluded plaintiffs' claims related to laser hair removal did qualify as health care liability claims. In the first case, the plaintiff herself specifically cast her complaint as one under article 4590i, Chapter 74's predecessor statute. See Sarwal v. Hill, No. 14-01-01112-CV, 2002 WL 31769295 *2-3 (Tex. App.-Houston [14th Dist.] Dec. 12, 2002, no pet.) (not designated for publication) (plaintiff's causes of action "even liberally construed, are framed only as health care liability claims"). In the second case, the plaintiff alleged the defendant physicians were directly negligent by failing properly to train and supervise their employees in use of the laser. See Kanase v. Dodson, 303 S.W.3d 846, 849 (Tex.App.-Amarillo 2009, no pet.). Kanase distinguishes Tesoro, saying the plaintiff in Tesoro alleged only that the physician was vicariously liable for the acts of the employee operator. Id. at 849 n. 2. Likewise, Sok claims only that appellants are vicariously liable for the actions of the employee operator.
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51 So. 3d 411 (2009)
NAPOLEAN BONEAPARTE JACKSON
v.
STATE.
No. CR-08-0241.
Court of Criminal Appeals of Alabama.
May 22, 2009.
DECISION WITHOUT PUBLISHED OPINION
Affirmed.
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234 Kan. 624 (1984)
675 P.2d 365
MINTER-WILSON DRILLING CO., INC., Appellee and Cross-Appellant,
v.
CLIFFORD M. RANDLE, MARY E. RANDLE and RAYMOND RANDLE, Appellants and Cross-Appellees.
No. 54,745
Supreme Court of Kansas.
Opinion filed January 13, 1984.
Scott E. Daniel, of Daniel & Daniel, of Garden City, argued the cause and was on the briefs for the appellants and cross-appellees.
Charles E. Owen, II, P.A., of Garden City, argued the cause, and Jackie Rapstine, of Garden City, was with him on the brief for the appellee and cross-appellant.
The opinion of the court was delivered by
LOCKETT, J.:
The defendants, Clifford M. Randle, Mary E. Randle and Raymond Randle (appellants) appeal from the district court's judgment against them. The district court found that the defendants had been unjustly enriched $25,000.00 at the expense of the plaintiff, Minter-Wilson Drilling Co., Inc. (M-W). M-W cross-appeals contending the amount of the judgment was inadequate.
The Randles are co-owners of property in Finney County, Kansas. From 1969 to 1975 the property was rented out as pasture land. Three quarter-sections of the land were part of a new lease negotiated between the Randles and Rodney Ardery (Ardery) to begin on January 1, 1975, for a term of fifteen years. Ardery was to develop the land so that it was suitable for farming. In addition, Ardery was to drill irrigation wells on the property and install the equipment necessary to irrigate the land at his expense. Ardery would give the Randles 25% of the crops grown on the land.
Ardery negotiated with M-W for the purchase of water pumps and pipe, to drill the wells and install the pumping equipment purchased from M-W on the Randle land. M-W was to drill and *625 equip the wells for a cost of $57,081.00. The cost included $42,170.00 for the equipment installed and the remainder for the drilling of the holes. Ardery paid M-W $14,271.00 as a down payment. Ardery and M-W contracted that the balance due M-W for the drilling and pumping equipment plus the finance charges was to be paid by Ardery in four annual installments of $14,094.75 each. On January 27, 1975, M-W sold the pumping equipment to Ardery (without retaining a security interest in the equipment). M-W assigned its contract with Ardery to the F.M.C. Corporation Pump Division (FMC). M-W unconditionally guaranteed to FMC the complete indebtedness of Ardery. The Randles did not participate in the negotiations between Ardery and M-W, although they knew M-W had been hired to drill the wells. M-W completed the drilling and installed the pumps on three wells in March, 1975.
Ardery planted crops on the land in 1975, 1976 and 1977. The Randles netted $85.00 from the crop share in 1975. They suffered a loss of $3,300.00 on the property in 1976. In 1977, Ardery had severe financial problems and was unable to secure financing to plant that year's crops. Raymond and Clifford Randle signed a loan guaranty for Ardery with the State Bank of Satanta (Bank), so that Ardery could borrow $165,000.00 needed to plant a crop in 1977. The Bank took the 1977 crop as security for its loan. The value of the 1977 crop, when harvested, was $24,600.00 short of the loan amount and the Randles were still paying on this loan on the trial date, January 17, 1983. In 1977, the Randles and Ardery agreed to terminate their farm lease agreement.
The Randles' property was leased to Ardery's mother in 1978 and 1979. Because of expenses, the Randles received no crop payments from the tenant. In 1980, the property was leased to another tenant who remained the tenant as of the date of trial in this matter, January 17, 1983.
The Randles and Ardery made a payment of $17,500.00 to FMC in April, 1977. Ardery subsequently defaulted on the contract with FMC with almost $40,000.00 still owing. On June 5, 1979, FMC filed an action against M-W for the balance due on the contract with Ardery, which M-W had guaranteed. M-W joined Ardery as a third-party defendant. On October 31, 1979, summary judgment was granted against M-W. M-W paid $40,000.00 to FMC in satisfaction of the judgment on November *626 26, 1979. Ardery filed a confession of judgment to M-W on December 4, 1979, for $42,000.00.
Some time in December, 1979, M-W's attorney notified Raymond Randle by letter that M-W had a claim against the Randles for payment for the well equipment it had supplied Ardery. M-W wanted possession of the well equipment or payment for the equipment. Raymond Randle spoke with the secretary-treasurer of M-W in person in January, 1980, concerning the equipment. The M-W officer informed Randle that they expected to be paid for the well equipment or have the well equipment returned to them. The two men discussed the possible purchase of the well equipment. Randle stated he would visit with his brother and sister-in-law, co-owners of the farm property, about the purchase of the equipment. No agreement on the purchase of the equipment was reached between the Randles and M-W. M-W decided to pick up its equipment and notified the Randles of its decision. The Randles would not permit M-W to take the equipment and the Randles claimed an interest in the well equipment because of their farm lease with Ardery.
On February 15, 1980, M-W filed an action against the Randles seeking payment of their $42,000.00 judgment against Ardery, reasonable use value of the well equipment or the return of the equipment. M-W proceeded on two theories: First, that the Randles had guaranteed Ardery's contract payments to M-W; secondly, that the Randles were unjustly enriched by their use of the wells without payment. On April 10, 1980, the Randles filed their answer claiming no interest in the equipment M-W sold to Ardery. The Randles filed a third-party petition against Ardery demanding judgment over and against Ardery for any judgment M-W obtained against them.
On September 22, 1980, Ardery filed for bankruptcy in the United States District Court for the District of Kansas listing M-W and the Randles as unsecured creditors. Ardery failed to include the well equipment purchased from M-W as an asset in the bankruptcy. On May 19, 1981, Ardery was granted a "Discharge of Debtor" and thereafter released as a third-party defendant by the trial court.
M-W filed a motion requesting that they be allowed to remove the well equipment. On December 10, 1980, the court ordered the Randles to stop using the wells and equipment involved in *627 the pending action. The order was vacated on September 2, 1981. On April 8, 1982, the Randles moved for summary judgment and the trial court granted the motion for summary judgment on the guarantee theory, but not on the unjust enrichment theory. A trial was conducted to the court on January 17, 1983. The court determined that M-W should have the right to possession of the pumping equipment or a money judgment against the Randles in the amount of $25,000.00. The judge allowed the Randles to choose which judgment should be awarded M-W. The Randles requested the court to award a money judgment to M-W. The court found the Randles had been unjustly enriched in the amount of $25,000.00. The Randles appeal the court's judgment.
After examination of the record, we have determined that the trial court erred in its judgment. Neither M-W nor the Randles were the owners of the pumping equipment. Therefore, M-W could not obtain a judgment against the Randles for unjust enrichment nor could the Randles be granted title to the pumping equipment.
M-W originally sold Ardery the pumping equipment January 27, 1975. M-W failed to secure any interest in the equipment it sold Ardery. Ardery was only indebted to M-W on his note for the balance of the purchase price and finance charges. On January 27, 1975, M-W assigned the note to FMC. When Ardery failed to pay the installments due on the note, FMC filed an action June 5, 1979, against M-W who had guaranteed Ardery's note. M-W joined Ardery as a third-party defendant claiming Ardery was indebted to M-W under the note. On October 31, 1979, FMC was granted summary judgment against M-W. M-W paid $40,000.00 to FMC in satisfaction of the judgment on November 26, 1979. On December 4, 1979, Ardery confessed judgment to M-W for $42,000.00. M-W obtained only a money judgment; it had not claimed nor obtained any interest in the pumping equipment it originally sold Ardery.
The Randles entered into a farm lease with Ardery January 1, 1975. The Randles never claimed any title to the pumping equipment purchased by Ardery and denied any obligation due M-W because of Ardery's contract with M-W for the purchase of the equipment. The Randles' only right to the pumping equipment could arise if Ardery failed to give the Randles one-fourth *628 of the crops harvested during the farm lease. The farm lease contained a provision that allowed the Randles an equitable lien on Ardery's share of the crops or his personal property located on the Randles' land, if he failed to give the Randles their share of the crops. The Randles received their share of the growing crops each year the lease was in effect and therefore could not claim an equitable lien.
Ardery, the owner of the pumping equipment, filed for bankruptcy. M-W and the Randles were listed as unsecured creditors in the bankruptcy. When Ardery received his discharge in bankruptcy, the M-W judgment claim of $42,000.00, and any equitable claims due the Randles, was legally discharged. Later, when Ardery was dismissed as a third-party defendant in this case, there remained no person claiming ownership of the property that the court could affect with its judgment.
Title to the pumping equipment is actually vested in the bankruptcy trustee. Ardery's failure to list the equipment as an asset did not deprive the trustee in bankruptcy of the property. Who is entitled to the pumping equipment is not a question for the Kansas courts in this action, but for the United States Bankruptcy Court for the District of Kansas. When a district court has no jurisdiction of the subject matter of the appeal, an appellate court does not acquire such jurisdiction by an appeal from the ruling of the district court. An appellate court may raise the question of jurisdiction on its own motion. When a court is without jurisdiction of the subject matter of an action, its authority in respect thereto extends no further than to dismiss the action. In re Miller, 228 Kan. 606, Syl. ¶ 2, 620 P.2d 800 (1980).
The trial court is reversed and the case is remanded for dismissal for lack of jurisdiction.
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52 So. 3d 880 (2011)
STATE ex rel. Larry B. JONES
v.
STATE of Louisiana.
No. 2009-KH-2442.
Supreme Court of Louisiana.
January 7, 2011.
Denied.
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54 So. 3d 628 (2011)
SPECIAL DISABILITY TRUST FUND, Appellant,
v.
MIAMI AIRPORT HILTON/HILTON HOTELS CORP., Appellees.
No. 1D10-4406.
District Court of Appeal of Florida, First District.
February 22, 2011.
Cynthia Arnold Shaw of the Department of Financial Services, Tallahassee, for Appellant.
*629 Douglas W. Barnes of Douglas W. Barnes, P.A., Miami Lakes, for Appellees.
PER CURIAM.
In this workers' compensation appeal, the Special Disability Trust Fund (Fund) challenges the judge of compensation claims' (JCC's) finding that reimbursement of the employer/carrier's (E/C's) 2001 reimbursement request was not barred by the statute of limitations. We agree the JCC misapplied prior case law and thus reverse the awarded reimbursement.
The facts are not in dispute. The E/C timely filed a notice of claim, the first step in the reimbursement process. See § 440.49(2)(g), Fla. Stat. (Supp.1990). The Fund notified the E/C that the claim was appropriate for reimbursement in December 1996, and amended its offer of reimbursement in January 1997 to include the settlement of the claim.
The Fund received the E/C's reimbursement request, the second step in the reimbursement process on August 3, 2001. The E/C did not thereafter submit anything further to the Fund, nor did it receive any communication from the Fund until May 2008 when the Fund notified the E/C that the statute of limitations had expired on its 2001 claim for reimbursement.
In rejecting the Fund's contention that the statute of limitations barred reimbursement on the 2001 submission, the JCC erroneously equated the two steps required for reimbursement and relied on Special Disability Trust Fund v. Rescare Home Health, Inc., 930 So. 2d 746 (Fla. 1st DCA 2006). In Rescare, the notice of claim was timely filed but the Fund never accepted the claim as reimbursable. Id. at 748. Because a request for reimbursement could not be submitted until the Fund determined the E/C was entitled to reimbursement, the statute of limitations did not begin to run on the E/C's time to file the reimbursement request. Id. This court "declined, as did the JCC, to adopt additional statutes of limitations for the first step in the reimbursement process." Id.
Here, it is undisputed that the Fund accepted the claim as reimbursable, thus step one was complete. The E/C thereafter began its compliance with step two of the reimbursement process by submitting its reimbursement request in August 2001. When no reimbursement was received within one year, the E/C's cause of action against the Fund accrued. See Associated Coca Cola v. Special Disability Trust Fund, 508 So. 2d 1305, 1307 (Fla. 1st DCA 1987) (holding E/C on notice at end of statutory "interval[s] that reimbursement request for that interval have either been accepted or rejected"). Because the E/C's contest of a denied reimbursement request is based on a statutory liability, section 95.031, Florida Statutes, provides that such an action must be instituted within four years. Id. at 1306. Based on the holding in Associated Coca Cola, the E/C's right to contest the failure of the Fund to act on the 2001 reimbursement request expired in 2006, long before the E/C filed its 2008 application for hearing.
Accordingly, the order requiring the Fund to reimburse the E/C for the 2001 reimbursement request is REVERSED.
BENTON, C.J., PADOVANO and WETHERELL, JJ., concur.
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51 So. 3d 109 (2010)
Angela Reilly CHERRY
v.
AUDUBON INSURANCE COMPANY, Disaster Master Restoration/Cleaning L.L.C. and Kenneth J. Taylor.
No. 2009-CA-1646.
Court of Appeal of Louisiana, Fourth Circuit.
October 20, 2010.
*110 John W. Redmann, Robert W. Tschirn, Law Office of John W. Redmann, LLC, Metairie, LA, for Angela Reilly Cherry.
*111 John W. Waters, Jr., Kristin G. Mosely Jones, Bienvenu, Foster, Ryan & O'Bannon, LLC, New Orleans, LA, for Audubon Insurance Company.
(Court composed of Judge PATRICIA RIVET MURRAY, Judge MICHAEL E. KIRBY, Judge TERRI F. LOVE).
TERRI F. LOVE, Judge.
This appeal arises from a dispute regarding the amount of insurance proceeds disbursed following a fire in the plaintiffs home. The trial court held that Audubon Insurance Company owed the plaintiff additional monies pursuant to the dwelling coverage and $1,300 for a security deposit. The trial court also awarded $25,000 for bad faith penalties, $25,000 for mental anguish, and forty percent attorneys' fees. We find that the trial court did not err in qualifying Earl Carr as an expert witness, in awarding the dwelling policy limits, and bad faith penalties. However, we find that the trial court erroneously awarded the security deposit and mental anguish damages and reverse.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
On May 4, 2002, Angela Reilly's front study caught fire, which caused damage to her home ("Property"). On the same day as the fire, Ms. Reilly contacted Disaster Master Restoration/Cleaning, L.L.C. ("DM") to clean and store her salvageable belongings. She signed an agreement stating that her insurance company could pay DM directly. Audubon Insurance Company ("Audubon"), Ms. Reilly's insurer, sent Nolan Allain, a property claims adjuster, to inspect the Property two days after the fire. During the inspection, Ms.
Reilly expressed concern regarding temporary housing and Mr. Allain informed Ms. Cherry of CRS Temporary Housing ("CRS"). Ms. Reilly then contacted CRS and signed an agreement for Audubon to pay CRS directly for her temporary additional living expenses ("ALE").
On May 20, 2002, Mr. Allain sent Ms. Reilly a $21,457.21 dwelling estimate to repair the fire damage to the Property. Ms. Reilly disagreed with Mr. Allain's estimate. Mr. Allain then contacted Rip Barberio, a licensed Louisiana contractor, to conduct a second inspection of the Property[1] and to prepare an additional estimate. Mr. Allain received Mr. Barberio's $31,858.06 estimate on June 7, 2002, and forwarded the estimate to Ms. Reilly on June 12, 2002. Also on June 12, 2002, Audubon paid CRS $12,010 for three and a half months of rent plus a deposit.
After receiving Mr. Barberio's estimate, Ms. Reilly hired Carr & Associates as her loss consultants. David Powell, of Carr & Associates, sent a letter to Mr. Allain on July 9, 2002, to advise him that he would be preparing an estimate and to designate Carr & Associates as an additional payee on checks issued by Audubon.[2] Audubon then tendered a check made payable to Ms. Reilly and Carr & Associates for $31,358.06, Mr. Barberio's dwelling estimate for damage to the Property, on July 23, 2002.
Audubon received a $29,795.22 invoice from DM in August. Upon learning of DM's estimate, Ms. Reilly instructed Audubon not to pay DM. Ms. Reilly did not complete the inventory lists of her damaged/lost contents to Mr. Allain as instructed. However, on September 25, *112 2002, Audubon paid an additional $1,898 to Ms. Reilly for ALE.
On October 10, 2002, Audubon received a dwelling estimate of $149,589.50 and a $196,229.14 contents estimate from Carr & Associates. On October 28, 2002, Audubon paid Ms. Reilly $40,000, her policy limits on her contents claim. Ms. Reilly was also paid $2,092, her policy limits, for ALE.
Subsequently, Ms. Reilly filed a petition for damages against Audubon, DM, and Kenneth Taylor, her insurance agent. Ms. Reilly alleged that Audubon failed to pay her claim within thirty days pursuant to La. R.S. 22:658, that DM failed to return her belongings after overcharging and performing unauthorized services, and because Audubon sent her a letter cancelling her insurance policy on November 19, 2002, as a result of the "total loss" of the Property.[3] DM then filed a cross-claim against Ms. Reilly seeking $41,026.50 for services rendered, penalties, and storage fees. Ms. Reilly filed a supplemental and amended petition in order to seek La. R.S. 22:1220 penalties against Audubon for failure to pay within sixty days.
Ms. Reilly dismissed Mr. Taylor from the present suit with prejudice. The trial court granted a joint motion to bifurcate Ms. Reilly's claims against Audubon from those of DM. Following a five-day bench trial regarding Ms. Reilly's claims against Audubon, the trial judge entered a judgment awarding Ms. Reilly $48,141.94 for the balance of her dwelling policy limits and $1,300 for a security deposit paid to CRS. The trial judge also awarded Ms. Reilly $25,000 for bad faith penalties, $25,000 for mental anguish, and forty percent attorneys' fees.
Audubon asserts that the trial court erred in qualifying Earl Carr, Jr. as an expert in loss adjustment, by awarding further damages under Ms. Reilly's policy, by awarding the security deposit, and for awarding bad faith and mental anguish damages.
STANDARD OF REVIEW
When reviewing findings of fact made by the trial court judge, appellate courts utilize the manifest error/clearly erroneous standard of review. S.J. v. Lafayette Parish Sch. Bd., 09-2195, p. 12 (La.7/6/10), 41 So. 3d 1119, 1127. To effectuate a reversal, the appellate court must find that no reasonable factual basis exists for the trial court's findings and that the record connotes the findings are clearly wrong. Id. Thus, we must determine whether the trial court judge's factual conclusions were reasonable. Stobart v. State through Dept. of Transp. and Dev., 617 So. 2d 880, 882 (La. 1993). "Accordingly, where there are two permissible views of the evidence, the factfinder's choice between them cannot be manifestly erroneous." S.J., 09-2195, p. 13, 41 So. 3d at 1127.
"When findings are based on determinations regarding the credibility of witnesses, the manifest error-clearly Wrong standard demands great deference to the trier of fact's findings." Rosell v. ESCO, 549 So. 2d 840, 844 (La.1989). This is because "only the factfinder can be aware of the variations in demeanor and tone of voice that bear so heavily on the listener's understanding and belief in what is said." Id. An appellate court may find manifest error when "documents or objective evidence so contradict a witness's story, or the story itself is so internally inconsistent or implausible on its face that a reasonable factfinder would not credit the witness's story." S.J., 09-2195, p. 13, 41 So. 3d at 1127. However, if "a factfinder's finding is based on its decision to credit the testimony *113 of one of two or more witnesses, that finding can virtually never be manifestly erroneous or clearly wrong." Rosell, 549 So.2d at 845.
Legal questions are reviewed with the de novo standard of review. Friedman v. Louisiana State Bd. of Dentistry, 08-0882, p. 2 (La.App. 4 Cir. 1/07/09), 3 So. 3d 565, 567.
EXPERT WITNESS QUALIFICATION
Audubon asserts that the trial judge erred in qualifying Mr. Carr, of Carr & Associates, as an expert because he is neither a licensed public adjuster nor a licensed contractor and is under an injunction to enjoin him from engaging in the unauthorized practice of law.[4]
La. C.E. art. 702 provides:
If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise.
"It is well-established that the trial judge has wide discretion in determining whether to allow a witness to testify as an expert, and his judgment will not be disturbed by an appellate court unless clearly erroneous." Versluis v. Gulf Coast Transit Co., 08-0729, p. 5 (La.App. 4 Cir. 7/29/09), 17 So. 3d 459, 463. The trial court's discretion "includes the determination of how much and what kind of education and/or training adequately qualify an individual as an expert." Tadlock v. Taylor, 02-0712, p. 4 (La.App. 4 Cir. 9/24/03), 857 So. 2d 20, 26. Formal education is "not always necessary" and experience may be sufficient. Becnel v. Lafayette Ins. Co., 99-2966, p. 7 (La.App. 4 Cir. 11/15/00), 773 So. 2d 247, 251.
Following Mr. Carr's extensive testimony regarding his background, the trial judge qualified him as an expert because his "background certifies him to be able to testify as to the loss estimate given to" Ms. Reilly. The trial judge also limited the scope of Mr. Carr's testimony due to the injunction and disallowed any preference to Mr. Carr advising or consulting Ms. Reilly. Further, the trial judge stated that Audubon's objections to Mr. Carr's expert status "may affect the weight given to his testimony," but that Ms. Reilly would be prejudiced if Mr. Carr was not permitted to testify.
The trial was non-jury, meaning only the judge would weigh the testimony of witnesses as opposed to a jury. Given the trial judge's limitation of Mr. Carr's testimony and the qualified weight to be given to his testimony, we do not find that the trial judge abused her discretion or manifestly erred in qualifying Mr. Carr as an expert witness.
DWELLING COVERAGE
It is undisputed that Audubon insured Ms. Reilly's dwelling up to $80,000. The trial court ordered Audubon to pay Ms. Reilly $48,141.94, the remainder of her dwelling policy limits. Audubon adamantly protests that it paid all of the monies due to Ms. Reilly for her dwelling coverage and that she failed to prove entitlement to the policy limits. Ms. Reilly contends that she is owed the remainder of her policy limits due to extensive damage to her home exceeding Audubon's payment, which included damage to her roof allegedly caused by firefighters extinguishing the fire.
*114 Ms. Reilly stated that the fire was "engulfing the entire front room," that "the flames were leaking out of the doorway," and "over the front door and towards the front windows." During the fire, she remembered seeing three fire trucks, one or two "giant" fire hoses being brought in through the front door, and at least one firefighter climbing onto her roof. After the fire was extinguished, Ms. Reilly testified that the Property was covered in smoke and water. She further testified that it seemed like the smoke went into the walls. The firefighters also smashed the ceiling in the study to inspect how far the fire spread. The Property was uninhabitable. Therefore, she telephoned DM and asked it to board up her house and save the furniture/con tents that could be saved.
As to Mr. Allain's inspection of the Property, Ms. Reilly recounted that he was only on the Property for about 10 minutes and she thought that was an insufficient amount of time to view all of the damage. Ms. Reilly also testified that Mr. Allain told her that he was "from Audubon Insurance, a subsidiary of AIG and AIG is on the hook for the World Trade Centers and we're not giving out much money." When Ms. Reilly became concerned about temporary housing, Mr. Allain suggested CRS. Ms. Reilly thought that Audubon would negotiate rent for her temporary apartment. However, when Ms. Reilly discovered the high cost of her apartment, $2,970 a month, she moved to a less expensive one bedroom studio apartment with $350 of rented furniture.
Ms. Reilly stated that the roof was in "bad condition" after the fire and water entered the Property. However, Ms. Reilly did admit that her roof had "ponding" since she bought the Property. Ms. Reilly also stated that mold began to grow within weeks of the fire because the ceiling and walls were soaked with water. As for the exterior of the Property, Ms. Reilly testified that there was smoke damage on the stucco and smashed windows. After receiving both Mr. Allain's and Mr. Barberio's estimates, Ms. Reilly testified that she felt the need to hire Carr & Associates for a loss estimation because of the low estimates provided by Audubon.
David Johnston, a fact witness for Ms. Reilly who lived across the street at the time of the fire, testified that there was at least one firefighter on the roof of the Property. Jerri Johnston, another fact witness, stated: "I remember specifically at least one firefighter on the roof with a hose." He then testified that he realized that the damage was going to be from the water being used to extinguish the fire.
Al Schmolke, Jr., a New Orleans Fire Department ("NOFD") captain, testified that the fire in the Property was a standard one-room fire, which did not breach the ceiling, but had heavy smoke damage. Capt. Schmolke stated that he did not get on the roof and does not remember any other firefighters getting on the roof. He testified that they do not go onto roofs unless it is necessary and does not remember any reason to in the current case, but admitted that it was possible. While he witnessed heavy smoke damage to the walls, he did not see the heat melt anything two or three rooms away. Capt. Schmolke thinks that they only used one hose, but he could not honestly remember. He had a rough firefighter estimate of $60,000 dwelling damage and $35,000 contents damage. Capt. Schmolke conjectured that water could damage the Property after they left and that they might have broken some windows for ventilation when trying to get the smoke out of the Property.
Gerard Aitken, another NOFD captain, remembered only one hose being used in *115 the Property and did not see any firefighters on the roof. While the fire damage was "more or less" confined to the study, the rest of the Property experienced smoke damage. Capt. Aitken remembered putting one hole in the ceiling of the study to check for fire. He also testified that smoke can get into walls and that just painting the walls will fail to rid the Property of the smell of smoke. He did not break any windows, but other firefighters could have.
Robert Anderson, Ms. Reilly's expert in structural engineering who inspected the house before and after the fire, testified that the membrane of the roof was "compromised with punctures" after the fire "probably due to a significant amount of activity on the surface of the roof." He stated that "dragging a fire hose probably did more damage to the membranes than the actual firefighter" and that a firefighter's foot could go through the roof sheathing. After the fire, Mr. Anderson observed damage to the bridging of the roof, trusses, and decking on the roof. He also noticed water damage. Mr. Anderson recommended removing everything down to the sheathing, reinforcing all of the trusses, and repairing cracked beams prior to putting a on a new roof. However, he did not see any fire damage on the roof. He also documented damage to the exterior walls, which he thought was caused by an effort to extinguish the fire. When questioned about his pictures of the inside of the Property, he stated that more probably than not, the discoloration in the photos was mold. Mr. Anderson concluded that the HVAC system was damaged and needed to be replaced. Based on his observations, Mr. Anderson concluded that demolishing and rebuilding the Property was more prudent than the cost of restoration. On cross-examination, Mr. Anderson testified that it was possible that ponding water caused roof damage, but he thought it was related to extinguishing the fire.
Mr. Carr visited Ms. Reilly's home four or five times and observed that everything in the study was destroyed with very heavy smoke and heat damage in the living/dining room. Mr. Carr stated that the Carr and Associates' estimate provided that the plaster and sheetrock should be removed and replaced. Mr. Carr also observed smoke and water damage in all of the rooms with heavy condensation and water streaking down the walls. Smoke also entered the cedar closet, which necessitated changing out the cedar because the aromatic wood would be irreparably damaged by smoke. Mr. Carr stated that the HVAC system appeared damaged with a vent or filter that was pretty black. Further, he testified that he recommended replacing the interior HVAC unit, air handler, and ductwork.
As a result of the mold growth since Audubon's inspection and his "chimney effect" wherein smoke gets into crevices in the walls, Mr. Carr suggested that all walls be replaced. He further stated that the smoke created a caustic or corrosive situation in the bathrooms, which necessitated the complete renovation of the bathrooms. Also, Mr. Carr thought the heat from the fire could have damaged the wax seals around the toilets. As for the kitchen, Mr. Carr observed mold. He recommended that the acoustic tile ceiling be replaced due to buckling and sagging. Overall, the estimate of Carr and Associates encompassed replacing all of the walls, flooring, ceilings, bathrooms, roofing, light fixtures, electrical outlets, electrical switches, doors, door casings, the thermostat, kitchen cabinets,[5] and the HVAC *116 system. The Carr & Associates estimate included replacing all walls that were comprised of plaster and drywall to be replaced with plaster and drywall to avoid the windows and sockets no longer being flush with the walls.
The software Mr. Carr and Mr. Powell utilized to create the estimate was licensed and contained up-to-date unit costs. Carr & Associates computer software allowed for substituting unit costs, but those substitutions would be denoted by asterisks or highlighting. Mr. Carr also stated that he attempted to arrange for Mr. Allain to meet him at the Property to no avail because Mr. Allain did not want to inspect additional damage.
Mr. Allain, the Audubon claims adjuster handling Ms. Reilly's claims, testified that he inspected the Property within two days after the fire and remained for three hours minus travel time. Mr. Allain did not inspect the roof or the HVAC system, but stated that it was possible that some HVAC damage existed. He did testify that the moisture resulted from "[whatever reason caused it" during or after the fire. During his inspection, Mr. Allain looked into the hole in the ceiling of the study and found no evidence of fire, flames, smoke, or soot on the rafters. He recommended that the study and the living/dining room be completely gutted and replaced with sheetrock only because any plaster placed beneath it would be ruined. Mr. Allain suggested cleaning and painting the bedrooms, replacing the carpet in the kids' bedrooms, and refinishing the floors in the master bedroom. His recommendation was to clean the bathrooms because each one only had smoke damage. The hallway and the kitchen needed to be cleaned and painted. The floors in the hallway could be refinished, while the kitchen floors needed replacing. Mr. Allain did not smell any smoke in the cedar closet. In the den, Mr. Allain suggested that everything could be cleaned and painted except that the acoustic tile ceiling needed replacing along with the vinyl flooring. As for the exterior of the Property, Mr. Allain recommended pressure washing the stucco. Mr. Allain claimed that he intended to inform Ms. Reilly that his estimate was a starting point.
Because months elapsed between Mr. Allain's estimate and Carr & Associates' estimate, Mr. Allain testified that it was possible that the dwelling check issued to Ms. Reilly was insufficient to repair the Property because the scope of the damage would have increased. However, at the time of the estimate he believed that $31,858 was adequate. Mr. Allain also agreed that "there's probably some additional damage today above the $31,000," that the estimate for the study should have included plaster, and that he could not speculate on further damage in the remainder of the Property because he never returned for another inspection and mold would become a concern. Overall, Mr. Allain testified that "[i]t certainly would have gotten worse than when I looked at it." In Mr. Allain's letter to Audubon's Loss Committee regarding the Property he wrote that the rest of the Property sustained very heavy smoke and water damage even though his estimate did not reflect that statement. Mr. Allain stated that his software was up-to-date as far as he knew.
Mr. Barberio, Audubon's expert in general contracting, was asked to perform a loss estimate on the Property by Audubon *117 after Ms. Reilly expressed her disagreement with Mr. Allain's estimate. The software he utilized to formulate the estimate was on a computer he purchased in 1996 and the software was already on the computer at the time of his purchase. His usage of the software was not licensed and admitted that the last update on the unit costs was in 1996.[6] However, unit costs could be manually changed. While he used 1996 unit costs, Mr. Barberio testified that he "went back and changed some of them," but he could not remember how many he changed. Mr. Barberio testified that he inspected the Property for one to two hours, but that he never inspected the roof or the HVAC system/vents. Mr. Barberio would defer to a structural engineer's report regarding roof damage. When Mr. Barberio discovered the plaster behind the sheetrock walls, Mr. Main told him just to include the cost of sheetrock in the estimate.
Mr. Barberio's estimate included gutting the study and living/dining room. However, Mr. Barberio concluded that the walls in all of the rooms except for the study and the living/dining room could be cleaned and painted. He did not think that the bathroom plastics, sinks, or toilets were damaged or needed replacing. Mr. Barberio's estimate did include cleaning a portion of the exterior stucco. Like, Mr. Carr, he suggested replacing the acoustic ceiling and flooring in the den, replacing the carpet in the two bedrooms, and replacing the vinyl flooring in the kitchen. However, he did not see a cedar closet. On cross examination, Mr. Barberio did admit that the damage to the walls could have changed while the Property was sitting closed up and that the condition of the Property was not going to improve after his inspection.
Ashton Avegno, Audubon's expert in civil and structural engineering who was retained on August 28, 2008, visited the Property in late August or September 2008. Mr. Avegno testified that even after Hurricane Katrina he could still tell which roof structures were damaged by fire. He did not see any evidence of fire damage to the roof or ceiling structure. Mr. Avegno calculated that the roof had a total load capacity of roughly 39,000 pounds and stated that firefighters with hoses would not damage the roof. However, his calculations were not based on the assumption that the roof timbers were cracked such that it would impair the roofs structural integrity. Further, he testified that it was "very unlikely" that the splits in Mr. Anderson's photographs were caused by firefighters. He did not know if the roof was safe to walk on. Overall, Mr. Avegno testified that roofing activities and rainstorms were more likely to damage the roof than firefighters. As to the floors, Mr. Avegno found the subfloors to be structurally sound except for some areas that were rotten or physically damaged. Mr. Avegno also opined that the moisture damage occurred over a long period of time before the fire.
Audubon asserts that Ms. Reilly did not prove her entitlement to her dwelling policy limits. The two estimates provided by Audubon were written within two and a half months after the fire. However, given the disparity between the amount of those estimates and Ms. Reilly's beliefs, Ms. Reilly had to retain Carr & Associates to prepare an estimate months after the fire, which meant the Property had deteriorated since the first estimates. Also, Audubon's structural engineer did not inspect the Property until six years later and after Hurricane Katrina.
*118 The trial judge, as the trier of fact, heard the testimony of the experts and determined their credibility. As such, their testimony was weighed accordingly and the trial judge formulated a reasonable conclusion. The trial judge heard the juxtaposed expert testimony of the structural engineers' opinions on alleged roof damage and the estimators' opinions regarding the amount of dwelling damages, which included the testimony of increasing damage due to the passage of time as the cause of some of the disparity of the estimates. Additionally, Mr. Allain agreed that the Property's condition would only worsen while sitting vacant and boarded up, which would require increased repairs and money than Mr. Allain's or Mr. Barberio's estimates documented. Therefore, we do not find that the trial court committed manifest error in awarding Ms. Reilly the remainder of her dwelling policy limits, which was $48,141.94.
SECURITY DEPOSIT
Audubon alleges that the trial court erred by ordering it to pay Ms. Reilly $1,300 for a security deposit paid to CRS.
Ms. Reilly did not recall receiving a $1,300 refund from Audubon or CRS. The record lacks evidence that Audubon received a $1,300 refund from CRS. As Mr. Allain testified, it is undisputed that Ms. Reilly had $16,000 ALE coverage. Audubon made three payments for ALE, which totaled $16,000 and exhausted her ALE policy limits. The record is devoid of evidence establishing Ms. Reilly's entitlement to the $1,300 since nothing reflects Audubon's receipt, which would result in an award of additional ALE coverage from Audubon. An additional $1,300 would exceed Ms. Reilly's coverage if CRS did not refund the deposit to Audubon. Therefore, we find the trial court erred by awarding Ms. Reilly $1,300 and reverse.
BAD FAITH
Audubon contends that the trial court erred in awarding Ms. Reilly $25,000 in bad faith penalties pursuant to either La. R.S. 22:658(B)(1) or La. R.S. 22:1220(B)(5).[7] "The prohibited conduct under these two statutes is virtually identical: 'the failure to timely pay a claim after receiving satisfactory proof of loss when that failure to pay is arbitrary, capricious, or without probable cause.'" Boudreaux v. State Farm Mut. Auto. Ins. Co., 04-1339, p. 3 (La. App. 4 Cir. 2/2/05), 896 So. 2d 230, 233, quoting Reed v. State Farm Mut. Auto. Ins. Co., 03-0107, p. 12 (La.10/21/03), 857 So. 2d 1012, 1020. The difference between the statutes is the time period permitted for payment. La. R.S. 22:658 requires payment within thirty days of receiving satisfactory proof of loss and La. R.S. 22:1220 requires payment within sixty days. Both statutes impose a penalty when the failure to pay is "arbitrary, capricious or without probable cause." See La. R.S. 22:658 and La. R.S. 22:1220.
"To initiate loss adjustment requires that `the insurer take some substantive and affirmative step to accumulate the facts that are necessary to evaluate the claim.'" Talton v. USAA Cas. Ins. Co., 06-1513, pp. 13-14 (La.App. 4 Cir. 3/19/08), 981 So. 2d 696, 706, quoting Hoilier v. State Farm Mut. Auto. Ins. Co., 01-0592, p. 4 (La.App. 4 Cir. 10/31/01), 799 So. 2d 793, 797, quoting McClendon v. Econ. Fire & Cas. Ins. Co., 98-1537, p. 7 (La.App. 3 Cir. 4/7/99), 732 So. 2d 727, 731. The statutes are strictly construed because they are penal in nature. Maurice v. Prudential *119 Ins. Co., 02-0993, p. 9 (La.App.10/23/02), 831 So. 2d 381, 388. Ms. Reilly was required to prove: (i) that the insurer received a satisfactory proof of loss, (ii) that the insurer failed to pay the claim within the applicable statutory period, and (iii) that the insurer's failure to pay was arbitrary and capricious. Boudreaux, 04-1339, p. 4, 896 So. 2d at 233.
"Satisfactory proof of loss ... is that which is sufficient to fully apprise the insurer of the insured's claim." Maurice, 02-0993, p. 10, 831 So. 2d at 388. "[Statutory penalties are inappropriate when the insurer has a reasonable basis to defend the claim and was acting in good-faith reliance on that defense." Id. When reasonable questions exist as to the extent of the claim, bad faith should not be inferred. Id. Additionally, penalties should not be assessed unless the record is clear "that the insurer was in fact arbitrary, capricious, and without probable cause in refusing to pay." Maurice, 02-0993, p. 9, 831 So. 2d at 388.
Ms. Reilly testified that Mr. Main told her that she would be back in her home within three months after inspecting the Property. Mr. Main's estimate was completed on May 20, 2002. Mr. Barberio's estimate was completed on June 5, 2002. Audubon did not issue a check based upon Mr. Barberio's dwelling estimate until July 18, 2002. In late June or early July 2002, Ms. Reilly hired Carr & Associates due to the dispute regarding the estimates. On August 15, 2002, DM gave Audubon a $29,795.22 invoice regarding Ms. Reilly's contents. Ms. Reilly did not return the inventory/contents lists provided to her by Mr. Main, but Carr & Associates sent Ms. Reilly's $196,229.14 contents estimate on September 28, 2002. However, Ms. Reilly did not receive any payment for her contents claim until October 28, 2002, when she received her contents policy limits in full. Mr. Main alleges that Audubon was unaware of the amount of contents Ms. Reilly was claiming until he received Carr & Associates $196,000 contents estimate.[8] However, Audubon possessed a satisfactory proof of loss of at least part of Ms. Reilly's contents by the May 20, 2002 estimate completion date and by the DM invoice in August, which followed his inspection of the Property. Carr & Associates also sent Ms. Reilly's dwelling estimate to Audubon on September 28, 2002. However, Ms. .Reilly testified that no attempts were made to mediate or resolve her claim after Audubon tendered the initial dwelling check and Audubon never returned to the Property to investigate the additional dwelling claims even though Mr. Main testified that the Property's condition would worsen, which would thereby increase the damages.
When asked, Mr. Main opined that if Ms. Reilly requested an advance, he probably could have received permission to advance around $2,500 on the contents policy, but he followed standard operational procedures. He then testified that the only way to pay a partial contents claim was if you had an inventory list. Mr. Main claims that the contents limits were paid after Audubon received Carr & Associates estimate and DM's bill, but Audubon received DM's bill in August, as stated above. Mr. Main thought the estimate from Carr & Associates was "just ... unbelievable because it was practically rebuilding the whole house." His notes reflect that he saw no point in meeting with Mr. Carr unless Ms. Reilly was willing to settle for $1,000 or $2,000 more. As to *120 meeting with Mr. Carr, Mr. Allain stated that he never refused to meet with Mr. Carr, but he doubted that any negotiation would occur. Mr. Allain's testimony also reflects that he was aware that the Property's damage would increase the longer it remained boarded up, yet he never inspected the Property a second time after receiving the estimate from Carr & Associates.
Given the testimony provided in the record, Audubon was, at the very least, aware that Ms. Reilly was owed some money on her contents policy on May 20, 2002. Audubon did not tender any money to Ms. Reilly regarding her contents claim until October 28, 2002, well over the thirty and sixty day time periods, and more than sixty days after receipt of DM's invoice related to contents. Additionally, Audubon never attempted to reinspect the Property after receipt of Carr & Associates' estimate. Accordingly, we find that the trial court's judgment was based on reasonable factual conclusions. Therefore, the trial court was not manifestly erroneous in awarding $25,000 in bad faith penalties.
MENTAL ANGUISH
Audubon avers that the trial court erred in awai'ding Ms. Reilly $25,000 for mental anguish. The trial court judge did not indicate her reasons for awarding mental anguish damages.
This Court held that damages may be recovered for mental anguish if an insurer breaches its duty of good faith. Orellana v. Louisiana Citizens Prop. Ins. Corp., 07-1095, pp. 5-6 (La.App. 4 Cir. 12/5/07), 972 So. 2d 1252, 1256. "However, La. C.C. art. 1998 provides that if the contract breached is not `intended to gratify a nonpencuniary interest,' damages for non-pecuniary losses `may be recovered... when the obligor intended, through his failure, to aggrieve the feelings of the obligee.'" Veade v. Louisiana Citizens Prop. Corp., 08-0251, p. 7 (La.App. 4 Cir. 6/4/08), 985 So. 2d 1275, 1280; quoting La. C.C. art. 1998. The object of an insurance contract is the payment of money. Id. The Louisiana Supreme Court pronounced that evidence should demonstrate that the insurer knew or should have known that his failure to perform would cause mental anguish damages. Sher v. Lafayette Ins. Co., 07-2441, p. 20 (La.4/8/08), 988 So. 2d 186, 202. The plaintiff must also prove that the insurer "intended, through his failure, to aggrieve the feelings of the obligee," pursuant to La. C.C. art. 1998. Sher, 07-2441, pp. 19-20, 988 So. 2d at 202.
Ms. Reilly testified that everything after the fire was overwhelming and devastating. She stated that Mr. Allain's alleged remark regarding the terrorist attacks of September 11, 2001, were troubling. She also received letters from Audubon stating that she was no longer insured because of the "total loss" of her home. This caused her to purchase additional insurance even though Audubon reinstated her insurance policy in January 2003, with no lapse in coverage. Audubon informed her that the cancellation letters were a mistake. Further, Ms. Reilly testified that she had to withdraw money from her IRA, incurring penalties, in order to begin repairing her home. She estimated spending $100,000 renovating the Property after the fire.
Mr. Allain did not know why Ms. Reilly received a cancellation letter because he never advised anyone that the Property was a total loss.
While Ms. Reilly was reasonably upset by the lack of alacrity in the disputed adjustment process, given the record before us, we find that Ms. Reilly failed to prove that Audubon intended to aggrieve her feelings. Accordingly, we find that the *121 trial court erred in awarding mental anguish damages and reverse.
DECREE
For the above mentioned reasons, we find that the trial court did not err by qualifying Mr. Carr as an expert witness, in awarding dwelling policy limits, or in awarding bad faith penalties. However, we find that the trial court erred in awarding $1,300 for the CRS security deposit and awarding $25,000 for mental anguish damages and reverse.
AFFIRMED IN PART; REVERSED IN PART.
NOTES
[1] Mr. Barberio inspected the Property while it was under repair for an eight inch differential settlement.
[2] Ms. Reilly's agreement with Carr & Associates states that it receives fifteen percent of monies recovered.
[3] Ms. Reilly's insurance policy was later reinstated, as the cancellation was an error.
[4] See Louisiana State Bar Ass'n. v. Carr and Associates, Inc., 08-2114 (La.App. 1 Cir. 5/8/09), 15 So. 3d 158, writ denied, 09-1627 (La. 10/30/09), 21 So. 3d 292.
[5] Mr. Carr admitted that he mistakenly over-estimated the value of the kitchen cabinets. However, he further stated that any overage mistakes were subsumed by underestimation mistakes contained in the estimate.
[6] The trial court judge stated that the information regarding Mr. Barberio's software would change the weight given to his testimony.
[7] The statutes are now numbered La. R.S. 22:1892 and La. R.S. 22:1973, respectively. The trial court judge did not indicate the statute she was using to assess penalties.
[8] Audubon attempts to attack Ms. Reilly's credibility and contents claim based upon a previous bankruptcy filing wherein contents are valued differently than for insurance purposes. However, the issue of contents coverage is not an issue in the present case.
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52 So. 3d 40 (2010)
Brendan RAO, Appellant,
v.
STATE of Florida, Appellee.
No. 4D07-4879.
District Court of Appeal of Florida, Fourth District.
December 15, 2010.
Rehearing Denied February 15, 2011.
*41 Carey Haughwout, Public Defender, and Emily Ross-Booker, Assistant Public Defender, West Palm Beach, for appellant.
Bill McCollum, Attorney General, Tallahassee, and Mitchell A. Egber, Assistant Attorney General, West Palm Beach, for appellee.
WARNER, J.
Brendan Rao appeals his conviction for first degree murder. He raises three issues on appeal, arguing that (1) the court erred in allowing a witness to testify that he was engaged in satanic worship in high school, where the evidence was inadmissible as showing only bad character; (2) the court erred by admitting gruesome pictures of the victim's burned body which were highly prejudicial; and (3) fundamental error occurred in closing argument when the prosecutor commented on his right of silence. We affirm on all issues, finding that in context the court did not abuse its discretion in admitting the single reference to satanic worship. Alternatively, it was harmless beyond a reasonable doubt. Further, the pictures were properly admitted to explain the cause of death. Finally, the prosecutor made only one comment which could be considered a comment on silence, but it did not constitute fundamental error.
On April 5, 2000, police received a call about smoke coming from a dumpster and upon investigation discovered the charred body of Matthew Collins inside the dumpster. An autopsy revealed that the victim's death was not caused by the fire, but rather was caused by a combination of head trauma and strangulation. Ligatures were found around his neck. A few days later Detective Stone received a phone call from Christine Grace, who worked with the victim at a music store. As a result, police investigated the phone records of the victim, which showed that in the last hours of his life the victim had made several *42 calls to the defendant, Brendan Rao. The police interviewed Rao and made further investigation, but no arrests were forthcoming at that time. After investigation, the case remained unsolved.
In 2004 after the original investigator retired, Detective Curcio took over the Collins murder investigation. Curcio reinterviewed individuals involved in the initial investigation, including Mark Lichtenberg, a classmate of Rao's, who was a suspect in the case. During their interview, Detective Curcio asked Lichtenberg to use the detective's cell phone to call the home phone number of Brendan Rao. Rao didn't answer. Instead, Lichtenberg left the detective's phone number and a message saying who he was and asking him to call back. Two days later Rao actually called Curcio's phone, and Curcio, portraying himself as Mark Lichtenberg, recorded the phone call. Acting as Lichtenberg, Curcio told Rao that the police had re-interviewed him in reference to the murder. During the conversation, Rao appeared unaware that he was not talking to the real Lichtenberg. Rao denied having talked further to the police and cautioned Curcio not to talk to anyone. Rao told Curcio that the case was entirely circumstantial and as long as he kept out of trouble, no one would know, because "nobody was there." Rao never directly referred to the murder or made any directly inculpatory statement but continued to repeat that Curcio (posing as Lichtenberg) should not say anything if interviewed. Rao also encouraged him to get out of town if necessary.
Two months later, the police arrested Rao. During Curcio's interview of Rao, Rao requested to contact his mother. Curcio left the interview room and allowed Rao to use his cell phone to call his mother. Rao's conversations with his mother were recorded and played at trial. In them, Rao first explained that the police had arrested him and what would happen to him. He asked her to bring him some clothes and then told her what monies she could have of his, as he was supporting her. He told her that there was nothing for her to say because he had never spoken "about it" to his mother. The conversations went on for a considerable period of time.
At trial, three witnesses testified that Rao had admitted the murder to them. Christine Grace testified that she worked with Collins, Lichtenberg and Rao at Mars Music store. Rao would talk to her and tell her about himself. Over objection, she was allowed to tell the jury that he had told her he was "into satanic worship" in high school, and that "he hadn't done anything serious but liked to mess around with fire." Rao told her that Collins had robbed Rao's home, taking a pound of marijuana, Rao's favorite guitar, and money. Rao claimed that Collins was the only one who knew where Rao kept his stash of marijuana and that Collins loved Rao's guitar. Although Rao asked Grace not to tell anyone about what he had revealed, when she learned during a meeting at work a few months later that Collins had been missing for a week and heard that a body had been found in a dumpster, she called police and gave a statement.
A second witness, Jacob Condell, knew Rao from high school. He testified that on April 25, 2000, he was at Rao's home, and they smoked marijuana. Rao told Condell that a kid named Matt had stolen stuff from Rao's house three times and that he had wound up dead. Rao also commented that "it was just something that had to be done." Condell asked Rao what he did with the body, and Rao mentioned that he *43 "touched the body"[1] and that his only mistake was not screwing up the dental records for identification purposes. Coldwell also gave a statement to the police.
Finally, Candice Moreland testified that she met Rao in high school in 1995. They were close friends and had a sexual relationship. In the summer of 2000 Rao told her that he murdered someone. He told her a coworker of his had robbed his house not once, but twice. Rao, Lichtenberg (whom she also knew from school), and another male coerced the victim back to Rao's cottage where he strangled him. Then they put his body in the trunk of a car, dumped it in a garbage bin, and set it on fire. Rao told Moreland that he had been the one to strangle Collins. Moreland was impeached on her delay in reporting the crime to the police and her substantial drug use, including her intoxication at the time she first reported the crime to the police.
Dr. Lisa Flannagan, the medical examiner, testified that the victim died prior to being burned. She could determine this based on the absence of soot in the victim's internal airways and a negative carbon monoxide level in his blood. In addition to the strangulation she determined that there had been a blow to the head because of the hemorrhage she found between the membrane and the skull. In her testimony she used photos of the charred body to show the ligatures around the victim's neck as well as to explain the hemorrhage. The photos were admitted over the defense objection, the court finding that they assisted the medical examiner in the explanation of the cause of death.
The jury found Rao guilty of first degree murder. The court sentenced him to life in prison, and he appeals.
Rao first contends that the trial court erred in allowing Grace to testify that Rao told her he was engaged in satanic worship in high school. He argues that the evidence did not tend to prove or disprove any material fact and was admitted simply to show bad character. The standard of review for admissibility of evidence is abuse of discretion. Nardone v. State, 798 So. 2d 870, 874 (Fla. 4th DCA 2001).
Had the witness testified only that Rao was formerly engaged in satanic worship, we would agree that this evidence was irrelevant, tending only to prove bad character. However, here the evidence was tied to the additional, unobjected-to statement that Rao liked to "mess around with fire." As the victim's body was burned, the statement provided at least an inference that the use of fire was consistent with Rao's past conduct.
Even if the evidence was erroneously admitted, we would conclude that under the circumstances any error is harmless beyond a reasonable doubt. See State v. DiGuilio, 491 So. 2d 1129 (Fla.1986). Only one witness referred to Rao's past, not present, interest in satanic worship. The state never mentioned it in its closing argument. No suggestion was made that satanic worship had anything to do with the crime. Three witnesses testified that Rao had admitted to committing the murder. We have no trouble in concluding that admitting this isolated reference did not affect the verdict.
The second issue, involving admission of the photographs of the victim's charred body, also does not merit reversal. The photographs were used by the medical examiner to explain the cause of death, strangulation and head trauma, as well as *44 the circumstances of the death, as the photographs showed the ligatures around the victim's neck. The circumstances are nearly identical to Jackson v. State, 545 So. 2d 260 (Fla.1989). There, the victims' bodies were also burned. The adult victims died of gunshot wounds, while the child victims died of smoke inhalation. Our supreme court rejected a claim that the trial court erred in admitting photographs of the victims' charred bodies, because "these photos were relevant to prove identity and the circumstances surrounding the murders and to corroborate the medical examiner's testimony." Id. at 265. The same can be said of the photographs admitted in this case. No error occurred.
Finally, Rao claims that the prosecutor committed fundamental error in closing argument by making three comments implicating Rao's right of silence. Two of these, however, occurred pre-arrest, and the prosecutor's comments did not violate any constitutional right. As to the third comment, although it was error, it was not fundamental error.
During the closing argument, the prosecutor discussed the phone call between Detective Curcio and Rao, where Curcio portrayed Lichtenberg. He asked the jury whether anyone would respond the way Rao did by telling him to keep his mouth shut. The prosecutor ended by saying: "I mean, wouldn't you come right out, wouldn't a common person, wouldn't a person who had nothing to do with it say what the hell you talking about, what do you mean, I have no idea what you're talking about, what, are you crazy?" Again referring to this conversation in rebuttal, the prosecutor maintained that Curcio got Rao to admit his involvement in the murder.
The telephone conversation between Rao and Curcio, posing as Lichtenburg, occurred well prior to Rao's arrest. Pre-arrest silence does not carry the same protection as post-arrest silence. See e.g. State v. Hoggins, 718 So. 2d 761, 770 (Fla. 1998); White v. State, 757 So. 2d 542 (Fla. 4th DCA 2000) (pre-arrest silence can be used to impeach a defendant, as long as silence was inconsistent with defendant's testimony at trial). Moreover, the prosecutor was not commenting on Rao's silence but on what Rao actually said in the recorded conversation, i.e., his exhortation to Curcio (posing as Lichtenberg) not to talk, to get out of town, etc. The prosecutor's comments were no more than a suggestion to the jury that Rao's statements were not the comments of an innocent man.
In Badillo v. State, 822 So. 2d 526 (Fla. 3d DCA 2002), the defendant claimed that it was error to allow a police detective to testify that in two interviews several months prior to the defendant's arrest, the defendant never claimed self-defense as to the incident, which that was his present contention at trial. The court noted that "[e]xamination regarding the contents of pre-arrest interviews did not amount to a comment on silence." Id. at 527. Similarly, in this case, the prosecutor's remarks on the Curcio telephone call made months before the arrest were not comments on silence but were used to contradict Rao's theory that he was not guilty and never admitted committing the murder. The comment was not error, let alone fundamental error.
The third comment raised by Rao as an impermissible comment on silence involves the prosecutor's reference to the taped conversation between Rao and his mother after his arrest. Commenting on the substance of the conversation, the prosecutor asked:
Did he ever complain to his mother, mom, I don't know what I'm doing here, I have no idea what I'm doing here, did *45 he ever? Did he ever tell his mother what he was charged with? I'm being held no bond, that's all he ever said. He never told his mom what he was charged with, never said he did not do it.... I'd like you to look at what he never did say; mom, I didn't do it, don't know what the heck I'm doing here, what am I doing on this charge of no bond, mom?
Rao attempts to analogize this post-arrest comment to ones made in Cowan v. State, 3 So. 3d 446 (Fla. 4th DCA 2009), which we held constituted an improper comment on defendant's silence. In Cowan, codefendants were placed in a police vehicle after their arrest on a burglary charge. While in the vehicle, the codefendant could be heard saying: "Damn, you think they caught us for the home invasion, home burglary?" and "Hey, we did not leave anything in there?" The defendant testified at trial, and the prosecutor confronted him with his codefendant's statements. The defendant claimed that he had said nothing to his codefendant in the vehicle. During cross-examination, the prosecutor asked the defendant, over objection, why he hadn't said, "What are you talking about, what burglary?" or "I don't know what you're talking about."
On appeal, Cowan argued that the prosecutor impermissibly commented on his silence by asking those questions. The appellate court agreed and reversed, ruling:
We see no significance in the fact that defendant's silence was not a response to police interrogation. Neither was defendant's silence in Hoggins a response to police interrogation, arising instead from accusations by the victim of the crime. Yet Hoggins emphasized that the state constitutional right against self-incrimination after arrest "extend[s] to all evidence and argument, including impeachment evidence and argument, that was fairly susceptible of being interpreted by the jury as a comment on silence." [e.s.] 718 So. 2d at 769. Similarly, in Hosper v. State, 513 So. 2d 234 (Fla. 3d DCA 1987)cited with approval in Hoggins, 718 So.2d at 769the Third District held: "The prosecution is not permitted to comment upon a defendant's failure to offer [e.s.] an exculpatory statement prior to trial, since this would amount to a comment upon the defendant's right to remain silent." 513 So. 2d at 235; see also Weiss v. State, 341 So. 2d 528 (Fla. 3d DCA 1977) (same holding as regards questioning of defendant concerning his failure to give exculpatory explanation at any time prior to his trial testimony). The plain meaning of the phrase used in Hoggins-"all evidence and argument"includes circumstances other than police interrogation. Hence, the Florida Constitutional right against self-incrimination does not require police interrogation to trigger its protection; it shields all post-arrest silence with or without police interrogation. The accused does not need any contextual element of police questioning to bar any use at trial of his post-arrest silence. Hoggins, 718 So.2d. at 771.
Id. at 450 (footnote omitted). Our court held that the prosecutor's questions constituted reversible error as they commented on the defendant's post-arrest silence.
The Cowan analysis applies in this case. The prosecutor's comments on the defendant's failure to explain his circumstances to his mother constituted an impermissible comment on silence. Nevertheless, the defense did not object to the comments. A comment on the right of silence in closing argument, while constitutional error, does not constitute fundamental error, which goes to the heart of the case or the merits of the cause of action. *46 See Gutierrez v. State, 731 So. 2d 94, 95 (Fla. 4th DCA 1999). Moreover, even if properly preserved, we would conclude that the error was harmless beyond a reasonable doubt under the standard announced in DiGuilio.
For the foregoing reasons, we affirm the conviction and sentence.
POLEN and FARMER, JJ., concur.
NOTES
[1] Although the trial transcript states "touched the body," we suspect that this may be a transcription error and that the witness really stated "torched the body."
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340 S.W.3d 296 (2011)
In the Interest of: C.F. & A.K.
No. ED 95633.
Missouri Court of Appeals, Eastern District, Division Five.
April 12, 2011.
Motion for Rehearing and/or Transfer to Supreme Court Denied May 24, 2011.
Application for Transfer Denied June 28, 2011.
*297 Brice R. Sechrest, Park Hills, MO, for appellant.
Christopher G. Hartmann, Farmington, MO, for Guardian Ad Litem.
Theodora L. Strassburg, St. Louis, MO, for respondent.
PATRICIA L. COHEN, Judge.
Introduction
Appellant D.K. ("Father") appeals from the judgment of the Circuit Court of Madison County terminating his parental rights to his two children, A.K. and C.F., on the grounds that: (1) under Section 211.211, he was entitled to but did not receive court-appointed counsel at case review, permanency, and post-permanency hearings; and (2) the trial court lacked the clear, cogent, and convincing evidence required to terminate his parental rights pursuant to Sections 211.447.5(3) and 211.447.5(6).[1] We reverse and remand.
Factual and Procedural Background
Father and D.F. ("Mother") have two daughters, one-year-old A.K. and eight-year-old C.F. Mother and Father were both on probation following convictions for manufacturing methamphetamines. On October 6, 2008, Mother met with her probation officer, who suspected Mother was under the influence of drugs and called the Farmington Police Department. Mother informed her probation officer that Father was operating a methamphetamine lab in the family's house, and gave police consent to search the residence. In addition to an active methamphetamine lab, police found marijuana, drug paraphernalia, roaches, and piles of trash, clothing, and dirty dishes. Police arrested Father on a probation warrant. Mother and Father both tested positive for methamphetamine and marijuana and were subsequently incarcerated. The Farmington Police Department took A.K. and C.F. into protective custody, and the Children's Division placed them in a foster home.
Two days later, the trial court granted the Madison County Juvenile Officer's petition for continuing protective custody. *298 Father was not present for the protective custody hearing or the adjudication and disposition hearing held on November 17, 2008 because he absconded after release from the St. Francois County Jail.
Father was again incarcerated, and he appeared pro se for the first time at a case review hearing on January 8, 2009. Sometime after this hearing, Father directed his first request for counsel to the Children's Division, which documented Father's request for counsel in a report dated February 19, 2009. On May 19, 2009, Father wrote a letter to the Juvenile Officer in which he renewed his request for counsel. The Children's Division caseworker later informed Father that his request was denied.
Between January 8, 2009 and March 4, 2010, Father appeared pro se at approximately six case review, permanency, and post-permanency hearings. During this time, Father was incarcerated and "writted in" to the proceedings. Although the trial court allowed Father the opportunity to testify, present evidence, and question witnesses, Father did not actively participate in the hearings, testifying only at the March 5, 2009 review hearing.
On March 8, 2010, the Juvenile Officer filed a petition to terminate the parental rights of Father ("TPR petition"). In a letter to the trial court dated March 19, 2010, Father again requested counsel. The trial court granted his request on April 21, 2010, and the trial court held a hearing on the TPR petition on May 6 and May 13, 2010. At the start of the hearing, Father moved to dismiss the TPR petition based on the trial court's denial of his request for counsel at prior hearings. The trial court denied Father's motion to dismiss the TPR petition, reasoning:
I don't believe that he is prejudiced by not having an attorney at the case review hearings. He was not here when adjudication was taken, when protective custody was taken. That was due to his own choice because he absconded. And during the case review hearings when he finally was incarcerated he was brought in, he was allowed to participate, he was allowed to ask questions, and now, today, is the actual first day for a hearing on the termination of parental rights petition and he does have counsel to represent him.
The trial court terminated Father's parental rights on June 4, 2010.
Father moved for rehearing, asserting that he was entitled to but denied appointment of counsel for proceedings prior to the hearing on the termination of his parental rights. The trial court denied the motion. This appeal follows.
Standard of Review
A parent's right to raise his or her children is a fundamental liberty interest protected by the constitutional guarantees of due process. In re W.C., 288 S.W.3d 787, 795-96 (Mo.App. E.D.2009). The constitutional implications of a termination of parental rights also inform the standard of appellate review. Id. at 795. Termination of parental rights is an exercise of "awesome power," and therefore we review such cases closely. In re S.M.H., 160 S.W.3d 355, 362 (Mo. banc 2005). "Statutes that provide for the termination of parental rights are strictly construed in favor of the parent and preservation of the natural parent-child relationship." In re K.A.W., 133 S.W.3d 1, 12 (Mo. banc 2004).
We will affirm a trial court's judgment terminating a parent's parental rights unless no substantial evidence supports it, it is contrary to the weight of the evidence, or it erroneously declares or applies the law. In re P.L.O., 131 S.W.3d 782, 789 (Mo. banc 2004). We defer to the *299 factual findings of the court and consider all evidence and reasonable inferences in the light most favorable to the judgment. Id.; In re N.J.S., 276 S.W.3d 397, 400 (Mo.App. E.D.2009).
Discussion
In his first point on appeal, Father argues that the trial court erred in denying his motion to dismiss the petition to terminate his parental rights because the trial court failed to appoint counsel for Father in violation of Section 211.211. He asserts that he was entitled to court-appointed counsel at case review, permanency, and post-permanency hearings because he satisfied the statutory criteria set forth in Section 211.211.4 in that he was the children's custodian, he was indigent, he desired appointed counsel, and a full and fair hearing required the court to appoint him counsel. Mo.Rev.Stat. § 211.211.4. The State counters that "Father was not entitled to appointed counsel because he made the request after the dispositional hearing and the time for appointed counsel to serve had expired."[2] The State further argues that Father was not entitled to appointed counsel under Section 211.211.4 because he was not A.K. and C.F.'s "custodian" and that the trial court properly appointed counsel for Father before the hearing on the TPR petition.
Section 211.211, which governs a party's right to counsel in juvenile proceedings, provides: "A party is entitled to be represented by counsel in all proceedings." Mo.Rev.Stat. § 211.211.1 (emphasis added). Regarding court-appointed counsel, the statute further provides:
When a petition has been filed and the child's custodian appears before the court without counsel, the court shall appoint counsel for the custodian if it finds:
(1) That the custodian is indigent; and
(2) That the custodian desires the appointment of counsel; and
(3) That a full and fair hearing requires appointment of counsel for the custodian.
Mo.Rev.Stat. § 211.211.4; see also Mo. Sup. Court Rule 116.01.[3] "It is fundamental that restrictions upon parental rights must be in accordance with due process of law." In re N.H., 41 S.W.3d 607, 612 (Mo.App. W.D.2001). "Because of the importance of the right to counsel to the fairness of the proceedings, there must be strict and literal compliance with the statutes affecting this right, and failure to strictly comply results in reversible error." In re D.J.M., 259 S.W.3d 533, 535 (Mo. banc 2008); see also In re M.M., 320 S.W.3d 191, 196-97 (Mo.App. E.D.2010).[4]
*300 We first address the Juvenile Division's argument that Father's request for counsel was untimely. The Juvenile Division argues that the trial court lacked authority to appoint counsel because Father did not request appointed counsel until more than thirty days after the November 17, 2008 adjudication and disposition hearing.[5] The Juvenile Division cites no cases in support of its position, but appears to rely on Section 211.211.6, which provides: "Counsel shall serve for all stages of the proceedings, including appeal, unless relieved by the court for good cause shown. If no appeal is taken, services of counsel are terminated following the entry of an order of disposition." Mo.Rev.Stat. § 211.211.6. According to the Juvenile Division, the trial court "had no authority to appoint counsel because the dispositional hearing had concluded."
We conclude that Section 211.211.6 applies when the trial court appoints counsel prior to the dispositional hearing and has no relevance here. Mo.Rev.Stat. § 211.211.6. Furthermore, this court has found that an indigent custodian who requests appointed counsel is entitled to appointed counsel even when the request is made more than thirty days after an order of disposition. In re N.S., 77 S.W.3d 655, 658 (Mo.App. E.D.2002). In In re N.S., the father filed his first request for appointed counsel more than two months after the dispositional review hearing but before two review hearings and the filing of the TPR petition. Id. at 656. On appeal, we held the trial court erred in denying the father's first request for appointed counsel because the father satisfied the criteria of Section 211.211.4. Id. at 658. We therefore reversed and remanded the judgment terminating the father's parental rights.[6]Id.
The Juvenile Division further argues that Father was not entitled to court-appointed counsel because he was not a "custodian" for purposes of Section 211.211.4 and Rule 116.01. Specifically, the Juvenile Division contends Father was not C.F. and A.K.'s custodian because "he would sometimes go a week without seeing his children" and he moved out of the family home about one month before his arrest. Father asserts that he is a "custodian" because, at the time the Children's Division assumed custody of C.F. and A.K., Mother and Father were living together with the children and there was no custody order in place at the time.
We agree that Father is a "custodian" for purposes of the right to appointed counsel under Section 211.211.4 and Rule 116.01. Rule 110.05(a)(5) provides that, as used in the rules governing juvenile proceedings, the term "`custodian' includes parent, guardian of the person, and any person having legal or actual custody of a juvenile." Mo. Sup. Court Rule 110.05(a)(5) (2008).[7] Furthermore, courts *301 have held that the "custodian" of a juvenile includes a parent. See In re L.E.C., 182 S.W.3d 680, 685" n. 5 (Mo.App. W.D.2006); In re J.L.C., III, 844 S.W.2d 123, 128 n. 2 (Mo.App. S.D.1992). There is no dispute that Father is the natural parent of C.F. and A.K. We therefore find that Father is a "custodian" under Section 211.211 and Rule 116.01.[8]
Finally, the Juvenile Division argues that the trial court was correct in not appointing counsel for Father until the hearing on the TPR petition. Similarly, at the TPR hearing, the trial court refused to dismiss the TPR petition because, in the earlier proceedings, Father was "allowed to participate" and "allowed to ask questions." However, a trial court commits reversible error when it fails to comply with the requirements of Section 211.211.4, even where a parent "was given an opportunity to cross-examine and otherwise participate in the hearing[s]...." In re M.A.J., 998 S.W.2d 177, 182 (Mo.App. W.D.1999) (reversing In re L.A.P., 640 S.W.2d 511 (Mo.App.1982)); see also In re N.S., 77 S.W.3d at 656.
The "only requirement [for receiving court-appointed counsel in all juvenile proceedings] was that father meet the statutory criteria [of Section 211.211.4]." In re N.S., 77 S.W.3d at 657. Because Father satisfied the statutory criteria of Section 211.211.4 entitling him to court-appointed counsel, we find that the trial court erred in failing to appoint counsel to represent Father at the juvenile proceedings prior to the TPR hearing. Point granted.[9]
Conclusion
The judgment of the trial court is reversed and the cause is remanded for proceedings consistent with this opinion.
GARY M. GAERTNER, JR., P.J., and MARY K. HOFF, J., concur.
NOTES
[1] All references are to Mo.Rev.Stat.2007 unless otherwise indicated.
[2] It should be noted that in response to Father's motion to dismiss the termination petition on the grounds that he was denied counsel, the Juvenile Division did not raise a timeliness argument but simply argued that: "the Court should not dismiss the T.P.R. based on the fact that he does now have counsel for the termination of parental rights hearing."
[3] Rule 116.01(d), which mirrors the language of Section 211.211.4, provides:
When a petition has been filed and the juvenile's custodian appears before the court without counsel, the court shall appoint counsel for the custodian if it finds:
(1) that the custodian is indigent; and
(2) that the custodian desires the appointment of counsel; and
(3) that a full and fair hearing requires appointment of counsel for the custodian.
Mo. Sup. Court Rule 116.01 (2008).
[4] See also In re J.S.W. 295 S.W.3d 877, 880 (Mo.App. E.D.2009) ("Due to the gravity of proceedings to terminate parental rights, the terms of section 211.462.2 are to be strictly applied. Failure to appoint counsel to represent the parents or to obtain an affirmative waiver of that right has been held to be a reversible error.") (citations omitted).
[5] We note that the Juvenile Division cites Rules 81.04 and 81.05. However, the statutory time period for appeals in juvenile cases is governed by Rule 120.01 and Section 211.261.1.
[6] Because this court determined that the trial court erred in denying the father's first request for appointed counsel and reversed and remanded the case on those grounds, we determined it was not necessary to address the father's claim that the trial court erred in denying a later request for counsel before the hearing on the TPR petition. In re N.S., 77 S.W.3d at 658.
[7] Effective January 1, 2010, the right to counsel provisions in Rule 116.01 were amended and now appear in Rules 115.01-115.03. Rule 115.03 specifically provides that a "parent, guardian or custodian" is entitled to appointed counsel when the parent, guardian or custodian is indigent, asks for counsel, and when a full and fair hearing requires appointment of counsel. Mo. Sup. Court Rule 115.03 (2010). Additionally, Rule 110.05(a)(5) was repealed and replaced by Rule 110.04(a)(5), which defines "custodian" to mean "any person having physical custody of a juvenile in the absence of an order of court." Mo. Sup. Court Rule 110.04(a)(5) (2010).
[8] The Juvenile Division does not dispute that Father satisfies the three remaining criteria of Section 211.211.4, and the record likewise supports a finding that he meets the criteria.
[9] As Father's point alleging that the trial court erred in failing to appoint counsel is dispositive of this appeal, we do not address his second point relied on.
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357 S.W.3d 761 (2011)
LA MARQUE INDEPENDENT SCHOOL DISTRICT, Appellant,
v.
HEALTHY RESOURCES ENTERPRISE, INC., Appellee.
No. 14-10-01269-CV.
Court of Appeals of Texas, Houston (14th Dist.).
November 29, 2011.
DeAndrea C. Washington, Philip Delbert Fraissinet, Houston, for appellant.
Panel consists of Justices BROWN, CHRISTOPHER and McCALLY.
OPINION
SHARON McCALLY, Justice.
Appellant La Marque Independent School District (La Marque ISD) appeals from an order denying its plea to the jurisdiction in this breach of contract cause arising from construction and renovation services provided by appellee Healthy Resources *762 Enterprise, Inc. (HRE) following Hurricane Ike. In two stated issues, La Marque ISD urges that the trial court erred in finding that (1) Chapter 271 of the Texas Local Government Code waived La Marque ISD's governmental immunity from HRE's breach of contract claim, when HRE failed to identify a contract between itself and La Marque ISD that would fall within the ambit of Chapter 271's waiver of governmental immunity; or (2) La Marque ISD waived its governmental immunity by conduct or by asserting an affirmative claim for relief. We affirm.
BACKGROUND
This is an accelerated appeal from the trial court's denial of La Marque ISD's plea to the jurisdiction. The underlying facts are largely undisputed, and the gravamen of the dispute is whether the parties' Agreement for Professional Services and subsequent purchase orders waive La Marque ISD's immunity from this breach of contract suit pursuant to Chapter 271 of the Texas Local Government Code.
On October 7, 2008, La Marque ISD and HSE entered into an Agreement for Professional Services. The agreement arose from hurricane damage for a project described as La Marque ISD's disaster recovery efforts. The term of the agreement was October 7, 2008 to April 7, 2009. The scope of the services and expertise outlined within the agreement are, inter alia:
HRE shall provide to [La Marque ISD] the deliverables related to advice, expertise, consulting, and project management; shall serve as [La Marque ISD's] representative for certain purposes and may be expressly set forth herein; and shall provide miscellaneous professional services for [La Marque ISD] in accordance with the scope of services attached hereto as and as defined in Attachment A ("Services") and the applicable phases to the extent that and for which [La Marque ISD] has provided advanced written notice to proceed by Work Order, as defined in Section 4 and further described herein, executed by both parties. . . .
. . . . If at any time during the Term (as hereinafter defined) of this Agreement, [La Marque ISD] wishes for HRE to perform any additional duties outside of this Agreement, HRE may do so as part of a separate agreement with [La Marque ISD], as a Work Order, or as a written amendment to this Agreement. Additional services shall be provided in accordance with the rate schedule included as Attachment B and attached hereto.
Other relevant terms of the contract include the termination and payment provisions. The Agreement for Professional Services "may be terminated by either party with or without cause upon thirty (30) days prior written notice to the other party." Further, the Agreement for Professional Services provides that the fees set forth in any Work Order "shall be slated in terms of a not-to-exceed amount," and "payment" is upon 10% retainage reserved by La Marque ISD.
In its brief, La Marque ISD outlines the following course of events:
Because of the emergency nature of the work, [La Marque ISD] determined that it would engage HRE to perform the actual construction and repair work after the initial consulting and construction management work had been completed without using the normal competitive bidding process to procure such services. Instead, [La Marque ISD] engaged HRE under a series of purchase orders pursuant to [La Marque ISD's] *763 interlocal agreement[1] with the Harris County Department of Education and HRE's job order contract with [Harris County Department of Education]. HRE submitted job order proposals to [La Marque ISD] for each construction project, which included a scope of work outlining the work to be completed by HRE and the total cost of the project. According to the details included in HRE's job order proposals, [La Marque ISD] issued a series of purchase orders for each construction project on February 13, 2009.
Ultimately unsatisfied with HRE's performance, La Marque ISD describes that it "determined that it would be in its best interest to terminate the purchase orders covering the work that remained outstanding and to offer to pay HRE for the construction and renovation work that it had completed satisfactorily." By May 2009, communications between La Marque ISD and the Harris County Department of Education show that "it is the desire of La Marque ISD to disengage with HRE as soon as possible," and "[a] review of our contract with Harris County Department of Education and with HRE shows . . . we must give them a 30 day notice."
The dispute over the construction work culminated in this suit by HRE against La Marque ISD for breach of contract, in which HRE asserts actual damages in the total amount of the purchase orders governing the construction work. La Marque ISD urges immunity from suit due to the lack of a contract "subject to" subchapter I of Texas Local Government Code Chapter 271.
ANALYSIS
I. Standard of Review
We review the denial of a plea to the jurisdiction de novo. Tex. Natural Res. Conservation Comm'n v. IT-Davy, 74 S.W.3d 849, 855 (Tex.2002). A governmental entity waives immunity from liability when it enters into a contract, but immunity from suit is not waived unless the legislature has clearly and unambiguously done so. See Tooke v. City of Mexia, 197 S.W.3d 325, 332 (Tex.2006). A plaintiff successfully invokes the trial court's subject matter jurisdiction over a claim arising out of a government entity's contractual obligations if it alleges a valid waiver of immunity from suit[2] and pleads sufficient facts demonstrating the trial court's jurisdiction. See Tex. Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004). Where, as here, the plea to the jurisdiction challenges the existence of jurisdictional facts, we consider relevant evidence submitted by the parties that is necessary to resolve the jurisdictional issues. Id. at 227. If the evidence creates a fact question regarding jurisdiction, the trial court must deny the plea and leave its resolution to the factfinder. Id. at 227-28.
II. Governmental Immunity
Section 271.152 of the Texas Local Government Code provides that "[a] local governmental entity that is authorized by *764 statute or the constitution to enter into a contract and that enters into a contract subject to the subchapter waives sovereign immunity to suit for the purpose of adjudicating a claim for breach of the contract, subject to the terms and conditions of this subchapter." TEX. LOC. GOV'T CODE ANN. § 271.152 (West 2005). Further, the Code defines "contract subject to this subchapter" as "a written contract stating the essential terms of the agreement for providing goods or services to the local governmental entity that is properly executed on behalf of the local governmental entity." Id. § 271.151(2) (West 2005).
La Marque ISD relies on three theories to urge no waiver of immunity: (1) the Agreement for Professional Services does not entail the construction work performed by HRE that forms the basis of HRE's breach of contract claim; (2) the terms of the Agreement for Professional Services were not renewed[3] to cover the construction and renovation services rendered by HRE; and (3) the Agreement for Professional Services is not a contract "subject to" the waiver provisions of Section 271.152 because it does not state the essential terms for the provision of construction and renovation services.
HRE does not contend that the scope of construction work performed is articulated in the four corners of the Agreement for Professional Services. Instead, HRE presents a straightforward argument that the February 2009 purchase orders are pursuant to the Agreement for Professional Services by which La Marque ISD unambiguously waived immunity.
Initially, we note that our sister court in Beaumont addressed a virtually identical legal question earlier this year in ICI Construction, Inc. v. Orangefield ISD, 339 S.W.3d 235 (Tex.App.-Beaumont 2011, no pet.). ICI performed Hurricane Rita-related repairs for Orangefield ISD pursuant to a series of purchase orders. Id. at 238. The trial court granted Orangefield ISD's plea to the jurisdiction, and the court of appeals affirmed. Id. at 236. Although the court acknowledged well-settled precedent to construe multiple documents together as a written contract,[4] ultimately the court determined that a waiver of immunity could not exist because the "putative contract documents do not contain several of the terms that are essential to a court's ability to enforce OISD's obligation to pay for hurricane-related repairs." Id. at 239. Specifically, the court noted the absence of the basis of the agreement to pay, identification of the properties to be repaired, and the full amount to be paid. Id.
The agreement in this case suffers none of the aforementioned infirmities. It is undisputed that the parties entered into a contract subject to the Code; that is, the Agreement for Professional Services. It is undisputed that La Marque ISD had the authority to do so. It is undisputed that such contract extended from October 2008 until April 2009, with the scope to include "any additional duties outside of the Agreement" covered by separate agreement *765 with La Marque ISD, a Work Order, or an amendment to the contract. It is undisputed that (1) La Marque ISD invited a proposal from HSE for additional work; (2) HSE supplied specific proposal for the additional work; and (3) La Marque ISD accepted the proposal and issued purchase orders "[a]ccording to the details included in HRE's job order proposals."
Further, undisputed evidence in this case reveals La Marque ISD purchase order terms and conditions:
Purchase Order 20091258-0101: ScopeHighlands Elementary Fence; Pricenot to exceed $6,590.22; Terms30 days net upon completion.
Purchase Order 20091046: ScopeLake Road; Pricenot to exceed $466,641.50; Terms30 days net upon completion, monthly invoices to be paid less 10% retainage.
Purchase Order 20091163-0302: ScopeLake Road ECLC Fencing Repair; Pricenot to exceed $10,024.56; Terms30 days net upon completion.
Purchase Order 20091048: Scope Westlawn Elementary; Pricenot to exceed $227,083.69; Terms30 days net upon completion, monthly invoices to be paid less 10% retainage.
Purchase Order 20091166-0502: ScopeWestlawn Electrical Repair; Pricenot to exceed $16,336.32; Terms30 days net upon completion.
Purchase Order 20091164-0303: ScopeLake Road ECLC Exterior Lighting; Pricenot to exceed $5,778.05; Terms30 days net upon completion.
Purchase Order 20091047: ScopeLa Marque High School; Pricenot to exceed $1,018,416.62; Terms30 days net upon completion, monthly invoices to be paid less 10% retainage.
Purchase Order 20091168: Scope Etheridge Stadium Electrical Repair; Pricenot to exceed $8,678.67; Terms30 days net upon completion.
Purchase Order 20091167-0702: ScopeLa Marque High School Electrical Repair; Pricenot to exceed $25,247.04; Terms30 days net upon completion.
La Marque ISD issued these purchase orders during the term of the Agreement for Professional Services. The fees set forth in the purchase orders are "slated in terms of a not-to-exceed amount" as required by the Agreement for Professional services, and several of the purchase orders documented the 10% retainage terms contained in the Agreement for Professional Services. And, when La Marque ISD became dissatisfied with HRE's performance on the purchase-order work, it advised the Board of Education that, upon review of the terms of the contract, it wished to "terminate the contract" and therefore needed to give thirty-days' notice. None of the purchase orders speak to 30-day notice of termination; the Agreement for Professional Services does.
The jurisdictional evidence reflects "a written contract stating the essential terms of the agreement for providing goods or services to the local governmental entity" that was "properly executed on behalf of the local governmental entity." TEX. LOC. GOV'T CODE ANN. § 271.151(2). The Agreement for Professional Services contemplated that La Marque might seek an enlarged scope of services through a separate agreement with La Marque ISD, a Work Order, or a written amendment to the agreement. La Marque ISD acknowledges that it did, in fact, seek an enlarged scope of work and memorialized the agreement with HSE through verbatim acceptance of the HSE proposal through La Marque ISD's purchase orders.
*766 Whether La Marque ISD may be held to breach of that agreement for failure to comply with the specific terms applicable to "amendments" or "Work Orders" is not within the scope of the governmental immunity question presented here. See, e.g., City of Houston v. Clear Channel Outdoor, Inc., 233 S.W.3d 441, 446 (Tex.App.-Houston [14th Dist.] 2007, no pet.) (holding that whether city's offer to purchase plaintiff's billboard was binding under city charter implicated the merits of the case and, thus, did not defeat Section 271.152 waiver of immunity). The evidence brings the parties' agreement within the waiver of immunity contemplated by Section 271.152.
CONCLUSION
We conclude that, at a minimum, the undisputed evidence before the trial court raises a fact question concerning whether the Agreement for Professional Services, including the purchase orders for construction services, constitutes a written contract stating the essential terms for providing services on behalf of La Marque ISD; as such, the evidence at least raises a fact question about whether, under Section 271.152 the contract is a "contract subject to this subchapter." The trial court's order denying La Marque ISD's plea to the jurisdiction is affirmed.
NOTES
[1] Interlocal agreements under Section 44.031 of the Texas Education Code provide that, under certain circumstances, a contract may be "deemed" conducted under a competitive bid process even when it was not actually bid. See Tex. Att'y Gen. Op. No. JC-0037 (1999).
[2] La Marque ISD does not and could not challenge the sufficiency of HSE's pleading of waiver of immunity in this case: "In the fall of 2008, as a result of damage caused by Hurricane Ike to the Gulf Coast of Texas and pursuant to the contract, Defendant La Marque ISD awarded and issued a series of work orders to Plaintiff HRE for services performed on property belonging to La Marque ISD."
[3] Under this argument, La Marque ISD suggests variously that the Agreement for Professional Services was "complete" or terminated; however, there is no evidence to suggest either. As outlined above, the contract term extends to April 7, 2009, and requires 30-days notice of termination. Neither event occurred prior to the February 2009 purchase orders.
[4] See Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 840 (Tex.2000). (holding that it is well established in Texas law that instruments pertaining to the same transaction may be read together to ascertain the parties' intent without contemporaneous execution or mention of one another); see also City of Houston v. Williams, 353 S.W.3d 128, 136-39 (Tex.2011) (applying principle in context of Chapter 271 immunity issue).
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30 B.R. 721 (1983)
In re STOP-N-GO OF ELMIRA, INC., Debtor.
John B. LAWLESS, as Trustee of Stop-N-Go of Elmira, Inc., Plaintiff,
v.
EASTERN MILK PRODUCERS COOPERATIVE ASSOCIATION, INC., Thomas Butler, William Woodhull and Lawrence Creighton, Defendants.
Bankruptcy Nos. 79-237, 80-120.
United States Bankruptcy Court, W.D. New York.
June 15, 1983.
*722 Peter T. Rodgers, David MacKnight, Rochester, N.Y., for plaintiff.
Peter N. Wells, Barbara Walzer, Syracuse, N.Y., for Eastern Milk Producers Coop. Ass'n, Inc.
James L. Burke, Elmira, N.Y., for Thomas Butler, William Woodhull and Lawrence Creighton.
MEMORANDUM AND DECISION
EDWARD D. HAYES, Bankruptcy Judge.
This is an action under §§ 60, 67 and 70 of the Bankruptcy Act to recover a preference and or fraudulent transfer from Stop-N-Go of Elmira, Inc., hereinafter referred to as Stop-N-Go, to Eastern Milk Producers Cooperative Association, Inc., hereinafter referred to as Eastern. The individual defendants, Thomas Butler, William Woodhull and Lawrence Creighton, were officers of Stop-N-Go. There has been extensive pretrial hearings, depositions and motions in regard to this case. But the case has been tried, briefs have been submitted and it is now ready for decision.
It appears that Thomas Butler, William Woodhull and Lawrence Creighton were officers and the sole owners of a corporation known as Maple Farms, Inc., hereinafter referred to as Maple. They operated this corporation for some 25 years prior to December of 1978. Some nine years before December of 1978, Butler, Woodhull and Creighton formed a new corporation known as Stop-N-Go of Elmira. This corporation was owned by the three principals and Maple.
Maple was a dairy. It processed milk and sold milk to various retail outlets. Stop-N-Go in the year 1978 had some 26 convenient stores located across the Southern Tier of the State of New York. Maple purchased milk from defendant, Eastern, beginning in 1976. In the Fall of 1977, Maple was delinquent some $300,000 in their payments to Eastern. In February of 1978, they gave a note to Eastern in the amount of $300,000 as evidence of the debt which they owed Eastern. Eastern throughout 1978 continued to supply Maple with milk at the rate of about $100,000 worth of milk per month. *723 One payment of $50,000 plus some interest was made upon the $300,000 note. However, by September 30, 1978, Eastern was owed by Maple $549,648.26 on their current account and they owed $254,650.20 on the note.
Mr. Dorn, who was the financial manager of Eastern, became concerned in late 1977 and early 1978 over Maple's delinquency to Eastern. He was instrumental in securing the note from Maple and its president, Mr. Butler, in February of 1978. He was the only unsecured creditor of Maple who received notice of the negotiations which Mr. Butler began with the franchisor of Stop-N-Go to sell the 26 outlets which Stop-N-Go had to the franchisor, Sun Oil Company. Subsequently, in about August of 1978, the negotiations between Maple and the Sun Oil Company for the purchase of the corporations known as Stop-N-Go and Maple by Sun Oil Company failed. Mr. Dorn was apprised of the failure of these negotiations but he was also apprised of the fact that Stop-N-Go was negotiating with another franchisor, Southland Company, which operated the Seven-Eleven Stores.
During Butler's and Dorn's discussions in August of 1978, Dorn suggested to Butler that Stop-N-Go secure the debt of Maple to Eastern. He did this after he reviewed the June 30, 1978 statements of both Maple and Stop-N-Go. Dorn, who was a CPA, and had spent some time with a national firm acting as an account executive and CPA, had looked over the financial statements of both Maple and Stop-N-Go. The statements provided by Stop-N-Go and Maple were unaudited ones. They did disclose that on June 30, 1978, Stop-N-Go had approximately $34,000 in net worth. Subsequently, it was discovered that in fact this net worth was over stated.
On September 29, 1978, Stop-N-Go who had other unsecured creditors and at that time owed no money to Eastern guaranteed the debt of Maple to Eastern by giving Eastern security in just about everything Stop-N-Go owned. The Security Agreement was properly filed. On the day following that guarantee, the total debt owed by Maple to Eastern was $804,298.46. This guarantee by Stop-N-Go of Maple's debt, if it were called upon to pay it, would render Stop-N-Go insolvent.
In the meantime, the Department of Agriculture of the State of New York, as a result of reports filed by Eastern with the Department of Agriculture, had commenced an action against Maple to revoke its license to process milk. In November of 1978, to close out this action, Stop-N-Go consented that the proceeds of its then contract with the Southland Corporation be assigned to Eastern in payment of Stop-N-Go's guarantee of Maple's debt and in payment of Maple's debt to Eastern. Stop-N-Go during this entire period of time was buying milk from Maple under its d/b/a All Star Dairy. They were buying approximately 70% of the milk produced by Maple.
After one adjourned closing, the Southland deal to purchase Maple and Stop-N-Go was closed on December 29, 1978. At that time, Southland and its attorneys insisted that all secured debts be paid. Southland Corporation and Taylor Car Leasing Company, a wholly owned subsidiary, had transferred to Marine Midland Bank a total amount of $2,272,492.96 to be available for the purchase of Maple and Stop-N-Go. During the day of December 29, 1978, an inventory was taken to determine the amount to be paid by Southland and its subsidiary, Taylor. The physical inventory figure taken on that day was substantially below the June 30th physical inventory amount which had been used as a guide for the Stop-N-Go figures. The deal was consummated and from the buyer's escrow fund the following transfers were made. An escrow account was established at Marine Midland Bank of $42,000. Two deposits were made to Stop-N-Go totaling $1,649,226.81. A deposit was made to Maple's account of $257,097.55 and a wire transfer was made to the Dallas headquarters of Southland Corporation and Taylor Car Leasing of the balance of $324,168.60. At the same time, checks were certified and issued to secured creditors. Stop-N-Go's secured creditors got $945,266.05. Maple's secured *724 creditors, including Eastern, got $1,042,665.08. There was a transfer by Stop-N-Go to Maple of $723,915.07 in checks by Stop-N-Go to All Star Dairy, the d/b/a of Maple and a check from Stop-N-Go for $61,652.46 to cover the shortfall of Maple's payment to Eastern. Eastern received in all a total of $811,995.99 in certified checks from Maple and received in return a release of Maple's debt to Eastern. After the payments by Stop-N-Go, over a $1,000,000 worth of unsecured creditors of Stop-N-Go, had about $6,000 to split up amongst themselves. These creditors filed an involuntary petition for Stop-N-Go on January 30, 1979. Subsequently, Stop-N-Go was adjudicated and John B. Lawless was elected trustee by the creditors.
Based upon this set of facts, the trustee is seeking to recover $785,567.33 from Eastern on the theory that there was a preference and or a fraudulent transfer. Eastern, on the other hand, is claiming that they had a lien upon the assets of Maple pursuant to a 1977 security agreement. The Southland contract required that Eastern be paid in full and its lien on Maple satisfied prior to closing. They received no money from Stop-N-Go and Maple paid off the secured claim of Eastern so that the Southland deal could go through. They claim there was no preference and no fraudulent transfer. Eastern also challenges the jurisdiction of this Court to hear this case under Northern Pipeline Construction Co. v. Marathon Pipeline Co., ___ U.S. ___, 102 S.Ct. 2858, 73 L.Ed.2d 598 (1982). The three individual defendants put in no testimony and really did not participate in the trial.
In pertinent part, § 67(d)(2) of the Bankruptcy Act (11 U.S.C. § 107) reads as follows:
"Every transfer made and every obligation incurred by a debtor within one year prior to the filing of a petition initiating a proceeding under this Act by or against him is fraudulent (a) as to creditors existing at the time of such transfer or obligation, if made or incurred without fair consideration by a debtor who is or will be thereby rendered insolvent, without regard to his actual intent; ..."
(5) For the purposes of this subdivision d, a transfer shall be deemed to have been made at the time when it became so far perfected that no bona fide purchaser from the debtor could thereafter have acquired any rights in the property so transferred superior to the rights of the transferee therein, ...
(6) A transfer made or an obligation incurred by a debtor adjudged a bankrupt under this Act, which is fraudulent under this subdivision d against creditors of such debtor having claims provable under this Act, shall be null and void against the trustee, except as to a bona fide purchaser, lienor, or obligee for a present fair equivalent value: ...
Section 60 of the Bankruptcy Act (11 U.S.C. § 96) provided in part as follows:
a. (1) A preference is a transfer, as defined in this Act, of any of the property of a debtor to or for the benefit of a creditor for or on account of an antecedent debt, made or suffered by such debtor while insolvent and within four months before the filing by or against him of the petition initiating a proceeding under this Act, the effect of which transfer will be to enable such creditor to obtain a greater percentage of his debt than some other creditor of the same class.
(2) ... a transfer of property other than real property shall be deemed to have been made or suffered at the time when it became so far perfected that no subsequent lien upon such property obtainable by legal or equitable proceedings on a simple contract could become superior to the rights of the transferee....
(b) Any such preference may be avoided by the trustee if the creditor receiving it or to be benefited thereby or his agent acting with reference thereto has, at the time when the transfer is made, reasonable cause to believe that the debtor is insolvent....
With regard to the jurisdictional question raised by Eastern, it should be noted, that this case was commenced under *725 the Bankruptcy Act and Eastern in accordance with the provisions of that Act consented to jurisdiction of this Court by failing to challenge jurisdiction until the commencement of the trial. Section 403 of the Bankruptcy Reform Act of 1978 reads in part as follows:
(a) A case commenced under the Bankruptcy Act, and all matters and proceedings in or relating to any such case, shall be conducted and determined under such Act as if this Act had not been enacted, and the substantive rights of parties in connection with any such bankruptcy case, matter, or proceeding shall continue to be governed by the law applicable to such case, matter or proceeding as if the Act had not been enacted.
In this case, the first transfer by Stop-N-Go to Eastern occurred on September 29, 1978. It was at this point in time that Stop-N-Go guaranteed the Maple debt to Eastern. At that time, Stop-N-Go owed nothing to Eastern and according to the testimony of Eastern's Mr. Dorn, received nothing from Eastern for the guarantee of the debt of Maple. The U.C.C.'s covering the security were filed October 10, 1978 in Chemung County and October 24, 1978 in the Secretary of State's Office in Albany. While it might be argued that this transaction was not a preference because Eastern was not a "creditor" and, at least, the transaction was initiated outside of the four month period (one day before), there can be no argument that this transaction clearly falls within the purview of § 67 of the Bankruptcy Act because here was a obligation incurred within a year of the filing in bankruptcy, while unsecured creditors existed, without fair consideration and the transaction rendered the debtor insolvent. Therefore, in the language of the statute this transaction "shall be null and void against the trustee." (Supra § 67).
The next transfer made by Stop-N-Go to Eastern occurred in November of 1978 when to settle the law suit by the New York State Department of Agriculture against Maple with regard to its license, Stop-N-Go, gave Eastern an assignment of the proceeds of its sale to Southland. Stop-N-Go received nothing for this transaction and again you have a transaction voidable as to the trustee under § 67 (supra) because the obligation was incurred within a year, other unsecured creditors existed, and there was no consideration given to the debtor, who was insolvent.
In addition, this transfer violated § 60 (supra) because here there was a transfer to an unsecured creditor, within four months, while the debtor was insolvent and the transfer enabled the then unsecured creditor, Eastern, to obtain a greater percentage of the debt than some other creditor of the same class. Clearly, the assignment can be avoided as a preference.
The third and final transfer occurred according to the trustee at the closing on December 29, 1978. This was when the $785,567.33 was transferred by Stop-N-Go to Maple by various checks. Checks totaling $723,915.07 representing the money owed by Stop-N-Go to Maple for milk purchased during 1978 and bearing various dates during that year was paid to Maple under its d/b/a All Star Dairy by Stop-N-Go. The remaining $61,652.46 check paid to Maple was to cover the short fall of Maple's payment to Eastern, which payment was in the amount of $811,995.99. The question is were these payments a preference or fraudulent as between Stop-N-Go and Eastern.
The leading case on indirect payments is National Bank of Newport v. National Herkimer County Bank, 225 U.S. 178, 32 S.Ct. 633, 56 L.Ed. 1042 where the Court said at page 184, 32 S.Ct. at page 635:
To constitute a preference, it is not necessary that the transfer be made directly to the creditor. It may be made to another, for his benefit. If the bankrupt has made a transfer of his property, the effect of which is to enable one of his creditors to obtain a greater percentage of his debt than another creditor of the same class, circuity of arrangement will not avail to save it. A "transfer" includes "the sale and every other and different mode of disposing of or parting with property, or the possession of property, *726 absolutely or conditionally, as a payment, pledge, mortgage, gift, or security." ... It is not the mere form or method of the transaction that the act condemns, but the appropriation by the insolvent debtor of a portion of his property to the payment of a creditor's claim, so that thereby the estate is depleted and the creditor obtains an advantage over other creditors ... and if an insolvent debtor arranges to pay a favored creditor through the disposition of such an account, to the depletion of his estate, it must be regarded as equally a preference, whether he procures the payment to be made on his behalf by the debtor in the account,the same to constitute a payment in whole or part of the latter's debt,or he collects the amount and pays it over to his creditor directly. This implies that, in the former case, the debtor in the account, for the purpose of the preferential payment, is acting as the representative of the insolvent, and is simply complying with the directions of the latter in paying the money to his creditor.... "These transfers of property, amounting to preferences, contemplate the parting with the bankrupt's property for the benefit of the creditor, and the consequent diminution of the bankrupt's estate." ...
The cases which have followed the law expressed in National Bank of Newport v. National Herkimer County Bank, (supra) have varied results depending upon the facts.
Examples abound, for instance the Courts look to substance rather than the form of the transactions. Steel Structures v. Star Manf. Co., 466 F.2d 207, 217-218 (6th Cir.1972). Where a fraudulent or preferential scheme is involved, the Courts must be vigilant. See Jackson v. Star Sprinkler Corp. of Florida, 575 F.2d 1223, 1226 (8th Cir.1978); In re Roscar Steel Scrap and Metals Corp., 12 B.R. 629, 633 (Bkrtcy.S.D. N.Y.1981). Courts must assess the facts in light of equitable principles, Bank of Marin v. England, 385 U.S. 99, 103, 87 S.Ct. 274, 277, 17 L.Ed.2d 197 (1966) and should undo a scheme whose basic nature is preferential and fraudulent, despite a technical facade of legality. Pepper v. Litton, 308 U.S. 295, 312, 60 S.Ct. 238, 247, 84 L.Ed. 281 (1939). A sophisticated creditor deeply involved in the financial woes of a debtor's parent or subsidiary and well aware of the close relationship between the two corporations is "on inquiry" with respect to matters affecting the debtor's financial condition and the creditor is chargeable with knowledge that a transaction will render the debtor insolvent. In re Ollag Constr. Equip. Corp., 578 F.2d 904 (2d Cir.1978); Miller v. Wells Fargo Bank Int'l Corp., 406 F.Supp. 452, 464-65 (S.D.N.Y.1975), affd. 540 F.2d 548 (2d Cir. 1976). An indirect transfer is preferential if the intermediary acts as representative of the insolvent and complying with the insolvent's direction, pays the money to or for the benefit of the creditor. See Dean v. Davis, 242 U.S. 438, 441, 443, 37 S.Ct. 130, 131, 61 L.Ed. 419 (1917), Miller v. Wells Fargo Bank Int'l Corp., 406 F.Supp. 452, 463, n. 2 (S.D.N.Y.1975), affd. 540 F.2d 548 (2d Cir.1976).
The main issue in indirect preferential transfer cases is whether the debtor's estate is depleted and whether the transferee of the debtor acts independently or as the debtor's agent. See Kapela v. Newman, 649 F.2d 887 (1st Cir.1981); Grubb v. General Contract Purchase Corp., 94 F.2d 70 (2d Cir.1938); In re Roscar Steel Scrap and Metals Corp., 12 B.R. 629, 633 (S.D.N.Y. 1981); In re Darke, 18 B.R. 510, 513 (Bkrtcy. E.D.Mich.S.D.1982); In re Moskowitz, 13 B.R. 357, 359 (Bkrtcy.S.D.N.Y. 1981), appeal denied 14 B.R. 307 (S.D.N.Y. 1981), trial 14 B.R. 677 (S.D.N.Y.1981).
In this case, if we look to substance rather than form, there are two companies operated by three men, Butler, Woodhull and Creighton, and they are treated by the three men almost as one company. The dairy, Maple, is in debt to Eastern for roughly $800,000. Eastern through its financial manager, Dorn, is worried about Maple's debt and when he, and through him Eastern, find out that Maple and Stop-N-Go are going to be sold persuades Butler, the *727 president of both companies, to have Stop-N-Go guarantee the debt of its parent, Maple. At the closing, Maple does not have sufficient assets to pay the debt of Maple to Eastern. A transfer is made from Stop-N-Go to Maple to enable the payment to be made. Stop-N-Go's estate is depleted and all its other unsecured creditors are left to scrounge for pennies while Eastern, who had improved its position at their expense, walks away with a hundred cents on the dollar. The payment of the money on December 29, 1978 was an indirect preference. Therefore, Stop-N-Go is entitled to receive back $785,567.33 from Eastern as a preference and a fraudulent transfer. Since there was no proof offered against the individual defendants and no transfer made to them, the case is dismissed as to them and it is so ordered.
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30 B.R. 326 (1983)
In re Jack Vernon PENROD, Debtor.
E.S.M. GROUP, INC., Plaintiff,
v.
Jack Vernon PENROD, Defendant.
Bankruptcy No. 82-01451-BKC-SMW, Adv. No. 82-1135-BKC-SMW-A.
United States Bankruptcy Court, S.D. Florida.
May 27, 1983.
*327 Gary M. Farmer, Fort Lauderdale, Fla., for defendant.
M. Lewis Hall, III, Miami, Fla., for plaintiff.
A.W. Beck, Trustee.
Patrick A. Barry, Fort Lauderdale, Fla., for trustee.
ORDER GRANTING MOTION TO DISMISS AMENDED COMPLAINT
SIDNEY M. WEAVER, Bankruptcy Judge.
This Cause having come before the Court upon a Motion to Dismiss Amended Complaint, and the Court having heard the arguments of counsel and being fully advised in the premises finds that pursuant to Bankruptcy Code § 522(b)(2)(B) a debtor using state exemptions may exempt:
any interest in property in which the debtor had, immediately before the commencement of the case, an interest as a tenant by the entirety or joint tenant to the extent that such interest as a tenant by the entirety or joint tenant is exempt from process under applicable nonbankruptcy law.
Florida Law provides that an interest held by tenants by the entireties is exempt from process. In Re Lunger, 14 B.R. 6 (M.D.Fla.1981). A judgment against one spouse cannot attach to property held by tenants by the entireties. Ohio Butterine Co. v. Hargrave, 79 Fla. 458, 84 So. 376 (Fla.1920), Hart v. Atwood, 119 So. 116 (Fla. 1928), State Department of Commerce, Division of Employment Security v. Lowery, 333 So.2d 495 (1 D.C.A.1976). See also Matter of Koehler, 6 B.R. 203 at 205 (M.D.Fla. 1980) stating that property held by tenants by the entirety is "immune from a claim of the single creditor of one of the tenants . . . ".
Applying the above cited law the Court concludes that the judgment held by E.S.M. Group, Inc. against the debtor, Jack Vernon Penrod, individually, cannot attach to property held by the debtor and his spouse as tenants by the entireties and accordingly it is hereby
ORDERED and ADJUDGED that the Motion to Dismiss Amended Complaint is granted.
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353 S.W.3d 365 (2011)
Robert E. MADISON, II, Movant-Appellant,
v.
STATE of Missouri, Respondent-Respondent.
No. SD 30965.
Missouri Court of Appeals, Southern District, Division One.
October 25, 2011.
Mark A. Grothoff, Columbia, MO, for Appellant.
Chris Koster, Attorney General, and, Karen L. Kramer, Assistant Attorney General, Jefferson City, MO, for Respondent.
DON E. BURRELL, Presiding Judge.
Robert E. Madison, II ("Movant") appeals the denial of his Rule 29.15[1] motion to set aside his convictions for assault in the first degree and armed criminal action. See §§ 565.050 and 571.015.[2] We affirmed Movant's convictions and sentences on direct appeal in State v. Madison, 302 S.W.3d 763 (Mo.App. S.D.2010). In a single point relied on, Movant asserts the motion court clearly erred in denying relief because trial counsel failed to establish through cross-examination of a witness that Movant and the victim were "hanging out" together on the day before the shooting occurred and that they often took trips together. Movant contends that such testimony would have contradicted *366 Victim's trial testimony and would have thereby created a reasonable probability that the verdict would have been different. Because Movant failed to prove any such prejudice, we affirm.
Background
We set forth here only the facts relevant to the resolution of Movant's claim. The charges against Movant arose from an exchange of gunfire between Movant and Marcus Robinson ("Victim") in August 2006 at Victim's home. During the gunfight, Victim was wounded and his wife was killed. Id. at 765. The bullets that killed Victim's wife were probably fired from Victim's gun. The jury also heard evidence that Victim received $106,500 in life insurance proceeds as a result of his wife's death. After deliberating, the jury convicted Movant of first-degree assault and armed criminal action for shooting Victim but acquitted him on all charges related to the death of Victim's wife. Id. at 765, 767.
At trial, Victim testified that he had known Movant since 1985 or 1986 and they had "hung out some." Victim stated that "at the time we was `gettin' along, we was cool, rode around, talked every once in a while, and then it was like I stopped `talkin' to him. We was `gettin' along good though. I ain't never seen no problems."
A couple of days before the gunfight, Movant came to Victim's home and told him that "God sent me over here to kill you all, but you know what, you a good man, I ain't `gonna' do all that[.]" Victim testified that the threat scared him, so he reported it to a police officer and decided to stay away from Movant. Victim specifically testified that he did not see Movant during the time period between Movant's threat and the gunfight.
Nathan Winfield testified for the State that he hung out with Movant two days before the shooting and gave Movant a ride to Victim's home. The following exchange then occurred during Winfield's cross-examination:
Q: You knew that [Movant] and [Victim] were friends?
A: Yes.
Q: You knew that [Victim] and [Movant] rode around together?
A: Yes.
Q: [Victim] and [Movant] would even come to your house together?
A: Yes.
Q: [Victim] and [Movant] might even take a trip together?
A: Yes.
[PROSECUTOR]: Objection, [u]nless he has personal information of that, it calls for speculation.
THE COURT: Sustained.
The prosecutor did not move to strike Winfield's answer or ask for any curative instruction.
After we issued our mandate affirming his convictions and sentences, Movant timely filed a pro se motion seeking post-conviction relief. Motion counsel was appointed and filed an amended motion that claimed trial counsel was ineffective for "unreasonably fail[ing] to establish through his cross-examination of [Winfield] at trial that [Winfield] had seen Movant and [Victim] hanging out together on the day before the shooting and that [Winfield] knew that Movant and [Victim] often took trips together." According to the amended motion, this evidence would have impeached Victim's testimony and thereby caused the jury to have a reasonable doubt about Movant's guilt.
The motion court held an evidentiary hearing on October 8, 2010. At the hearing, trial counsel testified that "[t]he theory of [the] defense was that [Victim]that *367 [Movant] did not enter the trailer, [Victim] did this all on his own and collected sizable insurance money, and that the crime scene was basically staged." Trial counsel admitted that he received pre-trial discovery of police reports containing Winfield's statements, including the fact that Winfield had reported seeing Movant and Victim hanging out together the day before the shooting. Trial counsel did not recall the strategy he employed in cross-examining Winfield, but he was able to elicit from him that Victim and Movant had been friends. Trial counsel testified he had no reason for failing to go into more detail about the trips Winfield said Victim and Movant had taken together. Trial counsel did opine that such evidence would have been relatively minor in light of all the other information he had to attack Victim's credibility.
Winfield also testified at the evidentiary hearing. He reiterated his trial testimony that he had taken Movant to Victim's home two days before the shooting. He further testified that he observed Movant and Victim hanging out together the day before the shooting. Finally, Winfield stated that he knew that Movant and Victim had taken trips together to New York and Indiana. But Winfield admitted on cross-examination that he did not accompany Movant and Victim on these trips, had no personal "knowledge" about them. He had simply heard about them from Movant or Victim.
The motion court concluded that "[t]he testimony at the evidentiary hearing did not prove that further cross-examination of Winfield would have provided a viable defense for [M]ovant, or would have otherwise changed the outcome of the trial."
Standard of Review
We review the denial of a motion for post-conviction relief for clear error. Rule 29.15(k). We presume that the motion court's findings of fact and conclusions of law are correct and will find that clear error has occurred only if our review of the entire record leaves us with the "definite and firm impression that a mistake has been made." Davidson v. State, 308 S.W.3d 311, 316 (Mo.App. E.D.2010).
To successfully prove ineffective assistance of counsel, a movant must demonstrate that counsel's performance was deficient and that the defense was thereby prejudiced. State v. Kinder, 942 S.W.2d 313, 335 (Mo. banc 1996). Such prejudice occurs when there is a reasonable probability that, but for the errors or omissions of counsel, the trial result would have been different. Id. If the Movant fails to prove either deficient performance or prejudice, we need not consider the other. Id.
Analysis
Generally speaking, "trial counsel's failure to impeach a witness does not alone constitute ineffective assistance of counsel." Davidson, 308 S.W.3d at 317. "To establish ineffective assistance for counsel's failure to impeach a witness, the movant must show that the impeachment of the witness would have provided the defendant a viable defense or otherwise changed the outcome of the trial." Id. Impeachment testimony that does not negate an element of the offense does not provide a viable defense. Id.
Here, Movant claims trial counsel was deficient for failing to adduce two specific pieces of evidence during Winfield's cross-examination: 1) that Winfield saw Victim and Movant together the day before the shooting; and 2) that Victim and Movant took trips together. Neither of these pieces of information negates an element of the crimes for which Movant was tried and convicted. See Id. at 318 (counsel's failure to impeach a witness about the last *368 time that the witness spoke with the defendant after his arrest did not provide a viable defense to murder, assault, and armed criminal action); State v. Mills, 872 S.W.2d 875, 881 (Mo.App. S.D.1994) (evidence tending to show that a witness, contrary to his alleged trial testimony, was not afraid of the defendant did not provide a viable defense to forcible rape and sodomy); but cf. Taylor v. State, 198 S.W.3d 636, 642-43 (Mo.App. S.D.2006) (holding that the movant was entitled to an evidentiary hearing when his claim was that counsel failed to investigate an alibi witness who could have accounted for the movant's whereabouts at the precise time of the crime).
At the evidentiary hearing, Winfield testified that he saw Movant and Victim together on the day before the shooting. This testimony would not have provided Movant with a defense as it neither established Movant's whereabouts at the time of the shootout nor negated any of the elements of the crimes with which he had been charged. See §§ 565.050 and 571.015; Mills, 872 S.W.2d at 881; and Davidson, 308 S.W.3d at 318. Winfield's motion hearing testimony that he heard from Movant and Victim that they took trips together revealed that his "knowledge" of these trips was second-hand. More importantly, the jury knew from other testimony that Movant and Victim were friends.
As in Mills and Davidson, the testimony Movant claims should have been adduced, if believed by the jury, would merely have shown that Victim had lied about the last time he saw Movant before the shooting and that he was likely not as worried about Movant's threat as he had claimed. Neither of these facts would have negated any of the elements of the charged crimes.
We are not left with a definite and firm impression that the motion court made a mistake in concluding that "[t]he testimony at the evidentiary hearing did not prove that further cross-examination of Winfield would have provided a viable defense for [M]ovant, or would have otherwise changed the outcome of the trial." As a result, there is no need to determine whether trial counsel's failure to elicit the testimony was deficient.
Movant's point is denied, and the motion court's order denying post-conviction relief is affirmed.
RAHMEYER and LYNCH, JJ., concur.
NOTES
[1] Unless otherwise indicated, all rule references are to Missouri Court Rules (2011).
[2] Unless otherwise indicated, all statutory references are to RSMo 2000.
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52 So. 3d 215 (2010)
Jamie CASS
v.
Kevin Charlie CASS.
No. 10-327.
Court of Appeal of Louisiana, Third Circuit.
November 17, 2010.
Rehearing Denied December 22, 2010.
*217 J. Ogden Middleton, II, Alexandria, LA, for Defendant/Appellant, Kevin Charlie Cass.
David C. Hesser, Alexandria, LA, for Plaintiff/Appellee, Jamie Cass.
Court composed of JOHN D. SAUNDERS, OSWALD A. DECUIR, MARC T. AMY, ELIZABETH A. PICKETT, and BILLY HOWARD EZELL, Judges.
AMY, Judge.
The defendant appeals a judgment of the trial court disallowing him to relocate to Texas with his minor son and naming the plaintiff as domiciliary parent. For the following reasons, we reverse and remand.
*218 Factual and Procedural Background
Ms. Jamie Cass, the plaintiff and appellee, and Mr. Kevin Cass, the defendant and appellant, obtained a judgment of divorce on July 31, 2009. Pursuant to a consent judgment, the parties shared joint custody of one minor child born of the marriage. The consent judgment, entered on May 28, 2009, detailed a shared physical custody schedule and designated Mr. Cass as the domiciliary parent.
The record reveals that Mr. Cass, a Sergeant First Class in the Army, received orders in early 2009 informing him that he was being transferred from Fort Polk in Louisiana to Fort Hood in Texas. Mr. Cass asserts that at some time in either April or May 2009, he informed Ms. Cass, a Lieutenant in the Army, of the transfer order. On May 29, 2009, Ms. Cass filed an "Objection to Relocation, Rule For Relocation Evaluation, and Rule For Custody" seeking to prevent Mr. Cass from moving out of Louisiana with the child until a hearing could be held in addition to requesting that she be named the domiciliary parent. Mr. Cass answered Ms. Cass's objection and filed a rule for a temporary order to relocate.[1] On July 29, 2009, the trial court denied Mr. Cass's request to temporarily relocate the child to Fort Hood, and a hearing was set to determine the permanent relocation issue.
Following a three-day hearing, the trial court issued oral reasons for judgment denying Mr. Cass's request to relocate, changing domiciliary custody to Ms. Cass, and denying Mr. Cass's request to remain in Louisiana as a domiciliary custodian. A "Judgment on the Rule" was subsequently signed; however, the written judgment did not contain reference to the trial court's denial of Mr. Cass's request to remain in Louisiana as a domiciliary custodian. Mr. Cass filed a Motion for Entry of Supplemental Judgment, and on September 10, 2009, the trial court issued a supplemental judgment reflecting that denial.
Mr. Cass appeals, asserting the trial court erred in: (1) misapplying the relocation statute and denying his request to relocate; (2) failing to follow the required analysis in relocation cases; (3) finding that his move to Texas constituted a change in circumstance warranting a modification of the initial consent judgment; (4) naming the defendant as the domiciliary parent and refusing to recognize him as a Louisiana domiciliary; (5) failing to have the child's in camera interview transcribed; (6) ignoring the mental health evaluator's findings; and (7) refusing to let the mental health evaluator see the minor child to further evaluate emotional issues.
Discussion
Standard of Review
Mr. Cass first asserts that this court should conduct a de novo review of the present matter, contending that the trial court: failed to consider the relocation factors enumerated in La.R.S. 9:355.12; ignored the applicable burden of proof under La.R.S. 9:355.13, and; in making its decision, the trial court relied upon what the child related to it in an in camera conversation that was not transcribed. He argues that these alleged failures constitute legal error; therefore, this court is not bound by the manifest error standard.
A parent seeking relocation must prove two things: (1) that the proposed relocation is in good faith and (2) that the proposed relocation is in the best interest of the child. La.R.S. 9:355.13. Louisiana Revised Statutes 9:355.12 enumerates factors *219 the trial court shall consider in deciding a contested relocation, as follows:
(1) The nature, quality, extent of involvement, and duration of the child's relationship with the parent proposing to relocate and with the nonrelocating parent, siblings, and other significant persons in the child's life.
(2) The age, developmental stage, needs of the child, and the likely impact the relocation will have on the child's physical, educational, and emotional development, taking into consideration any special needs of the child.
(3) The feasibility of preserving a good relationship between the nonrelocating parent and the child through suitable visitation arrangements, considering the logistics and financial circumstances of the parties.
(4) The child's preference, taking into consideration the age and maturity of the child.
(5) Whether there is an established pattern of conduct of the parent seeking the relocation, either to promote or thwart the relationship of the child and the nonrelocating party.
(6) Whether the relocation of the child will enhance the general quality of life for both the custodial parent seeking the relocation and the child, including but not limited to financial or emotional benefit or educational opportunity.
(7) The reasons of each parent for seeking or opposing the relocation.
(8) The current employment and economic circumstances of each parent and whether or not the proposed relocation is necessary to improve the circumstances of the parent seeking relocation of the child.
(9) The extent to which the objecting parent has fulfilled his or her financial obligations to the parent seeking relocation, including child support, spousal support, and community property obligations.
(10) The feasibility of a relocation by the objecting parent.
(11) Any history of substance abuse or violence by either parent, including a consideration of the severity of such conduct and the failure or success of any attempts at rehabilitation.
(12) Any other factors affecting the best interest of the child.
This statute mandates that the trial court consider the enumerated factors; however, it does not require the court to give preferential consideration to any certain factor. Curole v. Curole, 02-1891 (La. 10/15/02), 828 So. 2d 1094. A trial court's determination in a relocation dispute is entitled to great weight and will not be overturned absent a clear showing of abuse of discretion. Id. Further, a reviewing court may not set aside a trial court's factual findings in the absence of manifest error or unless it is clearly wrong. Stobart v. State, Through DOTD, 617 So. 2d 880 (La.1993); Rosell v. ESCO, 549 So. 2d 840 (La.1989). A two-tiered test must be applied in order to reverse the trial court's findings: (1) the appellate court must find from the record that a reasonable factual basis does not exist for the trial court's findings, and (2) the appellate court must further determine that the record establishes that the finding is clearly wrong (manifestly erroneous). Richardson v. Richardson, 09-609 (La.App. 3 Cir. 11/18/09), 25 So. 3d 203, citing Mart v. Hill, 505 So. 2d 1120 (La.1987). On review, if the trial court's findings are reasonable based upon the entire record, the reviewing court may not reverse even if it is convinced that had it been sitting as the trier of fact it would have weighed the evidence differently. Id.
*220 In its oral reasons for judgment, the trial court stated, in pertinent part:
In my decision in this case, is based not only on the evidence that has been presented in this proceeding, but also the interest that [the child] has conveyed to me. Sergeant Cass, you bear the burden of proving that this relocation would be in [the child's] best interest. In my opinion, you are placed in a very difficult situation, because of your career. Whether you orchestrated a move, or whether you were ordered to move, and had little or no say so in where you were moving to, as you were presented, or as you testified in this Court, on the 31st of July, on Monday, the 17th, and, an on the 17th, you have very sketchy information about your work schedule, your duties, who would care for [the child] while you are at work. There's very limited information on the school, other than what some website, how some website ranked it, which I place no significant credence in. I am left with a lot of questions about [the child's] environment in Fort Hood.
. . . .
[W]e have Ms. Cass, who has lived in the same home for a period of approximately two-years. Her work schedule is very defined, and it is scheduled in such a manner to where there is no reliance on day care.
. . . .
Sergeant Cass, I find that you have not met your burden of proving that the relocation would be in [the child's] best interest.
While a trial court is not required to specifically list each of the enumerated factors, the record must support that it considered the factors in light of the particular evidence presented. Leger v. Leger, 03-419 (La.App. 3 Cir. 7/2/03), 854 So. 2d 955. Here, in its oral reasons for judgment, the trial court found Mr. Cass failed to carry his burden of proof, characterizing the information about his work schedule, the child's school, and child care services as "sketchy." It stated that there was limited information provided about the child's school absent a website ranking, which it opined was unpersuasive.
However, at the hearing Mr. Cass testified that he enrolled the child in Meadows Elementary School and met with the school's principal. He explained that Meadows Elementary was the elementary school which corresponded with his assigned military housing on the base. Mr. Cass related that when he met with the principal of the school, she provided him with a packet of information about the school and base, including: a "Welcome" letter from Fort Hood explaining its size and function; a calendar of family activities available in Mr. Cass's assigned neighborhood and school; a school calendar including vacation days, testing dates, and parent conference dates; a school supply list and information about school meals, and a memo from the school district superintendent detailing information about the bus routes, classroom and extra-curricular educational opportunities, and contact information for the schools. Mr. Cass also testified that he had scheduled an appointment with the gifted and talented teacher at the school in order to have the child tested for gifted classes. This informational packet and brochure detailing the gifted and talented program were submitted into evidence at the hearing.
The hearing's transcript reveals that the trial court asked Mr. Cass what his normal work schedule would be during the week, and Mr. Cass confirmed that it would be 9:00 a.m. to 4:30 p.m., Monday through Wednesday. He indicated that on Thursdays, he would be released at 1:00 p.m. for "Family Day."
*221 As to child care, Mr. Cass testified that he enrolled his son in child care services offered on the military base. He explained that the child care services were available before and after the child's school hours for any time in which Mr. Cass was required to work during school hours. In response to questioning from the trial court, Mr. Cass explained that he had the child care services available in addition to a private child care provider and his mother if an emergency arose. He testified that he made arrangements with military housing personnel to allow his mother to live at the house, not to exceed thirty days in a one month window, to provide child care if he was called away from the home to field assignments.
Here, in its oral reasons for judgment, the trial court found Mr. Cass failed to carry his burden of proof, characterizing the information about his work schedule, the child's school, and child care services as "sketchy." It stated that there was limited information provided about the child's school absent a website ranking, which it opined was unpersuasive. Although the trial court provides reasons for its ruling, it's original judgment, supplemental judgment, and oral reasons for judgment do not cite or make reference to any of La.R.S. 9:355.12's factors.[2] While a *222 trial court is not required to specifically list each of the enumerated factors, the record must support that it considered the factors in light of the particular evidence presented. Leger v. Leger, 03-419 (La. App. 3 Cir. 7/2/03), 854 So. 2d 955. While there is no doubt that the trial court expressed concern for the parties, especially the minor child, it is difficult for this court, on review, to determine what factors, if any, the trial court considered, and how it evaluated and weighed the evidence under each factor. Further, the record does not support that the findings the trial court did make were reasonably based upon the evidence in the record. Here, Mr. Cass submitted several exhibits explaining Fort Hood's environment and Meadows Elementary. He further testified as to the hours he would be working, how child care was to be provided, and what activities he either planned to enroll the child in or had already enrolled the child in. Also, he testified extensively regarding the opportunities available at Fort Hood. Mr. Cass also submitted documentary evidence to support his testimony. The school rankings referenced in the trial court's oral reasons for judgment were submitted by Ms. Cass.
Based upon a lack of indication that the trial court considered all of the factors in La.R.S. 9:355.12 in addition to our determination of manifest error in some of the underlying factual determinations, we find that a de novo review is required. The finding of error does not mandate a reversal on that ground alone; rather, this court may remedy the deficiency via a de novo review based on the evidence in the record. Leger, 854 So. 2d 955.
De Novo Review
Under a de novo review, we must analyze the evidence presented regarding the relocation and determine whether Mr. Cass met his burden of proving: (1) that the proposed relocation is in good faith; and (2) that the proposed relocation is in the best interest of the child. La.R.S. 9:355.13.
Good Faith
There is no dispute in the record that Mr. Cass was ordered by the United States Army to report to Fort Hood in Texas. However, Ms. Cass contends that Mr. Cass "made plans to relocate out of Louisiana in order to deprive [her] of her relationship with the minor child." She further contends that Mr. Cass "likely requested that he be transferred to Fort Hood given the parties' history of the military *223 allowing them to choose where they wanted to be assigned."
Mr. Cass testified, at length, about the military's process of transferring soldiers. He explained that he was asked to fill out a form in 2006 for his personnel file listing his preferences for relocation if his transfer became necessary. Mr. Cass testified that he listed Fort Hood in Texas and Fort Carson in Colorado, explaining that he did not have the choice to list Fort Polk as an option. Mr. Cass related that on January 7, 2009, he received his first orders to report on May 10, 2009. He stated that his counsel, whom he had retained for the divorce proceedings, recommended he wait until sixty days before the move to inform Ms. Cass. At the hearing, Mr. Cass explained as follows:
And, Your Honor, the first orders were dated January the 7th. I had those amended to say that I agreed to go to Fort Hood. Then they were dated 21st January, to reflect the July 10th relocation to Fort Hood. I then went a step further and utilized my total 90 day extension of these current orders to be relocated. Once that had been initiated, now the Department of the Army is saying, "Sergeant Cass, you agreed prior to the 7th of January. We allowed you to extend the 60 now to 90 days. Now you must relocate to Fort Hood." If, in hindsight, Your Honor, if I knew that Jamie washad ability to relocate that far out where she was able to, I'm sure I would've informed her, from Counsel's recommendation, to do that. But to stay at Fort Polk now is impossible[.]
The record contains the orders requiring him to report to Fort Hood, which corroborate his testimony. While Ms. Cass argues that Mr. Cass's relocation is in bad faith, she offers no evidence other than the assertion, in brief, that Mr. Cass "likely requested that he be transferred to Ft. Hood" to "deprive her" of a relationship with her child. She has offered no contradictory evidence demonstrating that Mr. Cass or the military conspired to have him transferred or any other action on the part of Mr. Cass indicating bad faith. See Richardson, 25 So. 3d 203.[3] In light of the evidence presented, the record supports *224 a finding that Mr. Cass met his burden of proving that the relocation was in good faith.
Relocation Factors
In addition to proving that relocation was made in good faith, Mr. Cass must prove that relocation is in the child's best interest. La.R.S. 9:355.13. "In determining the child's best interest, the court shall consider the benefits which the child will derive either directly or indirectly from an enhancement in the relocating parent's general quality of life." The court must also consider the enumerated factors in La.R.S. 9:355.12. We turn to consideration of the record in light of these factors.
(1) The nature, quality, extent of involvement, and duration of the child's relationship with the parent proposing to relocate and with the nonrelocating parent, siblings, and other significant persons in the child's life
Dr. James Logan, a medical psychologist, was appointed by the parties to make a determination as to whether relocation was in the best interest of the child. When asked specifically about this factor, Dr. Logan replied "I would still give an advantage to [Mr. Cass] on that factor. Clearly not based on the duration of primary care-taker, but just an overall global impression of the current relationship." In his "relocation evaluation" report submitted into evidence, Dr. Logan opined that the child "appear[ed] to be most comfortable and enthusiastic when in the company of his father."
At the hearing, Ellis R. Spikes, principal of G.W. Carver Elementary, testified that Mr. Cass was heavily involved in the child's school, volunteering in the classroom and on the playground in addition to attending and coordinating parent-child activities. The record also reveals that Mr. Cass was involved in Cub Scouts with the child. Dr. Logan also noted that Mr. Cass's involvement and effort to be involved in the child's life was "impressive."
Testimony indicates that the child also has a close relationship with his mother and with his half-sister, Ms. Cass's daughter from a previous relationship. The record reveals that Ms. Cass and the child enjoy activities such as fishing, baseball, movies, canoeing, and roller skating.
The record reveals that both parties have a close relationship with their son and have, at different times in the child's life, been the primary caregiver. However, the weight of evidence, including the testimony of the parties, the child's school principal, and Dr. Logan, under this factor, favors relocation.
(2) The age, developmental stage, needs of the child, and the likely impact the relocation will have on the child's physical, educational, and emotional development, taking into consideration any special needs of the child
This factor also favors relocation. As explained above, Mr. Cass was heavily involved in the child's schooling. Both parties testified that the child was struggling academically during the 2006/2007 school year, and the parties feared that he would fail the first grade. During this period of time, Ms. Cass was the child's primary caregiver. However, in May of 2007, Ms. Cass moved from DeRidder to Pollock, and Mr. Cass became the child's primary caregiver. The record reveals that the child's grades began to steadily improve over the next two years, and in May 2009, the child received a 4.0 grade point average. Ms. Cass contends that the improvement of grades was a result of diagnosing the child with a speech problem that was affecting his test taking ability. Dr. Logan opined "that Sergeant Cass apparently places a higher value in academic involvement, academic achievement. The *225 young man is profiting from it. At one point, years ago, he was at risk of repeating the first grade. Now he's on the cusp of being tested for gifted and talented."
It is clear that both parents are committed to their child's education; however, in reviewing this factor, we must ask what "impact" the relocation would have on the child's educational development. In reviewing the child's academic history in the present matter, there is evidence that Mr. Cass's heavy involvement positively impacts the child's academics. As such, continuance of that involvement would be in the child's best interest, and this factor favors relocation.
(3) The feasibility of preserving a good relationship between the nonrelocating parent and the child through suitable visitation arrangements, considering the logistics and financial circumstances of the parties
This factor does not favor either party insofar as the parties appear to be willing to incur travel expenses to share regular periods of physical custody throughout the year. In its judgment, the trial court provided a physical custody arrangement wherein Mr. Cass would exercise physical custody on the 2nd and 4th weekend of every month. The child would be flown from Alexandria to Dallas/Fort Worth, and the parties would equally share the cost of transportation. Mr. Cass would have physical custody for the entire summer absent two weeks. The record reveals that both parties are financially able to maintain this type of visitation arrangement. In brief, neither party argues that the logistics of the trial court's visitation arrangement make it unfeasible, thus the visitation schedule could be modified, in the event of relocation, to allow Ms. Cass physical custody on alternating weekends and in the summer.
(4) The child's preference, taking into consideration the age and maturity of the child
This factor does not favor either parent in light of an absence of evidence on the subject. Dr. Logan's report opines that the child "expressed no reservations about the location." The trial court met with the child in chambers, but that meeting was not transcribed.[4] In oral reasons for judgment the trial court stated:
[The child] is a, based on my brief conversation with him, he is a personal [sic] young man, who loves both his parents. [He] wants to spend time with both parents. He does not want to decide, and nor should he have to decide, which parent he will spend the majority of his time with. . . . I did not want to ask him that question, because I knew he did not want to answer that question. I did explore interest with [the child].
Since this conversation was not transcribed, there is no evidence in the record to determine whether the child has a preference and, thus, this factor favors neither parent.
(5) Whether there is an established pattern of conduct of the parent seeking the relocation, either to promote or thwart the relationship of the child and the nonrelocating party
Both Mr. and Ms. Cass contend that the other has established a pattern of *226 conduct to thwart the other's relationship with the child. The record reveals that both parties have acted contentiously towards each other at different times throughout this proceeding with neither party clearly acting more egregiously than the other. The record also indicates that both parties have a desire to support the child's relationship with the other parent. Accordingly, this factor favors neither.
(6) Whether the relocation of the child will enhance the general quality of life for both the custodial parent seeking the relocation and the child, including but not limited to financial or emotional benefit or educational opportunity; and (8) The current employment and economic circumstances of each parent and whether or not the proposed relocation is necessary to improve the circumstances of the parent seeking relocation of the child
There is sufficient evidence in the record to support a finding that relocation would enhance Mr. Cass's and the child's quality of life. Mr. Cass's testimony indicates that Fort Hood offers a myriad of activities wherein the child would spend time with other families who share the commonality of being in the military. Additionally, as discussed earlier, relocation would benefit the child's educational development as Mr. Cass has shown to provide an effective support system to allow the child to succeed academically.
Ms. Cass testified that she is currently employed as a military dental hygienist, and is obligated to remain at this position in Louisiana for two years. Ms. Cass testified that she earns $4,600.00 a month for her job and can adequately provide for the child's needs under this salary. In brief, Ms. Cass contends that she earns a higher salary than Mr. Cass because she outranks him. Mr. Cass testified that he earns an annual gross income, which included a bonus, of $73,740.00 dollars. He asserts that relocation is necessary per his obligation to the military and to improve his salary and maintain him on the track of retiring in fewer than four years.
Based on the evidence in the record and in light of the transfer facilitating Mr. Cass's retirement and increase in salary, we find that this factor favors relocation.
(7) The reasons of each parent for seeking or opposing the relocation
Here, Mr. Cass is seeking relocation in order to fulfill his military obligations. In brief, Ms. Cass asserts that she is opposing relocation "because it would substantially damage the child's relationship with her." However, Ms. Cass does not specify how her relationship with the child would be substantially damaged in light of the evidence which indicates the parties have previously operated under a shared physical custody plan. This factor favors relocation.
(9) The extent to which the objecting parent has fulfilled his or her financial obligations to the parent seeking relocation, including child support, spousal support, and community property obligations
This factor is not applicable to the present case. Mr. Cass does not assert that Ms. Cass, the objecting parent, has failed to fulfill any financial obligations.
(10) The feasibility of a relocation by the objecting parent
Ms. Cass's military obligation requires her to remain in Louisiana, thus her relocation is not feasible. This factor does not favor relocation.
(11) Any history of substance abuse or violence by either parent, including a consideration of the severity of such conduct and the failure or success of any attempts at rehabilitation
Ms. Cass contends that Mr. Cass has an anger management problem which *227 has resulted in abuse to her teenage daughter. Mr. Cass admitted to violence against his ex-wife from a previous marriage, for which he received counseling; however, he denied any abuse against Ms. Cass's teenage daughter. The trial court limited submission of evidence regarding the alleged abuse of Ms. Cass's daughter, and thus the facts of the alleged abuse are unclear from the record. Dr. Logan commented in his relocation evaluation that Mr. Cass demonstrated some heightened levels of anger possibly from the custody dispute or his military background. However, nothing in the evaluation indicated that Mr. Cass was a threat to the child or that it was not in the child's best interest to be with Mr. Cass; in fact, Dr. Logan opined the opposite.
(12) Any other factors affecting the best interest of the child
In its oral reasons for judgment, the trial court reasoned that relocation was not in the best interest of the child because Mr. Cass would have to rely, in part, on outside child care whereas Ms. Cass would not. Mr. Cass testified that he would have to rely on child care three days a week for the window of time from when the child got out of school and he was working. The record indicates that before the relocation dispute, Mr. Cass, per the consent judgment, was the child's domiciliary parent and that the child lived with him during the school week. At that time, Mr. Cass had to rely on child care much like he would have to do at Fort Hood. Ms. Cass has not articulated why, at this point, it would not be in the best interest of the child to be exposed to minimal outside child care.
Based on our above de novo analysis of the factors set out in La.R.S. 9:355.12, we find no factors that would prevent relocation. After weighing the factors as a whole, we find that they preponderate in favor of allowing relocation. Accordingly, we find that Mr. Cass has carried his burden of proving that relocation is in the child's best interest.
DECREE
For the foregoing reasons, we reverse the trial court's August 19, 2009 judgment and September 10, 2009 supplemental judgment. On appeal, we reinstate Mr. Cass as the domiciliary parent. The parties will continue to share joint custody. As we recognize that the parties scheduling needs may have changed since the judgment was rendered, we remand for the entry of a physical custody schedule in light of the minor child's relocation with his father. All costs of this proceeding shall be assessed against Ms. Cass, the plaintiff and appellee.
REVERSED AND REMANDED.
SAUNDERS, J., dissents and assigns written reasons.
SAUNDERS, J., dissents and assigns written reasons.
In this relocation and custody matter, the majority has concluded firstly that the trial court committed legal error in its analysis of the case and that the matter should be reviewed on a de novo basis, and secondly, on de novo review, that it is in the best interest of the child that Mr. Cass be allowed to relocate David and to be reinstated as domiciliary parent. I respectfully disagree.
In finding that the trial court committed legal error, the majority opinion references the case of Leger v. Leger, 03-419 (La.App. 3 Cir. 7/2/03), 854 So. 2d 955, to stand for the principle that although the trial court is not required to specifically list each of the enumerated factors of La. R.S. 9:355.12, there must be support in the *228 record suggesting that each of the factors were considered. This court, in Leger, addressed a relocation case where the trial court stood firmly against relocation of the childrenstating that, "[t]his court is unwilling to put the children in ANY RISK associated with a move. . . ." Leger, 854 So.2d at 956-957. This court found that the trial court was imposing too high a burden on the mother seeking relocation and stated that no relocation would be acceptable under such an elevated standard.
I find the present matter to be distinguishable from Leger. There is nothing to indicate that the trial court in this matter was so firmly entrenched in its stance against relocation as to be applying a heavier burden on Mr. Cass than is required by law. Although the trial court did not list each of the factors to be considered, it did provide numerous reasons justifying its decisionin particular, its finding that Ms. Cass would provide a more stable environment for David because of her structured work schedule and the fact that she would not need to rely on daycare.
It is my opinion that this case more closely mirrors this court's decision in Miller v. Miller, 01-356, (La.App. 3 Cir. 10/31/01), 799 So. 2d 753, where the court found that the trial court had not committed legal error in choosing to only emphasize three of the listed factors in its reasons for judgment. In the present case, the trial court, in its reasons for judgment, addressed at least five of the La.R.S. 9:355.12 factorsparticularly factors one (The nature, quality, extent of involvement, and duration of the child's relationship with the parent proposing to relocate and with the nonrelocating parent, siblings, and other significant persons in the child's life) and six (Whether the relocation of the child will enhance the general quality of life for both the custodial parent seeking the relocation and the child, including but not limited to financial or emotional benefit or educational opportunity).
Regarding factor one, the trial court noted that David loves both parents and wants to spend time with both parents. It also noted that Mr. Cass has been active in the David's life and his education, and it expressed concern that Ms. Cass was occasionally more of a "buddy" than a parent.
Regarding factor six, the trial court expressed great concern with the amount of time David would have to spend in childcare if Mr. Cass was allowed to relocate, and it noted that Ms. Cass would not need to rely on daycare. Furthermore, the trial court expressed its dissatisfaction with the amount of information provided by Mr. Cass on what his work schedule would be and on the school David would attend. The trial court also took into consideration the fact that Ms. Cass has been living in the same home for the past two years.
Outside of these two factors, the trial court also commented that David did not want to choose which parent he wanted to live with (Factor 4). It also addressed the problem of both parents attempting to depict the other as a bad parent (Factor 5). Finally, the trial court, in great detail, discussed visitation arrangements and how each party would bear the costs of David's travel back and forth (Factor 3).
For these reasons, I disagree with the majority opinion that the trial court committed legal error in failing to consider the factors set out in La.R.S. 9:355.12.
However, even if legal error had occurred on the part of the trial court, I find that a de novo review of the record would still support a denial of Mr. Cass's request for relocation. In addition to the studied reasons laid out by the trial court, I find *229 great significance in David's close relationship with his half-sister and also with the pattern of violent behavior exhibited by Mr. Cass in the past.
A strong sibling relationship is an incredibly important bond, the impact of which is impossible to measure. The potential for severing that relationship should not be taken lightly. The record indicates that David and Jessie have the type of sibling bond that should not be disturbed without compelling reasons.
Furthermore, as important as the relationship between David and his sister seems to be, perhaps an even more compelling consideration for denying the relocation request is Mr. Cass's history with anger/violence, most notably his extreme method of disciplining Jessie, his elevated MMPI results, and his history with domestic assault. I fail to see how being brought up in such an environment can be interpreted as being in David's best interests.
For these reasons, I respectfully dissent from the majority opinion.
NOTES
[1] Included with the rule for a temporary order to relocate were other motions which are not at issue in this appeal, and therefore, will not be discussed herein.
[2] The trial court's oral reasons for judgment state, in pertinent part:
In trying to decide this case, there are, there have been many issues presented by the parties. It's my view that, with respect to Sergeant Cass' request to relocate, that I am to determine what is in [the child's] best interest. The parties, both sides, has [sic] spent a significant amount of time trying to point out to me how the other is a bad parent. I see very positive aspects for both parents, and I see some weaknesses on both sides.
I think that as a couple, that the two of you probably complimented each other. I think some of the strengths of one would compliment the weaknesses of the other. I think that both sides have a tendency in this proceeding to, fail to take responsibility for their own actions in bringing us to this place. I'm not here to decide whose the best parent, or who is a better parent. I'm here to decide what is going to be [the child's] best, what is going to serve his interests for the best, for the immediate future.
[The child] is a, based on my brief conversation with him, he is a personal [sic] young man, who loves both his parents. [He] wants to spend time with both parents. He does not want to decide, and nor should he have to decide, which parent he will spend the majority of his time with. He did not want to fill, fulfill that role, which was his reluctance to speak with Dr. Logan. Because that was going to be the ultimate question asked of him. I did not want to ask him that question, because I knew he did not want to answer that question. I did explore interest with [the child].
In my decision in this case, is not based not only on the evidence that has been presented in this proceeding, but also the interest that [the child] has conveyed to me. Sergeant Cass, you bear the burden of proving that this relocation would be in [the child's] best interest. In my opinion, you are placed in a very difficult situation, because of your career. Whether you orchestrated a move, or whether you were ordered to move, and had little or no say so in where you were moving to, as you were presented, or as you testified in this Court, on the 31st of July, on Monday, the 17th, and, and on the 17th, you have very sketchy information about your work schedule, your duties, who would care for [the child] while you are at work. There's very limited information on the school, other than what some website, how some website ranked it, which I place no significant credence in. I am left with a lot of questions about [the child's] environment in Fort Hood.
It has nothing to do with whether or not you love your son, and whether or not you have been involved in his upbringing, or his education. I believe that, that is clear. That you have been. What concerns me is based on the testimony there would be significant times where [the child] would be in the child care provided by the military, or left with a private sitter, whom by your own testimony you could not recall that persons name. I'm not saying that's all entirely your fault, but that is the situation we find ourselves in.
On the converse, we have Ms. Cass, who has lived in the same home for a period of approximately two-years. Her work schedule is very defined, and it is scheduled in such a manner to where there is no reliance on day care. Are there some areas that Ms. Cass should improve on as a parent? I believe that there are. Ms. Cass, based on the testimony that has been presented, I believe that is [sic] somewhat of a confusion, in your mind, as whether you are [the child's] mother, or whether you're his buddy. There have been several examples presented to this Court, where [the child] decided what he was going to do: meeting with Dr. Logan, going to the Pine Ridge Derby, continuing to attend college camp. Those are, in my opinion, those are decisions that you should have made. I understand that you and Sergeant Cass may have differences of opinion regarding discipline. Appropriate discipline is very important for a child.
The bottom line comes down to, there's been testimony that both of you, you have both testified that the other loves [the child], and is a good parent. You both did that. So, in my mind, where is [the child] going to be cared by a parent the most? For that reason, Sergeant Cass, I find that you have not met your burden of proving that relocation would be in [the child's] best interest.
[3] In Richardson, 25 So.3d at 207, a case factually similar to the present matter, a panel of this court discussed good faith relocation and military orders, stating:
The court further indicated that just because Steven might have told Chanda years earlier that he wanted to be transferred to Fort Carson one day, this fact did not mean, and there was no evidence in support, that Steven and the military colluded or conspired to get the transfer through shortly after Steven won primary custody of the children. The trial court further stated that Chanda had only opinions regarding the relocation, while the military order dated April 3, 2008, was credible evidence that the military had taken charge of Steven's life, as always, and transferred him to another location. The trial judge indicated that it was more surprising that the military had allowed Steven to stay in Louisiana for eleven years.
Steven testified that he had always wanted to go to Fort Carson, and that he had spoken about it, saying that he would probably be sent somewhere, and that if he had a choice, it would be Fort Carson. He stated that when he received the April 2008 notice, his choices were, Hawaii, New Jersey, and New York. He further stated that the Army considers you "stagnant" if you stay in one place too long. He stated that when he saw the choices, he held out for a short time to see if Fort Carson, Colorado became available, and it did. The record contained the official transfer orders to Fort Carson, Colorado, a letter from Steven's commander stating the reason for the PSC [permanent station change], and a letter from his branch manager indicating the available locations. The trial court did not abuse its discretion in finding that Steven's relocation of himself and the minor children to Colorado was done in good faith.
[4] Mr. Cass questions the failure to transcribe the interview in support of his argument that a de novo review is required. Specifically, he argues the trial court committed legal error in relying in part upon what the child told him in rendering a decision and that conversation not being made part of the record. We note that while the trial court referenced the conversation in its oral reasons for judgment, the trial court has filed a per curiam with this court stating that it did not rely on the conversation with the child in rendering its opinion.
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94 P.3d 609 (2004)
208 Ariz. 409
The STATE of Arizona, Appellee,
v.
Mark Anthony CONS, Appellant.
No. 2CA-CR 2002-0333.
Court of Appeals of Arizona, Division 2, Department B.
July 22, 2004.
*610 Terry Goddard, Arizona Attorney General, By Randall M. Howe, Phoenix, and Jase Steinberg, for Appellee.
Harriette P. Levitt, Tucson, for Appellant.
OPINION
ESPINOSA, Acting Presiding J.
¶ 1 Appellant Mark Anthony Cons was charged with forgery, a class four felony. Pursuant to A.R.S. § 13-604, the State of Arizona alleged that Cons had two prior felony convictions for sentence enhancement purposes. A jury found Cons guilty of the charged offense, and the trial court found, after a separate bench trial, that the state had proved the prior felony convictions. The trial court then sentenced Cons to the presumptive prison term of ten years. On appeal, Cons contends the court erred by granting the state's request to amend the allegation of prior convictions. He also contends the court applied an incorrect standard of proof at the trial on prior convictions and claims there was insufficient evidence to support its determination based on the correct standard. Finding no error, we affirm.
Background
¶ 2 In March 2002, the state alleged that Cons had been convicted of two felonies as follows:
On May 6, 1998, the defendant committed the crime of Attempted Aggravated Assault, a felony, and on or about June 30, 1999, the defendant was convicted of that crime in the Superior Court of Maricopa County, Arizona, in Cause Number 98007139.
On December 23, 1998, the defendant committed the crime of Aggravated Assault, a class 6 felony, and on or about December 23, 1998, the defendant was convicted of that crime in the Superior Court of Pinal County, Arizona, in Cause Number 99025078.
After the jury found Cons guilty of forgery on July 30, 2002, the trial court set a bench trial on the prior-convictions allegation for August 12, although it was apparently anticipated that Cons would be admitting to the allegations. We do not have the transcript *611 from that hearing, Cons having failed to designate it as part of the record on appeal, Rule 31.8(b)(3), Ariz. R.Crim. P., 17 A.R.S., but the trial court's August 12 minute entry reflects that the court continued the prior convictions trial after defense counsel advised the court that Cons would not be admitting the allegations. At that time, the state obtained Cons's fingerprints, marked for identification purposes exhibits related to the prior convictions, and then moved to amend the indictment to correct errors regarding the dates of the convictions and to add the class of felony as to one conviction. The court granted the motion but ordered the state to file the amended allegations, giving Cons time to object. The following day, the state filed a Motion to Amend Historical Priors in which it requested the following amendments: changing the conviction date in the Maricopa County matter from June 30, 1999, to August 13, 1998, and adding the felony class of four; changing the conviction date in the Pinal County matter from December 23, 1998, to March 15, 1999. The allegation was amended accordingly.
Discussion
a. Amendment of Alleged Priors
¶ 3 Cons contends the trial court committed "reversible error" by permitting the amendment of the allegation of prior felony convictions, insisting the allegation was "fatally defective" and violated his "constitutional right to due process" because the state had alleged convictions "[that] had not occurred on the dates contained in the pleading." But nothing in the record shows that Cons objected to the amendment, nor does he claim in his opening brief that he objected.[1] Therefore, we review the trial court's decision to allow the allegation to be amended for fundamental error. See generally State v. Gendron, 168 Ariz. 153, 812 P.2d 626 (1991) (failure to raise objection in trial court waives all but fundamental error). Although Cons uses words like "fatally defective," "reversible error," and "constitutional right," he does not specifically argue that the error is fundamental, that is, "error [that] goes to the foundation of the case or deprives [him] of an essential right to his defense." State v. White, 160 Ariz. 24, 31, 770 P.2d 328, 335 (1989). But even if we were to construe his arguments as tantamount to a claim that the error was fundamental, the claim is meritless.
¶ 4 The charges in an indictment and the allegations of a prior conviction are not procedural or substantive equivalents. See State ex rel. McDougall v. Crawford, 159 Ariz. 339, 767 P.2d 226 (App.1989). As Division One of this court pointed out in McDougall,
the charging of a substantive offense in a count of an information or complaint cannot be considered as the equivalent of an allegation of a prior conviction.... In this connection, we note that changes in an information or complaint relating to allegations of prior convictions as opposed to changes in the charges in the counts of a complaint or information are not treated similarly in the Arizona Rules of Criminal Procedure.
Id. at 342, 767 P.2d at 229. The court correctly noted that Rule 13.5, Ariz. R.Crim. P., 16A A.R.S., distinguishes in subsections (a) and (b) between the amendment of a charging document to add sentence enhancement allegations and amendments to actual charges. The rule "gives the prosecutor discretion to add allegations of prior convictions within the time limits prescribed by Rule 16.1(b), [Ariz. R.Crim. P., 16A A.R.S.,] but precludes the adding of substantive charges in the counts set forth in a complaint or information." McDougall, 159 Ariz. at 342, 767 P.2d at 229. And, subsection (b) contains additional limitations on when charges may *612 be amended that are not contained in subsection (a), which applies to adding enhancement allegations. See Ariz. R.Crim. P. 13.5(b) (unless defendant consents, charge may be amended "only to correct mistakes of fact or remedy formal or technical defects"; charging document deemed amended to conform to evidence). Consequently, Cons's reliance on Rule 13.5(b) and State v. Jonas, 26 Ariz.App. 379, 548 P.2d 1191 (1976), is misplaced because both relate to the amendment of actual charges.
¶ 5 Nor is Cons's reliance on State v. Benak, 199 Ariz. 333, 18 P.3d 127 (App.2001), availing. Based on notions of fundamental fairness and due process, Division One concluded in that case that A.R.S. § 13-604.04, which applies to enhanced sentencing for violent offenses, applies to A.R.S. § 13-901.01, which provides mandatory probationary terms and other sentencing restrictions for certain drug-related offenses. Thus, the state must give notice to a defendant if it is seeking to enhance the defendant's sentence with a prior conviction for a violent crime pursuant to § 13-901.01(B). The court found that although the state's allegation that the defendant had prior, non-dangerous felonies and its disclosure regarding the same gave the defendant sufficient notice that the state was seeking to enhance the sentence pursuant to § 13-604, it was not sufficient notice of the state's intent that the defendant be ineligible for probation because of his prior commission of a violent offense. The state's allegation referred to certain subsections of § 13-604, but it did not specifically refer to § 13-604.04, nor did it mention "violent crime." Thus, Benak essentially involved the absence of a specific enhancement allegation, not, as here, the amendment of an allegation that provided ample notice of precisely which prior offenses the state was relying on to enhance the sentence.
¶ 6 Finally, and perhaps most importantly, by amending the allegation to change the dates of conviction and specify the class of felony, the court did not so alter the nature of the allegation that Cons was deprived of the notice to which he was entitled. The dates of the offenses were the same, and Cons had ample notice of precisely which prior convictions the state was alleging. See State v. Waggoner, 144 Ariz. 237, 697 P.2d 320 (1985) (constitutional principles of due process entitle defendant to notice of range of potential sentence before trial); Benak, 199 Ariz. 333, ¶ 16, 18 P.3d at 131, quoting State v. Bayliss, 146 Ariz. 218, 219, 704 P.2d 1363, 1364 (App.1985) ("Notice ... must be such that the defendant is not `misled, surprised or deceived in any way by the allegations' of prior convictions."); State v. Rodgers, 134 Ariz. 296, 655 P.2d 1348 (App.1982) (allegations of prior convictions must be made before trial to give defendant notice of potential enhancement); see also § 13-604(P) (prescribing statutory procedures for notifying defendant that state seeks enhanced penalty). Indeed, it was readily apparent from the face of the state's allegations that there was a clerical error with respect to the Pinal County case because Cons could not have committed the offense on December 23, 1998, and been convicted of the charge the same day. The amendment reflected changes that were immaterial; Cons was not deprived of his due process rights, and the trial court did not err, fundamentally or otherwise, in permitting the state to amend its allegation of prior convictions.
b. Standard of Proof
¶ 7 Cons next contends that the trial court was required to find the state had proven the prior convictions beyond a reasonable doubt and that the evidence presented did not satisfy that standard. Cons intimates the evidence was insufficient because (1) there was insufficient foundation for the court's admission of the state's exhibits into evidence, which were certified copies of the convictions and related documents; (2) the court improperly relied on the fact that Cons had been willing to admit to the prior conviction at one point; and (3) the court shifted the burden to him to show that an appeal or other post-conviction challenge had been successful as to the convictions or that he had been pardoned, rather than imposing on the state the burden of showing the cases had not been successfully challenged.
¶ 8 The trial court did not articulate what standard of proof it had applied in *613 finding the state had proven the prior convictions. But, we disagree with Cons that the court was required to find beyond a reasonable doubt that he had been convicted of the two felonies alleged before the court could enhance his sentences.[2] Our conclusion is based on the history of § 13-604(P), as well as the Supreme Court's decision in Apprendi v. New Jersey, 530 U.S. 466, 120 S. Ct. 2348, 147 L. Ed. 2d 435 (2000), and its progeny.
¶ 9 Before the legislature amended § 13-604 in 1996, subsection (P) had provided that, unless admitted by the defendant, the "trier of fact" was required to decide the issue of prior convictions for sentence enhancement purposes. See 1996 Ariz. Sess. Laws, ch. 34, § 1. The statute now states that the enhancement provision applies if "the previous conviction... is ... admitted or found by the court." The case law that developed before the statute was amended automatically ascribed to the state the burden of proving beyond a reasonable doubt that the defendant had prior felony convictions as alleged. See, e.g., State v. Pennye, 102 Ariz. 207, 427 P.2d 525 (1967); State v. Wilson, 179 Ariz. 17, 875 P.2d 1322 (App.1993); State v. Terrell, 156 Ariz. 499, 753 P.2d 189 (App.1988); State v. Grijalva, 137 Ariz. 10, 667 P.2d 1336 (App.1983). However, as our supreme court stated in State v. Hurley, 154 Ariz. 124, 132, 741 P.2d 257, 265 (1987), it "[a]pparently" had never analyzed the question of the burden of proof on such an allegation, "evidently assuming that because the issue of prior convictions was tried to a jury, proof beyond a reasonable doubt was required." Even assuming the heightened standard had been correct in the first place, the question remains whether that is the state's burden still, in light of the statutory amendment requiring the court to decide the issue, unless admitted, and given the Supreme Court's decision in Apprendi. We think not.
¶ 10 In Apprendi, the Supreme Court held that "[o]ther than the fact of a prior conviction, any fact that increases the penalty for a crime beyond the prescribed statutory maximum must be submitted to a jury, and proved beyond a reasonable doubt." 530 U.S. at 490, 120 S.Ct. at 2362-63, 147 L. Ed. 2d at 455.[3] The Court's exception of prior convictions was based in large part on its discussion on the nature of recidivist sentencing statutes in Almendarez-Torres v. United States, 523 U.S. 224, 244, 118 S. Ct. 1219, 1231, 140 L. Ed. 2d 350, 368 (1998), and its conclusion in that case that "recidivism `does not relate to the commission of the offense, but goes to the punishment only,'" quoting Graham v. West Virginia, 224 U.S. 616, 629, 32 S. Ct. 583, 588, 56 L. Ed. 917, 923 (1912). Section 13-604(P) is constitutional and is consistent with Apprendi insofar as it allows the court, rather than a jury, to decide the allegation of prior convictions. See State v. Canez, 202 Ariz. 133, ¶ 80, 42 P.3d 564, 588 (2002) ("[W]hatever the impact of Apprendi on Walton [v. Arizona, 497 U.S. 639, 110 S. Ct. 3047, 111 L. Ed. 2d 511 (1990)], it is clear that prior convictions may be found by the court."). But that does not answer the question of what standard of proof applies to an allegation of prior convictions.
¶ 11 In excepting prior convictions from its holding, the Apprendi Court, discussing Almendarez-Torres, noted that because the defendant's guilt necessarily had been proven to a jury beyond a reasonable doubt during the trial on that offense, the required procedural safeguards have been met and the Sixth Amendment concerns have been mitigated. The Court reasoned in Apprendi that "there is a vast difference between accepting the validity of a prior judgment of conviction entered in a proceeding in which the defendant had the right to a jury trial and the right to require the prosecutor to prove guilt beyond a reasonable doubt, and allowing the judge to find the required fact under a lesser *614 standard of proof." 530 U.S. at 496, 120 S.Ct. at 2366, 147 L. Ed. 2d at 458-59. Implicit in the Court's exception of prior convictions from the requirement that a jury determine beyond a reasonable doubt any fact that increases the penalty for a crime beyond the statutory maximum is that something other than that heightened standard can apply.
¶ 12 In Harris v. United States, 536 U.S. 545, 556, 122 S. Ct. 2406, 2413-14, 153 L. Ed. 2d 524, 537 (2002), the Court upheld as constitutional a federal statute that allowed the trial judge to make a factual finding based on a preponderance of the evidence that the defendant had "brandished" a gun during the commission of a drug offense, thereby increasing the statutory minimum prison term from five to seven years. The Court concluded that its previous decision in McMillan v. Pennsylvania, 477 U.S. 79, 106 S. Ct. 2411, 91 L. Ed. 2d 67 (1986), survived Apprendi.[4]
¶ 13 In McMillan, the Court had "sustained a statute that increased the minimum penalty for a crime, though not beyond the statutory maximum, when the sentencing judge found, by a preponderance of the evidence, that the defendant had possessed a firearm." Harris, 536 U.S. at 550, 122 S. Ct. at 2410, 153 L.Ed.2d at 533. The Court reasoned in Harris that
McMillan and Apprendi are consistent because there is a fundamental distinction between the factual findings that were at issue in those two cases. Apprendi said that any fact extending the defendant's sentence beyond the maximum authorized by the jury's verdict would have been considered an element of an aggravated crime and thus the domain of the jury by those who framed the Bill of Rights. The same cannot be said of a fact increasing the mandatory minimum (but not extending the sentence beyond the statutory maximum), for the jury's verdict has authorized the judge to impose the minimum with or without the finding.
Id. at 557, 122 S. Ct. at 2414, 153 L.Ed.2d at 537-38. The Supreme Court has yet to address directly whether the existence of prior convictions that increase the statutory maximum penalty may be based on a lesser standard than beyond a reasonable doubt. But our supreme court's decision in the pre-Apprendi case of Hurley sheds additional light on this issue.
¶ 14 The defendant in Hurley had been sentenced under the enhancement provisions of § 13-604.02(A) (enhanced sentencing statute applicable to persons convicted of dangerous offenses while on probation, parole, work furlough, other release from confinement). The statute provided that the court, rather than a jury, was to decide release status. The defendant argued on appeal that unless the statute was interpreted to require the state prove to a jury beyond a reasonable doubt that the defendant was on release at the time of the offense, it had to be declared unconstitutional. The court rejected that argument and then turned to the question of the appropriate standard of proof for court-determined release status under § 13-604.02(A). For guidance, the court looked to prior convictions as a sentence enhancement and noted, as we did above, that the very fact that the statute required at that time that a jury decide that issue, had resulted in an automatic application of the heightened standard of proof. But, the court reasoned, because § 13-604.02 permitted the court to decide release status, the state was not required to prove that allegation beyond a reasonable doubt but by clear and convincing evidence. 154 Ariz. at 132, 741 P.2d at 265.
¶ 15 Prior convictions and release status essentially have switched places in this regard since our supreme court decided Hurley. As Division One of this court noted in State v. Gross, 201 Ariz. 41, 31 P.3d 815 (App.2001), Apprendi effectively overruled Hurley, requiring that release status be determined by a jury beyond a reasonable doubt. See also State v. Benenati, 203 Ariz. 235, 52 P.3d 804 (App.2002) (agreeing with Gross and holding that release status adding two years to sentence as enhancement under § 13-604(R) must be determined by jury in light of Apprendi). Of course, in Apprendi, the Supreme Court did not prescribe the burden of proof for determining the existence *615 of prior convictions for sentence enhancement purposes. And in Almendarez-Torres, decided before Apprendi, the defendant had admitted he was a recidivist; therefore, the Court declined to decide the question, commenting, "we express no view on whether some heightened standard of proof might apply to sentencing determinations that bear significantly on the severity of sentence." 523 U.S. at 248, 118 S.Ct. at 1233, 140 L. Ed. 2d at 371; see also United States v. Watts, 519 U.S. 148, 156 n. 2, 117 S. Ct. 633, 637-38 n. 2, 136 L. Ed. 2d 554, 564-65 n. 2 (1997) (noting, without resolving, "divergence of opinion among the Circuits" regarding whether "clear and convincing" should be standard for determining "relevant conduct" that could affect sentence); United States v. Restrepo, 946 F.2d 654 (9th Cir.1991) (suggesting clear and convincing evidence might be required to prove sentencing factors that result in extraordinary adjustments to sentence); cf. In re B.S., 205 Ariz. 611, ¶ 12, 74 P.3d 285, 289 (App.2003), quoting Rasmussen v. Fleming, 154 Ariz. 207, 223, 741 P.2d 674, 691 (1987) (higher evidentiary standard of clear and convincing evidence applies to "exceptional civil matters" involving" `personal interests more important than those found in the typical civil dispute'"). But see State v. Hurbenca, 266 Neb. 853, 669 N.W.2d 668 (Neb.2003) (in light of Apprendi, fact of prior conviction need only be found by trial court based on preponderance of the evidence); State v. Holgren, 106 Wash.App. 477, 23 P.3d 1132 (Wash.Ct.App.2001) (prior convictions need only be established by preponderance of the evidence); cf. Joyner v. State, 58 P.3d 331 (Wyo.2002) (finding protection order is not a prior conviction and must be established beyond a reasonable doubt to enhance sentence). Applying the court's reasoning in Hurley here and recognizing the significant impact prior convictions can have on the length of a sentence, we hold that because neither the statute nor Apprendi requires a jury trial on the allegation of prior convictions, the heightened burden of proof does not apply but rather prior convictions for sentence enhancement purposes must be established by clear and convincing evidence.
c. Sufficiency of the Evidence
¶ 16 We now turn to the sufficiency of the evidence to support the trial court's finding that Cons had two prior felony convictions as alleged by the state and subsequently amended. In order to prove a prior conviction, the state must submit positive identification establishing that the accused is the same person who previously was convicted, as well as evidence of the conviction itself. Terrell. The proper procedure for establishing a prior conviction is for the state to submit a certified copy of the conviction and establish that the defendant is the person to whom the document refers. State v. Hauss, 140 Ariz. 230, 681 P.2d 382 (1984). That is precisely what was done here.
¶ 17 The state submitted and the court admitted into evidence certified copies of the two convictions. The document relating to the Pinal County matter contained Cons's name, date of birth, and a fingerprint that the state's expert identified as belonging to Cons.Additionally, the trial judge stated she recognized Cons as the person she had sentenced in that case. The Maricopa County documents tied that conviction to the Pinal County case. Read together, those documents stated Cons's name and date of birth, which were the same as those contained in the Pinal County documents. The sentencing minute entry from the Maricopa County case specified that Cons's sentence was to be served consecutively to the sentence that had already been imposed in the Pinal County case. Based on the record before us, the court's findings as to the prior convictions is sustainable under a standard of clear and convincing evidence as well as beyond a reasonable doubt. The record belies Cons's contention that the court found the felony convictions were established based on the fact that initially he had been willing to admit them. Instead, there was overwhelming evidence to support the court's findings and its enhancement of the sentence.
¶ 18 Cons objected to the admission of the documents on the ground that, inter alia, the state had failed to show that the convictions were final and had not been appealed or that he had not been pardoned. The trial court admitted the documents over *616 this objection and Cons's additional objections, one of which was that insufficient foundation had been established for the admission of the documents. Cons reiterates both objections on appeal but does not provide sufficient argument for us to address the claim that there was a lack of foundation for the records. See Ariz. R.Crim. P. 31.13(c), 17 A.R.S. (setting forth contents appellate briefs must have, including argument and citation to authorities); State v. Sanchez, 200 Ariz. 163, 24 P.3d 610 (App.2001) (claim waived because defendant failed to develop argument in brief). We reject it summarily as waived and, in any event, meritless; certified copies of the court records are proper, self-authenticated documents that are properly offered in support of an allegation of prior convictions. See Hauss; State v. Lee, 114 Ariz. 101, 559 P.2d 657 (1976) (proper procedure for proving prior convictions is to offer certified copy of conviction); see also Ariz. R. Evid. 902(4), 17A A.R.S. (certified copies of public records are self-authenticating).
¶ 19 We also reject Cons's claim that, by admitting the documents over his objection that the state had failed to establish the conviction had not been vacated on appeal or in a post-conviction proceeding, the trial court impermissibly shifted the burden of proving the prior convictions to him. There is a presumption of regularity that attaches to convictions. See State v. McCann, 200 Ariz. 27, 21 P.3d 845 (2001). It is the defendant's burden to present some credible evidence that the case had been reversed or that he had been pardoned. Cons did not satisfy that burden, and it was not for the state to establish the negative, that is, that no appeal, post-conviction proceeding, or pardon had eliminated the prior convictions.
Disposition
¶ 20 The conviction and sentence are affirmed.
PELANDER, C.J. and ECKERSTROM, J., concurring.
NOTES
[1] Although we do not have the transcript from the August 12, 2002, hearing, the minute entry from that hearing does not state that Cons objected and there is no written objection in the record. Cons intimates in his reply brief that his objection to the exhibits supporting the prior convictions was also an objection to the amendment. He claims that "it is clear from [his] objection to [the exhibits] ... that his defense to the allegation was based on the State's failure to properly identify the convictions which it intended to use for enhancement." That objection to the exhibits was not an objection to the amendment, particularly not on the ground Cons raises on appeal.
[2] Sentence enhancement, of course, is not the same as sentence aggravation. "Sentence enhancement elevates the entire range of permissible punishment while aggravation and mitigation raise or lower a sentence within that range." State v. Alvarez, 205 Ariz. 110, n. 1, 67 P.3d 706, 708 n. 1 (App.2003).
[3] In Blakely v. Washington, ___ U.S. ___, 124 S. Ct. 2531, 159L.Ed.2d 403 (2004), the Supreme Court's most recent decision dealing with the Apprendi doctrine, the Court left unchanged that portion of Apprendi excepting the fact of a prior conviction from the rule that a jury must find certain facts that affect the length of a sentence.
[4] The Court in Blakely distinguished McMillan and Harris but did not invalidate those cases.
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51 So. 3d 1188 (2011)
Brian L. LOSH, Appellant,
v.
STATE of Florida, Appellee.
No. 4D10-980.
District Court of Appeal of Florida, Fourth District.
January 5, 2011.
Rehearing Denied February 15, 2011.
Bruce L. Losh, Monticello, pro se.
*1189 Pamela Jo Bondi, Attorney General, Tallahassee, and Myra J. Fried, Assistant Attorney General, West Palm Beach, for appellee.
PER CURIAM.
In this rule 3.800(a) appeal, appellant challenges his ten-year mandatory minimum sentence imposed for armed robbery with a firearm. He claims that the sentencing court did not pronounce the mandatory minimum term, and that its correction of the sentence days later has resulted in him serving an illegal sentence.
The state contends that the court simply corrected a clerical error in reducing the orally pronounced sentence to writing. Having reviewed the plea agreement, the plea colloquy, and the initial sentencing documents, we reject the state's characterization of the "error" as clerical.
Within days of the original sentencing, the state filed a motion to correct the sentence, noting the omission of the ten-year minimum mandatory term from the ten-year sentence. The trial court granted the motion given the parties' agreement to correct the sentencing documents. Appellant was not present at the hearing that led to the corrected sentencing documents. Also, though this court granted appellant a belated direct appeal of his judgment and sentence, it appears that the appeal was voluntarily dismissed.
Appellant now argues that the mandatory term, imposed well after the oral pronouncement and the initial written sentence, is illegal and violates double jeopardy. At the same time, appellant seems to acknowledge that he understood and intended to enter into a plea to a mandatory ten-year term.
Nevertheless, we agree with appellant that the corrected sentence is illegal. In reaching this conclusion, we have considered several lines of cases.
Reviewing a direct appeal, the Fifth District recently noted that "[c]ourts have reversed and remanded sentencing orders with instructions requiring the imposition of the mandatory minimum sentence when the trial court departed from the mandatory minimum sentencing requirement." Dunbar v. State, 46 So. 3d 81, 83 (Fla. 5th DCA 2010). There, while the judge's oral pronouncement did not include the mandatory term, the written documents prepared later that day did so.
Dunbar recognized that the imposition of a mandatory minimum sentence under section 775.087, Florida Statutes, is a nondiscretionary duty of the trial court when the record indicates that the defendant qualifies for such sentencing. Thus, failure to impose that sentence is reversible error. Concluding that the absent mandatory term renders the sentence "illegal," the Fifth District explained that the act of imposing the mandatory term after the oral pronouncement did not offend double jeopardy principles. Id. (citing Allen v. State, 853 So. 2d 533 (Fla. 5th DCA 2003)).
The Second District considered the issue in the context of a rule 3.850 appeal. See Gardner v. State, 30 So. 3d 629 (Fla. 2d DCA 2010). There, a jury found Gardner guilty, and the trial court sentenced him to concurrent eight-year terms for various felonies. This was a downward departure from the Criminal Punishment Code's guidelines. The judge made the requisite supporting findings and noted the state's objection. The state had argued that there were insufficient grounds for the downward departure. Following the lunch break, the prosecutor announced that he had forgotten to object on the record that the sentence was below the mandatory minimum ten-year term. There was discussion about the state filing a notice of appeal to correct the sentence. With that, the trial court resentenced Gardner to concurrent *1190 ten-year mandatory minimum terms for the armed burglary charges.
Gardner filed a rule 3.850 motion, arguing that his sentences violated double jeopardy. The trial court denied the motion and the Second District reversed. The appellate court reasoned that the sentencing court had no authority to call Gardner back for resentencing because jeopardy attached at the conclusion of the hearing at which the court originally pronounced the sentence. Id. at 630 (citing Ashley v. State, 850 So. 2d 1265, 1269 (Fla.2003)). Gardner acknowledged that had the state sought appellate review, the downward departure sentence would have been reversed. 30 So. 3d at 631-32.
The problem there was that once the sentence was orally pronounced, Gardner was deemed to have begun to serve that sentence and thus the trial court lacked authority to reopen the proceedings. Id. Absent an appeal by the state, double jeopardy barred increasing "even an illegal sentence." Id. at 632 (citing Delemos v. State, 969 So. 2d 544, 550 (Fla. 2d DCA 2007)). Though noting the trial court's attempt to serve the interests of judicial economy, the Second District reversed and remanded the case and directed that Gardner be sentenced as the court had orally pronounced, without minimum mandatory terms.
The sentences at issue in Gardner and Dunbar were characterized as "illegal" and "unauthorized" because the trial courts failed to impose the nondiscretionary minimum mandatory term. The trial court had no discretion in those cases because the state had not agreed to waive the mandatory term. See, e.g., State v. Weaver, 3 So. 3d 349 (Fla. 3d DCA 2008).
The Fifth District in Dunbar views the sentence as illegal and therefore double jeopardy does not bar the subsequent correction by the trial court. The Second District agrees that the sentence without the mandatory term is illegal, but absent an appeal by the state, the illegality cannot be corrected by the trial court without violating double jeopardy principles. See Gardner, 30 So.3d at 632; cf. also Gartrell v. State, 626 So. 2d 1364, 1365 (Fla. 1993) ("Because neither an illegal sentence nor a calculation error was involved in this case, rule 3.800(a) was clearly the improper vehicle for the State to use," and the state should have appealed the departure sentence entered without required written reasons.)
In both Dunbar and Gardner, the trial court lacked discretion to omit the mandatory terms. While we do not comment on the characterization of the resulting sentence in those cases as "illegal" as currently defined by the Florida Supreme Court, see Carter v. State, 786 So. 2d 1173, 1181 (Fla.2001), appellant's case is distinguishable because the trial court was not without discretion given the negotiated plea.
Unlike the trial court, the prosecutor had the authority to dispense with the firearm-based mandatory term at issue. See generally State v. Vanderhoff, 14 So. 3d 1185, 1189 (Fla. 5th DCA 2009); § 27.366, Fla. Stat. (2001). While perhaps not intended, this was the effect of the initial plea and sentencing hearing. We have reviewed the plea agreement, the plea colloquy, and the Criminal Punishment Code scoresheet furnished, all of which are silent with respect to a mandatory sentence. As a result, the trial court's failure to impose that mandatory term initially was not illegal or unlawful, nor was it contrary to the plea terms as stated to the court. See generally Van Buren v. State, 500 So. 2d 732 (Fla. 2d DCA 1987). Consequently, the subsequent addition of the mandatory minimum term impermissibly enhanced the sentence to violate double jeopardy principles.
*1191 We note that the record reflects that the addition/correction was the result of an agreed order. However, as appellant was not present at that hearing, we cannot presume a knowing waiver of the double jeopardy protection. See Novaton v. State, 634 So. 2d 607 (Fla.1994); Torbert v. State, 832 So. 2d 203 (Fla. 4th DCA 2002).
Accordingly, we reverse and remand the order that denied appellant's rule 3.800 motion. On remand, the trial court shall strike the mandatory portion of the sentence and sentence appellant as was orally pronounced.
WARNER, STEVENSON and LEVINE, JJ., concur.
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54 So. 3d 966 (2009)
RIVERVIEW REG'L MED. CTR., INC.
v.
DOROTHY LINDSEY.
No. 1071659.
Supreme Court of Alabama.
April 24, 2009.
DECISION WITHOUT PUBLISHED OPINION
Appeal dismissed.
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624 So.2d 779 (1993)
Karen KANTNER, Appellant,
v.
J. Urban BOUTIN, La Coquille Corporation, et al., Appellees.
No. 92-2038.
District Court of Appeal of Florida, Fourth District.
September 15, 1993.
Rehearing Denied October 26, 1993.
*780 Henry Latimer of Fine Jacobson Schwartz Nash & Block and Stephen B. Rakusin of Stephen B. Rakusin, P.A., Fort Lauderdale, for appellant.
G.P. Weidinger, Fort Lauderdale, for appellees.
PER CURIAM.
This is an appeal from a final judgment in favor of defendant, J. Urban Boutin, on a Motion for Entry of Final Judgment filed by plaintiff, Karen Kantner. We reverse and remand for further proceedings.
This appeal arises out of the construction of a settlement agreement entered into by the parties which undertook to settle several pending lawsuits between the parties and related entities. The settlement agreement involved, among other matters, a parcel of property which was owned by Boutin and leased to a restaurant operator. The lease agreement was executed simultaneously with a purchase agreement between Boutin and others and the lessee/purchaser some years prior to the settlement agreement. The lease agreement incorporated by reference the terms of the purchase agreement which gave the lessee/purchaser a continuing right of first refusal with respect to the sale of the property in the event the lessee/purchaser failed to close on the property. Kantner was not a signatory to either of these agreements. The property was also the subject of a foreclosure action brought by Boca Bank.
The settlement agreement provided Kantner would accept a conveyance of the property from Boca Bank "free and clear of all encumbrances," in the event the bank successfully foreclosed its mortgage and became the owner of the property. In the event the property could not be conveyed to Kantner "free and clear of all liens and encumbrances," then Kantner would be entitled to a judgment against Boutin in the amount of $115,000 plus interest.
The trial court concluded that although the lease on the property and the tenant's right of first refusal were encumbrances, they were not encumbrances under the settlement agreement because the settlement agreement defined the property to be conveyed as including the lease and the right of first refusal. In concluding the property was "free and clear of all encumbrances," the trial court, in essence, incorporated by reference the purchase agreement and the right of first refusal contained therein into the settlement agreement. We are respectfully of the view that the trial court misconceived and misapplied *781 principles of law relating to the doctrine of incorporation by reference.
The settlement agreement made reference to the parcel as "property being further defined in Exhibit `B' attached hereto." Exhibit "B" contained a legal description of the property and made specific reference to "the Landlord's interest under that certain Lease Agreement." The settlement agreement was silent as to any specific terms of the lease agreement and did not reflect it was "subject to" the lease agreement.
In Hurwitz v. C.G.J. Corp., 168 So.2d 84 (Fla. 3d DCA 1964), the Third District considered the doctrine of incorporation by reference and observed in part:
A document must be considered incorporated by reference where the incorporating document specifically provides that it is subject to the incorporated document. In our case, this did not occur, nowhere in the individual agreements with appellants did the appellee make those agreements subject to the long term lease.
Id. at 87. The court also observed that a collateral "document may be considered if it is sufficiently described or referred to in the incorporating agreement, but only for purposes of determining the intention of the contracting parties." Id.
As discussed in Hurwitz, the doctrine requires that there must be some expression in the incorporating document (as here, the settlement agreement) of an intention to be bound by the collateral document (as here, the lease agreement and purchase agreement). A mere reference to another document is not sufficient to incorporate that other document into a contract, particularly where the incorporating document makes no specific reference that it is "subject to" the collateral document.
Here, Kantner was not a signatory to the lease agreement and purchase agreement to which Boutin was a party. While Boutin may have been bound by the terms of those documents, Kantner could not have been bound by those collateral documents unless the incorporating document (i.e., the settlement agreement) specifically provided it would be "subject to" the collateral document (i.e., the lease agreement and purchase agreement with its attendant right of first refusal).
The inability of Boutin to deliver the property free and clear of the right of first refusal was not in compliance with the settlement agreement. Accordingly, the final judgment in favor of Boutin is reversed and the cause is remanded to the trial court for further proceedings consistent with the terms of the settlement agreement and further consistent herewith.
REVERSED and REMANDED.
WARNER, J., and MAGER, GERALD, Senior Judge, concur.
ANSTEAD, J., dissents with opinion.
ANSTEAD, Judge, dissenting.
The dispute was resolved by the trial court after a bench trial. Because I find that there is evidence in the record to support the trial court's rulings, I would affirm.
The parties entered into a complicated settlement agreement that provided in part for the former husband to satisfy a debt he owed to the former wife by seeing to it that certain real estate was transferred to her. The deal was "complicated" because the property was owned by a corporation wholly owned by the former husband, and the corporation had leased the property to another corporation that ran a restaurant on the premises. The lease made reference to a right of first refusal granted to the restaurant corporation. The property was also subject to a mortgage in favor of Boca Bank and this mortgage was being foreclosed at the time the settlement agreement was drafted and executed.
The agreement expressly noted that Boca Bank held a first mortgage as well as an assignment of the lease with the restaurant corporation. The agreement also expressly provided that if Boca Bank obtained a final judgment of foreclosure and a certificate of title, and would agree to convey "the property, and the Lease," to Kantner for a stated sum, then this agreement to convey by the Bank would operate to satisfy the debt owed by the former husband to the former wife.
*782 Now, I have greatly oversimplified and paraphrased the terms of the agreement, since it is some 24 lengthy and detailed paragraphs in content, and has a number of exhibits. However, because of the numerous ambiguities in the agreement and the disputed evidence as to compliance therewith, I believe the trial court acted well within its authority as the trier of fact in determining the agreement's meaning and the parties' compliance therewith, and I cannot properly second-guess its final resolution.
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51 So. 3d 659 (2010)
James LASTRAPES, et ux.
v.
PROGRESSIVE SECURITY INSURANCE COMPANY.
No. 2010-C-0051.
Supreme Court of Louisiana.
November 30, 2010.
*660 Jones, Walker, Waechter, Poitevent, Carrere & Denegre, Ian Alexander MacDonald, Lafayette, for Applicant.
Morrow, Morrow, Ryan & Bassett, Patrick Craig Morrow, Sr., Candyce Catherine Gagnard, Opelousas, for Respondent.
PER CURIAM.[*]
We granted certiorari in this case to determine (1) whether the court of appeal erred in affirming the judgment of the district court granting plaintiffs' motion for judgment notwithstanding the verdict and awarding statutory penalties and attorney fees; and (2) whether the court of appeal erred in reversing the judgment of the district court denying plaintiffs' motion for judgment notwithstanding the verdict, and increasing the jury's damage award. For the reasons that follow, we now reverse the court of appeal's judgment in part.
UNDERLYING FACTS
On November 13, 2004, James Lastrapes was involved in an automobile accident (hereinafter referred to as the "2004 accident"), in which the rear door of his 1999 Chevy van was struck by a vehicle driven by Lessie Vizinat as she attempted a left-hand turn. Mr. Lastrapes declined emergency medical care at the scene, but two days later he visited his family physician, Dr. Kirk Elliot, and complained of neck pain. Dr. Elliot initially diagnosed cervical acute myofascial strain, and recommended physical therapy three times per week.
Mr. Lastrapes regularly attended physical therapy until January of 2005. On February 18, 2005, Mr. Lastrapes underwent an MRI of the cervical spine. According to the report of radiologist, Dr. Robert L. Lapidus, Mr. Lastrapes' MRI indicated multi-level spondylosis, C3-C4 spurring with posterior subligamentous disc bulge partially effacing ventral subarachnoid space, C5-C6 mild AP diameter stenosis of the central spinal canal, but no focal disc herniation. Mr. Lastrapes was referred to Dr. Steve Rees, a pain management specialist, who diagnosed him with chronic low back pain status post MVA, and quadratus lumborum myofascial pain syndrome. From August 2005 to January 4, 2006, Mr. Lastrapes received at least five treatments for his neck and back pain, including trigger point injections and nerve blocks.
On January 24, 2006, fourteen months after the 2004 accident, Mr. Lastrapes was involved in a second accident (hereinafter referred to as the "2006 accident"), in *661 which he rear-ended another vehicle. Mr. Lastrapes did not inform his doctors of the 2006 accident, but he did notify his uninsured motorist carrier, Progressive Security Insurance Company ("Progressive"). He continued to receive treatment from Dr. Rees, including a steroid injection, trigger point injections, and nerve blocks. He was then referred to an anesthesiologist and pain management specialist, Dr. Sanjiv Jindia, who administered four cervical epidural steroid injections to Mr. Lastrapes from December 2006 through October 2007.
On June 7, 2007, Mr. Lastrapes underwent another MRI of the cervical spine. According to the radiology report of Dr. Lapidus, there was "no significant change compared with February 18, 2005 examination."
Meanwhile, on July 10, 2007, Mr. Lastrapes consulted an orthopedic surgeon, Dr. George Williams, who diagnosed him with cervical herniated nucleus pulposus. Based on the medical history provided by Mr. Lastrapes, which notably omitted any mention of the 2006 accident, together with the MRI results from 2005 and 2007, Dr. Williams recommended that plaintiff undergo neck surgery.[1] Dr. Williams estimated the cost of surgery to be $94,300 to $114,300, exclusive of follow-up care beyond three months. Like Dr. Lapidus, Dr. Williams concluded there was no evident change in Mr. Lastrapes' cervical spine between the 2005 and 2007 MRIs. Unlike Dr. Lapidus, Dr. Williams concluded the MRI films revealed disc herniations.
PROCEDURAL HISTORY
In November 2006, Mr. Lastrapes and his wife filed the instant suit against his uninsured motorist carrier, Progressive Security Insurance Company ("Progressive"), seeking damages for mental and physical pain and suffering, past and future medical expenses, loss of enjoyment of life, and loss of consortium arising from the 2004 accident.[2]
In January 2008, Progressive's claims adjuster, Sheryl Tardo, received Dr. Williams' July 10, 2007 report in which he recommended surgery. Ms. Tardo declined to make an unconditional UM tender to plaintiffs, and did not schedule Dr. Williams' deposition or otherwise follow up with him.
Thereafter, plaintiffs filed their first supplemental and amending petition for damages, alleging Progressive was "arbitrary and capricious for failing to timely pay benefits to plaintiffs under the uninsured/underinsured portion of its policy." Plaintiffs sought penalties and attorney fees.
The case proceeded to a three-day jury trial. At the conclusion of trial, the jury returned a verdict awarding plaintiff $88,000 in past medical expenses, and $125,000 in past pain and suffering. The jury declined to award plaintiffs any damages for future medical expenses, future pain and suffering, past mental anguish, loss of enjoyment of life, loss of consortium, and statutory penalties and attorney fees.
Plaintiffs moved for a judgment notwithstanding the verdict ("JNOV"), and alternatively for additur and/or new trial. The district court denied plaintiffs' motion for additur, but granted a JNOV in part, finding Progressive was arbitrary and capricious in its handling of the UM claim. In *662 particular, the district court found Progressive acted contrary to its duty of good faith and fair dealing by failing to tender payment for the surgery recommended by Dr. Williams within thirty days of receiving his report. Accordingly, the district court awarded plaintiffs $72,575 in penalties, and $24,192 in attorney fees.
Progressive appealed. Plaintiffs answered the appeal, seeking an increase in the amount of damages, and seeking damages for the items the jury declined to award. The court of appeal affirmed the district court in part, and reversed in part. Lastrapes v. Progressive Security Insurance Company, 2009-367 (La.App. 3 Cir. 12/9/09), 24 So. 3d 993.
In its opinion, the court of appeal affirmed the jury's award of $88,000 for past medical expenses, and $125,000 for past pain and suffering. It also affirmed the district court's judgment granting JNOV and awarding plaintiffs $72,575 in penalties, and $24,192 in attorney fees.
However, the court of appeal went on to find the jury's failure to award future medical expenses, future pain and suffering, loss of enjoyment of life, and loss of consortium was "not supported by the record and is an abuse of the jury's vast discretion." Accordingly, the court of appeal reversed "the trial court's refusal to award additional sums for loss of consortium and future damages." It then proceeded to render judgment in favor of plaintiffs in the amount of $100,000 for future medical expenses, $50,000 for future pain and suffering, and $20,000 for loss of enjoyment of life. Additionally, the court of appeal rendered judgment in favor of Mrs. Lastrapes in the amount of $10,000 for loss of consortium.
Upon Progressive's application, we granted certiorari to consider the correctness of these rulings. Lastrapes v. Progressive Security Insurance Company, 10-0051 (La.4/9/10), 31 So. 3d 375.
DISCUSSION
Although Progressive presents separate assignments of error concerning the district court's award of penalties and attorney fees and the court of appeal's award of additional damages, both issues have their genesis in JNOV rulings. In Joseph v. Broussard Rice Mill, Inc., 00-0628, pp. 4-5 (La.10/30/00), 772 So. 2d 94, 99, we explained the principles to be applied in determining whether JNOV was appropriate:
JNOV is warranted when the facts and inferences point so strongly and overwhelmingly in favor of one party that the trial court believes that reasonable persons could not arrive at a contrary verdict. The motion should be granted only when the evidence points so strongly in favor of the moving party that reasonable persons could not reach different conclusions, not merely when there is a preponderance of evidence for the mover. The motion should be denied if there is evidence opposed to the motion which is of such quality and weight that reasonable and fair-minded persons in the exercise of impartial judgment might reach different conclusions. In making this determination, the trial court should not evaluate the credibility of the witnesses, and all reasonable inferences or factual questions should be resolved in favor of the non-moving party. This rigorous standard is based upon the principle that when there is a jury, the jury is the trier of fact.
With these precepts in mind, we now turn to an examination of the record to determine whether the district court's rulings granting the JNOV as to penalties *663 and attorney fees and denying it as to additional damages were correct.
Statutory Penalties and Attorney Fees
It is well-settled that a plaintiff seeking penalties and attorney fees must prove the insurer knowingly committed actions which were completely unjustified, without reasonable or probable cause or excuse. Lewis v. State Farm Insurance Company, 41,527 (La.App. 2 Cir. 12/27/06), 946 So. 2d 708; Holt v. Aetna Cas. & Sur. Co., 28,450 (La.App.2d Cir.9/3/96), 680 So. 2d 117, writs denied, 96-2515, 96-2523 (La.12/6/96), 684 So. 2d 937, 938.
The jury, having heard the evidence at trial, declined to make any award to plaintiffs for penalties and attorney fees. Applying the JNOV standard, we find the record supports the conclusion that a reasonable juror could have concluded Progressive's actions were not completely unjustified or unreasonable.
The crux of plaintiffs' argument is that Progressive's actions were unreasonable because it took no action after receiving Dr. Williams' report recommending surgery. However, Progressive's adjuster, Ms. Tardo, testified she did not make an unconditional tender to plaintiffs because she questioned whether the surgical recommendation was related to the 2004 accident. She believed reasonable minds could differ on whether the 2004 accident caused Mr. Lastrapes' neck injury. Ms. Tardo based this conclusion on multiple factors, including Mr. Lastrapes' failure to notify Dr. Williams of his 2006 accident, and the fact Dr. Williams' report showed Mr. Lastrapes' physical examination was normal, with no complaints of neck or back pain. In addition, Dr. Williams did not expressly relate the need for surgery to the 2004 accident. Furthermore, Ms. Tardo believed Mr. Lastrapes' 2005 MRI did not reveal the injuries diagnosed by Dr. Williams.
In addition, Ms. Tardo testified Mr. Lastrapes' frequency of treatment increased after the 2006 accident, tending to support her suspicions that his neck injuries may have worsened after the 2006 accident. Notably, because Mr. Lastrapes did not inform his doctors of the second accident, the medical records do not attribute any worsening of his condition to the 2006 accident.
We have held bad faith should not be inferred from an insurer's failure to make a timely tender when there is a reasonable and legitimate question as to the extent and causation of a claim. Guillory v. Lee, 09-0075 at p. 32 (La.6/26/09), 16 So. 3d 1104, 1127. Applying this reasoning, we believe the jury could reasonably conclude Progressive was in good faith when it questioned the extent and causation of Mr. Lastrapes' ongoing complaints, and questioned whether the need for surgery was causally related to the 2004 accident. In addition, the jury could reasonably conclude that Progressive was justified in relying on this good-faith belief to defend the claim and refuse to make a tender within the statutory time limits.
In sum, having reviewed the record as a whole, we are unable to say the facts and inferences point so strongly and overwhelmingly in favor of plaintiffs that reasonable persons could not arrive at a contrary verdict. Accordingly, the district court erred in granting JNOV in favor of the plaintiffs on the issue of penalties and attorney fees, and the court of appeal erred in affirming that judgment.
Additional Damages
The jury declined to make any award for future medical expenses, future pain and suffering, loss of enjoyment of life, and loss of consortium. Plaintiffs moved for JNOV on this issue. The district court denied the motion, but the court *664 of appeal reversed and awarded damages for future medical expenses, future pain and suffering, loss of enjoyment of life, and loss of consortium.
In making this determination, the court of appeal implied it was inconsistent for the jury to determine Mr. Lastrapes suffered injuries as a result of the 2004 accident, but not accept his claims that his neck problems were caused by the accident and that he would undergo the cervical decompression and fusion in the future. However, in Wainwright v. Fontenot, 00-0492 (La.10/17/00), 774 So. 2d 70, we held an award in one category of damages does not automatically require an award in others.
Plaintiffs' argument with regard to future damages hinges on the assertion that Mr. Lastrapes' 2004 accident resulted in a cervical disc herniation. They claimed this injury would result in Mr. Lastrapes' future pain and suffering as well as necessitate future surgery.
However, Progressive countered plaintiffs' assertions with evidence suggesting Mr. Lastrapes' 2004 accident did not result in a cervical disc herniation. In particular, Progressive relied on the February 18, 2005 MRI report of Dr. Lapidus which did not show any disc injury. Progressive also produced evidence revealing Mr. Lastrapes was not candid with his doctors in disclosing his 2006 accident.
Considering the conflicting evidence in the record, we cannot say the facts and inferences point so strongly and overwhelmingly in favor of plaintiffs that reasonable jurors could not arrive at a contrary verdict. The district court properly denied plaintiffs' motion for JNOV with regard to future pain and suffering and future medical expenses, and the court of appeal erred in reversing this ruling.
Similarly, we believe the jury was reasonable in rejecting plaintiffs' claims for loss of enjoyment of life. In finding the jury abused its discretion in denying damages on this claim, the court of appeal cited Mr. Lastrapes' testimony that he has suffered a loss of his ability to travel, to maintain his yard, and to do many of the other activities he enjoyed most. However, the record contains evidence that many of Mr. Lastrapes' activities were limited by his medical problems and disabilities which pre-dated the 2004 accident. In addition, during the time between the 2004 accident and the 2006 accident, Mr. Lastrapes and his wife took several vacations (including vacations to Las Vegas, San Francisco, Canada, New York and New England) and he testified to doing work around his camp and home. In light of this evidence, we cannot say the facts and inferences point so strongly and overwhelmingly in favor of plaintiffs that reasonable jurors could not arrive at a contrary verdict. The district court properly denied plaintiffs' motion for JNOV with regard to plaintiffs' claims for loss of enjoyment of life, and the court of appeal erred in reversing this ruling.
Finally, the court of appeal found the jury erred in failing to award Mr. Lastrapes' wife damages for loss of consortium. The court of appeal relied on testimony from Mr. Lastrapes' wife indicating the couple was "no longer intimate and that most of their activities had been curtailed by his chronic pain."
As discussed above, there was evidence in the record supporting the conclusion that to the extent Mr. Lastrapes' activities were limited, it was due to his pre-accident disabilities. Moreover, Mr. Lastrapes and his wife continued to travel after the 2004 accident. To the extent Mr. Lastrapes' wife testified the couple's relationship and sex life was affected, the jury could have concluded any changes in their relationship *665 were not a result of the accident. See VaSalle v. Wal-Mart Stores, Inc., 01-0462 (La.11/28/01), 801 So. 2d 331 (holding jury properly declined to award damages for loss of consortium despite testimony from a husband that his wife "was hard to live with" and that the couple was "grouchier with each other" and "their sex life was not as active as it once was"). In light of this evidence, we cannot say the facts and inferences point so strongly and overwhelmingly in favor of plaintiffs that reasonable jurors could not arrive at a contrary verdict. The district court properly denied plaintiffs' motion for JNOV with regard to plaintiffs' claims for loss of consortium, and the court of appeal erred in reversing this ruling.
DECREE
For the reasons assigned, the judgment of the court of appeal affirming the district court's judgment granting judgment notwithstanding the verdict and awarding penalties and attorney fees is reversed. In addition, the judgment of the court of appeal reversing the district court's denial of judgment notwithstanding the verdict and awarding additional damages for future medical expenses, future pain and suffering, loss of enjoyment of life, and loss of consortium is reversed. In all other respects, the judgment of the court of appeal is affirmed.
REVERSED IN PART, AFFIRMED IN PART.
NOTES
[*] Retired Judge Philip C. Ciaccio, assigned as Justice ad hoc, sitting for Chief Justice Catherine D. Kimball.
[1] Dr. Williams recommended plaintiff undergo a three level cervical decompression and fusion and discography of the lower lumbar spine.
[2] Previously, plaintiffs settled with Ms. Vizinat's insurer for the policy limits.
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362 S.W.3d 52 (2012)
Skylor W. RADMER, Respondent,
v.
STATE of Missouri, Appellant.
No. WD 74014.
Missouri Court of Appeals, Western District.
March 27, 2012.
*53 Pamela Kay Blevins, St. Joseph, MO, for appellant.
Ruth Sanders, Kansas City, MO, for respondent.
Before Division One: CYNTHIA L. MARTIN, Presiding Judge, THOMAS H. NEWTON, Judge, and KAREN KING MITCHELL, Judge.
CYNTHIA L. MARTIN, Judge.
The State appeals from the motion court's grant of Skylor Radmer's ("Radmer") Rule 29.15 motion based on the ineffective assistance of counsel he received during the sentencing phase of his bifurcated trial. The State claims that defense counsel's failure to call a psychologist to testify about Radmer's mental disability in the sentencing phase did not rise to the level of ineffective assistance of counsel. We affirm.
Factual and Procedural History[1]
Radmer was first charged with statutory rape and statutory sodomy in 2003. Bert Godding ("Godding") represented Radmer in that case. During the 2003 prosecution, Godding hired Dr. Bill Geis ("Dr. Geis"), a licensed clinical psychologist, to evaluate whether Radmer had the intellectual capacity to knowingly waive his Miranda rights before giving a statement to law enforcement. After an examination of Radmer, Dr. Geis concluded that Radmer had an adjustment disorder with depressed mood and borderline intellectual functioning. Godding relied on Dr. Geis's conclusions as the basis for a motion to suppress Radmer's statement, but the trial court denied the motion to suppress. Ultimately, though, the 2003 charges were dismissed by the State because the alleged victim refused to testify at trial.
Four years later, Radmer was charged with four counts of first-degree statutory sodomy, and again, Godding represented Radmer. Because the four counts involved two victims, the trial court severed counts III and IV,[2] and in 2008, the remaining counts proceeded to a bifurcated jury trial pursuant to section 557.036.[3] The jury found Radmer guilty of the remaining charges, both of which were first-degree statutory sodomy, and the sentencing phase followed.
During the sentencing phase, the State presented two types of evidence: (1) the items found in Radmer's bedroom, including little girls' underwear and "dolls" that "were cut in their genital areas" and had "dog hair ... glued to the genital areas," and testimony regarding the tendency of sex offenders to use those items in "working up to the offense"; and (2) testimony of other individuals who claimed that Radmer committed other, uncharged acts of sexual abuse. In contrast, Radmer presented testimony of three witnessestwo family members and his employer. The family members testified that they had never observed Radmer behave inappropriately with children. And Radmer's employer testified that he was a good employee. No evidence was presented regarding Radmer's impaired intellectual functioning.
After evidence presented by the State and by Radmer, the jury recommended an imprisonment term of ninety years for *54 each count. Before the trial court imposed a sentence, Godding argued that the sentencing assessment report may not be accurate because Radmer has a low IQ and may not have understood the questions asked of him during the pre-sentencing investigation. Godding asked the judge to "remember that, that [Radmer] does have those mental deficits." However, no evidence supporting Godding's assertion had been presented to the jury as it considered its recommended sentence. The trial court accepted the jury's recommendation and sentenced Radmer to ninety years imprisonment on both counts. The conviction was affirmed in State v. S.W.R., 302 S.W.3d 811 (Mo.App. W.D.2010).
Radmer filed a timely pro se Rule 29.15 motion. Counsel was appointed, and an amended motion was filed timely. The amended motion argued that Godding provided Radmer with ineffective assistance of counsel by failing "to hire an expert such as Dr. Bill Geis to present evidence regarding the effects of [Radmer's] mental disability in mitigation at [Radmer's] sentencing hearing." The motion court granted an evidentiary hearing. The hearing was held in front of Judge Patrick Robb ("Judge Robb"), the same judge who presided over Radmer's trial.
Dr. Geis testified at the evidentiary hearing regarding the evaluation he completed of Radmer for the 2003 case, and a written copy of the findings of the evaluation was admitted into evidence. The written copy of Dr. Geis's findings indicated that, as determined by the evaluation, Radmer had a "Full Scale IQ of 75," a score that places Radmer in the "[b]orderline range of intellectual functioning" and within the bottom five percent of all persons. Dr. Geis testified that Radmer's IQ score signified that his functioning age was ten years old. In addition, the findings revealed that Radmer's "thinking is concrete and simplistic, and he has significant difficulty grasping complex or abstract ideas."
With respect to the problems that people with borderline intellectual functioning have with sexual boundaries, Dr. Geis testified as follows: "They're catching up in those kind of areas, this discovery, just basic sexual knowledge is oftentimes lacking just as any kind of knowledge would be whether it's about government or about current affairs. And these individuals have less controls [sic] in that kind of way." Dr. Geis testified that a person with borderline intellectual functioning who behaves sexually inappropriately is different than a pedophile. According to Dr. Geis, a pedophile has "a very fixated and specific template that they're looking for," such as prepubescent boys or girls. In contrast, an individual who has borderline intellectual functioning and behaves sexually inappropriately is a "regressed kind of sex offender." Regressed sex offenders "typically [have] more psychosocial difficulties," and "their kind of sexual affiliation seems to be more general and certainly due to access as in, for example, this case where somebody is in the very living situation they're in." Dr. Geis concluded that Radmer was not a pedophile and that he believed Radmer was amenable to treatment.
Godding also testified at the evidentiary hearing. Godding admitted that he neither consulted with an expert nor considered putting on evidence regarding Radmer's impaired intellectual functioning or other psychological factors during the sentencing phase. Godding acknowledged that if he had an expert witness to provide evidence that would mitigate Radmer's culpability, he would have presented that evidence to the jury during the sentencing phase. In response to the question of whether he had a strategic reason for failing *55 to call Dr. Geis or a similar expert to testify as to Radmer's impaired intellectual functioning in the sentencing phase, Godding stated, "I don't believe that I necessarily had a reason not to or to do that.... I don't know why I didn't call someone like that."
Following the conclusion of the evidentiary hearing, the motion court granted Radmer's motion, finding that Godding's failure to call an expert witness to testify about Radmer's impaired intellectual functioning constituted ineffective assistance of counsel and that prejudice resulted from the ineffective assistance of counsel.
The State appeals.
Standard of Review
"Appellate review of the [motion] court's action on the motion filed under this Rule 29.15 shall be limited to a determination of whether the findings and conclusions of the [motion] court are clearly erroneous." Rule 29.15(k). Findings of facts and conclusions of law are "`clearly erroneous only if, after review of the entire record, we are left with a definite and firm impression that a mistake has been made.'" Williams v. State, 205 S.W.3d 300, 305 (Mo.App. W.D.2006) (quoting Johnson v. State, 189 S.W.3d 640, 644 (Mo.App. W.D. 2006)).
Analysis
"In order to prevail on an ineffective assistance of counsel claim, [Radmer] must show by a preponderance of the evidence that: (1) trial counsel's performance was deficient because [he] failed to exercise the customary skill and diligence that a reasonably competent attorney would exercise in similar circumstances; and (2) the deficient performance prejudiced [Radmer]." Dawson v. State, 315 S.W.3d 726, 731 (Mo.App. W.D.2010) (citing Strickland v. Washington, 466 U.S. 668, 687, 104 S. Ct. 2052, 80 L. Ed. 2d 674 (1984); State v. Simmons, 955 S.W.2d 729, 746 (Mo. banc 1997)). If Radmer has not established either the performance prong or the prejudice prong, then we need not consider the other, and his claim of ineffective assistance of counsel must fail. Id.
"To satisfy the performance prong, [Radmer] must `identify trial counsel's specific acts or omissions that were not in conformance with the range of competent representation, or that were the result of unreasonable professional judgment.'" Id. (quoting Williams, 205 S.W.3d at 305). Radmer must overcome the presumption that any challenged action was sound trial strategy, that trial counsel rendered adequate assistance of counsel, and that trial counsel made all significant decisions in the exercise of professional judgment. Id. "Trial strategy is judged by the `reasonableness of counsel's challenged conduct on the facts of the particular case, viewed as of the time of counsel's conduct.'" Id. (quoting Williams, 205 S.W.3d at 305).
"[T]o overcome the prejudice prong, [Radmer] must show a reasonable probability that, but for trial counsel's alleged deficiencies, the result of the proceeding would have been different." Id. (citing Strickland, 466 U.S. at 694, 104 S. Ct. 2052). "`Simply showing that the alleged error had a conceivable effect on the trial outcome is not sufficient; instead, the appellant must show that, absent the error, there is a reasonable probability that he would have been found not guilty.'" Id. (quoting Williams, 205 S.W.3d at 305).
The State claims that the motion court clearly erred in finding that Godding's failure to call Dr. Geis or similar expert to testify as to Radmer's impaired intellectual functioning during the sentencing phase of the trial constituted ineffective assistance *56 of counsel.[4] More specifically, the State claims that Godding, as a seasoned defense attorney, made a well-informed, strategic decision not to call Dr. Geis or a similar expert.
To successfully prove that trial counsel was ineffective for failing to call a witness, a defendant must prove four elements: (1) "trial counsel knew or should have known of the existence of the witness"; (2) "the witness could be located through reasonable investigation"; (3) "the witness would testify"; and (4) "the witness's testimony would have produced a viable defense." Hutchison v. State, 150 S.W.3d 292, 304 (Mo. banc 2004). Further, "[c]ounsel's decision not to call a witness is presumptively a matter of trial strategy and will not support a claim of ineffective assistance of counsel unless the defendant clearly establishes otherwise.'" Id.
All four elements were proven in this case. Godding admitted at the Rule 29.15 evidentiary hearing that he knew of the existence of Dr. Geis because Dr. Geis examined Radmer in connection with Godding's representation of Radmer in the 2003 prosecution. Dr. Geis's testimony revealed that he was available for the 2008 prosecution and would have been willing to testify during the sentencing phase. And the final elementthe witness's testimony producing a viable defensewas proven because "the submission of mental health history, subject to counsel's strategic judgment, is a viable defense during a bifurcated sentencing phase." Vaca v. State, 314 S.W.3d 331, 336 (Mo. banc 2010) (emphasis added).
While trial counsel's decision not to call a witness is presumptively a matter of trial strategy, the trial court's conclusion that Radmer proved otherwise during the evidentiary hearing is not clearly erroneous. The transcript of the trial, of which the motion court took judicial notice, indicated that Godding was aware of Radmer's impaired intellectual functioning because Godding asked the trial court to take note of Radmer's "mental deficits" when relying on the sentencing assessment report, and in anticipation of sentencing. Though Godding's request of the trial court evidenced his appreciation of the relevance of such information at the sentencing stage, Godding failed to present any evidence of Radmer's impaired intellectual functioning to the jury as it considered the recommended sentence to be imposed. Further, when asked about his decision not to call Dr. Geis or a similar expert to testify as to Radmer's impaired intellectual functioning at sentencing, Godding testified at the evidentiary hearing as follows:
Q: Okay. And did you consult with an expert about putting on evidence about Mr. Radmer's mental disability or any other psychological factors? Did you consider putting on that evidence at sentencing?
A: In the 2007 case I did not.
....
Q: If you had had an expert witness to testify that Mr. Radmer would likely have benefitted from treatment earlier in his life but he wasn't able to get that treatment, would you have wanted to present that evidence to the jury at sentencing?
*57 A: Sure. I think that would be reasonable.
Q: And if you had had an expert witness to testify that Mr. Radmer is not a permanently dangerous sociopath pedophile, would you have wanted to present that evidence to the jury as well?
A: Yes.
Q: Okay. And just to be clear, you've been in the courtroom while Dr. Geis testified now?
A: Yes.
Q: And you heard his testimony?
A: Yes.
Q: Did you have a strategic reason for failing to put on evidence such as the evidence that Dr. Geis testified to at sentencing?
A: I don't believe that I necessarily had a reason not to or to do that. Mr. Radmer hadat the time of sentencing wasyou know, was older than the first time he had been there. He has beenheld a job. He was in his early 20's. I don'tI don't know why I didn't call someone like that. But I don't know that it might beat that time that it was necessarily pertinent, I think, at that point. I certainly didn't have the information that Dr. Geis was talking about.
On this evidence, the motion court concluded that Godding's testimony "rebutted the presumption that counsel's failure to call Dr. Geis was a matter of trial strategy." We cannot conclude that the motion court's finding is clearly erroneous. It is true that a lack of recollection by trial counsel of the reason for making a strategic decision at trial does not, alone, "overcome the presumption that [counsel's] decision... was a reasonable trial strategy." Dawson v. State, 315 S.W.3d 726, 734 (Mo. App.W.D.2010) Here, however, Godding testified that he didn't believe he had a strategy one way or the other, and that he didn't know why he didn't call an expert. The trial court could reasonably have interpreted Godding's testimony as an admission that he had no trial strategy, as opposed to testimony that he had a trial strategy he could no longer recall. See Vaca, 314 S.W.3d at 337 ("Here however, experienced defense counsel candidly admitted that, without consideration and for no strategic reason, he failed to call a mental health expert. His failure to consider was ineffective.").
Moreover, even if the trial court accepted Godding's musings on the stand as present day rationalizations for his failure to consider calling an expert to testify during the sentencing phase, the trial court was free to conclude on this record that a strategy based on those musings was not reasonable. Cf. White v. State, 290 S.W.3d 162, 165 (Mo.App. E.D.2009) (noting that if trial counsel cannot articulate a reasonable strategy for failing to strike an admittedly biased venireperson, trial counsel has failed to exercise the customary skill and diligence of a reasonably competent attorney). This is particularly so given Godding's awareness of Radmer's mental impairment, and in light of Godding's request that Radmer's impaired intellectual functioning be considered by the trial court in sentencinga request made after the jury had rendered its verdict regarding recommended sentencing.
Radmer successfully established that Godding's failure to call Dr. Geis or a similar expert during the sentencing phase fell below an objective standard of reasonableness. The motion court's findings of fact and conclusions of law regarding the performance prong are not clearly erroneous.
Because the motion court's findings and conclusions with respect to the performance prong are not clearly erroneous, we must consider whether Radmer established *58 the prejudice prong. The State argues that there was no reasonable probability that, as a result of Godding's failure to call Dr. Geis or a similar expert during the sentencing phase, Radmer was prejudiced. More specifically, the State claims that, because Dr. Geis had worked for the public defender in previous cases, the jury would have found his testimony biased. In addition, the State contends that Dr. Geis's testimony would be harmful to Radmer rather than helpful because Dr. Geis testified at the evidentiary hearing that Radmer demonstrated "a consistent pattern of sexual deviance" and Dr. Geis speculated that Radmer had "six to eight, something like that" victims of his sexual abuse.
The motion court made the following conclusion regarding the prejudice prong: "In light of the testimony of Dr. Geis presented at the evidentiary hearing, there is a reasonable probabilityalthough not a certaintythat presenting Dr. Geis's testimony would have led to a different outcome in the punishment stage of the trial." We cannot conclude that this finding is clearly erroneous. The motion court observed that "[t]he reason for having a separate penalty phase in non-capital trials is to permit a broader range of evidence relevant to the appropriate punishment to be imposed by the jury." State v. Prosser, 186 S.W.3d 330, 333 (Mo.App. E.D.2005) (citing State v. Ervin, 979 S.W.2d 149, 158 (Mo. banc 1998)). The motion court also observed that "a defendant's significant mental illness and intellectual deficits has been recognized as establishing a reasonable probability of a different sentencing outcome." See Glass v. State, 227 S.W.3d 463, 471 (Mo. banc 2007) (recognizing that evidence of a defendant's impaired intellectual functioning can be prejudicial as such evidence can be inherently mitigating.).
The State's arguments with respect to the motion court's finding of prejudice can be simplified into one: the motion court's conclusion that prejudice existed was error because the motion court failed to ascertain the possible effect of Dr. Geis's testimony. What the State fails to take into consideration is that Judge Robbas both the presiding judge at trial and at the Rule 29.15 motion hearingwas in a unique position to ascertain the effect of failing to call Dr. Geis or a similar expert to testify as to Radmer's impaired intellectual functioning during the sentencing phase. See State v. Wells, 804 S.W.2d 746, 749 (Mo. banc 1991) ("It is ... important that the same judge presided at the trial and at the 29.15 hearing, and was thus better equipped to assess the strengths and possible weaknesses of the prosecution's case....").
Because Judge Robb presided over the sentencing phase of Radmer's trial, he knew that the State presented testimony from other individuals who claimed that Radmer committed other, uncharged acts of sexual abuse. Thus, the State's claim that Dr. Geis's testimony that Radmer demonstrated "a consistent pattern of sexual deviance" and that Dr. Geis's speculation that Radmer victimized "six to eight" individuals would harm, rather than aid, Radmer's claim is false. The jury already knew about Radmer's additional victims and pattern of sexual abuse.
In addition, the State's claim that the jury would find Dr. Geis biased also fails. Dr. Geis testified at the evidentiary hearing that, while he had been hired by the public defender's office as an expert witness in the past, he had also been hired by prosecutors and by private attorneys for civil suits. Judge Robb heard Dr. Geis's testimony at the evidentiary hearing and was in the best position to evaluate Dr. Geis's possible bias.
The motion court's conclusion that there was a reasonable probability that presenting *59 Dr. Geis's testimony would have led to a different outcome is not clearly erroneous.
Conclusion
The motion court found that Radmer's trial counsel was ineffective and that Radmer was thereby prejudiced. We defer to those findings, and cannot conclude them to be clearly erroneous on this record. The motion court's judgment granting Radmer a new sentencing phase of his trial is affirmed.
All concur.
NOTES
[1] On an appeal from the motion court's ruling on a Rule 29.15 motion, we view the facts in the light most favorable to the verdict. Hutton v. State, 345 S.W.3d 373, 374 n. 1 (Mo.App. W.D.2011).
[2] The State dismissed counts III and IV following trial on counts I and II.
[3] All statutory references are to RSMo 2000 as supplemented unless otherwise indicated.
[4] Because the trial was bifurcated pursuant to section 557.036 and because Radmer's Rule 29.15 motion solely complained about Godding's representation during the sentencing phase, it follows that an evaluation of Godding's performance is limited to the sentencing phase of the trial. The motion court correctly limited its analysis to the sentencing phase, and we will do the same in our review of the motion court's findings of fact and conclusions of law.
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55 So. 3d 1214 (2010)
Earnest Lee WALKER, Sr.
v.
Deborah TILLMAN.
2090155.
Court of Civil Appeals of Alabama.
June 25, 2010.
*1215 Earnest Lee Walker, Sr., pro se.
Troy King, atty. gen., and Todd E. Hughes, asst. atty. gen., for appellee.
PER CURIAM.
Earnest Lee Walker, Sr., an inmate at Donaldson Correctional Facility, appeals from the judgment dismissing Walker's civil action against Mobile County assistant district attorney Deborah Tillman. Tillman prosecuted Walker in March 2009, obtaining convictions against him on charges of burglary, sexual abuse, attempted sodomy, and obstructing justice.[1] In his complaint, Walker alleges that Tillman violated his civil rights, specifically, his right to due process under both the United States Constitution and the Alabama Constitution of 1901, by knowingly using what he said was false testimony to obtain the convictions.[2] Walker based his claim on discrepancies between the testimony that certain witnesses gave at pretrial proceedings and the testimony they gave at his criminal trial.
Tillman moved to dismiss Walker's civil action on the ground of prosecutorial immunity. The trial court granted the motion without elaboration. Walker, appearing pro se, appealed to the Alabama Supreme Court, which transferred the appeal to this court pursuant to § 12-2-7(6), Ala.Code 1975.
"The appropriate standard of review of a trial court's [ruling on] a motion to dismiss is whether[,] `when the allegations of the complaint are viewed most strongly in the pleader's favor, it appears that the pleader could prove any set of circumstances that would entitle [the pleader] to relief.' Nance v. Matthews, 622 So. 2d 297, 299 (Ala.1993); Raley v. Citibanc of Alabama/Andalusia, 474 So. 2d 640, 641 (Ala.1985). This Court does not consider whether the plaintiff will ultimately prevail, but only whether the plaintiff may possibly prevail. Nance, 622 So.2d at 299. A `dismissal is proper only when it appears beyond doubt that the plaintiff can prove no set of facts in support of the claim that would entitle the plaintiff to relief.' Nance, 622 So.2d at 299; Garrett v. Hadden, 495 So. 2d 616, 617 (Ala.1986); Hill v. Kraft, Inc., 496 So. 2d 768, 769 (Ala.1986)."
Lyons v. River Road Constr., Inc., 858 So. 2d 257, 260 (Ala.2003); see also Rule 12(b), Ala. R. Civ. P.
Walker asserts that, because he sued Tillman in her individual capacity, prosecutorial immunity does not shield her from liability for developing a trial strategy that he claims deliberately violated the law.
In Van de Kamp v. Goldstein, 555 U.S. 335, 129 S. Ct. 855, 172 L. Ed. 2d 706 (2009), the United States Supreme Court discussed the relationship between a prosecutor's absolute immunity and qualified immunity, which applies to public officials who are sued in their individual capacities. In that case, Goldstein filed a petition for writ of habeas corpus, alleging that, in obtaining a murder conviction against him, prosecutors in the Los Angeles County District Attorney's Office had relied in large part upon the testimony of a jailhouse *1216 informant. Goldstein claimed that the informant's testimony was unreliable and, indeed, false. He alleged that the informant had previously received reduced sentences for providing prosecutors with favorable information in other cases and that at least some prosecutors in the L.A. County District Attorney's Office were aware of that favorable treatment. Goldstein asserted that the prosecutors failed to provide that potential impeachment information to his attorney. 555 U.S. at ___, 129 S.Ct. at 859.
An evidentiary hearing was held on Goldstein's petition. After the hearing, the federal district court agreed with Goldstein that the informant had not been truthful and that, if the prosecutors had told Goldstein's lawyer that, in the past, the informant had received reduced sentences in return for favorable testimony, "it might have made a difference" in Goldstein's case. Id. The district court ordered the state to hold a new trial or to release Goldstein. Goldstein had already served 24 years of his sentence, and the state decided to release him rather than retry him. Id. Upon his release, Goldstein sued his prosecutors, who claimed absolute immunity. In holding that the prosecutors were entitled to absolute immunity in such a situation, the Supreme Court reasoned that a prosecutor
"`inevitably makes many decisions that could engender colorable claims of constitutional deprivation. Defending these decisions, often years after they were made, could impose unique and intolerable burdens upon a prosecutor responsible annually for hundreds of indictments and trials.' [Imbler v. Pachtman, 424 U.S. 409,] at 425-26, 96 S. Ct. 984 [(1976)]. The Court thus rejected the idea of applying the less-than-absolute `qualified immunity' that the law accords to other `executive or administrative officials,' noting that the `honest prosecutor would face greater difficulty' than would those officials `in meeting the standards of qualified immunity.' Id., at 425, 96 S. Ct. 984."
Van de Kamp, 129 S.Ct. at 860. Thus, Walker's attempt to avoid Tillman's defense of absolute immunity by suing her in her individual capacity must fail.
Walker contends that, in allowing witnesses to testify falsely, Tillman acted outside of the scope of her duties as a prosecutor and, thus, should not be afforded absolute prosecutorial immunity. In Bogle v. Galanos, 503 So. 2d 1217, 1218 (Ala.1987), our supreme court discussed the application of the doctrine of absolute immunity in a case in which a prosecutor had been sued. The court stated:
"`The doctrine of absolute prosecutorial immunity from civil damages suits under § 1983 for actions "intimately associated with the judicial phase of the criminal process" was expressly recognized in Imbler v. Pachtman, 424 U.S. 409, 430, 96 S. Ct. 984, 994, 47 L. Ed. 2d 128 (1976). The more difficult question arises in a situation where functions performed by a prosecutor "cast him in the role of an administrator or investigative officer rather than that of advocate," id. at 430-431, 96 S. Ct. at 995. In such cases, a qualified good-faith immunity applies rather than the absolute immunity associated with the judicial process. [Citations omitted.]
"`In Imbler, absolute prosecutorial immunity was extended to allegations that a prosecutor knowingly used false testimony and suppressed material evidence at trial. 424 U.S. at 431 n. 33, 96 S. Ct. at 995 n. 33. In Henzel v. Gerstein, 608 F.2d 654, 657 (5th Cir. 1979), this Court held that allegations of filing an information without an *1217 investigation, filing charges without jurisdiction, filing a baseless detainer, offering perjured testimony, suppressing exculpatory evidence, refusing to investigate complaints about the prison and threatening defendant with further criminal prosecution were within the absolute immunity recognized in Imbler, and could not be the basis for recovery under § 1983.'
"Fullman v. Graddick, 739 F.2d 553, 558-59 (11th Cir.1984).
"The conclusory allegations of the complaint fall within the absolute immunity described in Fullman. Ordinarily these allegations might satisfy the rules of notice pleading and survive a motion to dismiss, but they are insufficient here. Where immunity is involved, the complaining party must specifically allege facts to show how the acts of the defendant are beyond the scope of the immunity. Absolute immunity would not be absolute if it did not support a motion to dismiss. To hold otherwise would subject the prosecutor to numerous vexatious summary judgment proceedings and would undercut the very foundation of the rule.
"In the words of Judge Learned Hand, who wrote of the prosecutor's immunity from actions for malicious prosecution:
"`As is so often the case, the answer must be found in a balance between the evils inevitable in either alternative. In this instance it has been thought in the end better to leave unredressed the wrongs done by dishonest officers than to subject those who try to do their duty to the constant dread of retaliation.'
"Gregoire v. Biddle, 177 F.2d 579, 581 (2d Cir.1949), cert. denied, 339 U.S. 949, 70 S. Ct. 803, 94 L. Ed. 1363 (1950).
"To resolve the issues raised in regard to Bogle's claims alleging causes of action under state law, we need not address common law immunity, because it is sufficient to say that the immunity under state law in this case is at least as broad as immunity under a § 1983 action."
Bogle v. Galanos, 503 So.2d at 1218-19.
In this case, just as the plaintiff did in Imbler v. Pachtman, 424 U.S. 409, 96 S. Ct. 984, 47 L. Ed. 2d 128 (1976), Walker sued Tillman alleging that she knowingly used false testimony to obtain his conviction. Clearly, Tillman is afforded the protection of absolute immunity, as recognized in Imbler; thus Walker's § 1983 claim, asserting deprivation of his rights under the federal constitution, must fail. As to Walker's state-law claim, we rely on Bogle, supra, in which our supreme court held that immunity under state law in a case dealing with prosecutorial immunity is "at least as broad as immunity under a § 1983 action." Bogle, 503 So.2d at 1219. Accordingly, the trial court correctly dismissed Walker's civil action on the basis of prosecutorial immunity.
Because we find that Tillman was entitled to absolute immunity in this case, we pretermit discussion of Walker's assertion that the trial court erred in granting the motion to dismiss without making specific findings of fact as to whether Walker "may possibly prevail."
For the reasons set forth above, the judgment of the trial court is affirmed.
AFFIRMED.
All the judges concur.
NOTES
[1] The Alabama Court of Criminal Appeals affirmed Walker's convictions, without an opinion. Walker v. State (No. CR-08-1521, Jan. 29, 2010), ___ So.3d ___ (Ala.Crim.App.2010) (table).
[2] Although Walker does not explicitly assert a claim under 42 U.S.C. § 1983 in his complaint, we note that § 1983 provides a civil action for the deprivation of rights secured by the United States Constitution.
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55 So. 3d 143 (2011)
Shirley Ann James HANSHAW
v.
Larry HANSHAW.
No. 2005-CT-01680-SCT.
Supreme Court of Mississippi.
January 20, 2011.
Rehearing Denied March 17, 2011.
*145 Stewart Guernsey, Clarksdale, attorney for appellant.
Thomas H. Freeland, IV, attorney for appellee.
EN BANC.
ON WRIT OF CERTIORARI
WALLER, Chief Justice, for the Court:
¶ 1. Following the chancery court's equitable division of the Hanshaws' property, Shirley was held in contempt for failure to leave the marital home by the court-ordered deadline. The Court of Appeals reversed and rendered judgment in Shirley's favor, and we granted certiorari. Although the court denied Shirley notice and a hearing, the record shows that she did not follow chancery court orders. Therefore, we vacate the Court of Appeals' decision, reverse the chancellor's contempt finding and subsequent denial of Shirley's motion to reconsider, and remand the case to the chancery court for contempt proceedings consistent with this opinion.
FACTS AND PROCEEDINGS BELOW
¶ 2. The chancery court ordered the equitable division of assets and liabilities in the Hanshaws' extremely contentious divorce.[1] The court ordered the marital home to be sold by September 21, 2004. Shirley and Larry located a buyer and scheduled the closing for September 30, 2004.[2] Later, Shirley rescheduled the closing for October 5, 2004.
¶ 3. Although Shirley had arranged for a company to move her belongings, she cancelled its services a day before closing. Thus, on October 4, 2004, counsel for both parties appeared before the court to express their concern that Shirley's failure to vacate the home could prevent the scheduled sale. On October 5, 2004, the chancellor ordered Shirley to vacate the home by 2:00 p.m. on the scheduled closing day. If she failed to comply, she would pay Larry a $500-per-hour penalty for each hour she remained at the home, and she would be held in contempt. Shirley did not vacate the home as ordered.
¶ 4. On October 6, 2004, Larry filed a contempt motion, and the court ruled on the motion the next day. Because Shirley did not leave the home as ordered, the court imposed a $12,000 fine. Shirley paid the fine to Larry from her share of the proceeds from the sale of their home.
¶ 5. The chancellor later denied Shirley's Rule 59 motion to reconsider the contempt finding. See M.R.C.P. 59. Shirley had argued that she should not be held in contempt because she did not receive notice and a hearing. The chancellor determined that Shirley's general appearance before the court during a hearing on one of *146 Larry's motions had waived any jurisdictional deficiencies.
¶ 6. The Court of Appeals held that the chancellor erred in finding that Shirley had waived proper notice of the contempt action. Hanshaw, 55 So.3d at 173-74. Then, the Court of Appeals reversed the chancellor's decision, rendered judgment in Shirley's favor, and taxed all costs of the appeal to Larry. Id.
ISSUES
¶ 7. We rephrase and review the following issues raised by both parties.
I. Whether the trial court had jurisdiction to enter a contempt order against Shirley Hanshaw when she did not receive service of process consistent with Mississippi Rule of Civil Procedure 81.
II. Whether the trial court erred by assessing a $500-per-hour contempt penalty against Shirley Hanshaw.
DISCUSSION
I. Jurisdiction and notice
¶ 8. We review a chancellor's denial of a Rule 59 motion under an abuse-of-discretion standard. Brooks v. Roberts, 882 So. 2d 229, 233 (Miss.2004). On appeal, the movant prevails by showing that the denied Rule 59 motion would have "correct[ed] a clear error of law. . . ." Id.
¶ 9. Because contempt proceedings are distinct actions, they require notice consistent with Mississippi Rule of Civil Procedure 81(d). M.R.C.P. 81(d); Shavers v. Shavers, 982 So. 2d 397, 402 (Miss.2008); Isom v. Jernigan, 840 So. 2d 104, 106 (Miss.2003); Dennis v. Dennis, 824 So. 2d 604 (Miss.2002). A chancery court's continuing jurisdiction to enforce a judgment does not waive the requirement for a Rule 81 summons in contempt actions. Vincent v. Griffin, 872 So. 2d 676, 677 (Miss.2004). Where a party does not waive proper notice of a contempt action, we have reversed the contempt finding and remanded the matter to the chancery court. Id. at 679; Weeks v. Weeks, 556 So. 2d 348, 350 (Miss.1990).
¶ 10. The Court of Appeals properly relied on this Court's opinions in Isom and Dennis to reverse the chancellor's contempt finding. Hanshaw, 55 So.3d at 173-75. Here, the record does not indicate that Shirley received proper notice of the October 4 proceeding which led to her contempt citation. While counsel for both parties appeared before the court on October 4, Rule 81 requires that a summons be personally served on Shirley before the contempt proceeding. M.R.C.P. 81(d). Further, the record does not indicate that a Rule 81 summons was ever issued after Larry filed his October 6 contempt motion or before the court's October 7 order holding Shirley in contempt. Because Shirley did not receive proper notice or an opportunity to defend against the charges in a contempt hearing, we reverse the chancellor's contempt finding and subsequent denial of Shirley's motion to reconsider. Shavers, 982 So.2d at 402; Brooks, 882 So.2d at 233.
¶ 11. But we also find that the Court of Appeals erred by rendering judgment in Shirley's favor. While the record is limited, Shirley clearly did not comply with the chancery court's orders to vacate the marital home. The chancellor had entered at least two valid orders that required Shirley to leave the marital home by specific dates. She did not comply with either order. Because Shirley did not follow unambiguous court orders, we remand this case to the chancery court for contempt proceedings properly noticed pursuant *147 to Rule 81(d)(2). Vincent, 872 So.2d at 679.
II. Contempt penalty
¶ 12. With contempt matters, we defer to the chancellor's discretion. Dennis, 824 So.2d at 608. When reviewing a chancellor's contempt finding, we first determine whether the contempt is civil or criminal. Id. (citation omitted).
¶ 13. Civil contempt orders enforce a private party's rights or compel compliance with a court's order. Purvis v. Purvis, 657 So. 2d 794, 796 (Miss.1994). Hence, the contemnor pays any resulting penalty to the injured party. Id. We have allowed a chancellor wide discretion in "exerting his coercive powers to enforce his decrees." Matthews v. Matthews, 227 Miss. 358, 86 So. 2d 462 (1956). See also Miss.Code Ann. § 9-5-87 (Rev.2002). But because civil contempt vindicates a private party's rights, the imposed sanction should not exceed the injured party's damages and expenses. Wyssbrod v. Wittjen, 798 So. 2d 352, 368 (Miss.2001). And generally, the court may award the prevailing party attorney's fees. Ladner v. Logan, 857 So. 2d 764, 773 (Miss.2003). See Corporate Mgmt., Inc. v. Greene County, 23 So. 3d 454, 466 (Miss.2009) (citation omitted) ("[W]here a party's intentional misconduct causes the opposing party to expend time and money needlessly, then attorney fees and expenses should be awarded to the wronged party."). We apply a manifest-error standard of review to civil-contempt orders. Purvis, 657 So.2d at 797.
¶ 14. Conversely, constructive criminal contempt punishes a party for noncompliant conduct outside the court's presence. Moulds v. Bradley, 791 So. 2d 220, 224-25 (Miss.2001). Along with proper notice and a hearing, criminal-contempt actions require additional procedural safeguards and a heightened burden of proof. In re Williamson, 838 So. 2d 226, 237-38 (Miss.2002). The contemnor must pay constructive criminal-contempt fines to the court, rather than to an injured party. Common Cause of Miss. v. Smith, 548 So. 2d 412, 416 (Miss.1989).
¶ 15. Shirley contends that the contempt finding was necessarily criminal. She argues that since the order finding her in contempt was entered after her contemptuous acts were completed, there was no way for her to purge herself of contempt. Further, if the chancellor imposed criminal contempt, the court exceeded Mississippi Code Section 9-1-17, which allows a $100 fine per contempt event.[3] But Shirley also argues that remand is now "futile" since she has "purged herself beyond cavil" of any contempt.
¶ 16. While disputed, the record shows that the chancellor intended to impose civil contempt. The primary purpose of the prospective penalty was to compel Shirley's compliance with the court's earlier judgment, which had required the home to be sold by September 21, 2004. Alternately, the penalty attempted to compel her to move by the rescheduled closing date of October 5, 2004. The contempt finding also enforced Larry's right to his portion of the proceeds from the sale. Finally, the court ordered Shirley to pay the fine to Larry, which further supports that the contempt was civil.
*148 ¶ 17. Here, the chancellor distributed the sanction to Larry without a finding on the damages, expenses, and attorney's fees that Larry had incurred because of Shirley's delay in leaving the home. Therefore, we find that the chancellor committed manifest error in not making this necessary finding for a civil-contempt citation. Purvis, 657 So.2d at 797.
¶ 18. We further find that Shirley has not "purged" herself of a civil-contempt finding simply because the time for her performance has passed. See Common Cause, 548 So.2d at 415 (citation omitted) (civil contemnor purges contempt finding by paying costs and expenses and complying with terms of court's order). On remand, any potential civil-contempt sanction should appropriately measure Larry's damages and attorney's fees. Corporate Mgmt., Inc., 23 So.3d at 466. Likewise, in any future constructive criminal-contempt proceeding, the court should allow Shirley the appropriate procedural safeguards. In re Williamson, 838 So. 2d 226 at 237-38. We leave the calculation of an appropriate penalty for a constructive criminal contempt finding to the chancellor's discretion. Miss.Code Ann. § 9-1-17 (Rev. 2002).
CONCLUSION
¶ 19. We reverse the decision of the Court of Appeals rendering judgment in Shirley's favor. We also reverse the chancellor's contempt finding and subsequent denial of Shirley's motion to reconsider and remand this case to the chancery court for contempt proceedings consistent with this opinion.
¶ 20. REVERSED AND REMANDED.
CARLSON AND GRAVES, P.JJ., DICKINSON, RANDOLPH, LAMAR, KITCHENS AND PIERCE, JJ., CONCUR. CHANDLER, J., NOT PARTICIPATING.
NOTES
[1] The Court of Appeals' opinion includes additional facts that are omitted here for brevity. Hanshaw v. Hanshaw, 55 So. 3d 170 (Miss.Ct. App.2009).
[2] The record does not show where the court approved a different deadline for the sale. Therefore, we assume that the closing deadline should have been September 21, 2004.
[3] Shirley cites no relevant authority to support her related contentions that the contempt finding unjustly enriched Larry and that the amount of the sanction contributed to her "impoverishment by divorce." We have no obligation to consider an assignment of error unsupported by reasons or authority. M.R.A.P. 28(a)(6); Hoops v. State, 681 So. 2d 521, 535 (Miss.1996).
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https://www.courtlistener.com/api/rest/v3/opinions/2544827/
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55 So. 3d 970 (2011)
PARAGON LOFTS CONDOMINIUM OWNERS ASSOCIATION, INC.
v.
PARAGON LOFTS, L.L.C., Ekistics, Inc., Edifice Construction Company, The Roof Doctors and Minerit, Inc.
No. 2010-CA-0419.
Court of Appeal of Louisiana, Fourth Circuit.
January 14, 2011.
*971 Raymond R. Egan, III, Lauren Fajoni Bartlett, George D. Fagan, Catherine L. Davidson, Leake & Andersson, L.L.P., New Orleans, LA, for Plaintiff/Appellant.
Andrew A. Braun, Mark T. Mahfouz, Gieger, Laborde & Laperouse, L.L.C., New Orleans, LA, for Royal Commercial Construction, Inc.
Mark W. Verret, Brett M. Bollinger, Dax C. Foster, Allen & Gooch Metairie, LA, for Pontchartain Mechanical Company, Inc.
James M. Benson, Ungarino & Eckert, Metairie, LA, for Ekistics, Inc.
Wade A. Langlois, III, Gevin P. Grisbaum, Gaudry Ranson Higgins & Gremillion, *972 LLC, Gretna, LA, for Edifice Construction, Inc.
(Court composed of Judge DENNIS R. BAGNERIS, SR., Judge ROLAND L. BELSOME, Judge PAUL A. BONIN).
ROLAND L. BELSOME, Judge.
This lawsuit was initiated by The Paragon Lofts Condominium Owners Association, Inc. (Condo Association) on March 11, 2002, alleging damages resulting from construction defects relating to the conversion of the building into condominium units. The original named defendants were The Paragon Lofts, ekistics, Inc., The Roof Doctor, Inc., Minerit, Inc., and Edifice Construction, Inc. The first petition filed asserted claims of breach of warranty and redhibition for structural defects in roof and exterior walls leading to water intrusion.
On July 29, 2003, a supplemental and amending petition was filed naming additional defendants related to the claims of water intrusion from the roof and exterior walls. A second supplemental and amending petition named two insurers but made no new allegations regarding damages. In a third supplemental and amending petition, filed on October 30, 2009, the Condo Association named Schiro Del Bianco Enterprises, Inc., Pontchartrain Mechanical Company, Inc., and Royal Commercial Construction, Inc. and their insurers. The third supplemental and amending petition also asserted claims of defective construction of bathrooms and showers. The newly added parties were subcontractors who allegedly performed the faulty bathroom and shower work for the contractor Edifice.
Edifice filed an exception of peremption claiming that the breach of warranty claims for the bathrooms and showers were perempted under the New Home Warranty Act (NHWA). After hearing arguments, the trial court granted Edifice's exception of peremption and dismissed the bathroom/shower claims asserted by the Condo Association. No written reasons were assigned to the trial court's ruling. The Condo Association filed a motion for reconsideration or alternatively for a new trial, which the trial court denied. The trial court certified the judgment as final and appealable.
Afterwards, the Condo Association moved the trial court to amend its judgment to also include the dismissal of the bathroom/shower claims asserted against Schiro, Pontchartrain Mechanical and Royal Commercial, who had not joined in the exception filed by Edifice. The trial court drafted an amended judgment adding the additional parties. Louisiana law allows for the amendment of final judgments under limited circumstances. La. C.C.P. art. 1951. A final judgment may be amended by the trial court on the motion of any party or on its own motion, at any time to alter the phraseology, but not the substance, of the judgment or to correct errors of calculation. Id. Thus, a judgment may be amended by the court only if the amendment takes nothing from or adds nothing to the original judgment. Villaume v. Villaume, 363 So. 2d 448 (La. 1978).
Although the Condo Association couched the amendment to the judgment as a change in phraseology, rewriting a judgment to include additional parties clearly adds to the judgment and is therefore substantive. There are three methods by which a trial court can make a substantive change in a judgment: 1) the timely motion for new trial; 2) timely appeal; or 3) petition or action for nullity. Webster v. Boh Bros. Const. Co., Inc., 603 So. 2d 761 (La.App. 4th Cir.1992). When the trial court does not follow the one of *973 the prescribed methods for making a substantive amendment to a judgment, the amended judgment is an absolute nullity. Francis v. Lafon Nursing Home of the Holy Family, 02-1863 (La.App. 4 Cir. 3/19/03), 840 So. 2d 1281. In this case, the trial court denied the motion for new trial and later amended the judgment. Accordingly, we find the amended judgment, dated January 14, 2010, is an absolute nullity. The original judgments rendered on November 16, 2009 and January 5, 2010, which make final the dismissal of the bathroom/shower claims asserted against Edifice, are hereby reinstated.[1]
On appeal the Condo Association sets forth four assignments of error: 1) the trial court incorrectly determined that the amended claims did not "relate back" to the Association's original petition; 2) the trial court incorrectly applied the law in effect on the date the construction defects were discovered instead of the conversion date which was held by the trial court and this court to be the warranty commencement date; 3) the trial court violated plaintiff's due process by retroactively applying procedural changes to the warranty periods when such application effectively deprived the plaintiff of vested rights; and 4) the trial court violated plaintiff's due process by retroactively applying substantive changes in the Louisiana New Home Warranty Act (NHWA).
By peremptory exception, the defendant argues that plaintiffs' bathroom/shower claims under the New Home Warranty Act have prescribed and are hereby perempted pursuant to the provisions of La. R.S. 9:3144 and 9:3146.
The New Home Warranty Act governs the exclusive remedies, warranties and prescriptive periods as between a builder and owner relative to home construction. La. R.S. 9:3150. The NHWA was originally enacted in 1986 and amended in 1997, 1999, 2001, and 2003. The amendments to the NHWA at issue in this appeal are the passage of Acts 2001, No. 179 § 1,[2] in which a peremptive period was substituted for the stated prescriptive period and the change in the warranty period provided in La. R.S. 9:3144 A(3).[3]
By definition under the NHWA, the "warranty commencement date" referenced in La. R.S. 9:3144 is the date that legal title is conveyed to the initial purchaser or the date that the home is first occupied, whichever occurs first. La. R.S. 9:3143(7). The Condo Association has asserted the commencement date of the warranty is March 12, 2001.[4] The courts have consistently held that the warranties afforded the buyer are those in effect on the "warranty commencement date." See, Hutcherson v. Harvey Smith Construction, *974 Inc., et al, 08-1046, p. 5 (La. App. 1 Cir. 2/13/09), 7 So. 3d 775, 778 (citing Barnett v. Watkins, 06-2442 (La.App. 1 Cir. 9/19/07), 970 So. 2d 1028, 1034, writ denied, 07-2066 (La. 12/14/07), 970 So. 2d 537; see also Eiswirth v. Anthony L.Golemi, Contractor, Inc., 03-1065 (La.App. 5 Cir. 12/30/03) 864 So. 2d 792. Therefore, the Condo Association is protected by a ten-year warranty period for major structural defects.
Next, we must determine the correctness of the trial court's finding that the peremptive period imposed by Acts 2001 applies retroactively.[5] Prior to that amendment, La. R.S. 9:3146 was titled "Prescription" and provided:
Any action to enforce any warranty provided in this Chapter shall prescribe thirty days after the expiration of the appropriate time period provided in R.S. 9:3144.
La. R.S. 9:3146 (West 2000) (emphasis added).
After the passage of Acts 2001, La. R.S. 9:3146 is titled "Peremption" and states:
Any action to enforce any warranty provided in this Chapter shall be subject to a peremptive period of thirty days after the expiration of the appropriate time period provided in R.S. 9:3144.
La. R.S. 9:3146 (emphasis added).
Generally, statutes of limitation are accorded retroactive application so long as it does not divest a plaintiff of his vested right in his cause of action. Lott v. Haley, 370 So. 2d 521, 523 (La.1979). In Metairie III v. Poche' Construction, Inc., 10-353 (La.App. 4 Cir. 9/29/2010), 49 So. 3d 446, this Court explained what establishes a party's vested right in his cause of action:
"[u]nder Louisiana law, a cause of action accrues when a party has the right to sue." Patriot American Hospitality Partnership, LP v. Mississippi Land Holdings, Inc., 2006-0601, p. 5 (La.App. 4 Cir. 12/13/06), 948 So. 2d 249, 252. Fault, causation, and damages are required for a cause of action to accrue. Owens v. Martin, 449 So. 2d 448, 451 (La.1984). "Once a party's cause of action accrues, it becomes a vested property right that may not constitutionally be divested." Cole v. Celotex Corp., 599 So. 2d 1058, 1063 (La.1992). "Damage is sustained for the purposes of prescription when it has manifested itself with sufficient certainty to support the accrual of a cause of action." Bell v. Glaser, 2008-0279, p. 5 (La.App. 4 Cir. 7/1/09), 16 So. 3d 514, 517. "Where a claimant has suffered some but not all damages, prescription runs from the day on which he suffered actual and appreciable damages even though he may thereafter realize more precise damages." Id.
Metairie, III, supra, p. 6, 49 So. 3d 446.
The Condo Association relies on the Eiswirth case in support of its position that the peremptive period was incorrectly applied retroactively by the trial court. Eiswirth, supra. The Eiswirth plaintiffs filed suit against their contractor under the NHWA. Id. The Eiswirths' action came into existence and suit was filed prior to the amendment of the statute. Id. Under those circumstances, the court found that retroactively applying the peremptive period would divest the Eiswirths of a right that had already accrued. Id.
Contrarily, in the instant case, the action to enforce the warranty provisions of the NHWA in relation to the bathroom/shower *975 claims did not come into existence until sometime in 2008. By that time the statute had been amended to provide for the peremptive period. Therefore, we find that unlike the Eiswirths, the Condo Association had not accrued a cause of action for the bathroom/shower claims prior to the effective date of the peremption provision. Thus, applying the peremptive period retroactively does not affect a vested right. Furthermore, because peremptive periods cannot be suspended or interrupted, the filing of the original suit has no bearing on the newly asserted bathroom/shower claims. See, Naghi v. Brener, 08-2527 (La.6/26/09), 17 So. 3d 919.
In conclusion, we find the trial court erred in rendering an amended judgment to include additional parties that had not joined in the peremptory exception and motion to dismiss filed by Edifice. Therefore the amended judgment was an absolute nullity. We further find that the peremptive period provided for in La. R.S. 9:3146 applies retroactively to the Condo Association's bathroom/shower claims. Additionally, we conclude that the warranty periods applicable to the Condo Association's claims are the ones that were in effect on the date of commencement. Thus, the ten-year warranty for major structural defects has not expired. It is unclear from the record and judgment what warranty period(s) was considered in dismissing the bathroom/shower claims. Likewise, we are also unable to ascertain from the record if the bathroom/shower claims rise to the level of major structural defects as contemplated by La. R.S. 9:3144.
Based on this Court's findings, a remand for rehearing is warranted. Accordingly, we reverse the trial court's ruling granting Edifice's peremptory exception and motion to dismiss plaintiff's shower/bathroom claims. This matter is remanded for further proceedings to specifically address whether the ten-year warranty period applicable to major structural defects encompasses the bathroom/shower claims asserted by the Condo Association.
REVERSED AND REMANDED.
BONIN, J., concurs with reasons.
BONIN, J., concurs with reasons.
I respectfully concur in the result which reverses the trial court's sustaining of the peremptory exception of peremption and remands the case for further proceedings. If the New Home Warranty Act (La. R.S. 9:3141 et seq.) applies to the plaintiff's cause(s) of action, then I agree that the warranty periods in effect as of the warranty commencement date, see La. R.S. 9:3143(7), are controlling and that the thirty-day period following the expiration of the applicable warranty period is peremptive and not prescriptive, see La. R.S. 9:3146. I write separately, however, to express my reservation about whether the New Home Warranty Act is even applicable.
Based upon the materials before us in the record, this is not a new structure. A hundred-year old warehouse was converted to condominiums for residential use. And the Act itself provides the following definition for "home":
"Home" means any new structure designed and used only for residential use, together with all attached and unattached structures, constructed by the builder whether or not the land was purchased from the builder. Such term includes structures containing multiple family dwellings or residences.
La. R.S. 9:3143(3) (emphasis added). Thus, the builder's warranty under the Act extends only to a "new structure designed and used only for residential use". See La. R.S. 9:3143(1).
*976 Then, even if the Act were stretched to cover the new construction in this old warehouse, because there is no allegation that the condominium association is the "owner" of the home, I struggle to discern how the condominium association has a cause of action against the builders. Last year, in that regard, a panel of this court explained in its denial of a condominium association's application for supervisory review that a condominium association "cannot pursue legal remedies under the [Louisiana New Home Warranty Act]" because the warranties are solely between builder and owner and the owner is defined under La. R.S. 9:3146(3) as "the initial purchaser of a home and any of his successors in title, heirs, invitees, or assigns to a home". Marseilles Homeowners Condominium Assn., Inc. v. Broadmoor, L.L.C., 2010-0524 (La.App. 4 Cir.5/26/10) (unpub.).[1] Because the matter is being remanded to the trial court, where the issue may be noticed on the court's own and an appropriate remedy fashioned if this condominium association is not an owner under the Act, I see no need to further address the matter on appeal. See La. C.C.P. arts. 927 B and 934.
NOTES
[1] The January 5, 2010 judgment was designated final and appealable pursuant to La. C.C.P. art. 1915, providing this Court with proper jurisdiction.
[2] Acts 2001, No. 179 § 1 became effective on May 31, 2001.
[3] Prior to the 2001 amendment, 9:3144 A(3) provided:
Ten years following the warranty commencement date, the home will be free from major structural defects due to noncompliance with the building standards or due to other defects in materials or workmanship not regulated by building standards. (emphasis added).
Then, in the 2001 amendment, the ten-year warranty period on major structural defects was changed to a seven year warranty period. Provision A(3) of 9:3144 was again amended by Acts 2003, No. 333 § 1, which reduced the warranty time on major structural defects to five years.
[4] The correctness of this date is not an issue before this Court. This is the date taken from the face of the petition and by reference of the trial court.
[5] Because there are no transcripts of the hearings or reasons for judgment, it is unclear what specific findings the trial court made. However, the granting of the exception of peremption indicates a retroactive application of La. R.S. 9:3146.
[1] The panel consisted of Jones, Lombard and Love, JJ. The application, opposition, and disposition are all available in the office of the Clerk of this Court.
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3 P.3d 392 (2000)
197 Ariz. 10
The STATE of Arizona, Appellee,
v.
Steven Alan WYMAN, Jr., Appellant.
Nos. 2 CA-CR 99-0283, 2 CA-CR 99-0284, 2 CA-CR 99-0286.
Court of Appeals of Arizona, Division 2, Department B.
May 31, 2000.
As Corrected June 2, 2000.
*393 *394 Janet Napolitano, Arizona Attorney General By Paul J. McMurdie and Diane M. Acosta, Tucson, for Appellee.
Emily Danies, Tucson, for Appellant.
ESPINOSA, Chief Judge.
¶ 1 A jury found appellant guilty of possession of a firearm by a prohibited possessor, a class four felony. He admitted that he had two prior felony convictions and that he was on probation at the time of the offense. The trial court sentenced appellant to the presumptive term of ten years' imprisonment.[1] He raises two issues on appeal, challenging the court's denial of his motion to suppress physical evidence based on an illegal search and seizure, and complaining that his sentence is excessive. Because we find that a police officer's repeated requests that appellant stop and talk to him, absent any reasonable suspicion of criminal conduct, constituted a violation of appellant's Fourth Amendment rights which led to the evidence on which he was convicted, we reverse his conviction.
Background
¶ 2 In reviewing the denial of a motion to suppress evidence, we view the facts in the light most favorable to upholding the trial court's ruling. State v. Sheko, 146 Ariz. 140, 704 P.2d 270 (App.1985). We review only the evidence presented at the suppression hearing. State v. Blackmore, 186 Ariz. 630, 925 P.2d 1347 (1996).
¶ 3 A Payson police officer was in uniform at a Wal-Mart store when a clerk pointed out two men outside whom she described as "acting nervous" when they had seen the officer's patrol car. The two men walked away from the store, looking over their shoulders at the officer. The officer drove his patrol car to within earshot of the two men, stepped out of the car, and yelled out, "Hey, can I talk to you?" The two men ignored the officer and continued walking. The officer yelled again, asking if he could talk to the men, but they continued to ignore him and kept walking. Undaunted, the officer yelled his request at least one more time. It was only at this point, after the officer "had yelled several times at them," that the men, appellant and Lorenzo Jackson, stopped and walked back to the patrol car. The officer requested identification and asked the pair what they were doing. They told him that "they were doing a little drinking and they were going to go shooting." The officer asked appellant if he had any contraband or weapons. Appellant admitted he had a handgun in his pants pocket. The officer then searched appellant and found a pistol. The gun was the basis for the prohibited possessor charge.
¶ 4 Appellant moved to suppress the gun and all statements he had made, arguing that the officer violated his right to be free from unreasonable searches and seizures guaranteed by the Fourth Amendment to the United States Constitution. The trial court denied the motion to suppress the handgun, finding that the officer's contact with appellant had been neither oppressive nor unreasonable, *395 that the officer had not compelled appellant to do anything until he had said he was carrying a firearm, and that, at that point, the officer had had cause to believe that appellant was committing the crime of carrying a concealed weapon. Thus, the court concluded the officer's search for the weapon was not unreasonable.
Discussion
¶ 5 In reviewing the denial of a motion to suppress evidence based on an alleged Fourth Amendment violation, we defer to the trial court's factual findings, but we review de novo mixed questions of law and fact and the trial court's ultimate legal conclusion. State v. Gonzalez-Gutierrez, 187 Ariz. 116, 927 P.2d 776 (1996); State v. Rogers, 186 Ariz. 508, 924 P.2d 1027 (1996). We agree with the trial court that, once appellant admitted he was carrying a pistol in his pants pocket, the officer had probable cause to believe appellant was committing the crime of carrying a concealed weapon. See A.R.S. § 13-3102. As a result, the officer was entitled to arrest and search appellant. See State v. Randall, 94 Ariz. 417, 385 P.2d 709 (1963). The question remains whether appellant's admission was the fruit of an earlier constitutional violation.
¶ 6 The Fourth Amendment's protection against unreasonable searches and seizures does not restrict police who have reasonable, articulable suspicion that criminal activity is afoot from stopping a suspect for questioning. Terry v. Ohio, 392 U.S. 1, 88 S. Ct. 1868, 20 L. Ed. 2d 889 (1968); State v. Richcreek, 187 Ariz. 501, 930 P.2d 1304 (1997). Here, the officer testified that neither he nor the Wal-Mart clerk had observed appellant or Jackson engage in any possibly criminal activity. Nor does the record suggest the officer had any other information the two had done anything illegal. The mere act of looking at and walking away from a police officer does not give rise to reasonable suspicion to stop and detain a person. See Rogers; see also State v. Stricklin, 191 Ariz. 245, 955 P.2d 1 (App.1996). Thus, the officer did not have a basis for a valid Terry stop. See Brown v. Texas, 443 U.S. 47, 99 S. Ct. 2637, 61 L. Ed. 2d 357 (1979).
¶ 7 Police may, however, approach and question people without implicating the Fourth Amendment, provided that the interaction is consensual. Florida v. Bostick, 501 U.S. 429, 111 S. Ct. 2382, 115 L. Ed. 2d 389 (1991); Florida v. Royer, 460 U.S. 491, 103 S. Ct. 1319, 75 L. Ed. 2d 229 (1983). "[L]aw enforcement officers do not violate the Fourth Amendment by merely approaching an individual on the street or in another public place, [and] asking him if he is willing to answer some questions." Id. at 497, 103 S. Ct. at 1324, 75 L.Ed.2d at 236. The state argues, as the trial court implicitly ruled below, that the encounter in this case was consensual and that, as a result, there was no seizure triggering Fourth Amendment scrutiny. The test is whether, in light of all the circumstances, the police conduct would "have communicated to a reasonable person that he was not at liberty to ignore the police presence and go about his business." Michigan v. Chesternut, 486 U.S. 567, 569, 108 S. Ct. 1975, 1977, 100 L. Ed. 2d 565, 569 (1988). Whether a person has been seized by police is a mixed question of law and fact. In re Maricopa County Juvenile Action No. JT30243, 186 Ariz. 213, 920 P.2d 779 (App. 1996).
¶ 8 The officer's original request to talk to appellant and Jackson was itself well within the bounds of a consensual encounter. The officer did not draw his gun or otherwise physically compel a response. Cf. In re Steven O., 188 Ariz. 28, 932 P.2d 293 (App.1997) (investigatory stop became seizure for Fourth Amendment purposes when suspect attempted to walk away but was physically restrained by officer). The officer did not demand that appellant and Jackson speak with him; instead, he asked, albeit in a loud, forceful manner. See United States v. Sealey, 30 F.3d 7, 8 (1st Cir.1994) (no seizure when undercover officer yelled, "Hey Steven, what's up?" from car). Initially, appellant and Jackson did feel free to ignore the officer and walk away; in fact, this is exactly what they did. However, when the officer incessantly repeated his request after the men refused to respond, he clearly demonstrated that they were not free to ignore him and go about their business.
*396 ¶ 9 We find Maricopa County No. JT30243 instructive. There the police, without articulable suspicion to justify a Terry stop, conducted a "round-up" of a group of young people at a parking lot. One juvenile tried to leave, but the officers called out for her to return, saying they "need[ed] to talk to [her]." 186 Ariz. at 215, 920 P.2d at 781. Subsequent questioning led to the discovery that the juvenile possessed tobacco, an offense for which she was ultimately cited. In affirming the granting of the juvenile's motion to suppress the evidence, Division One of this court noted:
Appellee's response to the officers' arrival was to walk away, which demonstrated to the officers that Appellee wanted to leave. The officers' response to Appellee's expressed intention was to overrule it by calling her back, politely but authoritatively, which demonstrated to the juvenile that the officers did not consent to her departure.
Id. at 217, 920 P.2d at 783. Other jurisdictions have reached the same conclusion on similar facts.
¶ 10 In United States v. Palmer, 603 F.2d 1286 (8th Cir.1979), an officer who lacked articulable suspicion for a Terry stop saw Palmer and a companion walking and called for them to come to his car. Although Palmer complied, his companion did not until the officer repeated himself. The officer then frisked both men, found concealed weapons, and arrested them. The court concluded that, when the officer had "called a second time" to the companion, it "indicate[d] that the pair were not free to continue down the street" and "constituted a sufficient show of authority to restrain appellant's freedom of movement, therefore appellant was seized." Id. at 1289.
¶ 11 In People v. Padgett, 932 P.2d 810 (Colo.1997), two officers observed Padgett and a companion cross a street. When they got out of their vehicle and asked Padgett if they could speak with him, "Padgett continued walking" away from them. Id. at 812. An officer then "called out a second time," and Padgett "reluctantly" walked back to where the officers were, an encounter that led to the discovery of contraband on his person. Id. In upholding the suppression of that contraband, the Colorado Supreme Court relied in part on the officer's second request, finding this encounter to have been an investigative stop unsupported by reasonable suspicion, not a consensual interview. See also In re D.T.B., 726 A.2d 1233, 1234 (D.C.1999) (seizure of juvenile who did not comply with officer's request to "come here" until second request, leading to discovery of contraband, unsupported by reasonable suspicion).
¶ 12 As the foregoing cases demonstrate, a consensual encounter with an uncooperative subject can become a Fourth Amendment seizure when the subject's participation is ultimately gained through more than one request for "voluntary" cooperation. Here, appellant chose to ignore a consensual, Royer-type request and was then subjected to two or more renewed requests before he capitulated to the officer's insistence. Cf. United States v. Wilson, 953 F.2d 116, 123 (4th Cir.1991) ("The officer's prolonged and persistent questioning after the suspect had conveyed an unequivocal unwillingness to engage in further conversation with the officer is the type of conduct that is proscribed by the Fourth Amendment."). This is the rare case in which a person did choose to ignore and walk away from an officer's request for a voluntary interview, perhaps the only course of action under the law remaining to a pedestrian who does not care to talk to the police. Cf. Illinois v. Wardlow, 528 U.S. ___, 120 S. Ct. 673, 145 L. Ed. 2d 570 (2000) (reasonable suspicion for Terry stop arose when subject ran from police). If the Royer paradigm is to have any practical meaning, police must allow a person to go about his or her business when it is clear that the person does not wish to voluntarily cooperate.[2]
¶ 13 At least three times, appellant walked away from the officer. In each instance, the *397 officer's response was to yell at him. A reasonable person in this situation would not have felt free to leave in the face of the officer's repeated summons. Thus, when appellant finally complied with the officer's shouting and went to talk to him at the patrol car, he had been seized for Fourth Amendment purposes. The officer had no reasonable suspicion for an investigatory stop; the seizure was therefore unreasonable. Because the officer obtained appellant's confession and pistol as a direct result of his unreasonable seizure, that evidence should have been suppressed. See Maricopa County No. JT30243.
Disposition
¶ 14 We find the trial court erred in denying appellant's motion to suppress. And, because the weapon seized was the basis of the prohibited possessor charge, we reverse appellant's prohibited possessor conviction in CR 99-020. Accordingly, we need not address his sentencing issue. Furthermore, because the record shows that appellant's probation in CR 98-078 and CR 98-162 was revoked solely on the conviction in CR 99-020, we vacate the revocation orders and appellant's resulting prison sentences in those matters as well.[3] All three cases are remanded for further proceedings consistent with this decision.
CONCURRING: J. WILLIAM BRAMMER, JR., Presiding Judge, and JOSEPH W. HOWARD, Judge.
NOTES
[1] By virtue of the conviction on the instant weapons charge, appellant's probation was revoked. Sentencing on the two prior convictions underlying his revoked probation, Gila County Nos. CR 98-078 and CR 98-162, was consolidated with sentencing on the weapons conviction, No. CR 99-020. The trial court sentenced appellant to concurrent, mitigated prison terms of nine months and four years for the prior convictions, to be served consecutively to the sentence for the weapons conviction. We have consolidated the appeals in all three cases, but appellant has raised issues pertaining only to the weapons conviction.
[2] Of course, officers may renew Royer-type requests when a subject does not hear or understand them. Nothing in this record suggests appellant and Jackson did not comprehend the officer's requests; the state agrees they "ignored [the officer's] initial requests to speak to him and continued walking away."
[3] We note that this decision does not bar the probation department from pursuing independent revocation proceedings based on evidence we have found should have been suppressed in CR 99-020. See State v. Alfaro, 127 Ariz. 578, 623 P.2d 8 (1980) (exclusionary rule does not apply to probation revocation proceedings).
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183 P.3d 497 (2008)
SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT AND POWER DISTRICT, an agricultural improvement district organized and existing under the laws of the State of Arizona, Plaintiff/Appellant/Cross Appellee,
v.
MILLER PARK, L.L.C., an Arizona limited liability company; Miller Park II, L.L.C., an Arizona limited liability company, Defendants/Appellees/Cross Appellants.
No. CV-07-0207-PR.
Supreme Court of Arizona, En Banc.
February 14, 2008.
*498 Jennings, Strouss & Salmon, P.L.C. by Douglas Zimmerman, Michael J. O'Connor, John J. Egbert, Phoenix, Attorneys for Salt River Project Agricultural Improvement and Power District.
Bryan Cave LLP by Steven A. Hirsch, Rodney W. Ott, Phoenix, Attorneys for Miller Park, L.L.C. and Miller Park II, L.L.C.
Ayers & Brown, P.C., by Charles K. Ayers, Melinda A. Bird, Stephanie Heizer, Phoenix, Attorneys for Amicus Curiae City of Phoenix.
OPINION
BALES, Justice.
¶ 1 This condemnation case presents two issues. We hold that the trial court did not abuse its discretion in excluding evidence of the land owner's prior statements of valuation for property tax purposes. We also hold that mandatory cost-based sanctions may be imposed under Arizona Rule of Civil Procedure 68 even though Arizona Revised Statutes ("A.R.S.") § 12-1128(A) (2003) gives trial courts discretion to apportion costs among the parties in condemnation actions.
*499 I.
¶ 2 Miller Park, LLC and Miller Park II, LLC ("Miller Park") bought undeveloped land near Buckeye in 1997 and 2000. Buckeye subsequently annexed the property and rezoned it for general commercial purposes. By the end of 2001, Buckeye's Planning Development Board had approved Miller Park's "concept plan" for the property's commercial development, water and sewer service had reached the edge of the property, and nearby residential population had grown significantly.
¶ 3 In February 2002, Miller Park contracted to sell part of the property to a developer for more than $17.4 million, or about $4.00 per square foot. One month later, the Salt River Project Agricultural Improvement and Power District ("SRP") announced its intention to condemn part of the land, including some of the property under contract to the developer, to build a 500,000-volt electric transmission line. When notified of SRP's plans, the developer canceled its purchase. SRP eventually condemned an easement extending over sixteen acres and installed thirteen utility towers on Miller Park's property.
¶ 4 In September 2002, SRP filed this condemnation action to determine the compensation owed to Miller Park. Before trial, Miller Park moved to exclude evidence regarding its April 2001 protest of the county's property tax assessment of the property. The Maricopa County assessor had set the "full cash value" at $18,500 per acre. Deloitte & Touche Property Tax Services ("Deloitte") filed a tax protest on behalf of Miller Park arguing that the full cash value of the property was less than $10,000 per acre. Before trial, a Deloitte employee testified at a deposition that he had only calculated the "full cash value" for property tax purposes and had not attempted to assess the fair market value.
¶ 5 The trial court granted Miller Park's motion in limine and excluded evidence regarding the protest of the property tax valuation. At trial, Miller Park's managing member, Michael Pierce, testified that the property's fair market value was $174,240 per acre ($4.00 per square foot). He said that the fair market value of the property condemned for the easement was $2.4 million and that the severance damage to the remaining property was $3.1 million. The parties also presented conflicting expert appraiser testimony regarding the fair market value.
¶ 6 The jury determined that just compensation for SRP's condemnation was approximately $4.7 million$2.5 million for the fair market value of the condemned property plus $2.2 million for severance damage to the remaining property.
¶ 7 Before trial, SRP had rejected Miller Park's offer of judgment for $2.3 million. After the jury awarded a higher sum, Miller Park requested sanctions under Rule 68 of the Arizona Rules of Civil Procedure. The trial court denied this request, reasoning that because A.R.S. § 12-1128(A) permits discretionary cost awards in condemnation cases, it precludes the imposition of cost-based sanctions under Rule 68. The trial court instead used its discretion under A.R.S. § 12-1128(A) to award Miller Park some costs.
¶ 8 SRP appealed the exclusion of the tax protest evidence and Miller Park cross-appealed the denial of Rule 68 sanctions. The court of appeals held that the trial court had not abused its discretion by excluding the evidence. Salt River Project Agric. Improvement & Power Dist. v. Miller Park, L.L.C., 216 Ariz. 161, 168 ¶ 35, 164 P.3d 667, 674 (App.2007). The court of appeals also held that, at least in cases in which a land owner seeks sanctions against a condemnor, Rule 68 sanctions may be imposed. Id. at 172 ¶ 50, 164 P.3d at 678.
¶ 9 We accepted review because this case presents two recurring issues in condemnation cases. Our jurisdiction is based on Article 6, Section 5(3), of the Arizona Constitution and A.R.S. § 12-120.24 (2003).
II.
¶ 10 We first consider whether the trial court abused its discretion by excluding statements that Miller Park made through its agent Deloitte regarding the "full cash value" of the property for purposes of the tax protest. See State v. Spreitz, 190 Ariz. 129, *500 146, 945 P.2d 1260, 1277 (1997) (noting that trial court's decisions to admit or exclude evidence are reviewed for abuse of discretion).
¶ 11 An owner of condemned property is constitutionally entitled to "just compensation." U.S. Const. amend. V; Ariz. Const. art. 2, § 17. Just compensation equals the fair market value of the property. City of Phoenix v. Wilson, 200 Ariz. 2, 6 ¶ 8, 21 P.3d 388, 392 (2001). To determine market value, "the fact finder must consider the highest and best use of the land." Id. Valuation for property tax purposes, on the other hand, is based on the property's "full cash value," which we have interpreted as "limited to present usage." A.R.S. § 42-13301(B) (2006); A.R.S. § 42-11001(6) (Supp.2007); Golder v. Dep't of Revenue, 123 Ariz. 260, 265, 599 P.2d 216, 221 (1979) (discussing limitation on full cash value in A.R.S. § 42-11054(C)-(D) (Supp.2007)).
¶ 12 Because of the difference in valuation standards, tax assessments are generally inadmissible to show the value of property for purposes of just compensation. See, e.g., Jackson v. Pressnell, 19 Ariz.App. 221, 222, 506 P.2d 261, 262 (1973) (holding "that the mere production" of a tax appraisal "is not admissible . . . on the issue of fair market value in a condemnation hearing"). An owner's own valuation for tax purposes, however, may be admissible in non-tax contexts as a party admission. See Ariz. R. Evid. 801(d)(2); see also 5 J. Sackman, Nichols on Eminent Domain ("Nichols") § 18.12[1] (3d ed.2006) (noting that statements of the owner, including "a statement made to the tax assessor that his property is not as valuable as the assessment," "may become admissions").
¶ 13 SRP argues that statements Miller Park made in its tax protest were admissible either as admissions as to the property's value or for purposes of impeaching the testimony of Miller Park's representative Michael Pierce. SRP further contends that the trial court erroneously excluded such evidence as irrelevant by following a court of appeals opinion that was later depublished, see State ex rel. Mendez v. Am. Support Found., Inc., 209 Ariz. 321, 100 P.3d 932 (App.2004), depublished by 210 Ariz. 232, 109 P.3d 571 (2005), and by disregarding this Court's opinion in State ex rel. Morrison v. Jay Six Cattle Co., 88 Ariz. 97, 353 P.2d 185 (1960).
¶ 14 Miller Park moved to exclude the evidence under both Rule 402 and Rule 403 of the Arizona Rules of Evidence. Rule 402 generally provides that relevant evidence is admissible and irrelevant evidence is not. Under Rule 403, relevant evidence may be excluded if its probative value is "substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence." Ariz. R. Evid. 403.
¶ 15 In granting the motion in limine, the trial court did not specify whether its ruling was based on Rule 402, Rule 403, or both.[1] SRP in effect asks us to presume that the trial court relied only on Rule 402 and, after the case has proceeded to a jury verdict, to order a new trial because the excluded evidence was relevant. Under our case law, however, we instead presume in these circumstances that the trial court also relied on Rule 403 and we will uphold the trial court's ruling if supportable under that rule. See Readenour v. Marion Power Shovel, 149 Ariz. 442, 449 n. 8, 719 P.2d 1058, 1065 n. 8 (1986) (concluding that the trial court had exercised Rule 403 discretion in excluding evidence challenged as prejudicial, although the "record reveal[ed] neither formal invocation nor application of Rule 403").
¶ 16 SRP contends that the trial court's failure to expressly discuss its application of Rule 403 itself requires a new trial in which the trial court may, in the first instance, apply Rule 403's balancing test. SRP and its amicus cite two cases in support of this argument: Shotwell v. Donahoe, 207 Ariz. 287, 295-96 ¶¶ 31-36, 85 P.3d 1045, 1053-54 (2004) (remanding for new Rule 403 determination because basis of original ruling was legally *501 insufficient), and Yauch v. Southern Pacific Transportation Co., 198 Ariz. 394, 403 ¶ 26, 10 P.3d 1181, 1190 (App.2000) (noting that Rule 403 balancing "is peculiarly a function of trial courts" and refusing to "assume that the court would have excluded . . . proffered evidence based on Rule 403").
¶ 17 In Shotwell, this Court remanded for a new Rule 403 balancing because the trial court erroneously gave conclusive weight to a non-dispositive factor. 207 Ariz. at 295 ¶¶ 31-32, 85 P.3d at 1053 (noting that trial court excluded evidence under Rule 403 "solely on the ground that the [evidence] was `conclusory,'" yet "[a] document is not necessarily inadmissible . . . simply because it contains conclusions or is conclusory"). Similarly, the trial court in Yauch excluded evidence because of a legal reason unrelated to Rule 403; the court of appeals disagreed with the legal reasoning and refused to independently uphold the exclusion under Rule 403. 198 Ariz. at 403-04 ¶¶ 26-28, 10 P.3d at 1190-91. Thus, in both Shotwell and Yauch, it was clear that the trial court had committed legal error and never conducted a proper Rule 403 balancing. Neither case suggests that a trial court necessarily commits reversible error by failing to describe on the record its application of Rule 403.
¶ 18 Although it is generally desirable for a trial court to make a record of its Rule 403 determinations, Readenour provides the correct framework for evaluating the trial court's ruling here. Miller Park sought to exclude the tax protest material under both Rules 402 and 403. To the extent the basis for the trial court's evidentiary ruling was ambiguous, it was incumbent upon SRP to seek to clarify the record rather than to proceed to trial and later seek to upset the jury's verdict on appeal by arguing that the ruling could not be sustained on one of two possible grounds.[2]
¶ 19 Presuming the evidence was sufficiently probative to meet the relevance threshold of Rule 402, we must also consider whether Rule 403 supports the trial court's decision to exclude the evidence. SRP contends that our decision in Jay Six establishes that the trial court should have admitted the tax protest material. In Jay Six, the Court held that the trial court had erred by not allowing the state to cross-examine an appraiser who had testified about the fair market value of condemned property with the witness's own prior appraisal for federal tax purposes. 88 Ariz. at 105-06, 353 P.2d at 190-91. The Court called the error "merely technical and harmless" because, "even for purposes of impeachment," the evidence "was of slight probative force" and the state's "examination and cross-examination of the witness . . . was otherwise very extensive." Id. at 106, 353 P.2d at 191.
¶ 20 Jay Six did not establish a per se rule that previous estimates of value for tax purposes are always admissible in condemnation actions; it merely held that the trial court abused its discretion under the circumstances of that case. Whether a land owner's prior statements of valuation for tax purposes are admissible in a subsequent condemnation action will depend on the facts of the particular case.
¶ 21 Here, several factors suggest that the evidence was of minimal relevance and potentially confusing to the jury. Miller Park's tax protest concerned a valuation of the property at a different time, under different conditions, and under a different standard than did the determination of fair market value for condemnation purposes. Seventeen months had passed since Deloitte submitted the tax protest material. During that time, Buckeye had approved Miller Park's "concept plan" for commercial development and the area had substantial residential growth. Moreover, Deloitte focused exclusively on the property-tax specific "full cash value" of Miller Park's property in its then-current use, not on fair market value, *502 which depends on the "highest and best use" of the land.
¶ 22 Because of the different legal standards and the nature of the property tax and condemnation valuations here, the tax protest evidence had little probative value, risked jury confusion, and could have unduly wasted the time needed to introduce and explain the evidence.
¶ 23 SRP argues that it should have been allowed to impeach Pierce with Deloitte's statements. But even assuming that the statements of Miller Park's agent may constitute a party admission in this context, the fact that the statements may not be hearsay under Rule 801(d)(2) of the Arizona Rules of Evidence does not mean they are admissible under Rules 402 and 403. See Shotwell, 207 Ariz. at 295 ¶ 29, 85 P.3d at 1053 (noting that satisfying hearsay rule does not necessarily satisfy Rule 403); cf. Nichols, supra ¶ 12, § 18.12[1] at 18-85 ("The value stated by the owner may be a type of value other than fair market value, and when this is the case, the statement is generally held not to be inconsistent and therefore not admissible as an admission.").
¶ 24 Any impeachment value of the tax protest evidence was reduced because the Deloitte representative who prepared the protest did not testify at trial and Pierce, the Miller Park representative who did testify, had not participated in preparing the tax protest. These circumstances further distinguish this case from Jay Six, in which the condemnor sought to examine a witness about his own prior appraisal. Even under those circumstances, Jay Six concluded that the prior statements had only "slight" probative value. The probative value of the tax protest material here was even less and the trial court could properly conclude that any probative value was outweighed by the risks of confusion and unnecessary delay.
¶ 25 In short, we hold that a land owner's prior statements of valuation for tax purposes may be, but are not always, admissible in a condemnation action. The trial court did not abuse its discretion in excluding such evidence here.
III.
¶ 26 SRP contends that the trial court properly refused to award Rule 68 sanctions because the rule conflicts with A.R.S. § 12-1128.
¶ 27 Under Rule 68, an offeree who declines an offer of judgment and fails ultimately to obtain a more favorable judgment "must pay, as a sanction, reasonable expert witness fees and double the taxable costs . . . incurred by the offeror after making the offer." Ariz. R. Civ. P. 68(g). In condemnation actions, A.R.S. § 12-1128(A) states that "[c]osts may be allowed or not, and if allowed may be apportioned between the parties on the same or adverse sides, in the discretion of the court."
¶ 28 Although the rule and statute both refer to costs, there is no real conflict between the two. The statute provides for the discretionary allocation of costs in all condemnation cases. Rule 68 does not provide for the recovery of costs as such, but instead authorizes sanctions that are measured, in part, by twice the costs incurred after the offer is made. Ariz. R. Civ. P. 68(g).[3]
¶ 29 Because we conclude that Rule 68 and A.R.S. § 121-128(A) do not conflict, we overrule in part Pima County v. Hogan, 197 Ariz. 138, 3 P.3d 1058 (App.1999). In Hogan, the condemnor sought Rule 68 sanctions after the jury awarded the land owner less than the condemnor had offered in settlement. 197 Ariz. at 139 ¶¶ 2-3, 3 P.3d at 1059. The court of appeals held that sanctions could not be imposed because Rule 68 conflicts with A.R.S. § 12-1128(A) and requiring the land owner to pay costs as a sanction "arguably" would reduce the land owner's constitutional entitlement to just compensation. Id. at 140 ¶¶ 7, 9, 3 P.3d at 1060. Cf. City of Phoenix v. Mori, 182 Ariz. 612, 615, 898 P.2d 990, 993 *503 (App.1995) (holding that right to just compensation limits court's discretion to allocate costs against land owner under A.R.S. § 12-1128(A)).
¶ 30 We agree with the dissent in Hogan that the rule and statute can be harmonized. See Hogan, 197 Ariz. at 141 ¶ 13, 3 P.3d at 1061 (Howard, J., dissenting). Because only the condemnor faces sanctions in this case, we need not decide whether applying Rule 68 against a land owner might violate the owner's right to just compensation.
IV.
¶ 31 For the foregoing reasons, we affirm the judgment of the superior court in part and vacate it in part, vacate the opinion of the court of appeals, and remand to the superior court for proceedings not inconsistent with this opinion.
CONCURRING: RUTH V. McGREGOR, Chief Justice, REBECCA WHITE BERCH, Vice Chief Justice, MICHAEL D. RYAN and ANDREW D. HURWITZ, Justices.
NOTES
[1] The trial court's minute entry stated only that it had "considered all legal memoranda, the court's file and the relevant law."
[2] We also reject SRP's argument that a new trial is required because the trial court relied on the subsequently depublished American Support opinion. Miller Park cited American Support in its motion in limine, but the trial court did not cite the opinion in its ruling. American Support did not hold that tax protest evidence is always irrelevant and thus inadmissible under Rule 402 in condemnation cases; and depublication, while eliminating an opinion's effect as precedent, does not imply that the court of appeals erred in resolving particular legal issues.
[3] Rule 68 sanctions may also include prejudgment interest from the date of the offer on unliquidated claims. This sanction, as the court of appeals recognized, does not apply to amounts that are already subject to prejudgment interest, as was the case here because SRP obtained an order of immediate possession and Miller Park thereby became entitled to prejudgment interest under A.R.S. § 12-1123(B).
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3 P.3d 61 (2000)
134 Idaho 383
Elizabeth KORNFIELD, Plaintiff-Appellant,
v.
Lee M. KORNFIELD, Defendant-Respondent.
No. 25416.
Court of Appeals of Idaho.
April 7, 2000.
Rehearing Denied May 31, 2000.
*62 Sherer & Wynkoop, Meridian, for appellant.[1]
Bevis, Cameron & Johnson, Boise, for respondent.
SCHWARTZMAN, Judge.
Elizabeth Kornfield appeals from the district court's appellate decision affirming the magistrate's memorandum decision and order modifying an award of child support.
I.
FACTS AND PROCEDURE
Lee and Elizabeth Kornfield were divorced in the latter half of 1990 and have litigated almost continuously ever since. The Kornfields have four childrentwo who have reached majority, one who is fifteen and one who is nine. The two minor children are currently in an equal physical custody arrangement. As part of this continuing litigation, Lee filed a motion to modify child support in June of 1997 because of material and substantial changes in circumstances. The magistrate court received evidence and then issued its decision on December 18, 1997.
The magistrate found that material and substantial changes in circumstances were proven by Lee. The magistrate noted that prior divorce litigation and appeals brought by Elizabeth have been persistent and protracted, and that previous decisions have awarded over $11,000 in attorney fees against Elizabeth for pursuing frivolous litigation. The magistrate reviewed the complete divorce file since September of 1993 and found that over 95 percent of the pleadings and filings had come from Elizabeth. The court also found that Lee incurred $51,692 in legal fees over this same time period, which he paid from his income. This figure excluded prior awards of attorney fees to Lee.
The magistrate then reviewed the Idaho Child Support Guidelines (I.C.S.G.), I.R.C.P. 6(c)(6), and found that it could consider expenses as an income reduction "if such expenses impact the ability of an obligor to pay child support in a significant manner." The court determined that Lee's legal expenses incurred in defending himself from Elizabeth's constant litigation should be deducted from his income. Lee's income, for purposes of computing his child support obligation, was then reduced by $12,923 per yearfrom $163,288 to $150,365based on the history of legal fees incurred by him since September of 1993.
The magistrate then addressed Elizabeth's potential income and found that she was trained as a registered nurse and had some post-graduate education. The court received testimony that such a person could earn approximately $17.05 per hour or $35,464 per year in the subject community. Elizabeth testified that she could not obtain work in her profession because she is overburdened *63 by the litigation against her ex-husband. Finding that Elizabeth was "so infatuated and consumed with litigation that she has voluntarily become insolvent," the magistrate found her to be voluntarily unemployed and accordingly imputed to her a potential income of $2,955 per month.
Finally, the magistrate addressed two other potential sources of income to Elizabeth: (1) the house she was living in at no cost because it was owned by her mother and (2) her current vehicle given to her by friends. The court decided that the definition of imputed income encompassed the benefit of a residence at no cost to a party. Based on the evidence presented, the court imputed additional income of $1,100 per month to Elizabeth for the house. The court also heard evidence that the 1990 Jeep Wagoneer given to Elizabeth by her friends was worth $6,175. The magistrate thereafter imputed income of $195 per month to Elizabetha reflection of the cost of purchasing a similar vehicle over three years at 9 percent interest. The child support payments were computed according to all of the above income adjustments.
Elizabeth thereafter appealed to the district court, which concluded that the magistrate's findings were supported by competent, albeit conflicting evidence. The district court held that the adjusting of Lee's income was an appropriate remedy considering Elizabeth's history of conduct and that the remedy took into account the reality of the funds available to Lee to satisfy his obligations. The court concluded that there was no abuse of discretion by the magistrate. Elizabeth now appeals to this Court.
II.
STANDARD OF REVIEW FOR AN ORDER TO MODIFY A CHILD SUPPORT AWARD
The decision of the trial court on a motion to modify child support is reviewed for an abuse of discretion on appeal. Atkinson v. Atkinson, 124 Idaho 23, 25, 855 P.2d 484, 486 (Ct.App.1993). As set forth in Sun Valley Shopping Center Inc. v. Idaho Power Co., 119 Idaho 87, 94, 803 P.2d 993, 1000 (1991), this Court shall inquire to determine (1) whether the trial court correctly perceived this issue as one of discretion; (2) whether the trial court acted within the outer boundaries of its discretion and consistently with the applicable legal standards; and (3) whether the trial court reached its decision by an exercise of reason. However, any interpretation of the I.C.S.G. is a question of law and will be reviewed freely. Robertson Supply, Inc. v. Nicholls, 131 Idaho 99, 101, 952 P.2d 914, 916 (Ct.App.1998).
Where the district court has acted in an appellate capacity and a further appeal is taken, this Court independently reviews the complete record before the magistrate, but with due regard to the district court's decision. Keeler v. Keeler, 131 Idaho 442, 444, 958 P.2d 599, 601 (Ct.App.1998). Findings of fact made by the magistrate will not be set aside on appeal unless they are clearly erroneous. Id.; I.R.C.P. 52(a). Findings of fact supported by substantial and competent evidence are not clearly erroneous. Id.; Holley v. Holley, 128 Idaho 503, 507, 915 P.2d 733, 737 (Ct.App.1996). Where, as here, the trial court sat without a jury, an appellate court liberally construes the trial court's findings of fact in favor of the judgment entered. Wilson v. Wilson, 131 Idaho 533, 535, 960 P.2d 1262, 1264 (1998), citing Ervin Constr. Co. v. Van Orden, 125 Idaho 695, 699, 874 P.2d 506, 510 (1993).
III.
THE MAGISTRATE DID NOT ABUSE HIS DISCRETION WHEN HE IMPUTED INCOME TO ELIZABETH FOR HER POTENTIAL EMPLOYMENT AS A NURSE
Child support modification requests must state a substantial and material change in circumstances since the last order affecting support obligations. Rohr v. Rohr, 126 Idaho 1, 878 P.2d 175 (Ct.App.1994.) Once a court determines there have been material and substantial changes in circumstances, the court uses I.C. § 32-706 and the I.C.S.G. to calculate the amount of child support. Rohr v. Rohr, 128 Idaho 137, 142, 911 P.2d 133, 138 (1996). There has been no claim on appeal *64 that there were not material and substantial changes in circumstances since the last child support order. Therefore, our analysis focuses on applying the I.C.S.G. to the facts of the case.
Section 6(c) of the I.C.S.G. provides that "if a parent is voluntarily unemployed or underemployed, child support shall be based on gross potential income." The determination of potential income occurs by analyzing the parent's work history, occupational qualifications, the prevailing job opportunities in the community and the earnings levels in the community. I.C.S.G. § 6(c)(1)(A). Elizabeth is trained as a registered nurse and has a post-graduate education. Evidence was presented that Elizabeth could be earning $17.05 per hour or $35,464 per year in this community based on her qualifications. This evidence was not contradicted by Elizabeth and she has conceded this issue of fact on appeal. Accordingly, we hold that the magistrate correctly imputed monthly income of $2955 to Elizabeth as a voluntarily unemployed parent pursuant to I.C.S.G. § 6(c)(1)(A). See Humberger v. Humberger, 134 Idaho 39, 995 P.2d 809 (2000).
IV.
THE MAGISTRATE ERRED BY IMPUTING INCOME TO ELIZABETH FOR THE RENT-FREE ACCOMMODATIONS AND VEHICLE SHE RECEIVED FROM FAMILY AND FRIENDS
While we recognize that I.C.S.G. § 6(a) generally includes gift income within the definition of "gross income," § 6(a)(4) more specifically addresses Elizabeth's free rent and vehicle as contributions to her living expenses and should control. K. Hefner, Inc. v. Caremark, Inc., 128 Idaho 726, 732, 918 P.2d 595, 601 (1996) (holding that where two statutes appear to apply to an issue, the more specific statute should control over the general statute); City of Sandpoint v. Sandpoint Indep. Highway Dist., 126 Idaho 145, 149, 879 P.2d 1078, 1082 (1994).
Idaho Child Support Guidelines § 6(a)(4) provides that "where a parent derives a benefit through contribution to living expenses of the parent or children, e.g., from parents, spouse or others ... the court shall not consider the benefit to the parent as an available resource, unless compelling reasons exist." This guideline will commonly preclude a trial court from considering any free rent or vehicle given to a parent as income for purposes of determining an appropriate child support modification because they are "contributions to living expenses." Only where "compelling reasons" exist can a court vary from the usual application of I.C.S.G. § 6(a)(4).
More specifically, I.C. § 32-706A(C) provides that "if the court determines that circumstances exist to permit a departure from the guidelines, the judge making the determination shall make a written or specific finding on the record that the application of the guidelines would be unjust or inappropriate in the particular case." The magistrate's decision makes no specific finding, and the record does not reveal, that compelling circumstances exist in the instant case such that the contributions to Elizabeth's living expenses, over and above the newly imputed income of $35,464, should be considered a source of income to her. The magistrate therefore erred in imputing income to Elizabeth in the form of free rent and vehicle use. Where no compelling circumstances have been shown, a trial court "shall not consider [a contribution to living expenses] as an available resource."
V.
THE MAGISTRATE ACTED WITHIN HIS DISCRETION BY REDUCING LEE'S ANNUAL INCOME FOR PURPOSES OF CHILD SUPPORT CALCULATION IN ACCORDANCE WITH THE HISTORIC AMOUNT OF LEGAL FEES INCURRED EACH YEAR BY LEE AS A RESULT OF PROTRACTED DIVORCE LITIGATION
In reducing Lee's income by the amount of his annually incurred attorney fees averaged over the previous four years, the magistrate court stated that it had authority to "consider expenses if such expenses impact the ability *65 of an obligor to pay child support in a significant manner."
While it is unclear from the I.C.S.G. whether involuntarily incurred attorney fees can commonly be used to adjust the gross income of one party, this case presents uncommon circumstances where the parties' combined income is well over $150,000. Section 10 of the Idaho Child Support Guidelines sets forth an income table to calculate the amount of child support for up to $150,000 of combined income. For combined income over $150,000, subsection 10(d)(2) provides that "the court shall consider all relevant factors, which may include ... the financial resources, needs, and obligations of both parents." (Emphasis added.). Accordingly, trial courts, in determining an appropriate child support award, are vested with broad discretion in addressing any combined income over $150,000.
Lee's gross income before the current modification was $163,288. Lee presented evidence that he incurred $51,692 in legal expenses during the prior four years because of Elizabeth's persistent divorce litigation, not including the attorney fees awarded from prior court actions held to be frivolous. All these fees had to be paid from income earned by Lee. Elizabeth, meanwhile, received free legal services or income from family and friends to assist her in continual litigation. Accordingly, the magistrate modified the child support order by lowering Lee's annual gross income by $12,923.
Based upon I.C.S.G. § 10(d)(2), the magistrate had the discretion to treat that income as unavailable for purposes of child support, which is in effect what he did. The magistrate properly exercised his discretion by declining to award any child support from Lee's income over $150,365, based on Lee's historic financial obligationshis extraordinary legal expenses caused by Elizabeth.
VI.
CONCLUSION
For the reasons set forth above, we conclude that the magistrate (1) properly imputed income to Elizabeth for her potential employment as a nurse; (2) erred by imputing income to Elizabeth for contributions to her living expenses; and (3) on these specific facts, acted within his discretion by adjusting Lee's income to account for the amount of attorney fees Lee incurred as a result of Elizabeth's continued litigiousness.[2] We accordingly remand this case to the magistrate court for modifications to the order for child support in accordance with this opinion. The parties shall each bear their own costs and attorney fees on this appeal.
Judge LANSING and Judge Pro Tem McDERMOTT concur.
NOTES
[1] On February, 16, 2000, the date set for oral argument, this Court granted Mr. Sherer's motion to withdraw as appellate counsel of record. This appeal was thereafter decided on the briefs by order of the Court.
[2] There is a lack of clarity as to the magistrate's intended duration of this adjustment to Lee's income for attorney fees. If Elizabeth no longer causes Lee to involuntarily incur attorney fees, then it would only take four years for Lee to recover his depleted income. Thereafter, this reduction should cease to be effective, subject, of course, to any further showing by Lee of protracted litigation expenses.
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269 Kan. 272 (2000)
3 P.3d 81
ROBIN B. MOORE, Appellee,
v.
ST. PAUL FIRE MERCURY INSURANCE COMPANY, Appellant.
No. 80,469.
Supreme Court of Kansas.
Opinion filed June 2, 2000.
Arthur S. Chalmers, of Hite, Fanning & Honeyman, L.L.P., of Wichita, argued the cause and was on the briefs for appellant.
Jacob S. Graybill, Reals & Weber, of Wichita, argued the cause and was on the briefs for appellee.
The opinion of the court was delivered by
LOCKETT, J.:
The district court held that where the insurer and its insured settled all issues except the amount of attorney fees to be awarded to the insured pursuant to K.S.A. 40-256, the statute also provides for additional attorney fees to be awarded to the insured for litigating that issue. The insurer appealed. The Court of Appeals, after finding the amount of attorney fees awarded by the district court were reasonable, then determined that the fees incurred *273 by the insured for litigating only the amount of attorney fees to be awarded under the statute were not recoverable and reversed the district court on that issue. The insured's petition for review was granted.
Robin B. Moore's automobile was damaged in a collision. Her insurance company, St. Paul Mercury Insurance Company (St. Paul), paid for repairs to the vehicle but refused to pay its diminished market value due to prior damage. Moore filed an action in Sedgwick County District Court against her automobile insurance carrier demanding payment of $2,500 for the diminished market value of the automobile, interest, and attorney fees under K.S.A. 40-256.
St. Paul's answer admitted that it owed Moore $2,500 for the loss of value claim and paid that sum to the court to satisfy the insured's claim. St. Paul stated there remained issues as to interest due and the insured's claim for attorney fees. The following day, St. Paul filed an amended answer admitting liability for attorney fees and interest. St. Paul stated that the sole remaining issue to be determined was the amount of reasonable attorney fees to be assessed pursuant to K.S.A. 40-256. St. Paul offered judgment in the amount of $2,605.48 plus court costs. St. Paul's offer as to damages was accepted by Moore and filed with the district court.
Moore then filed a motion requesting the district court to assess attorney fees allowed by K.S.A. 40-256. After a hearing on that motion, the district court awarded Moore $6,078.50 for attorney fees. St. Paul filed a motion contesting the amount awarded by the judge for attorney fees. The district court denied St. Paul's motion and awarded Moore additional attorney fees of $540 for services rendered by her attorneys in responding to St. Paul's motion contesting the amount awarded for attorney fees.
St. Paul appealed the amounts awarded as attorney fees to the Kansas Court of Appeals. Moore v. St. Paul Mercury Insurance Co. 26 Kan. App. 2d 506, 509, 989 P.2d 294 (1999). The Court of Appeals held the $6,078.50 awarded by the district court for attorney fees was reasonable. It then held that attorney fees awarded pursuant to K.S.A. 40-256 could not include the $540 awarded as *274 fees associated with litigating the amount of fees in the underlying action. Moore's petition for review was accepted.
STANDARD OF REVIEW
K.S.A. 40-256 provides, in part:
"That in all actions hereafter commenced, in which judgment is rendered against any insurance company ..., if it appear from the evidence that such company, society or exchange has refused without just cause or excuse to pay the full amount of such loss, the court in rendering such judgment shall allow the plaintiff a reasonable sum as an attorney's fee for services in such action, including proceeding upon appeal, to be recovered and collected as part of the costs."
The Court of Appeals based its decision on a Florida case, State Farm Fire & Cas. Co. v. Palma, 629 So. 2d 830 (Fla. 1993). Resolution of the question presented requires the interpretation of a statute. Interpretation of a statute is a question of law, and our review is unlimited. Hamilton v. State Farm Fire & Cas. Co., 263 Kan. 875, 879, 953 P.2d 1027 (1998).
In Palma, the insured sought payment for a medical procedure from her insurer. The trial court rejected the insured's petition for relief. The decision was appealed to the intermediate appellate court which reversed the trial court and remanded for the trial court to determine the amount of attorney fees to be awarded under the Florida statute which allows "`a reasonable sum as fees or compensation for the insured's or beneficiary's attorney prosecuting the suit in which recovery is had.'" 629 So. 2d at 832. The trial court awarded a judgment for the cost of the medical procedure and fees for the insured's attorney services in the trial court and the intermediate appellate court. The insurer appealed the amounts awarded as attorney fees to the intermediate appellate court. The amounts of attorney fees awarded were affirmed by the intermediate appellate court. The insured was awarded additional fees for litigating the appeal by the intermediate appellate court. The issue appealed to the Florida Supreme Court was whether the plaintiff/insured was entitled to additional attorney fees for attorney services in defense of the insurer's appeals of attorney fee calculations. 629 So. 2d at 831.
*275 The Florida Supreme Court analyzed the statute which provided for awards of attorney fees to insureds who successfully sue their insurance companies. The court held:
"Thus, if an insurer loses such a suit but contests the insured's entitlement to attorney's fees, this is still a claim under the policy and within the scope of section 627.428. Because such services are rendered in procuring full payment of the judgment, the insured does have an interest in the fee recovered. Accordingly, we hold that attorney's fees may properly be awarded ... for litigating the issue of entitlement to attorney's fees.
"However, we do not agree with the district court below that attorney's fees may be awarded for litigating the amount of attorney's fees. The language of the statute does not support such a conclusion. Such work inures solely to the attorney's benefit and cannot be considered services rendered in procuring full payment of the judgment." 629 So. 2d at 832-33.
Moore asserts the Court of Appeals' adoption of the Florida rationale in Palma should not be accepted as precedent because (1) the Florida Supreme Court was deeply divided on the issue, (2) that decision is followed by a long line of conflicting Florida opinions on the issue, and (3) the Florida court, in interpreting the Florida statute, departed from well-established federal case law based on federal fee shifting statutes similar to Kansas statutes.
Palma was a 4 to 3 decision. The dissenting opinion by Justice Kogan reasoned:
"I cannot agree that attorneys fees are unavailable for litigating the amount of those fees even though, as the majority concedes, fees may be awarded for litigating the entitlement to the fees. In actual practice, the two issues are inextricable, and I believe the majority is expecting the legislature to draft legislation with a distinction far more fine than we have required in other contexts. The purpose of the attorneys fees legislation is to make legal representation more widely available to those who need it. The federal courts have recognized this and have adopted a rule in harmony with what I am advocating here. I would adhere to the federal view as a matter of state law. There is no sound reason in policy or in statutory construction to depart from the view used by the largest court system in this nation." 629 So. 2d at 834.
We note that the Florida judiciary has continued to express doubts as to Palma. In Citibank Federal Savings Bank v. Sandel, 766 So. 2d 302 (Fla. App. 2000), a majority of the court summarily affirmed an order awarding attorney fees in a federal truth-in-lending act case filed in state court. Contrary to Palma, the Florida Supreme Court *276 awarded attorney fees to the plaintiff for the attorney work on the appeal. The court explained that Palma did not control because the action was based on federal law which entitled the plaintiff to attorney fees for services rendered in litigating the amount of attorney fees. 766 So. 2d at 303.
Three judges concurred with the majority opinion in Sandel. One concurring justice, Justice Farmer, strongly criticized Palma, stating:
"If Palma did supply the rule of decision, I would find it contrary to the purpose of an attorney's fee recovery and quite inequitable to apply it in this case. For one thing, the premises on which the Palma exclusion is based are, to me, all but indefensible. The [Palma] court explained its rationale for denying fees-for-fees thus:
`We do not agree with the district court below that attorney's fees may be awarded for litigating the amount of attorney's fees. The language of the statute does not support such a conclusion. Such work inures solely to the attorney's benefit and cannot be considered services rendered in procuring full payment of the judgment.' Palma, 629 So.2d at 833.
"Taking the last part of the justification first, that such work inures solely to the benefit of counsel, this simply cannot be right. It is akin to saying that all attorney's fees statutes are for the benefit of counsel, which is obviously not true. The primary purpose of all fee-shifting statutes is to benefit the client. The fact that the benefit to the client will also ultimately result in the attorney being paid is collateral and incidental to its primary purpose, which is to indemnify a party for the cost of counsel.
"Moreover, the first part of the premisethat fees-for-fees is in conflict with the fee-authorizing statuteis equally unsustainable. The statute in Palma, section 627.428, provided that the insured was entitled to `a reasonable sum as fees or compensation for the insured's or beneficiary's attorney prosecuting the suit in which recovery is had.' It is thus a reasonable fee authorized by this statute. If the carrier disputes the reasonableness of the amount of the fees sought by the insured, that issue cannot be settled without being litigated. If it must be litigated it is perforce an issue in the case. Nothing in the statute precludes fees for litigating the amount of the authorized reasonable fee." 766 So. 2d at 304.
Others have also commented that Palma lacks persuasive value because it follows a lengthy history of conflicting decisions on the matter in the Florida courts. See Marguerite H. Davis and Judge James C. Hauser, A Plea for Uniformity, 64 Fla. B.J. 33 (Apr. 1990).
In reaching its decision here, the Court of Appeals concluded that an award of attorney fees for litigating the amount of attorney *277 fees is not authorized by K.S.A. 40-256 because "the amount of attorney fees to be awarded inures solely to the attorney's benefit and has no relation to services rendered in procuring either the judgment in favor of a plaintiff or the payment of that judgment." Moore, 26 Kan. App.2d at 509. The Court of Appeals' language is taken from Palma and originates from "common fund cases." See 629 So. 2d at 833.
The common fund doctrine provides the basis for awarding attorney fees in class actions. The rationale for awarding attorney fees out of a common fund is that the attorney's services benefit the fund by creating, increasing, or preserving the fund. An attorney's time expended in connection with the fee application or a fee appeal does not benefit the fund; therefore, it does not benefit the plaintiff class. In fact, at that point the attorney's interest becomes adverse to the interest of the class which the attorney represents. To award attorney fees for services which do not benefit the fund does not comport with the policy of the common fund doctrine. Prandini v. National Tea Co., 585 F.2d 47, 53 (3d Cir. 1978).
On the other hand, in statutorily authorized fee cases, the rationale for prohibiting fees acquired in litigating the amount of fees does not apply. Unlike in common fund cases, there is no potential or actual conflict of interest between counsel seeking attorney fees and the individuals they represent, since payments are by the defendant and will not adversely affect the client's recovery. Gagne, 594 F.2d 336, 344 (2d Cir. 1979), aff'd 448 U.S. 122, 65 L. Ed. 2d 653, 100 S. Ct. 2570 (1980). Therefore, in statutorily authorized fee cases an award of fees for litigating the amount of fees does not inure solely to the attorney's benefit.
Finally, Palma is contrary to federal decisions which allow the award of attorney fees for litigating the entitlement to and amount of attorney fees. In reaching its conclusion the Palma court stated:
"We recognize that the federal courts that have addressed the issue have not distinguished between entitlement to attorney's fees and the amount of attorney's fees, but instead permit fees for the entire time spent on the issue. [Citation omitted.] In awarding fees for litigating all issues relating to attorney's fees, the federal courts have noted that such awards comport with the purpose behind most *278 statutory fee authorizations, namely to encourage attorneys to represent indigent clients. [Citation omitted.]" 629 So. 2d at 833.
To support her argument that the rationale of the federal courts should be adopted, Moore cites Gagne v. Maher, 594 F.2d 336; Prandini v. National Tea Co., 585 F.2d 47; Massachusetts Fair Share v. O'Keefe, 476 F. Supp. 294 (D. Mass. 1979); and Lackey v. Bolling, 476 F. Supp. 1111 (N. D. Ill. 1979).
The cases cited are federal civil rights cases where attorney fees are authorized pursuant to 42 U.S.C. § 1988 (1994). Section 1988(b) provides, in part:
"In any action or proceeding to enforce a provision of sections 1981, 1981a, 1982, 1983, 1985, and 1986 of this title, title IX of Public Law 92-318, ... [or] title VI of the Civil Rights Act of 1964, ... the court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney's fee as part of the costs."
There are well over 200 federal fee statute provisions. The largest growth in fee-shifting statutes has been in the civil rights field. 10 Wright, Miller & Kane, Federal Practice and Procedure: Civil 3d § 2675.2 (1998). The United States Supreme Court has held that attorney fee award provisions in civil rights actions are sufficiently similar so that decisions interpreting one are applicable to all. See Flight Attendants v. Zipes, 491 U.S. 754, 759, 105 L. Ed. 2d 639, 109 S. Ct. 2732 (1989); Hensley v. Eckerhart, 461 U.S. 424, 433, n. 7, 76 L. Ed 2d 40, 103 S. Ct. 1933 (1983).
The Gagne circuit court observed that the issue of whether plaintiff's attorneys can recover fees for services performed in connection with the fee application was an issue of first impression for the Second Circuit. The court noted that the issue had arisen in the First Circuit and the Third Circuit, and both those circuits had ruled that such time was compensable. Gagne, 594 F.2d at 343. The court found there were "strong reasons" for adopting the approach of the First and Third Circuits. Referring to Prandini, 585 F.2d at 53, from the Third Circuit, the Gagne circuit court stated:
"If an attorney is required to expend time litigating his fee claim, yet may not be compensated for that time, the attorney's effective rate for all the hours expended on the case will be correspondingly decreased.... Such a result would not comport with the purpose behind most statutory fee authorizations, viz, the encouragement *279 of attorneys to present indigent clients and to act as private attorneys general in vindicating congressional policies." 594 F.2d at 344.
The Gagne circuit court held, therefore, that the time reasonably spent by the plaintiff's attorneys in establishing their fee was compensable. 594 F.2d at 344.
In Massachusetts Fair Share, the plaintiff brought suit under 42 U.S.C. § 1983 (1994) to restrain the defendants from refusing to issue a raffle and bazaar permit. After a hearing on the merits, the judge concluded that the plaintiff was a charitable organization within the ordinance authorizing the requested permit and issued a temporary restraining order allowing the plaintiff to hold its event as planned. Following completion of discovery, the parties negotiated a consent decree, and the plaintiff agreed to a dismissal without prejudice. Regarding attorney fees, the defendants argued that the plaintiff should not receive all the fees it had requested. The court found for the plaintiff on the attorney fee issues.
In determining the amount of fees to be awarded, the Massachusetts Fair Share court found that counsel was entitled to compensation for work performed in litigating the issue of fees. The court stated:
"It is true that the total time spent on this phase of the case exceeds one-half of the total time devoted to the merits of the case itself. However, most of counsel's work was necessitated by defendants' opposition to the fee application and by defendants' request for a hearing before us. Defendants' choice to contest this motion more vigorously than the issues in the underlying case should not now lead to a reduced fee award for plaintiffs." 476 F. Supp. 299.
The Court of Appeals decided not to follow the federal cases interpreting 42 U.S.C. § 1988 (1994) and determined that fees incurred in litigating only the amount of attorney fees to be awarded are not recoverable under K.S.A. 40-256. We disagree with that determination. There is little difference in the wording and purpose of K.S.A. 40-256 and 42 U.S.C. § 1988. We find the federal reasoning on the issue applicable and persuasive.
The primary purpose of the Kansas fee-shifting statute is to benefit the insured. Fees incurred litigating the amount of attorney fees to be awarded are recoverable under K.S.A. 40-256. The fact that the award of such fee ultimately results in the insured's attorney *280 being paid to litigate the fee is collateral and incidental to the primary purpose of indemnifying an insured for the cost of counsel in an action against the insurer.
The district court's award of attorney fees is affirmed. The Court of Appeals determination that attorney fees for litigating the amount of fees to be awarded is not authorized by K.S.A. 40-256 is reversed.
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55 So. 3d 235 (2005)
Demarius Hughes AMAN
v.
Michael J. GILLEY and Susan Helms Gilley.
2031166.
Court of Civil Appeals of Alabama.
September 2, 2005.
*237 Robert H. Brogden, Ozark, for appellant.
Steven K. Brackin of Lewis, Brackin, Flowers & Johnson, Dothan, for appellees.
On Application for Rehearing
THOMPSON, Judge.
The opinion of June 24, 2005, is withdrawn, and the following is substituted therefor:
Demarius Hughes Aman appeals the judgment of the trial court finding that Michael J. Gilley and Susan Helms Gilley own an easement across a portion of Aman's real property. We reverse and remand.
Aman sued the Gilleys, who are coterminous landowners on the southern boundary of Aman's real property, to quiet title to a 120-acre parcel of real property and to enjoin them from interfering with a fence erected by Aman and her husband. The Gilleys answered, claiming to have paid taxes on a strip of land 20 feet wide and 975 feet long purportedly located within the 120-acre parcel. The Gilleys counterclaimed for a determination of the boundary line between their property and Aman's property, and they claimed ownership of the strip of land by adverse possession for a period of 10 years. The case was tried before a judge without a jury.
During the trial, the parties stipulated that the 20 foot by 975 foot strip of land was a public dirt road. At trial, however, the parties disputed the ownership of an additional strip of land (hereinafter "the disputed property") approximately 20 feet wide and approximately 200 feet long located at the end of the dirt road; the Gilleys use the disputed property as a driveway. At trial, the Gilleys claimed to own the disputed property through adverse possession.
In their posttrial brief, for the first time, the Gilleys claimed to own an easement by prescription over the disputed property. In her posttrial brief, Aman argued to the trial court that the Gilleys had not claimed an easement by prescription before or at trial and that, therefore, they were not entitled to an easement by prescription. Aman specifically directed the court's attention to Michael Gilley's trial testimony that the Gilleys were claiming ownership of the disputed property by adverse possession. Aman also argued that the Gilleys had failed to prove that their possession of the disputed property was exclusive and hostile. The trial court entered a judgment finding that "the Gilley[s] have acquired an easement or right of way down the roadway including the driveway in question and that the Gilley[s] shall be entitled to use the road and driveway free of any interference from [Aman] or [Aman's] agents or employees."
When evidence is presented ore tenus and the trial court "`resolves conflicting questions of fact in favor of one of the parties, its findings will not be disturbed on appeal unless they were clearly erroneous or manifestly unjust.'" Lilly v. Palmer, 495 So. 2d 522, 525 (Ala.1986) (quoting Scarbrough v. Smith, 445 So.2d *238 553, 555 (Ala.1984)). "The presumption of correctness is particularly strong in adverse possession cases, because it is difficult for an appellate court to review the evidence in such cases." Rice v. McGinnis, 653 So. 2d 950, 950 (Ala.1995). However, when the question presented on appeal is one of law, the ore tenus rule has no application. Ex parte Perkins, 646 So. 2d 46, 47 (Ala.1994).
Aman contends on appeal that the trial court erred in granting the Gilleys a prescriptive easement because the Gilleys did not allege that they had acquired an easement by prescription in their counterclaim and because Michael Gilley specifically testified at trial that the Gilley were claiming ownership of the disputed property by adverse possession.
"At the outset, we note that Rule 54(c) of the Alabama Rules of Civil Procedure gives the trial court the discretion to award any relief a party is entitled to, even if the party has not specifically requested such relief. The rule provides, in pertinent part:
"`Except as to a party against whom a judgment is entered by default, every final judgment shall grant the relief to which the party in whose favor it is rendered is entitled, even if the party has not demanded such relief in his pleadings.'
"The same principle is enunciated by Rule 15(b), [Ala. R. Civ. P.,] where it is stated:
"`When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings.'
"We find that these provisions make clear the fact that the trial court is empowered with the discretion to award relief to a party, even when such relief is not specifically requested in the complaint. See Awad v. Awad, 54 Ala.App. 154, 306 So. 2d 21 (Ala.Civ.App.1975)."
Beason v. Beason, 571 So. 2d 1155, 1156 (Ala.Civ.App.1990). Thus, it was within the trial court's discretion, if it determined that the issue had been tried by the implied consent of the parties, to award the Gilleys relief not requested in their counterclaim, i.e., an easement by prescription. However, a trial court can grant relief not specifically requested in a complaint or counterclaim only when the party seeking such relief has met its burden of proving the elements of that claim.
Therefore, we address Aman's claim that the Gilleys failed to meet their burden of proof to establish their claim of an easement by prescription. The Alabama Supreme Court has identified the elements necessary to establish an easement by prescription as follows:
"`"... [T]he claimant must use the premises over which the easement is claimed for a period of twenty years or more, adversely to the owner of the premises, under claim of right, exclusive, continuous, and uninterrupted, with actual or presumptive knowledge of the owner. The presumption is that the use is permissive, and the claimant has the burden of proving that the use is adverse to the owner."'
"Apley v. Tagert, 584 So. 2d 816, 818 (Ala.1991) (citation omitted) (emphasis added)."
Hollis v. Tomlinson, 585 So. 2d 862, 863 (Ala.1991). A permissive use of lands does not ripen into an adverse use until there has been a repudiation of the permissive use so as to afford the owner notice of an adverse claim. Cotton v. May, 293 Ala. 212, 301 So. 2d 168 (1974); Gonzalez v. Naman, 678 So. 2d 1152 (Ala.Civ.App. 1996). Furthermore, an easement by prescription "`is not established merely by *239 the use of the lands of another for a period of twenty years or more.'" Cotton v. May, 293 Ala. at 214-15, 301 So. 2d at 170 (quoting West v. West, 252 Ala. 296, 297-98, 40 So. 2d 873, 874 (1949)). Accord Carr v. Turner, 575 So. 2d 1066, 1067-68 (Ala. 1991); Fisher v. Higginbotham, 406 So. 2d 888, 889 (Ala.1981); Ford v. Alabama By-Products Corp., 392 So. 2d 217, 219 (Ala. 1980); Belcher v. Belcher, 284 Ala. 254, 256, 224 So. 2d 613, 614 (1969); Loveman v. Lay, 271 Ala. 385, 392, 124 So. 2d 93, 98 (1960); Roberts v. Monroe, 261 Ala. 569, 577, 75 So. 2d 492, 499 (1954); and West v. West, 252 Ala. 296, 297-98, 40 So. 2d 873, 874 (1949).
In 1975, Leonard Helms conveyed to the Gilleys approximately an acre and a half of property in the midst of property he owned; Helms is Susan Gilley's father and Michael Gilley's father-in-law. At trial, the parties stipulated that a dirt road branching off County Road 68 and ending at the northeast corner of the Gilleys' real property is a public road and is maintained by Geneva County. The public dirt road forms the southern boundary of Aman's property until the road terminates at the northeastern corner of the Gilleys' property; the northern boundary of the Gilleys' property then marks the southern boundary of Aman's property. Helms retained property to the west of the Gilleys' property on the southern boundary of Aman's property. Aman's father is her predecessor-in-title to her property.
The property in dispute is approximately 20 feet wide and approximately 200 feet long; it commences at the end of the dirt road in the northeast corner of the Gilleys' property on the southern boundary of Aman's property and "curves out" into Aman's property. The Gilleys use the disputed property as a driveway. The only issue before the trial court was whether the Gilleys' use of the disputed property was adverse to Aman. See Hollis v. Tomlinson, 585 So.2d at 863.
Helms testified that during the time he owned the property now owned by the Gilleys, he used the disputed property. Helms has continued to use the disputed property to access the portion of his property that lies to the west of the Gilleys' property. Helms testified that Aman's father, who owned Aman's property until approximately 2000, did not mind his using the disputed property to access his property. Helms testified that he did not do anything antagonistic to the interest of Aman's father when he used the disputed property.
Michael Gilley testified that he had used the disputed property as a driveway during the entire time the Gilleys have owned their property. Michael Gilley admitted that Helms, Aman's father, and Aman's husband had also used the disputed property during the 26 years that the Gilleys had lived on their property. He admitted that he had never maintained the disputed property, but he claimed that Geneva County had graded the public dirt road and the disputed property at least once a month.
Larry Everett, a County Commissioner for Geneva County, testified that the county had graded the public road. In response to a question whether the county had graded the disputed property in this action, Everett testified that, to his knowledge, it had not, and that the person employed by the county to conduct the grading was only authorized to grade to the end of the public road. Mark Carroll, the person who performed the grading for the county, testified that he had graded the public road and the disputed property.
The Gilleys' use of the disputed property was presumed to be permissive. Hollis v. Tomlinson, supra. The Gilleys did not present any evidence to rebut the presumption *240 that their use of the disputed property was permissive. The Gilleys presented only evidence that they had used the disputed property for 26 years as a driveway. However, as stated earlier, the mere use of the disputed property for 20 years or more does not establish an easement by prescription. Cotton v. May, supra; Carr v. Turner, supra; Fisher v. Higginbotham, supra; and Ford v. Alabama By-Products Corp., supra. Therefore, the Gilleys failed to prove adverse use of the disputed property, which is an essential element to establish their entitlement to an easement by prescription. Accordingly, we must conclude that the trial court erred in awarding an easement by prescription. The judgment of the trial court is reversed, and this cause is remanded for the entry of a judgment consistent with this opinion.
OPINION OF JUNE 24, 2005, WITHDRAWN; OPINION SUBSTITUTED; APPLICATION FOR REHEARING OVERRULED; REVERSED AND REMANDED WITH INSTRUCTIONS.
PITTMAN and BRYAN, JJ., concur.
MURDOCK, J., concurs in the result, with writing, which CRAWLEY, P.J., joins.
MURDOCK, Judge, concurring in the result.
Based on my review of the record, I conclude that a claim FOR an easement by prescriptionas opposed to a claim FOR adverse possessionwas not tried by the implied consent of the parties. Accordingly, I do not find the holding from Beason v. Beason, 571 So. 2d 1155 (Ala.Civ.App. 1990), quoted in the main opinion, nor Rule 15(b) or Rule 54(c), Ala. R. Civ. P., to be applicable.
While it is true that Rule 54(c) does provide that "every final judgment shall grant the relief to which the party in whose favor it is rendered is entitled," the purpose of this rule is to confirm that a failure to ask for particular relief in one's pleadings does not serve to bar that relief from being granted, provided that a claim that would support that relief has been tried by the implied consent of the parties. The rule itself implies this purpose in stating that every final judgment shall grant the relief to which the party in whose favor it is rendered is entitled "even if the party has not demanded such relief in the party's pleadings." Moreover, the official Committee Comments on 1973 Adoption of the rule verify that
"[t]he second sentence of subdivision (c) implements the general principle of Rule 15(b), that in a contested case the judgment is to be based on what has been proved rather than what has been pleaded. . . . But this rule is only applicable where the proof supports the relief finally given, and where, therefore, pursuant to Rule 15(b), the pleadings could be deemed to be amended to conform to the evidence."
The "general principle of Rule 15(b)" that Rule 54(c) "implements" is exactly as indicated by this comment; Rule 15(b), itself, states: "When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings."
A cause of action for an easement by prescription was not tried by the implied consent of the parties in this case. Aman was not put on notice before or during trial that a cause of action for an easement by prescription was being litigated. The Gilleys included no mention of a claim for an easement by prescription in any pleading. At trial, Mr. Gilley specifically testified that he claimed title to the subject property by "adverse possession." As Aman defended *241 against the elements of a cause of action for adverse possession, there was nothing to indicate to her that she ought also to be putting on evidence or making legal arguments in opposition to the somewhat different elements of a cause of action for an easement by prescription. The evidence introduced by the Gilleys that could be viewed as consistent with the assertion of a claim for an easement by prescription was in fact properly admitted as supportive of the Gilleys' adverse-possession theory.
Not unlike the present case, in McCollum v. Reeves, 521 So. 2d 13 (Ala.1987), the plaintiffs contended that they should have been granted relief by the trial court in the form of an easement based on the fact that they had introduced evidence establishing their use of a strip of property located along or near the boundary of their land and the land of the defendants. As the Supreme Court explained, however,
"the testimony concerning the plaintiffs' use of the [disputed property] was also relevant to the issue of the proper location of the boundary line. When a party contends that an issue was tried by express or implied consent and the evidence on that issue is also relevant to the issue expressly litigated, there is nothing to indicate that a new issue was raised at trial, and the pleadings are not deemed amended under Rule 15(b). Wright & Miller, Federal Practice & Procedure, Civil, § 1493 (1971)."
McCollum v. Reeves, 521 So.2d at 17. See also, e.g., Metropolitan Life Ins. Co. v. Sullen, 413 So. 2d 1106 (Ala.1982).
In Foy v. Foy, 447 So. 2d 158, 162 (Ala. 1984), "[t]he parties came into court to determine whether an executory option contract [was] enforceable and valid. The trial court, on its own motion, voided that contract and ... deeds which transferred... land on the basis of the contract." As the Supreme Court held, however, there was
"no legal authority for the trial court's action. While Rules 15(b) and 54(c), [Ala. R. Civ. P.], eliminate the necessity of strict pleading of issues tried with the implied consent of the parties, they do not provide a trial court with the authority to foist on the parties relief completely different from that contemplated by the parties, based on issues not raised by either party."
Foy, 447 So.2d at 163. Similarly, in the present case, while the Gilleys did raise the issue of an easement by prescription in their postjudgment brief, that was not an issue raised by either party before or during the trial of this case.
Accordingly, I disagree with the suggestion in the main opinion that the trial court could have entered a judgment in favor of the Gilleys based upon a cause of action for an easement by prescription if only the evidence at trial had been sufficient to establish each of the elements of such a cause of action. I therefore must concur only in the result reached by the main opinion; the issues presented in this appeal do not include the issue upon which the main opinion primarily focuses, i.e., whether the evidence introduced at trial was sufficient to prove each of the elements of an easement by prescription.
CRAWLEY, P.J., concurs.
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51 So. 3d 407 (2009)
JAMES McCONICO, JR.
v.
CLASSIFICATION SPECIALIST. ROMA ROBINSON, ET AL.
No. CR-07-1894.
Court of Criminal Appeals of Alabama.
April 24, 2009.
DECISION WITHOUT PUBLISHED OPINION
Affirmed.
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55 So. 3d 1074 (2011)
Montae BLANCHARD
v.
STATE of Mississippi.
No. 2010-KA-00312-SCT.
Supreme Court of Mississippi.
March 10, 2011.
*1075 Office of Indigent Appeals by George T. Holmes, Leslie S. Lee, Jackson, attorney for appellant.
Office of the Attorney General by Laura Hogan Tedder, attorney for appellee.
Before WALLER, C.J., DICKINSON, P.J., and KITCHENS, J.
KITCHENS, Justice, for the Court:
¶ 1. Following a jury trial from which he was absent, Montae Blanchard was convicted of armed robbery as defined by Mississippi Code Section 97-3-79 (Rev. 2006). The trial court sentenced Blanchard to fifty years' imprisonment and ordered him to pay court costs, fees, restitution, and a fine, totaling $15,822.50. Finding no reversible error, we affirm the conviction and sentence.
Facts
¶ 2. On January 7, 2008, just before 5:00 p.m., Dale Pierce, the owner of Terrific Tax in Aberdeen, Mississippi, noticed two young people, a male and a female, loitering outside the Terrific Tax building. Pierce asked whether they needed assistance, and was told that their car had been stolen. Pierce advised the two youths to contact the police, but they replied that they did not want to inform law officers because their cousin probably had taken the car. Pierce left, then returned to the store at 5:20 p.m., when he was told by David Mink, a Terrific Tax employee, that the business had been robbed.
*1076 ¶ 3. According to Mink, the young female had entered the store at 4:50 p.m. Mink said that he initially had thought she was a boy and later described her to police as a short, black teenager with short hair and tattoos. Mink said that the girl asked him for his telephone number, but he declined to give her his number because he was married.
¶ 4. Shortly thereafter, her male companion entered the Terrific Tax establishment. Mink described him as a tall, black male, wearing a stocking cap over his dreadlocks. When the man entered the store, the girl asked Mink for some candy that she noticed behind the business counter. When Mink brought the candy to her, the man removed what appeared to be a handgun from the waistband of his shorts and pointed it at Mink's face. The man then handed the gun to the girl, and told Mink to go sit in a chair by the front door while she continued to point the gun at Mink. Mink complied and sat down while the man went behind the counter and stole a bag containing roughly $5,000 in cash.
¶ 5. Before exiting the establishment, the man instructed Mink to come to the back of the business counter. There, the man told Mink not to use the telephone, and demanded that Mink give him his car keys and mobile telephone. Mink responded that he did not have his keys or his mobile telephone. The man then told Mink he was "Chris from Amory" and "that he [Mink] would remember him." The two robbers then exited the business, the man carrying the bag of cash, and the young woman carrying the gun. As they left, Mink's mother entered the building, and Mink yelled for her to call the police.
¶ 6. Police arrived soon after the robbery was reported, and Investigator Quinell Shumpert was assigned to the case. Shumpert testified that, during the course of his investigation, he developed a suspicion that the girl involved in the robbery was Mary Minor.[1] Shumpert identified Mary as a suspect from the description Mink gave of a short black teenager with tattoos, brown skin, and masculine features. Shumpert's matching identification came from personal knowledge of Mary in his capacity as an investigator in previous matters.
¶ 7. Shumpert eventually located Mary at her cousin's home. Upon arrest, Mary told Shumpert that she had hidden the gun used in the robbery under a mattress in her cousin's bedroom. The police located a BB pistol under the mattress and confiscated it. Mink testified at trial that this BB pistol looked like the gun that was used in the robbery.
¶ 8. During further questioning, Mary also told Shumpert that her accomplice was her cousin, Montae Blanchard. Shumpert called Blanchard and asked him to come to the Aberdeen police station to talk about the robbery.
¶ 9. After Mary had disclosed the name of her accomplice, both men from Terrific Tax identified Blanchard from a photo array. When Blanchard arrived at the police station, he was taken to an interrogation room with a two-way mirror. Shumpert testified that Pierce and Mink had observed Blanchard from the other side of the mirror, and that Pierce had again positively identified Blanchard as the man he had seen loitering outside his store. Shumpert could not recall whether Mink also made a second identification, but Mink testified that he had *1077 identified Blanchard as the robber from behind the mirror.
¶ 10. Although Mink had described the man who robbed Terrific Tax as having braids in his hair, Blanchard arrived at the police station with a shaven head. While being questioned, Blanchard contended that he had been in Tupelo at a hospital with his girlfriend and another female friend during the time of the robbery. Shumpert then contacted the hospital, and the hospital's security guard stated he had reviewed the hospital's surveillance tapes and had not seen Blanchard but had seen the two women he claimed to have been with.
¶ 11. Prior to trial, Blanchard was assigned a public defender, Luanne S. Thompson. When the trial began, Blanchard was not present. Neither the judge, prosecutor, nor Thompson mentioned Blanchard's absence until the first witness had testified. During a recess, with the jury out, the judge noted for the record that the defendant was not present. Lawyer Thompson told the court that she had been in contact with Blanchard numerous times, and that he was well aware of his trial date. The trial proceeded to conclusion in Blanchard's absence.
¶ 12. Mary Minor, the juvenile accomplice, testified against her cousin, corroborating Pierce and Mink's version of events and confirming their accounts of Blanchard's activities in connection with the crime. She said that she had not wanted to rob the store, but that Blanchard had threatened to harm her if she did not help him "hit a lick." Although some of the details of her story were contradictory, she was emphatic that Blanchard was the person who had robbed Terrific Tax. At trial, Mary identified Blanchard from a photograph. Pierce and Mink also were shown the photograph at trial, and both testified that Blanchard was the man who had robbed the store.
¶ 13. Following a day's testimony, the jury found Blanchard guilty of armed robbery. A sentencing hearing was held the next day, with Blanchard again absent. The trial judge sentenced Blanchard to fifty years' imprisonment.
Issues
¶ 14. Blanchard raises three issues on appeal: (1) whether the trial court erred by trying him in absentia; (2) whether he had received ineffective assistance of counsel; and (3) whether the verdict was against the weight of the evidence.
Discussion
(1) Trial In Absentia
¶ 15. Blanchard was released on bail pending his trial. After the first witness had testified, the trial judge briefly discussed Blanchard's absence outside the presence of the jury. Blanchard's attorney, Thompson, told the court that Blanchard was aware of his trial date and time, and that Blanchard had told Thompson the night before the trial that he would be present. Thompson did not request a continuance or otherwise object to the trial's proceeding in her client's absence.
¶ 16. On appeal, Blanchard asks that this Court review the issue as plain error. When a defendant fails to make a proper objection at trial, and thus fails to preserve the issue for appellate review, we will reverse if the error involved a fundamental and/or substantive right and resulted in a "manifest miscarriage of justice" or "seriously affect[ed] the fairness, integrity or public reputation of judicial proceedings." Brown v. State, 995 So. 2d 698, 703 (Miss.2008).
¶ 17. An accused's right to be present at every stage of his trial is guaranteed by the Sixth Amendment to the *1078 United States Constitution and Article 3, Section 26, of the Mississippi Constitution. See Illinois v. Allen, 397 U.S. 337, 338, 90 S. Ct. 1057, 25 L. Ed. 2d 353 (1970); Corbin v. State, 99 Miss. 486, 55 So. 43, 44 (1911). This right may be waived based on a defendant's "willful, voluntary, and deliberate absence from trial." Jay v. State, 25 So. 3d 257, 264 (Miss.2010). Mississippi Code Section 99-17-9 (Rev.2007) provides,
In criminal cases the presence of the prisoner may be waived (a) if the defendant is in custody and consenting thereto, or (b) is on recognizance or bail, has been arrested and escaped, or has been notified in writing by the proper officer of the pendency of the indictment against him, and resisted or fled, or refused to be taken, or is in any way in default for nonappearance, the trial may progress at the discretion of the court, and judgment made final and sentence awarded as though such defendant were personally present in court.
(Emphasis added.) Thus, a trial in absentia may be had where the accused "is on recognizance or bail ... and ... is in any way in default for nonappearance...." Miss.Code Ann. § 99-17-9.
¶ 18. To support his argument, Blanchard cites Jay v. State, 25 So. 3d 257, and Ali v. State, 928 So. 2d 237 (Miss.Ct.App. 2006). However, in both cases, there was evidence that the defendant's absence was not deliberate. In Jay, 25 So.3d at 264, there was evidence that the defendant was not mentally competent, and therefore, "[w]hether or not Jay's absence at trial was a result of willful, voluntary, and deliberate actions turned on whether or not he was mentally competent at the time of trial." In Ali, 928 So.2d at 240, the defendant's testimony at a post-trial hearing on his motion for a new trial established that he did not understand when his trial was being held. The defendant in Ali was a Somalian citizen with limited knowledge of the English language. Id.
¶ 19. These cases clearly are distinguishable from the one before us in that there was evidence in each that the defendant's actions were not deliberate. In the present case, Blanchard's attorney made it clear to the trial court that he was aware of his trial date. Without evidence that Blanchard's absence was not willful, voluntary, and deliberate, the trial judge did not commit plain error by conducting the trial in absentia.
(2) Ineffective Assistance of Counsel
¶ 20. Blanchard next argues that his trial counsel was ineffective for failing to request a continuance based on his absence and for failing to object to certain hearsay testimony, specifically, Shumpert's testimony regarding his conversation with the hospital security guard. This Court has held:
Ordinarily, ineffective-assistance-of-counsel claims are more appropriately brought during post-conviction proceedings. This is because during direct appeals the Court is limited to the trial court record in its review of the claim, and there may be instances in which insufficient evidence exists within the record to address the claim adequately. Wilcher v. State, 863 So. 2d 776, 825 (Miss.2003). In such a case, the appropriate procedure is to deny relief, preserving the defendant's right to argue the issue through a petition for post-conviction relief. Read v. State, 430 So. 2d 832, 837 (Miss.1983).
However, this Court may address an ineffectiveness claim on direct appeal if the presented issues are based on facts fully apparent from the record. M.R.A.P. 22; see also Havard v. State, 928 So. 2d 771, 786 (Miss.2006).
*1079 Archer v. State, 986 So. 2d 951, 955 (Miss. 2008). Although, in his brief, Blanchard stipulates that the record on direct appeal is adequate, we find that Blanchard's ineffective assistance of counsel claims are best reserved for a potential petition for post-conviction relief. See Read v. State, 430 So. 2d 832, 841 (Miss.1983) (holding that we may review an ineffective assistance of counsel claim where "the parties stipulate that the record is adequate and the Court determines that findings of fact by a trial judge able to consider the demeanor of witnesses, etc. are not needed.") (emphasis added).
(3) Weight of the Evidence
¶ 21. Lastly, Blanchard argues that the verdict was against the weight of the evidence.
We will only disturb a jury verdict when "it is so contrary to the overwhelming weight of the evidence that to allow it to stand would sanction an unconscionable injustice." Bush v. State, 895 So. 2d 836, 844 [(Miss.2005)] (citing Herring v. State, 691 So. 2d 948, 957 (Miss.1997)). This Court acts as a "thirteenth juror" and views the evidence in the light most favorable to the verdict. Bush, 895 So.2d at 843 (citing Herring, 691 So.2d at 957). A decision to reverse and order a new trial, "unlike a reversal based on insufficient evidence, does not mean that acquittal was the only proper verdict." Bush, 895 So.2d at 844 (quoting McQueen v. State, 423 So. 2d 800, 803 (Miss.1982)).
Harris v. State, 970 So. 2d 151, 156 (Miss. 2007).
¶ 22. In his brief argument on this purported point of error, Blanchard avers that the victims' descriptions of the robber did not match his physical appearance, that Mary's testimony was "unreasonable and unreliable," and that there was no physical evidence to tie Blanchard to the crime.
¶ 23. The only difference between the victims' physical descriptions of the robber and Blanchard was that the robber had dreadlocks or braids, while Blanchard's head was shaven. However, Mary Minor testified that, at the time of the robbery, Blanchard had dreadlocks. Moreover, Officer Shumpert testified that he had seen Blanchard roughly a week before the robbery and knew that Blanchard had longer hair which he kept in braids. Both Shumpert and Mary deduced that Blanchard had shaved his head between the robbery and his arrival at the police station.
¶ 24. Regarding Mary's testimony, Blanchard does not explain to this Court how her testimony was "unreasonable or unreliable." While there were some inconsistencies in her testimony, it was the jury's duty, not ours, to gauge the witness's credibility. Moore v. State, 933 So. 2d 910, 922 (Miss.2006) (citing Johnson v. State, 904 So. 2d 162, 167 (Miss.2005); Davis v. State, 568 So. 2d 277, 281 (Miss. 1990)).
¶ 25. Finally, a limited amount of physical evidence, in itself, does not mean that a guilty verdict was against the weight of the evidence. See Moore v. State, 933 So. 2d 910, 922-23 (Miss.2006) (burglary conviction not against the weight of the evidence where there was no physical evidence tying defendant to crime). Thus, this issue is without merit.
Conclusion
¶ 26. The trial court did not commit plain error by trying Blanchard in absentia when there was no evidence to indicate that his absence was involuntary. As for his ineffective assistance of counsel claims, we find that these matters are best preserved for post-conviction proceedings. *1080 Finally, we find no merit in Blanchard's arguments regarding the weight of the evidence. For these reasons, we affirm Blanchard's conviction and sentence.
¶ 27. CONVICTION OF ARMED ROBBERY AND SENTENCE OF FIFTY (50) YEARS IN THE CUSTODY OF THE MISSISSIPPI DEPARTMENT OF CORRECTIONS, AFFIRMED.
WALLER, C.J., CARLSON AND DICKINSON, P.JJ., RANDOLPH, LAMAR, CHANDLER AND PIERCE JJ., CONCUR. KING, J., NOT PARTICIPATING.
NOTES
[1] Because of her youth, the pseudonym Mary Minor is used in place of the accomplice's real name. At the time of the robbery, Mary was sixteen years old and was adjudicated delinquent in the youth court for her role in the robbery.
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01-03-2023
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10-30-2013
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https://www.courtlistener.com/api/rest/v3/opinions/2544855/
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183 P.3d 1285 (2008)
Lorenzo SANCHEZ, Sr., and Bertha Sanchez, husband and wife, Plaintiffs/Appellants,
v.
OLD PUEBLO ANESTHESIA, P.C., an Arizona corporation, and Daniel F. Hughes, M.D., and Barbara Hughes, husband and wife, Defendants/Appellees.
No. 2 CA-CV 2007-0131.
Court of Appeals of Arizona, Division 2, Department B.
May 30, 2008.
*1286 Aboud & Aboud, P.C. by Michael J. Aboud, Tucson, Attorneys for Plaintiffs/Appellants.
Smith Law Group by Christopher J. Smith and E. Hardy Smith, Tucson, Attorneys for Defendants/Appellees.
OPINION
ECKERSTROM, Presiding Judge.
¶ 1 Appellants Lorenzo and Bertha Sanchez appeal from the trial court's dismissal of their complaint against Daniel Hughes, M.D., and Old Pueblo Anesthesia, P.C., for the Sanchezes' failure to obtain a preliminary expert opinion affidavit from an anesthesiologist to support their claim. They argue that, because their claim is based on res ipsa loquitur, the relevant statutes, A.R.S. §§ 12-2603 and 12-2604, do not require them to engage an expert in the specialty of each physician they allege may have been negligent. The Sanchezes also argue the trial court should have given them leave to obtain the affidavit of an anesthesiology expert, rather than dismissing their complaint. Although we agree with the court that plaintiffs must comply with the requirements of § 12-2604 even when relying on the doctrine of res ipsa loquitur, we disagree that a dismissal *1287 with prejudice was the appropriate remedy for the plaintiff's failure to abide by that statute.[1] Accordingly, we reverse and remand the case to the trial court.
¶ 2 When reviewing the trial court's grant of a motion to dismiss, we accept the facts alleged in the complaint as true, and we view those facts in the light most favorable to the complainant, here the Sanchezes. See Johnson v. McDonald, 197 Ariz. 155, ¶ 2, 3 P.3d 1075, 1077 (App.1999). According to the complaint, Dr. James Levi, an orthopedic surgeon, performed knee surgery on Lorenzo Sanchez on April 28, 2004. Hughes, a boardcertified anesthesiologist, administered anesthesia. Lorenzo now has severe and permanent nerve damage to his leg.
¶ 3 The Sanchezes filed a complaint against Old Pueblo, Hughes, Levi, and Tucson Orthopaedic Institute for medical malpractice. The complaint alleged that, although the Sanchezes were "not in a position to prove the particular circumstances or conduct which caused [the] damage," the nerve damage to Lorenzo's leg would not have occurred unless Hughes, Levi, or both had been negligent. Old Pueblo moved to dismiss the complaint on the ground that the Sanchezes had failed to certify whether expert opinion testimony was necessary pursuant to § 12-2603(A). The Sanchezes responded by submitting an affidavit, certifying that the "applicability of [res ipsa loquitur] must and will be established by expert testimony." The Sanchezes also avowed they would timely provide a preliminary expert opinion affidavit confirming their claims pursuant to § 12-2603(B). The court denied Old Pueblo's motion to dismiss at that time.
¶ 4 Before the court's pretrial discovery deadline for the disclosure of expert witnesses expired,[2] the Sanchezes had provided the affidavit of an orthopedic surgeon but not an anesthesiologist. After the disclosure deadline had expired, Old Pueblo again moved to dismiss the Sanchezes' complaint for failure to comply with § 12-2604(A), which sets forth the necessary qualifications for expert testimony establishing the standard of care in a medical malpractice case. Old Pueblo argued the orthopedic surgeon's affidavit the Sanchezes had provided was not "qualified and admissible expert testimony against Dr. Hughes," an anesthesiologist. The court granted the motion, thereby dismissing the complaint against Old Pueblo,[3] and this appeal followed.
¶ 5 The Sanchezes argue the trial court erred when it determined §§ 12-2603 and 12-2604 required them to provide expert testimony from both an anesthesiologist and an orthopedic surgeon to establish their claim based on the doctrine of res ipsa loquitur. We review de novo the trial court's interpretation and application of statutes. Energy Squared, Inc. v. Ariz. Dep't of Revenue, 203 Ariz. 507, ¶ 15, 56 P.3d 686, 688 (App.2002).
¶ 6 Under § 12-2603(A), a plaintiff who asserts a claim against a health care professional in a civil action must certify "whether or not expert opinion testimony is necessary to prove the health care professional's standard of care or liability for the claim." If the claimant certifies such expert testimony is necessary, "the claimant shall serve a preliminary expert opinion affidavit with the initial disclosures that are required by rule 26.1, Ariz[. R. Civ. P]." § 12-2603(B). In doing so, the claimant "may provide affidavits from as many experts as the claimant . . . deems necessary." Id. An affidavit must contain, at a minimum, four elements: the expert's qualifications for providing an opinion on the standard of care, the factual basis of the claim, the acts that violated the standard of care, and the manner in which those acts *1288 harmed the claimant. Id. The companion statute, § 12-2604(A), sets forth the minimum qualifications for an expert to provide testimony on the appropriate standard of care: the expert witness must be "licensed as a health professional" and must specialize in the same specialty "as the party against whom . . . the testimony is offered."
¶ 7 In an attempt to comply with the statutes, the Sanchezes submitted the preliminary expert opinion affidavit of an orthopedic surgeon. In it, the surgeon stated, inter alia, that he believed the injury to Lorenzo's nerves was caused during the surgery and that "such damage would not occur during this kind of operative procedure unless there was negligence either by the Surgeon or by the Anesthesiologist." He noted a possible indication in Lorenzo's medical records that the anesthesiologist, Hughes, had administered a popliteal block and opined that the use of such a block would fall below the standard of care for knee surgery. Finally, he concluded that, even if there had been a "legitimate reason" for using a popliteal block, it "should not have resulted in [nerve] damage."
¶ 8 In dismissing the Sanchezes' complaint against Old Pueblo, the court concluded that they had
failed to comply with the requirements of A.R.S. § 12-2604 as it applies to Dr. Hughes, a board certified anesthesiologist. [They] attempt [ ] to show that Dr. Hughes violated the standard of care through the testimony of a board certified orthopedic surgeon. In order to make this claim, the statute requires [the Sanchezes] to produce the expert testimony of a board certified anesthesiologist. [They] may not rely on the theory [of] res ipsa loquitur in order to avoid the requirements of the statute in this case.
¶ 9 The Sanchezes maintain the trial court erred in so concluding because §§ 12-2603 and 12-2604 only apply to "usual" medical malpractice cases and not those involving the doctrine of res ipsa loquitur.[4] But the terms of those statutes apply globally to "claim[s] against a health care professional . . . asserted in a civil action" and contain no exception for cases asserting the theory of res ipsa loquitur. § 12-2603(A). And we presume that, if the legislature had intended to create such an exception, it would have done so expressly. See Gorney v. Meaney, 214 Ariz. 226, ¶ 9, 150 P.3d 799, 803 (App. 2007) (rejecting argument that legislature intended to except informed-consent claims from § 12-2603 because it had not expressly created exception); see also N.Y.C.P.L.R. 3012-a(c) (McKinney 1991) (creating specific exception for claims "rely[ing] solely on the doctrine of `res ipsa loquitur'" in statute requiring attorney's affidavit of consultation with physician in medical malpractice cases); Manic v. Dawes, 213 Ariz. 252, ¶ 17, 141 P.3d 732, 735 (App.2006) ("[L]egislative intent sufficient to overcome unambiguous statutory language must be more than implied; it must be clearly expressed."). Nor have the Sanchezes directed us to any legislative history otherwise suggesting the legislature did not intend §§ 12-2603 or 12-2604 to apply in such cases.
¶ 10 The Sanchezes emphasize that, by its nature, the res ipsa doctrine does not require them to identify precisely what actions, falling below the standard of care, have been taken by each of the many health care professionals involved in Lorenzo's operation. Accordingly, they suggest that the requirement of §§ 12-2604(A)(1) and 12-2603(B) that they provide an affidavit from an expert witness qualified in the same specialty "as the party against whom . . . the testimony is offered" is unduly burdensome and extinguishes the benefit of proceeding on a theory of res ipsa. And, they complain that applying § 12-2604 to res ipsa cases would require litigants to identify an expert witness for every health care practitioner conceivably involved in an operation.
*1289 ¶ 11 But, no feature of the res ipsa doctrine gives a plaintiff license to sue, indiscriminately, each and every health care practitioner involved in a medical procedure; nor does the doctrine require a plaintiff to sue every such practitioner. Rather, "[t]he exotic-sounding doctrine of res ipsa loquitur is nothing more than a rule of circumstantial evidence." Schneider v. City of Phoenix, 9 Ariz.App. 356, 359, 452 P.2d 521, 524 (1969). The rule allows a trier of fact to draw an inference of negligence when (1) the injury is "of a kind that ordinarily does not occur in the absence of negligence," (2) the injury is "caused by an agency or instrumentality subject to the control of the defendant," and (3) the claimant is not "in a position to show the particular circumstances that caused the offending agency or instrumentality to operate to her injury." Lowrey v. Montgomery Kone, Inc., 202 Ariz. 190, ¶ 7, 42 P.3d 621, 623 (App.2002). Thus, the doctrine of res ipsa loquitur does not relieve claimants of the obvious necessity of identifying which defendant or defendants controlled "the agency or instrumentality" causing their injuries. Id. Here, the record suggests the Sanchezes had little difficulty securing experts who could identify which two practitioners, of those involved in Lorenzo's operation, had controlled the instrumentalities potentially causing his injury.[5]
¶ 12 Moreover, Arizona law has never applied the res ipsa loquitur doctrine to relieve a claimant of the necessity of securing expert testimony when such testimony would be required to establish the prerequisites for applying the doctrine. Res ipsa loquitur is applicable "`only when it is a matter of common knowledge among laymen or medical [experts], or both, that the injury would not ordinarily have occurred if due care had been exercised.'" Ward v. Mount Calvary Lutheran Church, 178 Ariz. 350, 355, 873 P.2d 688, 693 (App.1994), quoting Falcher v. Saint Luke's Hosp. Med. Ctr., 19 Ariz.App. 247, 250, 506 P.2d 287, 290 (1973). Expert testimony that the injury would not occur in the absence of negligence "may be essential to the plaintiff's case where, as . . . in some actions for medical malpractice, there is no fund of common knowledge which may permit laymen reasonably to draw the conclusion." Restatement (Second) of Torts § 328D cmt. d (1965).
¶ 13 In accordance with the Restatement view, Arizona courts have repeatedly held, in medical malpractice cases where the plaintiff is invoking the res ipsa doctrine, that expert testimony is necessary to establish a departure from the relevant standard of care except when negligence is so clearly apparent that a layman would recognize it. See, e.g., Riedisser v. Nelson, 111 Ariz. 542, 544, 534 P.2d 1052, 1054 (1975); McWain v. Tucson Gen. Hosp., 137 Ariz. 356, 360, 670 P.2d 1180, 1184 (App.1983); Faris v. Doctors Hosp., Inc., 18 Ariz.App. 264, 269, 501 P.2d 440, 445 (1972); see also Boyce v. Brown, 51 Ariz. 416, 420-21, 77 P.2d 455, 457 (1938) (in general medical malpractice case, departure from standard of care "must be established by expert medical testimony, unless the negligence is so grossly apparent that a layman would have no difficulty in recognizing it"); Carranza v. Tucson Med. Ctr., 135 Ariz. 490, 491-92, 662 P.2d 455, 456-57 (App.1983) (holding no expert testimony needed to recover on res ipsa theory for burn on child's leg after heart surgery).
¶ 14 Thus, long before either § 12-2603 or § 12-2604 became law, claimants seeking recovery on a res ipsa loquitur theory in medical malpractice cases could be required to marshal expert testimony to support their cause of action. And, neither statute expressly requires expert testimony in those res ipsa cases where none was previously required. See § 12-2603(A), (D), (E) (expert witness required only when counsel for claimant believes, or court determines, expert testimony necessary to present case against chosen defendants). The statutes merely impose standards for the qualifications of experts and the specificity of their *1290 testimony in those cases where such testimony is necessary.
¶ 15 Notably, the trial court has dismissed the case before us not because the Sanchezes erroneously maintained that no expert testimony would be necessary to support their case, but rather because the specific expert provided, an orthopedic surgeon, does not have the qualifications required under § 12-2604 to testify about the appropriate standard of care applicable to the defendant, an anesthesiologist. And, we cannot fathom how the court's enforcement of this requirement in any way impedes use of the res ipsa doctrine when, as here, the need for expert testimony is undisputed.[6]
¶ 16 Nor have the Sanchezes explained why our state's policy, expressed in § 12-2604, should be relaxed in the context of res ipsa cases. Because § 12-2604 merely sets forth the necessary qualifications for experts testifying to the standard of care in medical malpractice cases and because nothing about that requirement alters a claimant's evidentiary burden, we cannot agree with the Sanchezes that application of § 12-2604 would so interfere with the res ipsa doctrine that the legislature could not have intended the statute to apply in such cases.[7]
¶ 17 The Sanchezes challenge the propriety of applying § 12-2604 to their case for another reason. They observe that, because an orthopedic surgeon is generally in charge of the type of operation underlying their claim, that surgeon is well-qualified to opine that "this kind of injury does not ordinarily occur in the absence of someone's negligence either . . . the surgeon or the anesthesiologist." But, in the plain, unambiguous language of § 12-2604(A), our legislature has determined that an expert in one field may not under any circumstances testify as an expert on the standard of care for a specialist in another field. See id.; Maycock v. Asilomar Dev., Inc., 207 Ariz. 495, ¶ 24, 88 P.3d 565, 570 (App.2004) (if statute's "language is unambiguous, we give effect to the language and do not use other rules of statutory construction in its interpretation"). Even if the orthopedic surgeon chosen by the Sanchezes might have the necessary qualifications and experience to knowledgeably address the standard of care for anesthesiologists in the context of the specific operation performed here, we are not at liberty to overlook the requirements of a statute merely because we think those requirements might be unnecessary or cumbersome when applied to a particular case or class of cases.
¶ 18 The Sanchezes also argue the court erred when it dismissed their complaint for failure to comply with § 12-2604 because they were in compliance with Rule 26(b)(4)(D), Ariz. R. Civ. P., which presumptively allows only one expert per side on an issue in a medical malpractice case. But the intent of Rule 26(b)(4)(D) is simply to limit the presentation of cumulative evidence, and its limits allow one expert for each medical issue; it imposes no limitation on the number of experts per case. The rule also allows liberal expansion of its presumptive limitation when "an issue cuts across several professional disciplines." Id. cmt. (Committee cmt. to 1991 amendment). We are therefore unpersuaded that Rule 26(b)(4)(D) justifies the Sanchezes' failure to disclose an anesthesiology expert under the circumstances here.
¶ 19 The Sanchezes finally argue the trial court erred by denying their request for leave to remedy their failure to provide an affidavit from an anesthesiologist "in the event the court disagreed with [their] interpretation of the statute." Old Pueblo counters *1291 that the Sanchezes' request was improperly presented to the trial court as "a mere sentence appended to the tail end of their response to the defendants' motion to dismiss." It therefore claims the argument is waived.
¶ 20 However, we can find no support in either § 12-2603 or § 12-2604 for dismissing a case with prejudice merely because one party has provided a deficient preliminary expert opinion affidavit. To the contrary, § 12-2603 erects an orderly procedure by which the respective parties can litigate what expert witness testimony will be necessary and what experts must therefore be disclosed and it does not contemplate dismissal with prejudice as a sanction for a deficient preliminary affidavit.
¶ 21 First, § 12-2603(A) and (B) require a claimant to certify whether expert testimony is necessary and, if so, to serve a preliminary expert opinion affidavit on opposing counsel. Then, if opposing counsel believes that the claimant has overlooked the need for certain expert testimony, opposing counsel may apply for an order directing the claimant to serve an expert opinion affidavit and must articulate the specific claim for which it believes an expert witness would be required. § 12-2603(D). If the trial court agrees and finds the affidavit of an appropriate expert witness is necessary, the court must first set a date for compliance with the statute. § 12-2603(E). Then, the court "shall dismiss the claim against the health care professional . . . without prejudice if the claimant . . . fails to file and serve a preliminary expert opinion affidavit." § 12-2603(F) (emphasis added). Apparently distinguishing the filing of an affidavit from its sufficiency, subsection (F) also requires that the court "allow any party a reasonable time to cure any [insufficient] affidavit." Id.
¶ 22 Here, whether we characterize Old Pueblo's motion to dismiss as an application for further expert disclosure under § 12-2603(D) or as an allegation of insufficiency of the affidavit under § 12-2603(F),[8] the trial court has imposed a sanction for the failure to comply with § 12-2603, and its companion § 12-2604, that is not contemplated by either statute.[9] Because the Sanchezes were entitled to assume the trial court would choose a remedy authorized by the relevant statutes, we find their one-sentence request that the trial court allow them an opportunity to provide an additional affidavit sufficient to preserve this claim on appeal.
¶ 23 During oral argument, Old Pueblo correctly observed that it moved for dismissal not under § 12-2603, but rather under § 12-2604, because the Sanchezes' disclosed expert was not qualified to provide testimony against Old Pueblo, as required by § 12-2604. For that reason, Old Pueblo suggests that the procedural framework set forth in § 12-2603 does not apply to its motion, and the trial court was not limited by the remedies set forth therein. But § 12-2604 contains no procedural framework of its own for litigating the required qualifications of an expert, and § 12-2603 provides clear procedural steps for parties who, like Old Pueblo, seek to raise a challenge to the qualifications of the expert offering an opinion in the preliminary affidavit. See § 12-2603(B)(1), (D) (requiring preliminary expert affidavit to state "[t]he expert's qualifications to express an opinion on the health care professional's standard of care or liability for the claim" and permitting opposing counsel who believes additional expert testimony is needed to apply for relief); see also § 12-2603(F) *1292 (implying opposing counsel may allege "insufficiency" of expert affidavit as part of application for relief). And, the carefully articulated procedure set forth in § 12-2603 would have little practical application if litigants could simply bypass its requirements and specified remedies by merely omitting reference to § 12-2603 when challenging the contents of a preliminary expert opinion affidavit. At least in the context of challenges to preliminary witness affidavits, we do not believe the legislature intended § 12-2603 to be a mere recommendation for how our trial courts might procedurally address such disputes.
¶ 24 Finally, Old Pueblo maintains the trial court could dismiss the case against it with prejudice because, once the court determined the Sanchezes' expert lacked the qualifications to testify, any disclosure of a new expert witness would violate the witness-disclosure deadline set by the court, a separate concern not squarely addressed by § 12-2603. Our record suggests, however, that the Sanchezes had provided their flawed preliminary expert affidavit in November 2006, five months before the witness-disclosure deadline. Nonetheless, Old Pueblo did not challenge the sufficiency of that affidavit until one month after the deadline had passed insuring that the Sanchezes could not remedy the problem within the disclosure deadline.
¶ 25 Although the trial court has not articulated why it chose the sanction of dismissal with prejudice, we can identify no appropriate ground for doing so on the record before us.[10] To the extent the trial court did so to punish the Sanchezes for submitting a flawed affidavit in the first instance, dismissal with prejudice was not authorized under § 12-2603, as discussed above. If the court sought to sanction the Sanchezes for the delay caused by litigation over the sufficiency of the affidavit, the record suggests Old Pueblo was primarily responsible for that delay. Indeed, the Sanchezes' inability to remedy the flawed affidavit within the witness-disclosure deadline was caused not by the Sanchezes' dilatory conduct but rather by Old Pueblo's arguably strategic behavior in filing its challenge after that deadline had passed. In short, were we to conclude the trial court intended to sanction the Sanchezes for violating the witness-disclosure deadline, we would find the sanction it chose unsupported by the factual record before us. See Austin v. City of Scottsdale, 140 Ariz. 579, 581, 684 P.2d 151, 153 (1984) (sanction of dismissal "`harsh and not to be invoked except under extreme circumstances'"), quoting Buchanan v. Jimenez, 18 Ariz.App. 298, 299, 501 P.2d 567, 568 (1972).
¶ 26 For the foregoing reasons, we affirm the trial court's conclusion that the Sanchezes were required to provide an affidavit in compliance with § 12-2604 as a prerequisite to presenting testimony regarding the appropriate standard of care for an anesthesiologist under the circumstances of the case. However, we reverse its order dismissing the complaint with prejudice and remand the case to the trial court to address the Sanchezes' failure to provide that affidavit in a manner consistent with § 12-2603.
CONCURRING: PHILIP E. ESPINOSA and GARYE L. VÁSQUEZ, Judges.
NOTES
[1] Old Pueblo moved for dismissal with prejudice, and the court granted the motion without specifying whether the dismissal was with or without prejudice. We therefore presume it was with prejudice. See Ariz. R. Civ. P. 41(b) (unless court specifies, dismissal is "adjudication upon the merits"); Torres v. Kennecott Copper Corp., 15 Ariz.App. 272, 274, 488 P.2d 477, 479 (1971) (dismissal with prejudice is judgment on merits).
[2] We presume the Sanchezes provided the affidavit in a timely fashion, although it appears in the record on appeal only as an attachment to Old Pueblo's motion to dismiss.
[3] Tucson Orthopaedic moved for summary judgment on different grounds that are not the subject of this appeal. The trial court granted the motion, and the Sanchezes have also separately appealed that ruling.
[4] In a cursory argument raised for the first time in their reply brief (to which we allowed Old Pueblo to file a supplemental brief in response), the Sanchezes argue §§ 12-2603 and 12-2604 "ha[ve] no application to this case" because they took effect after Lorenzo's surgery. We disagree. Although the statutes are not expressly retroactive, they are clearly procedural and do not affect a vested right of the Sanchezes. Thus, they may be applied retroactively. See Aranda v. Indus. Comm'n, 198 Ariz. 467, ¶ 11, 11 P.3d 1006, 1009 (2000).
[5] Notably, of all the health care professionals presumably in the operating room at the time of Lorenzo's surgery, the Sanchezes have contended only two physicians were potentially negligent and have stated, through an expert witness, that each may have fallen below the standard of care. On appeal, the Sanchezes concede they have obtained "an anesthesiology expert" who has submitted an affidavit "essentially identical" to the orthopedic surgeon's affidavit.
[6] During oral argument, the Sanchezes conceded that, under most circumstances, a claimant would eventually need to present expert testimony to demonstrate a particular health professional's liability even when proceeding on a res ipsa theory.
[7] The Sanchezes also argue that the specificity requirements set forth in § 12-2603(B) more dramatically interfere with the doctrine of res ipsa loquitur a result they maintain the legislature could not have intended. During oral argument, the parties stated that the Sanchezes' parallel case against the orthopedic surgeon had been dismissed because of their inability to comply with that specificity requirement. But, because the trial court did not dismiss their complaint against these defendants on that basis, we do not address that issue here. Nor do we address in this appeal whether the Sanchezes have sufficiently raised a res ipsa loquitur claim.
[8] Old Pueblo could arguably have sought a dismissal without prejudice if the Sanchezes had "certified that an affidavit [was] necessary" and then failed to file it. A.R.S. § 12-2603(F). But here the Sanchezes did file an affidavit. Old Pueblo merely contends that the orthopedic surgeon was not qualified to render an opinion about the standard of care for Dr. Hughes, an anesthesiologist.
[9] In Gorney v. Meaney, 214 Ariz. 226, ¶ 16, 150 P.3d 799, 804-05 (App.2007), we affirmed the trial court's grant of summary judgment where the plaintiff had provided an expert opinion affidavit failing to meet the requirements of § 12-2603(B)-an outcome arguably at odds with our reasoning in this case. But in Gorney, the appellant never contended that summary judgment was an inappropriate remedy for a violation of § 12-2603(B). We therefore never addressed that question. Moreover, the plaintiff there had been provided an opportunity to cure his affidavit and had failed to do so before his case was dismissed. Gorney, 214 Ariz. 226, ¶ 3, 150 P.3d at 801.
[10] Under different circumstances, a court might well find ample justification for imposing the sanction of dismissal with prejudice for a plaintiff's failure to abide by witness disclosure deadlines-even when that failure arises from the plaintiff's lack of compliance with § 12-2604. We merely hold that, under the particular circumstances here, where the Sanchezes' inability to remedy the violation of § 12-2604 within the deadline arose from Old Pueblo's approximate six-month delay in raising a challenge on that basis, such a drastic sanction is not supported by the record before us.
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616 So. 2d 700 (1993)
STATE of Louisiana
v.
Jeffrey NELSON.
No. 93-KK-0588.
Supreme Court of Louisiana.
April 23, 1993.
*701 Denied.
HALL, J., not on panel.
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64 P.3d 340 (2003)
138 Idaho 414
STATE of Idaho, Plaintiff-Respondent,
v.
Clinton Marshall HOOVER, Defendant-Appellant.
No. 27683.
Court of Appeals of Idaho.
February 10, 2003.
*343 Molly J. Huskey, State Appellate Public Defender; Charles Isaac Wadams, Deputy Appellate Public Defender, Boise, for appellant. Charles Isaac Wadams argued.
Hon. Lawrence G. Wasden, Attorney General; Kenneth K. Jorgensen, Deputy Attorney General, Boise, for respondent. Kenneth K. Jorgensen argued.
GUTIERREZ, Judge.
This is an appeal from a judgment of conviction entered after a jury found Clinton Marshall Hoover guilty of felony domestic battery, I.C. § 18-918(3). In this case, the victim testified that she could not remember the circumstances surrounding her injuries. Hoover argues that the district court abused its discretion in admitting testimony as to statements the victim made about her injuries to a security guard and others and erred in refusing to give jury instructions on his self-defense and defense of others theories. Hoover also argues that the district court erred in admitting testimony at his sentencing hearing as to other instances of his alleged domestic violence against other women. We affirm.
I.
FACTUAL AND PROCEDURAL SUMMARY
The following facts are adduced from the evidence presented at trial. Hoover and his fiancé, Mikel James, had been drinking vodka and began arguing in their apartment at about 9:00 p.m. on December 12, 2000. Their argument escalated. James wanted to leave the apartment, and she and Hoover wrestled for the car keys. Hoover prevented James from leaving by gripping her wrist and taking the car keys away from her. Somehow, James fell to the floor and hit the back of her head, losing consciousness for an unknown period of time.
At some point between 12:15 and 12:20 a.m. on December 13, James collapsed in a snow bank outside the apartment. At 12:30 a.m., a security guard, Joshua Smith, found her lying in a fetal position in a pool of blood in the snowhysterical, shaking and crying, with her face actively bleeding. When Smith asked James what had happened, she told him that Hoover had beaten her.
At 12:38 a.m., Smith flagged down Deputy Heather Goldner and Detective Jeffery Thurman of the Kootenai County Sheriff's Department, who called for back up and an ambulance. Arriving by ambulance seconds later, Burt Maines, an emergency medical technician (EMT), began treating James' injuries within about two minutes of his arrival. James was still crying and, when questioned about the cause of her injuries, told Maines that Hoover had thrown her to the ground, kicked and stomped her, and grabbed her around the neck. Concerned that James' chest injury and difficulty in breathing might indicate broken ribs and a punctured lung, Maines wanted to transport her to the hospital, but James refused.
While being treated in the ambulance, James told Detective Thurman that she and Hoover had been drinking and had begun fighting, and that Hoover had injured her. James completed and signed a handwritten victim witness statement. Later on December 13, James went to the Kootenai County Medical Center for treatment for multiple contusions of the chest wall, left shoulder and hip secondary to a trauma, and contusions to her face, head, neck and wrist. James told the treating physician, Dr. Richard Thurston, that Hoover had caused her injuries. As a result of this incident, Hoover was arrested and charged with domestic violence.
At the preliminary hearing, James testified that she wanted the charge against Hoover to be dropped. She swore that she remembered nothing about the events surrounding her injuries, including her purported oral statements and the preparation of her written statement. Based upon Smith's testimony as to James' statements under an excited utterance hearsay exception, I.R.E. 803(2), the magistrate bound Hoover over for trial.
Prior to trial, Hoover moved to exclude all James' statements made at the scene. After hearing argument, the district court excluded as hearsay James' oral statements to the sheriff's officers, the EMT, and others, and excluded James' December 13 written statement *344 because those statements did not constitute excited utterances under Idaho Rule of Evidence 803(2). The court, however, ruled to admit James' statements to Smith as excited utterances.
At trial, James testified that on the day she sustained the injuries, she and Hoover had argued about their poor financial circumstances and about her lunch with a male friend. James stated that she and Hoover had consumed a significant amount of vodka. She testified that she did not recall when the argument became physical, but that somehow the back of her head hit the living room floor and that she lost consciousness for some unknown duration. She testified that the next thing she remembered was being directed into the ambulance. James testified that police officers later handed her a statement form, but that she did not know then why she was writing such a statement. James also testified that she did not remember how she was injured, telling anyone about those injuries, or completing a document describing how those injuries had occurred.
Over Hoover's hearsay objections, the court permitted Dr. Thurston to testify as to James' statements to him regarding an unidentified person's infliction of her injuries, that is, limited testimony to show how James' injuries had occurred, but not as to who had caused them. Guard Smith then testified that he saw James lying on the snow bank and approached her, asking what had happened. Over Hoover's hearsay objection, Smith testified that James stated that her boyfriend had beaten her. Smith also testified as to James' visible injuries.
Both sheriff's officers, James' mother and EMT Maines testified as to James' injuries, over Hoover's objections of cumulativeness. The district court also allowed the admission of photographs of James and her throat, ankle, hip, and upper thigh area and permitted James' mother to testify as to her observations of James' injuries as compared with those photographs. The court struck as speculative the mother's testimony that James' neck and ankle injuries resembled fingerprints, but the court permitted her testimony as to her observance of a boot print with tread marks in the photograph of James' hip injury. James' mother also testified that James had no injuries on December 11 or 12.
The court overruled Hoover's hearsay objection regarding EMT Maines' testimony as to James' statements to him and permitted that testimony under a Rule 803(4) exception for statement to medical personnel. The court, however, limited Maines' testimony to James' statements as to how her injuries had occurred, and did not permit Maines to testify as to who James said had caused those injuries. Similarly, Hoover raised a hearsay objection to Detective Thurman's testimony regarding his inquiry of James and her responses as to what had happened. The court admitted the detective's testimony solely for purposes of impeaching James' prior testimony, and gave the jury a limiting instruction thereon.
The trial concluded with the presentation of the state's evidence. Hoover did not object to the jury instructions proposed by the court, but sought additional instructions on self-defense and defense of others theories. The court denied the requested instructions for lack of evidentiary support. The jury subsequently found Hoover guilty of domestic battery, I.C. § 18-918(3).
At the sentencing hearing, Hoover unsuccessfully objected on hearsay grounds to a victim advocate's testimony as to her previous contact with two of Hoover's former live-in girl friends, including her testimony as to the statements of one of these women. The court also admitted, over Hoover's objections, 1997-1999 police reports showing Hoover's arrests on three charges of domestic battery and one charge of aggravated assault with a firearm upon these two women.
The district court sentenced Hoover to a unified term of three and one-half years with one and one-half years determinate, to run concurrently with his sentences imposed on three other convictions. Hoover timely appeals from his judgment of conviction and sentence.
II.
ANALYSIS
Hoover argues that the district court abused its discretion in admitting hearsay, *345 impeachment, privileged, cumulative, and opinion evidence at trial and by admitting hearsay evidence of prior bad acts at his sentencing hearing without affording him sufficient opportunity to explain or rebut such evidence. Hoover also argues that the court erred in refusing to give jury instructions on his self-defense and defense of others theories.
A. Evidentiary Rulings at Trial
We review the evidentiary rulings challenged by Hoover under an abuse of discretion standard. When a trial court's discretionary decision is reviewed on appeal, we conduct a multitiered inquiry to determine whether the trial court: (1) rightly perceived the issue as one of discretion; (2) acted within the boundaries of such discretion and consistent with any legal standards applicable to specific choices; and (3) reached its decision by an exercise of reason. State v. Hedger, 115 Idaho 598, 600, 768 P.2d 1331, 1333 (1989).
At trial, the court has broad discretion in determining the admissibility of testimonial evidence. A decision to admit or deny such trial evidence will not be disturbed on appeal absent a clear showing of abuse of that discretion. State v. Smith, 117 Idaho 225, 232, 786 P.2d 1127, 1134 (1990).
1. Excited utterance exception
Hoover argues that the district court abused its discretion by permitting security guard Smith to testify as to James' statements to him under the Rule 803(2) excited utterance exception to the general evidentiary bar against hearsay. The trial court exercises its discretion to permit testimony of such excited utterances, giving consideration to the totality of the circumstances and provided two requirements are met. State v. Hansen, 133 Idaho 323, 325, 986 P.2d 346, 348 (Ct.App.1999). First, a startling event must have occurred such that the observer's normal reflective thought process is rendered inoperative. Id. Second, the proffered utterance must constitute a spontaneous reaction to that event, rather than the product of the observer's reflective thought. Id.
Hoover argues that the instant case is similar to Hansen, where we overturned the trial court's decision to admit a complainant's lengthy oral and written statements given to a police officer at least ten minutes after the alleged misdemeanor battery. The victim in Hansen was crying when she talked to the officer but otherwise had no physical injuries. Moreover, the complainant stated that she had never been angrier, a state of mind that generated concern as to the reliability of her statement. Furthermore, she had had time to regain her normal reflective thought process during her ten-minute walk to the police station. Finally, the complainant's composition of her written statement was even further removed in time from the event complained of and her prior discussions with the interviewing officer intervened to render her statement non-spontaneous and therefore not a reliable indicator of the truth as contemplated by Rule 803(2). The totality of the circumstances surrounding Hansen is thus distinguishable from that of the instant case.
Here, James' statements to Smith meet both requirements for excited utterances under Rule 803(2). The extensive physical injuries established that James had experienced a startling event that would have rendered her normal reflective thought process inoperative. When Smith arrived in the apartment parking lot on the night in question, he shone his car light upon the snow bank where he later saw James lying. He testified that he positioned his light to fall upon this snow bank at some time within the five-minute interval between 12:15 a.m. and 12:20 a.m. Smith then proceeded to complete paper work inside his car. When he looked up from his work at 12:30 a.m., he saw James lying in the snow bank. Approaching her, Smith observed James curled up in a fetal position in the snow. She was crying and hysterical. James lay in a pool of blood, and blood was streaming down her face and wrists. She was dressed in a bathrobe, Tshirt, and jeans and was shaking. Smith asked James what had happened, and she told him that her fiancé had beaten her. James was still crying and "pretty shaken up" when the EMT began to treat her in the ambulance some eight to ten minutes later.
*346 The evidence that James was not lying in the snow bank at 12:15-12:20 a.m. and that blood was streaming down her face and wrists when Smith first observed her at 12:30 a.m. support the inference that James' injuries had transpired very shortly before she made her statements to Smith. Other testimony by Smith and Maines as to James' fetal position, extended crying, and hysteria substantiates the district court's conclusion that, even as late as about 12:40 a.m., James' statements continued to be the product of her shocked mental condition and a spontaneous reaction to the violence she endured, and that her battering was not then sufficiently removed in time as to re-engage her normal reflective thought process. Hansen, 133 Idaho at 325, 986 P.2d at 348. Thus, we conclude that the district court did not abuse its discretion in admitting James' statements to Smith as excited utterances.
2. Impeachment evidence
Hoover also asserts that the district court abused its discretion by allowing Detective Thurman's testimony. Hoover argues that the state offered James' testimony merely as a pretext for admitting Thurman's impermissible impeachment hearsay. Hoover notes that the state knew that James wanted the charges against Hoover to be dropped, that James had testified at the preliminary hearing that she was intoxicated and could not remember what had happened on the relevant night, and that the district court had ruled before trial that James' statements to Thurman did not constitute excited utterances. Thus, Hoover claims the state called James as an improper tactical maneuver to elicit her adverse testimony and thus set the stage for her purported impeachment by Thurman's testimony as to her otherwise inadmissible statements to him.
Any party, including the party calling the witness, may attack the credibility of a witness. See I.R.E. 607. Thurman's testimony that James remembered how her injuries were inflicted and gave statements about it to Thurman on December 13 is not inadmissible as hearsay where such testimony is not offered for the truth of the facts asserted and its sole evidentiary purpose is to impeach her credibility. See I.R.E. 613(b); State v. Wood, 126 Idaho 241, 248, 880 P.2d 771, 778 (Ct.App.1994). To determine whether the state examined James for the primary purpose of impeaching her before the jury with otherwise inadmissible substantive evidence, we review the evidence presented at trial rather than any subsequent explanation of the state's reason or motive for calling her to testify. United States v. Gomez-Gallardo, 915 F.2d 553, 555 (9th Cir.1990).
We conclude that the state had legitimate reasons to call James as a witness and did not call her for the primary purpose of gaining admission of otherwise impermissible evidence. James' testimony was key to establishing that Hoover was her boyfriend, thus connecting her testimony with the testimony of guard Smith that James identified her attacker as her boyfriend without naming Hoover. Furthermore, absent eyewitnesses to the attack, James' testimony that she and Hoover were alone, lived together in the apartment and had been engaged in an argument just before she was injured, supplied crucial circumstantial evidence of her attacker's identity and direct evidence as to household membership. See I.C. § 18-918(1), (3). The state in its closing arguments specifically relied on James' testimony for these two elements of proof. Cf. Gomez-Gallardo, 915 F.2d at 555. Accordingly, we hold that the district court did not abuse its discretion in admitting Thurman's testimony.
3. Other evidentiary rulings at trial
Hoover claims that James' statements to Dr. Thurston were inadmissible as confidential physician-patient communications under Rule 503(b)(2). Hoover's argument is without merit. Although in civil cases statements made to a physician for purposes of obtaining treatment for physical conditions are privileged, I.R.E. 503(b)(1), in criminal cases the privilege applies only to communications related to diagnosis or treatment of a mental or emotional condition. I.R.E. 503(b)(2).
Hoover also argues against cumulative evidence where several persons testified as to the scope and nature of James' injuries. *347 We find no abuse of discretion, but even if the district court abused its discretion by admitting any such cumulative testimony in this regard, the admission of that testimony was harmless in view of other conclusive proof of the victim's injuries. Beyond a reasonable doubt, the jury's verdict of guilt would not have differed with the exclusion of some of that evidence. State v. Velasquez-Delacruz, 125 Idaho 320, 323, 870 P.2d 673, 676 (Ct.App.1994).
Hoover further contends that the district court abused its discretion in admitting testimony from James' mother that she observed a boot print with tread marks in the photograph of James' hip injury. The court rejected Hoover's objection that this testimony constituted speculation as to the cause of James' injury where the testimony simply described what James' mother observed in the photograph. Assuming arguendo that the admission of such observation was an abuse of discretion, any such error was harmless because, beyond a reasonable doubt, the outcome in Hoover's case would not have been different, absent that minor error. See State v. Barcella, 135 Idaho 191, 204, 16 P.3d 288, 301 (Ct.App.2000).
B. Jury Instructions on Self-Defense and Defense of Others Theories
Next we consider Hoover's claim of error on the denial of his proposed jury instructions involving self-defense and defense of others theories. Whether the jury has been instructed properly is a question of law over which we exercise free review. State v. Gleason, 123 Idaho 62, 65, 844 P.2d 691, 694 (1992). In determining whether the trial court should have given a requested jury instruction, we must examine the instructions that were given and the evidence adduced at trial. State v. Fetterly, 126 Idaho 475, 476, 886 P.2d 780, 781 (Ct.App.1994).
Idaho Code § 19-2132(a) requires that the trial court must state to the jury being charged "all matters of law necessary for their information," and must give a requested jury instruction if it determines that instruction to be correct and pertinent. Under a four-part test, a requested instruction must be given where: (1) it properly states the governing law; (2) a reasonable view of the evidence would support the defendant's legal theory; (3) it is not addressed adequately by other jury instructions; and (4) it does not constitute an impermissible comment as to the evidence. Fetterly, 126 Idaho at 476-77, 886 P.2d at 781-82; State v. Evans, 119 Idaho 383, 385, 807 P.2d 62, 64 (Ct.App.1991). To meet the second prong of this test, the defendant must present at least some evidence supporting his theory, and any support will suffice as long as his theory comports with a reasonable view of the evidence. Fetterly, 126 Idaho at 476-77, 886 P.2d at 781-82; State v. Kodesh, 122 Idaho 756, 758, 838 P.2d 885, 887 (Ct.App.1992).
Hoover claims entitlement to the requested jury instructions on theories that he acted against James in defense of others or self-defense under I.C. § 19-202A. Hoover's claim fails because his theories lacked evidentiary support. First, no evidence supports Hoover's reasonable belief, as required by the statute, that anyone was in imminent danger from or victimized by James. Second, Hoover presented no evidence at trial that he reasonably feared some degree of bodily harm from James. See State v. Hansen, 133 Idaho 323, 329, 986 P.2d 346, 352 (Ct.App.1999). Rather, Hoover relies on James' trial testimony that: (1) she was taking antidepressant and anti-anxiety medications at the time of trial in May 2001; (2) her physician suggested avoiding alcohol consumption with these medicines; (3) her behavior is somewhat, but not completely, rational when she consumes alcohol with these medicines; and (4) she attempted self-inflicted injuries when consuming unspecified medicine(s) with alcohol at some past time, none of which evidence is relevant to his claimed "self-defense" on the date in issue.
Hoover also suggests that James' testimony regarding their alcohol consumption that night and her past attempt to harm herself when combining alcohol and medicine supports an inference of his reasonable fear for his safety. However, no evidence shows that anything James did that night could have provoked a reasonable fear that she was going to harm Hoover.
*348 Finally, Hoover claims as support James' testimony about their "wrestling" for the car keys that night, an incident that ended, and any threat from which accordingly abated, at about 9:00 p.m., some three to four hours before guard Smith encountered James in the snow with bleeding injuries. No reasonable view of the evidence supports Hoover's self-defense or defense of others theories. Thus, we conclude the district court did not err in rejecting Hoover's requested jury instructions.
C. Evidentiary Ruling At Sentencing
Finally, we address Hoover's argument that he was denied sufficient opportunity to explain or rebut allegations of his prior domestic violence incidents. After a criminal defendant's guilt has been established, the trial court has greater latitude regarding the information that it may consider for sentencing than could have been considered while the state was attempting to establish that guilt at trial. State v. Brown, 121 Idaho 385, 391, 825 P.2d 482, 488 (1992). The rules of evidence do not apply to sentencing proceedings. I.R.E. 101(e)(3); State v. Creech, 105 Idaho 362, 366, 670 P.2d 463, 467 (1983). The trial court, therefore, has broad discretion in the admission of evidence at a sentencing proceeding and properly may consider a wide range of relevant evidence in determining an appropriate sentence for the particular defendant before it. Id. Moreover, it is essential that the trial court receive all information available about the defendant before imposing sentence so that such sentence will reflect the character and propensity of the defendant as well as the circumstances of the offense. Id.
At sentencing, the district court permitted a victim advocate to testify as to her conversations with two of Hoover's former domestic partners. The advocate testified as to the statements by one of these women that Hoover had injured her. The court also admitted four police reports showing that Hoover had been arrested in 1997-1999 on three separate occasions for allegedly battering the two women. One such report documented his 1998 arrest for alleged aggravated assault using a firearm against one of these women. Hoover then presented witnesses who offered their own testimony to rebut the evidence that Hoover repeatedly battered his domestic partners. Hoover's presentation of witnesses to rebut the state's evidence undermines his argument that the district court did not afford him the opportunity to explain or rebut the allegations of prior domestic violence incidents. We thus hold that the district court did not abuse its discretion in admitting such evidence at sentencing.
III.
CONCLUSION
We conclude that the district court did not abuse its discretion in admitting at trial James' statements to the security guard as an excited utterance. We also conclude that the district court did not abuse its discretion in making its other evidentiary rulings at trial and at sentencing and that if any were error, such constituted harmless error. Finally, we conclude that the district court did not err in rejecting Hoover's requested self-defense or defense of others jury instructions. Thus, we affirm Hoover's judgment of conviction and sentence.
Chief Judge LANSING concurs.
Judge Pro Tem SCHWARTZMAN, Specially Concurring.
I concur in the opinion of this Court, but wish to write separately on the use of Detective Thurman's testimony regarding James' statements to him to impeach her testimony that she later lacked any memory of the events.
Prior to trial, the district court had issued an order excluding all of James' statements to police officers other than security guard Smith as not falling within the excited utterance exception to the hearsay rule, I.R.E. 803(2). However, the trial court then permitted Thurman to testify concerning the specific details of James' account to him for purposes of impeachment. The court also gave a limiting instruction to the jury that this evidence was admitted "solely for the purpose of testing the credibility of the witness, and not as substantive evidence of the *349 truth of the facts contained in such statements."
The above evidentiary rulings are technically correct. However, I think it takes a combination of wishful thinking and the willing suspension of disbelief to require a jury to follow the court's limiting instruction when it has now been made privy to the specific details of the admittedly hearsay account to the police officer. If the intent of the ruling is to impeach credibilityhere, a negative of "I don't remember"then all the jury really needs to know is (1) that the witness previously did remember a particular incident and (2) that the witness gave a specific version of what happened, verbally and in writing, to the officer. The jury need not, and indeed should not, be given or exposed to a verbatim hearsay account of those statements when its sole purpose is to impeach credibility. Juries are not superhuman and should not be needlessly expected to act as trained legal evidentiary scholars.
Alternatively, the day may come when such recanted or inconsistent statements may be admissible as substantive evidence pursuant to I.R.E. 803(24)other exceptions: the convenient lapse of memory or I tripped and fell excuse in domestic battery cases where the domestic partners have since reconciled.
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340 S.W.3d 139 (2011)
In the Matter of GENE WILD INSURANCE TRUST.
U.S. BANK, N.A., Petitioner-Respondent,
v.
James H. WILD, Individually, and as Trustee of the Gene Wild Revocable Trust, Cottey College, and College of the Ozarks, Respondents-Appellants,
Katherine Alice Cunningham, and Laura Nance Cunningham, Respondents-Respondents.
Nos. SD 30449, SD 30457, SD 30459.
Missouri Court of Appeals, Southern District, Division One.
February 22, 2011.
Motion for Rehearing and Transfer Denied March 14, 2011.
Application for Transfer Denied April 26, 2011.
*141 Kevin Checkett, Checkett & Pauly, P.C., Carthage, MO, for Appellant James H. Wild.
Virginia Lynne Fry and Jason C. Smith, Husch Blackwell LLP, Springfield, MO, for Appellant College of the Ozarks.
Todd W. Ruskamp and Clayton T. Norkey, Shook, Hardy & Bacon, L.L.P., Kansas City, MO, for Appellant Cottey College.
Jeremy K. Brown, Copeland & Brown, Joplin, MO, for Respondents Cunningham.
Jeffrey Wayne Heil, Spencer, Scott & Dwyer, Joplin, MO, for Respondent U.S. Bank, N.A.
GARY W. LYNCH, Judge.
James H. Wild, Trustee of the Gene Wild Revocable Trust; The School of the Ozarks, Inc., d/b/a College of the Ozarks; and Cottey College (collectively "Appellants"), appeal the trial court's judgment on the pleadings in favor of Katherine Cunningham and Laura Cunningham (collectively "the Cunninghams"), in a case brought by U.S. Bank, Trustee of the Gene Wild Insurance Trust, seeking a determination as to the manner in which it is to distribute the corpus of the Insurance Trust.[1] Finding that the trial court's judgment does not comport with the grantor's stated intent for the Insurance Trust, we reverse and remand for further proceedings.
Factual and Procedural Background
Rule 55.27 authorizes a trial court to enter a judgment based solely on the pleadings. Rule 55.27(b).[2] "`The party moving for judgment on the pleadings admits, for purposes of the motion, the truth of all well[-]pleaded facts in the opposing party's pleadings'" State ex rel. Nixon v. Am. Tobacco Co., Inc., 34 S.W.3d 122, 134 (Mo.2000) (quoting Barker v. Danner, 903 S.W.2d 950, 957 (Mo.App.1995)). In that context, the pleadings, as stipulated by the parties, reveal the following.
On July 10, 1990, Shirley Gene Wild ("Decedent") executed a number of estate-planning documents, including the Gene Wild Revocable Trust agreement, which created the Gene Wild Revocable Trust ("Revocable Trust"), and the Gene Wild Insurance Trust agreement, which created the Gene Wild Insurance Trust ("Insurance Trust") that is the subject of this litigation.
The Revocable Trust named Decedent's brother, James H. Wild, as Trustee. As thereafter amended,[3] the Revocable Trust directs Trustee Wild to make certain specific distributions and then distribute the residue equally to two charitable remainder annuity trusts ("CRATs"). James H. Wild, individually, is the lifetime beneficiary of each CRAT, and College of the Ozarks is the remainder beneficiary of one, and Cottey College is the remainder beneficiary of the other.
*142 The Revocable Trust gave Trustee Wild the discretionary authority to pay any applicable estate and inheritance taxes associated with Decedent's death, with such payment to be charged to the residue before funding the CRATs. It further specified that if such tax payment was undertaken, it was "without reimbursement from Grantor's Personal Representative, from any beneficiary of insurance from Grantor's life or any other person."
The Insurance Trust was irrevocable in that Decedent retained "no right, power or privilege to alter or amend" it after its execution. Paragraph A of Article VII of the Insurance Trust provides:
A. Outright Gifts. The Trustee shall distribute, outright and free of trust, to each person who is determined under Missouri law to be ultimately responsible for any federal estate tax, state estate or inheritance tax or any other death tax as a result of Grantor's death (hereinafter "death tax or taxes"),[[4]] an amount equal to such death taxes for which such person is determined by the Trustee to be responsible under Missouri law, it being Grantor's intent that such person(s) who receive a gift, devise or bequest as a result of Grantor's death (or receives property which is otherwise subject to death taxes at Grantor's death) in effect receives such gift, devise, bequest or other property without being burdened with such death taxes.
Paragraph B of Article VII provides that any funds remaining in the Insurance Trust "[a]fter funding the gift(s) in Paragraph A above," are to be held first in trust to benefit James H. Wild individually and then, upon his death, distributed to the then-living descendents of Virginia Sue Nance Cunningham.
Decedent passed away June 19, 2005. On March 10, 2006, James H. Wild, in his individual capacity, disclaimed any personal interest in any distributions from the Insurance Trust. The Cunninghams are the living descendents of Virginia Sue Nance Cunningham. Trustee Wild paid Decedent's death taxes.
U.S. Bank, as second successor trustee of the Insurance Trust, initiated the present action on July 19, 2006, seeking guidance as to the administration of the Insurance Trust, specifically "whether, and to what extent, James H. Wild, the Gene Wild Revocable Trust, or any of its beneficiaries are entitled to distributions under Article VII A of the [Insurance Trust] with respect to federal and state estate taxes[.]" The Cunninghams and both colleges subsequently filed cross-motions for judgment on the pleadings. The trial court granted the Cunninghams' motion, denied the colleges' motions, and entered a declaratory judgment finding that only the Cunninghams were entitled to any distribution from the Insurance Trust. This appeal timely followed.
Standard of Review
The grant of a motion for judgment on the pleadings is proper only if, from the face of the pleadings, the moving party is entitled to judgment as a matter of law. State ex rel. Nixon, 34 S.W.3d at 134. Overall, we review a grant of judgment on the pleadings de novo, without deference to the trial court's ruling. Cures Without Cloning v. Pund, 259 S.W.3d 76, 80 (Mo.App.2008). A motion for judgment on the pleadings should be sustained "only where under the conceded facts, a judgment *143 different from that pronounced could not be rendered notwithstanding any evidence which might be produced." McIntosh v. Foulke, 360 Mo. 481, 228 S.W.2d 757, 761 (1950).
Discussion
Appellants present two points for our review. The second one is dispositive of this appeal.
In their second point, Appellants contend that the trial court misapplied the law in granting the Cunninghams' motion for judgment on the pleadings because it was Decedent's intent that those receiving gifts under the Revocable Trust do so without being burdened by death taxes. We agree.
Before beginning our analysis, however, we observe that we are in much the same position as Decedent was on the date she initially executed her estate plan, i.e., neither the amount of her death taxes nor the amount available for distribution from the Insurance Trust are known. Unlike Decedent's position when she initially executed her estate plan, however, the mere existence of this lawsuit supports that the latter amount is greater than zero. It is from this perspective that we proceed to consider Decedent's intent.
In general, Missouri courts use the same rules when construing both wills and trusts. Commerce Bank, N.A. v. Blasdel, 141 S.W.3d 434, 443 n. 9 (Mo.App. 2004). Ultimately, the paramount rule in construing a trust is that the intent of the grantor is supreme. First Natl. Bank of Kansas City v. Hyde, 363 S.W.2d 647, 652 (Mo.1962). This intent must be gleaned, if possible, from the trust instrument as a whole. In re Gene Wild Revocable Trust, 299 S.W.3d 767, 774 (Mo.App.2009). In examining the entirety of the trust agreement at issue, no single word or clause is given undue preference. Commerce Bank, N.A., 141 S.W.3d at 443. Rather, we must give meaning to the trust in its entirety and adopt a construction of its terms that reconciles, rather than creates, inconsistencies. A.G. Edwards Trust Co. v. Miller, 59 S.W.3d 550, 552 (Mo.App.2001). Furthermore, "where the language is clear and of well-defined force and meaning, it must stand as written, . . . and a testator is presumed to know and intend the legal effect of the language he [or she] uses." Blue Ridge Bank and Trust Co. v. McFall, 207 S.W.3d 149, 157 (Mo.App.2006) (internal citations omitted). "Unless the context of a will or trust indicates a different meaning of a word, the word will be interpreted according to its plain, ordinary meaning." Id. Finally, if the language of the trust is clear, there is no need to engage the rules of construction, as we cannot rewrite the terms of the trust using such rules. Boone Cnty. Nat'l Bank v. Edson, 760 S.W.2d 108, 111 (Mo. banc 1988).
Here, paragraph A of Article VII of the Insurance Trust explicitly states Decedent's intent: "that such person(s) who receive a gift, devise or bequest as a result of Grantor's death (or receives property which is otherwise subject to death taxes at Grantor's death) in effect receives such gift, devise, bequest or other property without being burdened with such death taxes." This statement as to Decedent's intent in establishing and funding the Insurance Trust is, to this Court, clear and unambiguous; thus, we must effectuate Decedent's intent according to its plain, ordinary meaning. To do this, we must examine the words of the Insurance Trust in light of Decedent's entire estate plan and, particularly, her Revocable Trust.[5]
*144 To effectuate her Insurance Trust intent, Decedent provided in the immediately preceding phrase what she described as an "Outright Gift" to
each person who is determined under Missouri law to be ultimately responsible for any federal estate tax, state estate or inheritance tax or any other death tax as a result of [Decedent's] death (hereinafter "death tax or taxes"), an amount equal to such death taxes for which such person is determined by the Trustee to be responsible under Missouri law[.]
The parties here stipulate that Trustee Wild qualifies as a person determined under Missouri law to be ultimately responsible for Decedent's death taxes. The Cunninghams contend, nevertheless, that any "outright gift" from the Insurance Trust to Trustee Wild lapsed because such a gift would frustrate Decedent's intent, as expressed in the Revocable Trust, that Trustee Wild not seek reimbursement for the payment of death taxes and that any such taxes paid by him be charged against the residue of that trust.
Article XI of the Revocable Trust, in relevant part, provides that if the trustee of the Revocable Trust should deem it legally advantageous to pay Decedent's death taxesrather than distributing the corpus subject to the payment of death taxes by the beneficiariesthe trustee is to make such payment out of the residue of the estate, and is to so act "without reimbursement from Grantor's Personal Representative, from any beneficiary of insurance from Grantor's life or any other person." First, the Cunninghams argue that "the Trustee of the Revocable Trust (as the representative of the residue) was specifically excluded from receiving a distribution under the Insurance Trust because such distribution by its very nature and design was nothing more than a reimbursement (which the Revocable Trust specifically precluded [Trustee] Wild from accepting)." Second, the Cunninghams argue that Decedent's "intent has always been to allocate the burden and ultimate responsibility of [death taxes] upon the Revocable Trust residue, without the right to seek reimbursement, including specifically prohibiting reimbursement from the Insurance Trust." Neither argument has any substance and, if accepted, would frustrate Decedent's stated intent for the Insurance Trust.
In support of their first argument, the Cunninghams equate "reimbursement" as used by Decedent in the Revocable Trust with "gift" as used by Decedent in the Insurance Trust. This alleged equality is premised upon the language in the Insurance Trust that the gift is in the "amount of the death taxes" paid by the beneficiary. Thus, the Cunninghams contend that the "gift" is nothing other than a "reimbursement" for the death-tax payment, which Trustee Wild is expressly prohibited from requiring under the terms of the Revocable Trust. Therefore, they argue, the "gift" lapsed because Trustee Wild could not require such "reimbursement." The mistake in the Cunninghams' argument, however, is that it fails to give both words their plain and ordinary meaning, as we are required to do. See Blue Ridge Bank and Trust Co., 207 S.W.3d at 157.
"Reimbursement" means "repayment" or "indemnification," BLACK'S LAW DICTIONARY *145 1312 (8th ed.2004), while "a gift made outright indicates [a] general intent" to simply transfer one's property to another without compensation. Obermeyer v. Bank of Am., N.A., 140 S.W.3d 18, 25 (Mo. banc 2004); BLACK'S LAW DICTIONARY 709 (8th ed.2004). The fact that these documents were executed at the same time, using the word "gift" in one context and the word "reimbursement" in another, supports that Decedent understood and intended for the words to have different meanings and effects. Blue Ridge Bank and Trust Co., 207 S.W.3d at 157 (a testator is presumed to know and intend the legal effect of the language he or she uses); cf. Goulding v. Bank of America, N.A., 340 S.W.3d 114 (Mo.App.2010) (settlor's use of "accrue" and "vest," although very similar in meaning, were understood and intended by settlor to have different meanings and effects). Here, the plain and ordinary meanings of "gift" and "reimbursement" are not similar, in that a gift a transfer of one's property to another without compensationdoes not encompass in any respect a reimbursement, which is a right to repayment or to be legally indemnified. Here, Trustee Wild had no right to repayment or legal indemnification from the Insurance Trust as a result of his payment of Decedent's death taxes. While the payment of death taxes may serve to trigger a gift from the Insurance Trust and the amount so paid may serve as a cap upon the amount of that gift, these factors neither give Trustee Wild a right to repayment or of indemnification for such payment nor convert what Decedent expressly described and intended as an "outright gift" into a "reimbursement."[6] Therefore, nothing in the Revocable Trust prohibits Trustee Wild from receiving an outright gift from the Insurance Trust.
The Cunninghams' second argumentDecedent's provision in the Revocable Trust that any death taxes be charged against the residue of that trust negates any gift from the Insurance Trust to Trustee Wildcreates an inconsistency and fails to harmonize Decedent's estate-plan documents. Decedent's stated intent and purpose for the Insurance Trust was to use the funds in that trust to ameliorate her beneficiaries' death-tax burden. In stating her intent for the Insurance Trust, Decedent drew no distinction between the various types of beneficiaries in her estate plan; rather, she addressed them in plenary terms. With no foreknowledge as to the amount of her death taxes or what amount, if any, might be available from the Insurance Trust at the time of her death, Decedent allocated the death-tax burden, as between the beneficiaries of the Revocable Trust, to its residuary beneficiaries. Nothing in this limited allocation, however, runs counter to Decedent's broader intent and purpose for the Insurance Trust. To hold otherwise would create an inconsistency, rendering paragraph A of Article VII in the Insurance Trust inoperative and ineffective immediately upon execution, and would result in the residuary beneficiaries of the Revocable Trust bearing the entire death-tax burden, thereby frustrating Decedent's stated intent for the Insurance Trust. On the other hand, interpreting this limited allocation provision in the Revocable Trust as nothing more than that harmonizes the Revocable Trust with paragraph A of Article VII of the Insurance Trust to provide a gift to Trustee Wild in an amount up to the amount paid for Decedent's death taxes, thereby effectuating Decedent's stated intent to ameliorate the *146 burden imposed by her death taxes upon her beneficiaries.
Without question, providing for her brother, James H. Wild, during his life was a major objective in Decedent's estate plan. The primary vehicles employed by Decedent to achieve that purpose are the lifetime annuities in his favor in the CRATs funded by the residue of the Revocable Trust.[7] Any strained interpretation of Decedent's estate-planning documents that would place her death-tax burden upon her brother by reducing the funding amount of those CRATs, and thereby his annuities, would not only frustrate Decedent's stated intent for her Insurance Trust but would also frustrate her clear overarching intent to provide for her brother.
In addition, adopting the Cunninghams' interpretation of Decedent's estate-planning documents would create two different results based solely upon the arbitrary distinction as to who ultimately paid the applicable death taxes: if the trustee paid the taxes, such taxes would be paid out of the residue of the Revocable Trust with no ameliorative gift from the Insurance Trust, while, if the individual beneficiaries paid the taxes, the burden of such taxes would be lessened by a gift from the Insurance Trust. These differing results are, to this Court, absurd and are thus to be avoided. See A.G. Edwards Trust Co., 59 S.W.3d at 552.
The first scenario in the preceding paragraph also highlights the crux of Decedent's intent: if the death-tax burden is borne by the residue of the Revocable Trust without any ameliorative gift from the Insurance Trust, then, in addition to the diminution of her brother's annuities, as previously discussed, Decedent's two charitable beneficiariesCollege of the Ozarks and Cottey Collegewould receive their charitable gifts effectively having been burdened with her estate taxes. Such a result expressly contradicts Decedent's stated intent for the Insurance Trust. As Decedent's intent is our paramount concern, see First Nat'l Bank of Kansas City, 363 S.W.2d at 652, such a result is impermissible. Appellants' second point is granted.
Decision
The trial court's judgment on the pleadings in favor of the Cunninghams is reversed, and the case is remanded to the trial court for further proceedings not inconsistent with this opinion.
BARNEY, P.J., and BURRELL, J., concur.
NOTES
[1] The Court previously ordered Appellants' three separate appeals consolidated for all purposes.
[2] All references to rules are to Missouri Court Rules (2010).
[3] Decedent executed six amendments to the Revocable Trust that were the subject of two prior appeals, both of which were resolved in In re Gene Wild Revocable Trust, 299 S.W.3d 767 (Mo.App.2009). No party asserts that any of these amendments have any impact upon the resolution of the issues in this appeal.
[4] In keeping with Decedent's designation, we will likewise refer in this opinion to any such tax or taxes as "death tax or taxes."
[5] Appellants argue that the Insurance Trust stands alone because it was no longer considered part of Decedent's assets; however, it was undeniably part of Decedent's estate plan and, as such, the estate plan must be examined in its entirety. See Schupbach v. Schupbach, 760 S.W.2d 918, 924 (Mo.App.1988) (citing Commerce Trust Co. v. Starling, 393 S.W.2d 489, 494 (Mo. 1965)). Furthermore, the terms of the relevant portion of the Insurance Trust necessarily require an examination of the Revocable Trust, and Appellants admit as much in their Reply Brief.
[6] We observe that the amount of Trustee Wild's gift from the Insurance Trust would only equal the amount of the Decedent's death taxes in the event that the distributive amount from the Insurance Trust exceeded the amount of the death taxes so paid.
[7] Each CRAT provides for an annual annuity payment of five percent of the trust assets to James H. Wild. On the other hand, the residuary provisions of the Insurance Trust provide for discretionary distribution of income and principal to James H. Wild for his life as the trustee determined "to be required for his support, maintenance and health."
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55 So. 3d 758 (2011)
In re Jerome W. DIXON.
No. 2010-B-1950.
Supreme Court of Louisiana.
January 19, 2011.
*759 Charles Bennett Plattsmier, G. Fred Ours, Baton Rouge, LA, for Applicant.
Clary & Overton, LLP, James Ronald Clary, Jr., Jerome Wayne Dixon, for Respondent.
*760 PER CURIAM.
This disciplinary matter arises from formal charges filed by the Office of Disciplinary Counsel ("ODC") against respondent, Jerome W. Dixon, an attorney licensed to practice law in Louisiana but currently on interim suspension for threat of harm to the public. In re: Dixon, 09-0734 (La.5/29/09), 10 So. 3d 1222.
PRIOR DISCIPLINARY HISTORY AND SUBSTANCE ABUSE HISTORY
Before we address the current charges, we find it helpful to review respondent's prior disciplinary history and substance abuse history.
Respondent was admitted to the practice of law in Louisiana in 1988. In 1995, respondent was publicly reprimanded and ordered to complete fifteen hours of continuing legal education in the area of law office management for conduct involving incompetence, neglect, and failure to cooperate with the ODC in its investigations. Also in 1995, respondent began a recovery program for alcoholism and drug abuse.
In 1999, the court accepted a petition for consent discipline transferring respondent to disability inactive status, deferred, subject to two years of probation with supervision by the Lawyers Assistance Program ("LAP"). Respondent's misconduct involved issuing numerous bad checks from his office account and client trust account between 1993 and 1995, which misconduct was the direct result of alcoholism and drug abuse. In re: Dixon, 99-1743 (La.10/1/99), 744 So. 2d 618.
In August 2005, respondent relapsed after ten years of sobriety. He entered a detox facility in January 2006 but again relapsed soon thereafter. From February 2006 until September 2006, respondent sought treatment at the O'Brien House, a halfway house for recovering alcoholics and drug addicts. In 2007, respondent relapsed twice, and on November 1, 2007, he entered the Louisiana Health & Rehabilitation Options Social Detox facility in Baton Rouge.[1] On November 6, 2007, following detox, he returned to the O'Brien House and completed a six-month treatment program. On December 17, 2007, respondent signed a five-year LAP contract.
In 2008, the court suspended respondent from the practice of law for one year and one day, with all but six months deferred, followed by one year of unsupervised probation, for neglecting a legal matter, altering a public record, and making false statements to the ODC, all of which occurred between January 2003 and February 2005. In re: Dixon, 08-1618 (La.12/2/08), 996 So. 2d 1029.
In March 2009, the ODC filed a petition to place respondent on interim suspension at the expiration of his six-month suspension issued in December 2008. The petition for interim suspension was based on the same misconduct that forms the basis of the formal charges in the instant matter. On May 29, 2009, the court ordered that respondent be suspended from the practice of law on an interim basis to take effect at the expiration of his suspension. In re: Dixon, 09-0734 (La.5/29/09), 10 So. 3d 1222. Respondent's interim suspension took effect on June 17, 2009.
UNDERLYING FACTS
Count IThe Trust Account Matter
Between December 1, 2006 and May 30, 2008, respondent maintained two client *761 trust accounts, one at Chase Bank and one at Liberty Bank. The ODC's auditor, Ronald White, audited the accounts. Mr. White's November 2008 audit report indicated there were more than 200 unexplained entries in the accounts because respondent failed to keep complete records of the accounts. The report also indicated there were multiple instances of commingling of respondent's funds with client funds and multiple instances of conversion of client and/or third-party funds.
With respect to the commingled funds, the audit report indicated respondent left approximately $91,000 of his fees in the trust accounts. Mr. White also indicated respondent paid personal and/or office expenses from the trust accounts.
With respect to the converted funds, Mr. White's report indicated the following: 1) approximately $890 was paid to clients or third-party medical providers from the wrong trust account (the settlement funds were deposited in the other trust account); 2) approximately $2,185 was not paid to third-party medical providers; 3) approximately $4,100 was not paid to clients; 4) a $7,300 settlement check was not deposited in either trust account; and 5) a $4,667 settlement check was deposited into one of the trust accounts on October 19, 2007, but the account did not have sufficient funds to pay the client until November 18, 2007. The report also indicated that, on several occasions, the trust accounts had negative balances. Mr. White further indicated that, in many cases, he found no supporting documentation to prove the amounts on settlement disbursement statements were actually disbursed.
Respondent's accountant, Brian Blackwell, conducted his own audit and provided a response to Mr. White's audit report in May 2009. In his response, Mr. Blackwell determined all clients and third parties were paid in full after he analyzed respondent's trust account records, interviewed respondent, and called clerk of court offices and third-party medical providers. Mr. Blackwell also indicated that respondent took his fees from the trust accounts "in partial payments or increments over time."[2] Mr. Blackwell agreed that respondent's trust account records were disorganized, stating he encountered "a document problem, a support problem, a bookkeeping problem, the ability to accurately determine, you know, how [respondent] took his fees."
The ODC alleged respondent violated Rules 1.3 (failure to act with reasonable diligence and promptness in representing a client), 1.15(a)-(e) (safekeeping property of clients or third persons), 8.4(b) (commission of a criminal act that reflects adversely on the lawyer's honesty, trustworthiness, or fitness as a lawyer), and 8.4(c) (engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation) of the Rules of Professional Conduct.
Count IIRespondent's Criminal Conviction
In February 2008, during respondent's six-month substance abuse treatment program at the O'Brien House, he paid a woman $20 to have sexual intercourse with him. A police officer interrupted the sexual act, and both respondent and the woman admitted that respondent had paid $20 in exchange for sexual intercourse. Respondent subsequently received a misdemeanor summons for prostitution. In his pre-argument brief to this court, respondent indicated he pled no contest to the charge, which was subsequently dismissed pursuant to La. C. Cr. P. art. 894.
*762 The ODC alleged respondent violated Rule 8.4(b) of the Rules of Professional Conduct.
Count IIIThe Woods Matter
In October 2005, Reva Woods paid respondent $500 to handle her bankruptcy matter. Respondent failed to appear in bankruptcy court to represent Ms. Woods at a creditors' meeting in February 2006, and a show cause order was issued against him. In the meantime, the creditors' meeting was rescheduled in March 2006. Again, respondent failed to appear, but he did arrange for attorney Hansel Harlan to represent Ms. Woods at the creditors' meeting.[3] In June 2006, the bankruptcy court ordered respondent to refund $100 of the $500 fee to Ms. Woods because of his failure to represent her at the creditors' meeting. Respondent failed to comply with the court's refund order until February 2009, when he sent Ms. Woods a $100 money order.[4]
The ODC alleged respondent violated Rules 1.5(f)(5) (failure to refund an unearned fee), 3.4(c) (knowing disobedience of an obligation under the rules of a tribunal), 8.4(c), and 8.4(d) (engaging in conduct prejudicial to the administration of justice) of the Rules of Professional Conduct.
DISCIPLINARY PROCEEDINGS
In March 2009, the ODC filed formal charges against respondent. Respondent answered the formal charges, admitting some misconduct while denying other misconduct. The matter proceeded to a formal hearing on the merits, which was conducted by the hearing committee in October 2009.
Hearing Committee Report
After reviewing the testimony and evidence presented at the hearing, the hearing committee found the following:
The Trust Account matterThe committee found that according to Mr. White's audit, there were substantial improper transactions in respondent's trust accounts, including multiple instances of commingling and conversion of client and/or third-party funds. Although respondent testified at the hearing that he had inadequate knowledge of how to maintain his trust accounts, the committee found this testimony was not credible because, in 1994, respondent was publicly reprimanded and ordered to complete additional hours of continuing legal education in the area of law office management. Respondent stipulated that he failed to maintain and preserve the trust accounts and financial records as required by Rule 1.15(a), and his conduct was knowing. Respondent has a prior disciplinary offense from 1999 stemming from his failure to maintain the required separation of funds and his use of trust account funds to pay personal expenses. Respondent testified that he deposited his own funds into the trust account to make up for missing funds in violation of Rule 1.15(b). Respondent's testimony and/or Mr. White's audit report established violations of Rules 1.15(c), 1.15(d), and 1.15(e). Such conversion of client funds constitutes either theft or unauthorized use of a movable, both of which *763 are criminal offenses in violation of Rule 8.4(b). Conversion also constitutes conduct involving dishonesty, fraud, deceit, or misrepresentation in violation of Rule 8.4(c). Respondent also violated Rule 1.3 by failing to accurately account for and disburse client funds.
Respondent's criminal convictionThe committee made factual findings consistent with the underlying facts set forth above. Accordingly, the committee found respondent violated Rule 8.4(b). The committee also found respondent acted intentionally.
The Woods matterThe committee made factual findings consistent with the underlying facts set forth above. Additionally, the committee found that Ms. Woods was not paid until after she filed a disciplinary complaint and some ten months after the ODC notified respondent of the complaint. Respondent's excuse was that he "thought" he had paid her but had no receipt. The committee found this explanation not credible and determined respondent "deliberately delayed (perhaps stubbornly), as long as possible, the refund of this money." There was a judicially-determined unearned portion of the fee respondent was ordered to refund. His failure to promptly refund this unearned portion after being ordered to do so is a violation of Rules 1.5(f)(5), 3.4(c), 8.4(c), and 8.4(d).
The committee further determined respondent knowingly and intentionally violated duties owed to his clients, the public, and the legal system. After considering the ABA's Standards for Imposing Lawyer Sanctions, the committee determined permanent disbarment is the baseline sanction.[5]
In aggravation, the committee found the following factors: prior disciplinary offenses, a dishonest or selfish motive, a pattern of misconduct, multiple offenses, vulnerability of the victim, substantial experience in the practice of law (admitted 1988), and illegal conduct. The committee did not find any mitigating factors present, noting its belief that "Respondent's chance of relapse at this stage is fairly high and does not justify any further risk to the public." The committee also stated that the facts show respondent has "an historic inability to resist the temptation to convert client funds." Finally, the committee indicated "[n]othing in mitigation supports a deviation from the sanction called for."
Under these circumstances, and in light of respondent's "multiple and intentional instances of a breach of the attorney trust account and substantial actual and potential harm to the public," the committee recommended respondent be permanently disbarred.
Respondent filed an objection to the hearing committee's report and recommendation.
Disciplinary Board Recommendation
After reviewing the matter, the disciplinary board determined the hearing committee's factual findings do not appear to be manifestly erroneous. The board also determined the committee correctly applied the Rules of Professional Conduct, except that the board found respondent did not violate Rules 1.15(c), 1.15(d), or 1.15(e).
Specifically, the board determined respondent violated Rule 1.3 by failing to maintain, account for, and keep appropriate records of client funds in his trust *764 account and by failing to properly segregate those funds from his own. He violated Rules 1.15(a) and 1.15(b) by leaving his fees in the trust accounts and depositing his own money into the trust accounts, resulting in commingling of funds. He also violated Rule 1.15(a) by depositing client settlement funds into one trust account and disbursing the funds from the other trust account, resulting in conversion. Additionally, he set up automatic withdrawals from his trust accounts to pay personal and business expenses, resulting in conversion. However, the board noted the record does not show that client and third parties were not paid. The board also found that respondent's claim of ignorance of the trust accounting rules is not believable. The board further determined respondent violated Rules 8.4(b) and 8.4(c) by converting client funds. He additionally violated Rule 8.4(b) by engaging in prostitution, which constitutes criminal conduct. Furthermore, respondent violated Rules 1.5(f)(5) and 3.4(c) by failing to immediately refund the unearned portion of Ms. Woods' fee, despite being ordered to do so by the bankruptcy court. Additionally, respondent violated Rules 8.4(c) and 8.4(d) by deliberately delaying the refund to Ms. Woods.
With respect to Rules 1.15(c), 1.15(d), and 1.15(e) in Count I, the board determined respondent did not violate these rules because there is not clear and convincing evidence that he failed to deposit into or improperly withdrew from his trust accounts payments for advanced fees or expenses. There is also not clear and convincing evidence that respondent failed to notify clients or third parties of the receipt of settlement funds or promptly disburse the funds. Finally, the record does not contain complaints from clients or third parties that respondent failed to pay them.
After considering the above rule violations, the board concluded respondent knowingly and intentionally violated duties owed to his clients, the public, the legal system, and the legal profession. He caused significant potential harm to his clients and third parties by mismanaging his trust accounts. He also caused actual harm to Ms. Woods and the legal system by failing to promptly refund the unearned fee. The board determined the "heartland" of respondent's misconduct is his mismanagement of his trust accounts, and the other misconduct only serves to enhance whatever sanction is appropriate for the trust account mismanagement. Upon review of the ABA's Standards for Imposing Lawyer Sanctions, the board determined the baseline sanction is disbarment.
The board found the following aggravating factors: prior disciplinary offenses, a dishonest or selfish motive (only with respect to Count III), a pattern of misconduct, multiple offenses, substantial experience in the practice of law, and illegal conduct. Regarding mitigation, the board rejected the mitigating factor of mental disability or chemical dependency because respondent failed to establish a causal connection between his dependency and his misconduct. Instead, the board found respondent suffers from personal or emotional problems but assigned the factor very little weight because of the lack of a causal connection. See In re: Stoller, 04-2758 (La.5/24/05), 902 So. 2d 981.
In addressing the issue of an appropriate sanction, the board reviewed the court's sanction guidelines for misconduct involving conversion of client funds as set forth in Louisiana State Bar Ass'n v. Hinrichs, 486 So. 2d 116 (La.1986). The board concluded "[t]here are a greater number of factors in this matter that are consistent with the three-year range provided by *765 Hinrichs, namely the lack of actual harm to the clients. However, the extensive duration of Respondent's conduct, the magnitude of the risk of damage to clients and third-parties, and the Respondent's prior discipline for similar misconduct pushes the matter into the disbarment range." The board determined, however, that permanent disbarment is not warranted under any of the permanent disbarment guidelines established by the court in Supreme Court Rule XIX, Appendix E.
Under these circumstances, the board recommended respondent be disbarred.
Respondent filed an objection to the disciplinary board's report and recommendation. Accordingly, the case was docketed for oral argument pursuant to Supreme Court Rule XIX, § 11(G)(1)(b).
DISCUSSION
Bar disciplinary matters fall within the original jurisdiction of this court. La. Const. art. V, § 5(B). Consequently, we act as triers of fact and conduct an independent review of the record to determine whether the alleged misconduct has been proven by clear and convincing evidence. In re: Banks, 09-1212 (La.10/2/09), 18 So. 3d 57. While we are not bound in any way by the findings and recommendations of the hearing committee and disciplinary board, we have held the manifest error standard is applicable to the committee's factual findings. See In re: Caulfield, 96-1401 (La.11/25/96), 683 So. 2d 714; In re: Pardue, 93-2865 (La.3/11/94), 633 So. 2d 150.
In this matter, the record reveals respondent mishandled his client trust accounts, resulting in commingling and conversion of funds. Respondent also engaged in a criminal act and failed to promptly refund a $100 unearned fee after he was ordered to do so by a bankruptcy judge. Based on this misconduct, respondent has violated the Rules of Professional Conduct as found by the disciplinary board.
Having found evidence of professional misconduct, we now turn to a determination of the appropriate sanction for respondent's actions. In determining a sanction, we are mindful that disciplinary proceedings are designed to maintain high standards of conduct, protect the public, preserve the integrity of the profession, and deter future misconduct. Louisiana State Bar Ass'n v. Reis, 513 So. 2d 1173 (La.1987). The discipline to be imposed depends upon the facts of each case and the seriousness of the offenses involved considered in light of any aggravating and mitigating circumstances. Louisiana State Bar Ass'n v. Whittington, 459 So. 2d 520 (La.1984).
Respondent knowingly violated duties to his clients, the public, the legal system, and the legal profession. He caused potential harm to his clients and third parties and actual harm to Ms. Woods and the legal system.
The following aggravating factors are present: prior disciplinary offenses, a pattern of misconduct, multiple offenses, vulnerability of the victim, and substantial experience in the practice of law. The only mitigating factor supported by the record is respondent's personal and emotional problems.
We agree with the board that the "heartland" misconduct in this matter is respondent's mishandling of his trust accounts. Our 1986 opinion in Louisiana State Bar Ass'n v. Hinrichs, 486 So. 2d 116 (La.1986), is the landmark case in which the following range of sanctions was established for varying degrees of conversion of client funds:
*766 In a typical case of disbarment for violation of DR 9-102 [now Rule 1.15], one or more of the following elements are usually present: the lawyer acts in bad faith and intends a result inconsistent with his client's interest; the lawyer commits forgery or other fraudulent acts in connection with the violation; the magnitude or the duration of the deprivation is extensive; the magnitude of the damage or risk of damage, expense and inconvenience caused the client is great; the lawyer either fails to make full restitution or does so tardily after extended pressure of disciplinary or legal proceedings.
A three year suspension from practice typically results in cases involving similar but less aggravated factors. In such cases the lawyer is guilty of at least a high degree of negligence in causing his client's funds to be withdrawn or retained in violation of the disciplinary rule. He usually does not commit other fraudulent acts in connection therewith. The attorney usually benefits from the infraction but, in contrast with disbarment cases, the client may not be greatly harmed or exposed to great risk of harm. The attorney fully reimburses or pays his client the funds due without the necessity of extensive disciplinary or legal proceedings.
A suspension from practice of eighteen months or two years will typically result where the facts are appropriate for a three-year suspension, except that there are significant mitigating circumstances; or where the facts are appropriate for a one-year suspension, except that there are significant aggravating circumstances.
A suspension from practice of one year or less will typically result where the negligence in withdrawing or retaining client funds is not gross or of a high degree. No other fraudulent acts are committed in connection with the violation of the disciplinary rule. There is no serious harm or threat of harm to the client. Full restitution is made promptly, usually before any legal proceeding or disciplinary complaint is made. [Internal citations omitted.]
Following these guidelines, we find a three-year suspension is appropriate. Accordingly, we will suspend respondent from the practice of law for three years. Pursuant to Supreme Court Rule XIX, § 24(A),[6] the suspension shall be made retroactive to June 17, 2009, the effective date of respondent's interim suspension.
DECREE
Upon review of the findings and recommendations of the hearing committee and the disciplinary board, and considering the record, briefs, and oral argument, it is ordered that Jerome W. Dixon, Louisiana Bar Roll number 18587, be and he hereby is suspended from the practice of law for three years, retroactive to June 17, 2009, the date of his interim suspension. All costs and expenses in the matter are assessed against respondent in accordance with Supreme Court Rule XIX, § 10.1, with legal interest to commence thirty days from the date of finality of this court's judgment until paid.
CLARK, Justice, dissents in part with written reasons.
*767 CLARK, J., dissenting.
I respectfully dissent from the majority's holding that suspends respondent from the practice of law for a period of three years. Believing this sanction to be too lenient, I find disbarment to be appropriate. First, I find significance in respondent's extensive history of disciplinary conduct. He received a public reprimand in 1995 and engaged in misconduct that led to his transfer to disability inactive status in 1999, which was deferred for a two-year supervisory probation period with the LAP program. Respondent then experienced several relapses after maintaining sobriety for ten years, resulting in another LAP contract. Thereafter, in 2008, he was suspended from the practice of law again and placed on probation for neglecting a legal matter, altering a public record, and making a false statement to the Office of Disciplinary Counsel. Once more, he was placed on interim suspension in 2009. These numerous brushes with our disciplinary system provide ample evidence of a pattern of misconduct that is likely to be unchanged by rehabilitation efforts or time.
Presently, respondent is before this court due to allegations relative to the mismanagement of client funds, neglect of a client matter, and the commission of a criminal act. The hearing committee found respondent's testimony not to be credible regarding his alleged "inadequate knowledge" of the handling of trust accounts. The hearing committee discredited this assertion of ignorance due to his 1995 reprimand concerning the same issue, as well as his familiarity with this violation in 1999. The hearing committee stated respondent "has an historic inability to resist the temptation to convert client funds." It also found "[respondent's chance of relapse at this stage is fairly high and does not justify any further risk to the public." Moreover, the hearing committee found respondent acted intentionally with regard to his criminal conduct, which constituted a violation of Rule 8.4(b). I agree with the determinations made by the hearing committee. Lastly, I believe actual harm was caused to Ms. Woods and the legal system insofar as two and one-half years passed before responded paid Ms. Woods the court-ordered restitution.
Due to respondent's lengthy history of misconduct and his apparent inability to alter his misconduct, I adopt the recommendations of the hearing committee and the disciplinary board that a harsher sanction is warranted. Accordingly, I would disbar respondent.
NOTES
[1] Respondent's medical records indicate he smoked crack cocaine daily until he entered the facility. A doctor at the facility diagnosed respondent with cocaine dependency.
[2] Mr. Blackwell admitted that respondent commingled funds by leaving his fees in the trust accounts and, over time, writing smaller checks to himself or to pay personal expenses.
[3] The parties stipulated that the bankruptcy trustee and Mr. Harlan helped Ms. Woods with her paperwork and guided her through the process. They also stipulated that respondent arranged for other attorneys to handle most of his bankruptcy clients during this time period.
[4] In his letter to Ms. Woods, respondent stated, "My attorney has instructed me to send you this money order for $100.00. I honestly believe I gave you this amount in cash the last time we were in court for your case. I believe I am paying you twice, but my attorney has instructed me to pay you again and retain proof of payment."
[5] In In re: McClanahan, 09-1883, fn. 9 (La.2/5/10), 26 So. 3d 756, the court established that disbarment, and not permanent disbarment, is the most serious sanction available as a baseline sanction.
[6] Supreme Court Rule XIX, § 24(A) provides, in pertinent part:
In matters where a lawyer who has been placed on interim suspension and is then suspended for the same misconduct that was the ground for the interim suspension, at the court's discretion, the lawyer's term of suspension may be applied retroactively to the effective date of the interim suspension.
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818 F.2d 924
260 U.S.App.D.C. 275
Deborah FRITZ, Appellant,v.HONDA MOTOR CO., LTD., et al.
No. 86-7027.
United States Court of Appeals,District of Columbia Circuit.
Argued April 16, 1987.Decided May 8, 1987.
Appeal from the United States District Court for the District of Columbia (Civil Action No. 85-01694).
Frank Martell, with whom Aaron M. Levine and Thomas Fortune Fay, Washington, D.C., were on the brief, for appellant.
Paul M. Honigberg, with whom Michael A. Brown, Robert L. Zisk, Washington, D.C., Harold L. Schwab and James J. Yukevich, New York City, were on the brief, for appellees.
Before WALD, Chief Judge, and SILBERMAN and D.H. GINSBURG, Circuit Judges.
Opinion PER CURIAM.
1
PER CURIAM.
2
Appellant Aaron M. Levine served as counsel for plaintiff Deborah Fritz in a products liability action against appellees Honda Motor Co., Ltd. and American Honda Motor Co., Inc. (hereinafter jointly referred to as "Honda"). The District Court dismissed the action and awarded $10,847.77 in costs and attorney's fees to Honda, finding that Levine's conduct in the litigation had been "unreasonable, vexatious and harassing, as well as an abuse of the processes of this court." Fritz v. Honda Motor Co., Ltd., No. 85-1694, slip op. at 8 (D.D.C. Mar. 19, 1986) (memorandum order granting defendants' motion for costs and attorney's fees) ("Fritz I "); Fritz v. Honda Motor Co., Ltd., No. 85-1694, slip op. at 2 n. 1 (D.D.C. July 31, 1986) (memorandum order granting in part and denying in part plaintiff's motion for reconsideration) ("Fritz II ").
3
The District Court based its imposition of sanctions on four instances of misconduct by Levine in the course of the litigation. The court found that Levine refused to dismiss the complaint voluntarily after being informed by defendants' counsel that service of process on Honda Motor Co., Ltd. (a Japanese corporation) had been defective, thereby forcing Honda to file a motion to dismiss to which Levine made no opposition. The court held that "in refusing to cooperate with defendants' counsel and then in not opposing defendants' motion[ ], plaintiff's counsel acted in bad faith and multiplied the proceedings vexatiously and unreasonably." Fritz I at 5. Accordingly, the court ordered Levine to pay the costs and attorney's fees incurred by Honda in filing the motion to dismiss, basing its award on 28 U.S.C. Sec. 1927, which permits the assessment of costs and fees against an attorney who "multiplies the proceedings in any case unreasonably and vexatiously," and on the court's inherent power to assess attorney's fees against counsel under the bad faith exception to the "American rule" that litigants ordinarily cannot recover attorney's fees. See Roadway Express, Inc. v. Piper, 447 U.S. 752, 765-66, 100 S.Ct. 2455, 2463-64, 65 L.Ed.2d 488 (1980).
4
The District Court also concluded that Levine was guilty of discovery-related misconduct. The court found that Levine acted improperly in taking the deposition of Edward Glynn, a Honda employee, when Levine had no intention of proceeding with the litigation in federal court. Levine announced at the end of the Glynn deposition that he was thinking of bringing a new action on behalf of plaintiff Fritz in Maryland state court; he had in fact already filed a complaint in the Circuit Court for Prince George's County, Maryland the day before. The District Court held that "Mr. Levine's failure to represent truthfully the status of the Maryland case and his taking of the deposition despite his obvious intent to litigate his client's case in state court was a blatant misuse of the federal discovery procedures," Fritz I at 6, and accordingly ordered Levine to pay Honda's costs and attorney's fees associated with the Glynn deposition. The court also found that Levine advised Fritz not to appear for her scheduled deposition, although neither the court nor defendants' counsel had authorized her nonappearance. It therefore ordered Levine, pursuant to Rule 37(d) of the Federal Rules of Civil Procedure, to pay Honda's expenses, including attorney's fees, caused by Fritz's failure to appear. Finally, the court found that Levine failed to answer interrogatories filed by Honda, without requesting either an extension or a protective order. Levine was required to pay the costs and attorney's fees incurred by Honda in preparing and filing the interrogatories.
5
Our review of an award of costs and attorney's fees is limited; we may not reverse such an award "save for legal error or abuse of discretion." Lipsig v. National Student Marketing Corp., 663 F.2d 178, 182 n. 34 (D.C.Cir.1980). In this case, the court found that Levine repeatedly took actions which required Honda to expend unnecessary time and money, even though he had no intention of pursuing this litigation in federal court. Such conduct has been held to justify an award of costs and attorney's fees. See id. at 181 ("[A]dvocacy simply for the sake of burdening an opponent with unnecessary expenditures of time and effort clearly warrants recompense for the extra outlays attributable thereto."). The District Court properly exercised its discretion in imposing sanctions against Levine.
6
Levine argues that the attorney's fees claimed by Honda in connection with the Glynn deposition and with Fritz's failure to appear at her scheduled deposition were excessive, and that the District Court's acceptance of those fees as reasonable was an abuse of the court's discretion. See Reply Brief for Appellant at 13-20. In its first memorandum order, the District Court directed Honda to "submit affidavits, time records and such other written evidence as may be necessary to prove the amount of the award of fees and costs to which they are entitled under this order." Fritz I at 10. Honda filed this information on April 15, 1986. See District Court Docket Nos. 30, 31. In its July 31, 1986 memorandum order setting the amount of attorney's fees and costs Levine would be required to pay, the District Court noted that Levine had not challenged the affidavits and records of hours worked and hourly rates submitted by Honda. Fritz II at 6. Levine clearly had an opportunity to challenge the specific hours and rates claimed by Honda's attorneys during the more than three months between the time the affidavits and time records were submitted and the time the court issued its order specifying the amount of attorney's fees Levine would be required to pay. Because Levine could have argued before the District Court that the attorney's fees claimed by Honda were unreasonable, but did not do so, he may not raise that issue for the first time on appeal. See District of Columbia v. Air Florida, Inc., 750 F.2d 1077, 1084 (D.C.Cir.1984) ("It is well settled that issues and legal theories not asserted at the District Court level ordinarily will not be heard on appeal.").1
7
Accordingly, the judgment of the District Court is
8
Affirmed.
1
Honda seeks to recover the attorney's fees and costs it incurred in connection with this appeal, pursuant to Rule 38 of the Federal Rules of Appellate Procedure, which permits a court of appeals to award "just damages and single or double costs" (including attorney's fees) to the appellee if it determines that an appeal is frivolous. We do not find this appeal to be frivolous or to have been brought merely for the sake of harassment or delay. We therefore decline to disturb the "strong presumption that each party should pay its own fees on appeal." See Reliance Insurance Co. v. Sweeney Corp., 792 F.2d 1137, 1139 (D.C.Cir.1986)
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52 So.3d 475 (2010)
Ex parte Gilnita JONES et al.
(In re Angela S. Levert, as personal representative of the estate of M.S., deceased v. Tyshelle Wilson et al.).
Ex parte Tyshelle Wilson
(In re Angela S. Levert, as personal representative of the estate of M.S., deceased v. Tyshelle Wilson et al.).
1090762 and 1090781.
Supreme Court of Alabama.
June 25, 2010.
*476 Sharon E. Ficquette, gen. counsel, and Felicia M. Brooks, staff atty., Department of Human Resources, for petitioners Gilnita Jones, Elizabeth Walter, Cynthia Pate Henderson, and Tracy Eubanks.
James S. Lloyd and J. Rick Walls of Lloyd, Gray & Whitehead, P.C., Birmingham, for petitioner Tyshelle Wilson.
G. Courtney French and Michael D. Petway of Fuston, Petway & French, LLP, Birmingham, for respondent.
LYONS, Justice.
In case no. 1090762, Gilnita Jones, Cynthia Pate Henderson, Elizabeth Katie Walter, and Tracy Eubanks petition this Court for a writ of mandamus directing the Jefferson Circuit Court to enter a summary judgment in their favor on the basis of State-agent immunity in a wrongful-death action brought against them by Angela S. Levert, as personal representative of the estate of M.S. In case no. 1090781, Tyshelle Wilson petitions this Court for a writ of mandamus directing the Jefferson Circuit Court to enter a summary judgment in her favor on the basis of State-agent immunity in the same wrongful-death action. We grant the petition as to Jones, Henderson, and Walter; we deny the petition as to Eubanks (case no. 1090762). We deny the petition as to Wilson (case no. 1090781).
I. Facts and Procedural History
At the time of the events underlying this wrongful-death action, Wilson was a social worker with the Jefferson County Department of Human Resources ("DHR"). Among Wilson's duties at that time was to act periodically as an on-call DHR worker charged with responding to telephone calls made to DHR after normal business hours. On October 5, 2007, Wilson was the scheduled on-call worker responsible for investigating a call received by DHR alleging child abuse or neglect against a minor child, M.S., who was at that time approximately 23 months old. Levert, the child's grandmother, telephoned DHR at approximately 9:30 p.m. Jones, another *477 DHR worker, was assigned to "shadow" Wilson while Wilson investigated Levert's allegations. According to DHR, a shadow assignment is a training exercise for a worker before that worker assumes responsibility as an on-call worker. Jones testified that as a shadow worker she had no input into investigating a call. Before going to M.S.'s home, Jones spoke with Levert on the telephone. Wilson and Jones stated that Jones returned Levert's initial telephone call because Wilson was busy with another call involving a teenager received on the same evening. Levert described bruising on M.S.'s face and reported that a day-care worker who saw M.S. regularly reported to her that he had been walking with a limp. Levert reported to Jones that M.S.'s mother, L.S. ("the mother"), told her that she intended to take M.S. to the doctor, but Levert said that she did not believe that he had been taken to the doctor.
Wilson spoke with the on-call supervisor for the evening, Deborah Key, who advised her to go to the house and confirm that M.S. had been taken to the doctor. Wilson and Jones then went to the house, where they found M.S. in the care of the mother's boyfriend, Nakia McConico. M.S. was asleep on the couch; there were bruises on his forehead and around his eye. Wilson and Jones then traveled to the mother's place of employment to verify that M.S. had been seen by a doctor. The mother told Wilson and Jones that M.S. had fallen off his bicycle, that he had been taken to the hospital where he had seen a doctor on October 4 (the preceding day), and that the paperwork generated by the hospital visit was at the house. Wilson and the mother then returned to the mother's house, where the medical paperwork was located and given to Wilson. Jones did not accompany Wilson on her second visit to M.S.'s house. Wilson took the paperwork and returned to her office. Wilson telephoned Key, the on-call supervisor for the evening, and reported to her the information she had gathered, including the fact that the hospital physician who saw M.S. indicated that his injuries were consistent with a fall from a bicycle. Wilson advised Key that the investigation had been completed, that she was preparing a written report of the investigation, and that she would place the report, together with the hospital-discharge paperwork and the doctor's report, in the DHR intake supervisor's mailbox. Eubanks was the intake supervisor at that time. Wilson says that she prepared written reports of both the investigation of M.S.'s case and the investigation of the call involving the teenager, and that she placed both reports in Eubanks's box during the early morning hours of October 6 before the DHR office opened at 7:30 a.m. DHR intake logs and building logs show Wilson's arrival and departure from the building. However, Eubanks testified that she never saw Wilson's report on M.S.
Wilson thereafter had no further involvement in M.S.'s case. She did not hear anything further about M.S. until she was informed on October 21, 2007, that he had died on that date. It is undisputed that Wilson's report should have triggered assignment of the call to an intake worker to obtain more detailed facts surrounding Levert's call to DHR and, thereafter, assignment of the case to a child-abuse-and-neglect ("CA/N") worker to investigate more fully Levert's allegations of the alleged abuse. It is also undisputed that no intake worker or CA/N worker was assigned to M.S.'s case immediately after Wilson's initial contact with the family as the on-call worker. After M.S.'s death, Eubanks assigned Henderson, an intake worker in Jefferson County, to undertake the intake process concerning M.S.'s case and assigned Walter, a CA/N worker in *478 Jefferson County, to undertake the CA/N investigation.
On May 30, 2008, Levert sued Wilson, Jones, Henderson, Walter, Eubanks, and numerous other DHR workers.[1] Levert sued each DHR worker in her individual capacity, alleging that she had negligently failed to perform her mandatory duties in accordance with DHR's rules and regulations, as well as the laws of the State. The complaint also alleged that each DHR worker had acted willfully, maliciously, fraudulently, in bad faith, beyond her authority, or under a mistaken interpretation of the law, proximately causing M.S.'s death. Expert testimony indicates that M.S. died from injuries inflicted during the evening of October 20-21 and not from any injuries relating to the October 4 incident investigated by Wilson and Jones. McConico has been arrested and charged with capital murder in connection with M.S.'s death.
Levert contended in the trial court that Wilson and Jones neither completed an investigatory report nor turned it in to Eubanks, who has stated that she "did not see [the report]." Levert also contended that Eubanks failed to make a timely assignment of an intake worker and a CA/N worker to M.S.'s case and that Henderson and Walter, who were assigned to the case after M.S.'s death, failed to complete timely investigations. Levert further contends that any investigation DHR conducted would have, or should have, uncovered the facts that McConico, who was reported to be a drug user and drug dealer who had also been previously charged with child abuse, was alone with M.S. for 12 or more hours a day and that both the mother and McConico were addicted to cocaine, heroin, marijuana, ecstacy, and other drugs.
Wilson, Jones, Henderson, Walter, and Eubanks all filed motions for a summary judgment arguing that they were immune from liability on the basis of State-agent immunity. Levert contended that, by their willful deviations from DHR policy, Wilson, Jones, Henderson, Walter, and Eubanks waived any State-agent immunity they may have otherwise had. On January 26, 2010, the trial court denied their motions for a summary judgment, and they petitioned for writs of mandamus.
II. Standard of Review
"This Court has stated:
"`"While the general rule is that the denial of a motion for summary judgment is not reviewable, the exception is that the denial of a motion grounded on a claim of immunity is reviewable by petition for writ of mandamus. Ex parte Purvis, 689 So.2d 794 (Ala.1996)....
"`"Summary judgment is appropriate only when `there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law.' Rule 56(c)(3), Ala. R. Civ. P., Young v. La Quinta Inns, Inc., 682 So.2d 402 (Ala. 1996). A court considering a motion for summary judgment will view the record in the light most favorable to the nonmoving party, Hurst v. Alabama Power Co., 675 So.2d 397 (Ala. 1996), Fuqua v. Ingersoll-Rand Co., 591 So.2d 486 (Ala.1991); will accord the nonmoving party all reasonable favorable inferences from the evidence, Fuqua, supra, Aldridge v. Valley Steel Constr., Inc., 603 So.2d 981 *479 (Ala.1992); and will resolve all reasonable doubts against the moving party, Hurst, supra, Ex parte Brislin, 719 So.2d 185 (Ala.1998).
"`"An appellate court reviewing a ruling on a motion for summary judgment will, de novo, apply these same standards applicable in the trial court. Fuqua, supra, Brislin, supra. Likewise, the appellate court will consider only that factual material available of record to the trial court for its consideration in deciding the motion. Dynasty Corp. v. Alpha Resins Corp., 577 So.2d 1278 (Ala.1991), Boland v. Fort Rucker Nat'l Bank, 599 So.2d 595 (Ala.1992), Rowe v. Isbell, 599 So.2d 35 (Ala.1992)."'
"Ex parte Turner, 840 So.2d 132, 135 (Ala.2002) (quoting Ex parte Rizk, 791 So.2d 911, 912-13 (Ala.2000)). A writ of mandamus is an extraordinary remedy available only when the petitioner can demonstrate: `"(1) a clear legal right to the order sought; (2) an imperative duty upon the respondent to perform, accompanied by a refusal to do so; (3) the lack of another adequate remedy; and (4) the properly invoked jurisdiction of the court."' Ex parte Nail, 879 So.2d 541, 543 (Ala.2003) (quoting Ex parte BOC Group, Inc., 823 So.2d 1270, 1272 (Ala. 2001))."
Ex parte Yancey, 8 So.3d 299, 303-04 (Ala. 2008).
III. Analysis
"In Ex parte Cranman, 792 So.2d 392 (Ala.2000), a plurality of this Court restated the test for determining when a State employee is entitled to State-agent immunity:
"`A State agent shall be immune from civil liability in his or her personal capacity when the conduct made the basis of the claim against the agent is based upon the agent's
"`(1) formulating plans, policies, or designs; or
"`(2) exercising his or her judgment in the administration of a department or agency of government, including, but not limited to, examples such as:
"`(a) making administrative adjudications;
"`(b) allocating resources;
"`(c) negotiating contracts;
"`(d) hiring, firing, transferring, assigning, or supervising personnel; or
"`(3) discharging duties imposed on a department or agency by statute, rule, or regulation, insofar as the statute, rule, or regulation prescribes the manner for performing the duties and the State agent performs the duties in that manner; or
"`(4) exercising judgment in the enforcement of the criminal laws of the State, including, but not limited to, law-enforcement officers' arresting or attempting to arrest persons; or
"`(5) exercising judgment in the discharge of duties imposed by statute, rule, or regulation in releasing prisoners, counseling or releasing persons of unsound mind, or educating students.
"`Notwithstanding anything to the contrary in the foregoing statement of the rule, a State agent shall not be immune from civil liability in his or her personal capacity
"`(1) when the Constitution or laws of the United States, or the Constitution of this State, or laws, rules, or regulations of this State enacted or promulgated for the purpose of regulating the activities of a governmental agency require otherwise; or
"`(2) when the State agent acts willfully, maliciously, fraudulently, in *480 bad faith, beyond his or her authority, or under a mistaken interpretation of the law.'
"792 So.2d at 405. Although Cranman was a plurality decision, the restatement of law as it pertains to State-agent immunity set forth in Cranman was subsequently adopted by this Court in Ex parte Rizk, 791 So.2d 911 (Ala.2000), and Ex parte Butts, 775 So.2d 173 (Ala.2000).
"Additionally, this Court has stated:
"`This Court has established a "burden-shifting" process when a party raises the defense of State-agent immunity. Giambrone v. Douglas, 874 So.2d 1046, 1052 (Ala.2003). In order to claim State-agent immunity, a State agent bears the burden of demonstrating that the plaintiff's claims arise from a function that would entitle the State agent to immunity. Giambrone, 874 So.2d at 1052; Ex parte Wood, 852 So.2d 705, 709 (Ala.2002). If the State agent makes such a showing, the burden then shifts to the plaintiff to show that the State agent acted willfully, maliciously, fraudulently, in bad faith, or beyond his or her authority. Giambrone, 874 So.2d at 1052; Wood, 852 So.2d at 709; Ex parte Davis, 721 So.2d 685, 689 (Ala.1998). "A State agent acts beyond authority and is therefore not immune when he or she `fail[s] to discharge duties pursuant to detailed rules or regulations, such as those stated on a checklist.'" Giambrone, 874 So.2d at 1052 (quoting Ex parte Butts, 775 So.2d 173, 178 (Ala.2000)).'
"Ex parte Estate of Reynolds, 946 So.2d 450, 452 (Ala.2006)."
Ex parte Yancey, 8 So.3d at 304-05.
A. Case No. 1090762
1. Gilnita Jones
Jones argues that as a "shadow worker" she was assigned to assist Wilson on the calls Wilson received during her oncall assignment and to observe the on-call process but that she had no other responsibilities. Levert argues that as an employee of DHR Jones was considered a child-welfare staff worker just as Wilson was and that she had the same duty as did Wilson to turn in her on-call reports before 7:30 a.m. on the next business day. The trial court found that Levert presented substantial evidence that Jones had responsibilities beyond merely observing Wilson and that she also had a duty to turn in an on-call report. Because the trial court found that a factual dispute existed involving whether Jones had any involvement with the report and whether the report was properly submitted, it concluded that Jones was not entitled to a summary judgment on the basis of State-agent immunity. We disagree.
Jones and various DHR supervisory personnel all testified that a "shadow worker" was assigned to observe another worker performing a certain task as a type of training exercise and that a shadow worker did not have the same responsibilities as did the worker who was being observed. The only testimony Levert produced to indicate that Jones had a duty to turn in the same report as did Wilson was Wilson's statement that she thought Jones would have had the same duties she did and the statement by Levert's expert witness, a former DHR employee, that any child-welfare staff worker had a duty to follow all DHR policy, including the policy that all on-call reports were to be turned in before the beginning of the next business day. This testimony ignores the fact that Jones shadowed Wilson only as far as Wilson's interview with the mother at her workplace. Both Jones and Wilson testified that at that point Wilson told Jones she could go home and that Jones neither *481 accompanied Wilson and the mother back to the mother's house to retrieve the hospital records nor accompanied Wilson back to the DHR office to prepare and to turn in the on-call report. Wilson undertook the preparation of the on-call report by herself; Jones did not assist in its preparation or undertake to turn the report in to Eubanks. Jones clearly had no involvement in the point of dispute in this casewhether a report of the on-call investigation of M.S. was turned in to the supervisor who would have been responsible for assigning other workers to further investigate the incident upon receipt of the report. By that time, Wilson had terminated Jones's association with the investigation.
Jones demonstrated that Levert's claims arise from a function that would entitle her to State-agent immunity, i.e., "(3) discharging duties imposed on a department or agency by statute, rule, or regulation, insofar as the statute, rule, or regulation prescribes the manner for performing the duties and the State agent performs the duties in that manner. . . ." Ex parte Cranman, 792 So.2d 392, 405 (Ala.2000). Levert failed to prove that Jones acted willfully, maliciously, fraudulently, in bad faith, or beyond her authority so as not to be entitled to State-agent immunity. We conclude that no genuine issue of material fact exists as to Jones's entitlement to State-agent immunity; therefore, her petition for a writ of mandamus is due to be granted.
2. Cynthia Pate Henderson and Elizabeth Katie Walter
Both Henderson and Walter testified that they were not aware of the anything relating to M.S.'s case until they were assigned to investigate it as the intake worker and the CA/N worker, respectively, following M.S.'s death. They both argue that they were complete strangers to the events made the basis of Levert's complaint and that their involvement with the case after M.S.'s death cannot be a basis for any liability arising from any failure to properly investigate the case after Levert's initial call to DHR. Levert argues that because Henderson and Walter were employees of DHR, each of them was considered a child-welfare staff worker who had the duty to respond to reports of suspected child abuse in accordance with DHR policy. The trial court found that Levert presented substantial evidence that if Wilson's report had been properly submitted, then Henderson and Walter should have known about M.S. before his death and that each of them had a duty to act on M.S.'s case pursuant to the deadlines established by DHR policy. Because the trial court found that whether Henderson and Walter received Wilson's report and whether each knew about M.S. before his death were questions of fact to be decided by a jury, it concluded that Henderson and Walter were not entitled to State-agent immunity. We disagree.
Eubanks contends that because she never saw Wilson's report she cannot be held responsible for failing to assign an intake worker and a CA/N worker to investigate Levert's allegations of abuse before M.S.'s death. Consequently, it is undisputed that she made no such assignment before M.S.'s death. Henderson testified that Eubanks assigned her to complete the intake process on M.S. after he had died and that she had never heard of M.S. before that time. Henderson further testified that Eubanks gave her notes that she was told had been written by Wilson and that Eubanks instructed her to enter those notes into her intake report. Henderson said she did as instructed, although she had not seen the notes before M.S.'s death and she never saw the report Wilson said she turned in to Eubanks.
*482 Walter testified that Eubanks assigned her to complete the CA/N investigation on M.S. after he had died and that she had never heard of M.S. before that time. Walter also testified that Eubanks gave her notes that she was told had been written by Wilson and that Eubanks instructed her to enter those notes into her CA/N investigation report. Like Henderson, Walter said she did as she had been instructed, although she had not seen the notes before M.S.'s death and she never saw the report Wilson said she turned in to Eubanks.
The only testimony Levert produced to indicate that Henderson or Walter had a duty to M.S. before his death was the statements by Levert's expert witness that any child-welfare staff worker had a duty to follow all DHR policy, including the policy that intake and CA/N reports were to be completed within a specified period. This testimony assumed that Wilson's report had been properly turned in and acted upon and ignores the factual dispute that surrounds that report; it also assumes that assignments to Henderson and Walter preceded M.S.'s death, contrary to the undisputed evidence. Both Henderson and Walter testified that they had no knowledge about M.S. or the report of alleged abuse until after M.S.'s death, when they were assigned to be workers on his case. Clearly, Henderson and Walter were both complete strangers to any investigation of M.S. before his death.
Both Henderson and Walter demonstrated that Levert's claims arise from a function that would entitle each of them to State-agent immunity, i.e., "(3) discharging duties imposed on a department or agency by statute, rule, or regulation, insofar as the statute, rule, or regulation prescribes the manner for performing the duties and the State agent performs the duties in that manner. . . ." Cranman, 792 So.2d at 405. Levert failed to prove that either Henderson or Walter acted willfully, maliciously, fraudulently, in bad faith, or beyond her authority so as not to be entitled to State-agent immunity. We conclude that no genuine issue of material fact exists as to Henderson's or Walter's entitlement to State-agent immunity; therefore, their petitions for a writ of mandamus are due to be granted.
3. Tracy Eubanks
As previously noted, Eubanks insists that she never saw Wilson's on-call report; therefore, she argues, she cannot be held responsible for failing to assign an intake worker and a CA/N worker before M.S.'s death to investigate Levert's allegations of abuse. Eubanks does not contend that Wilson did not turn in the report, only that she never saw it. Levert argues that Eubanks mishandled the assignments she was obligated to make upon receipt of the report and also argues that, as a supervisory employee of DHR, Eubanks was also considered to be a child-welfare staff worker who had the responsibility to assure that investigatory reports were completed within the periods specified by DHR policy. The trial court found that Levert presented substantial evidence that Eubanks had the supervisory responsibility of assigning workers to M.S.'s case upon the proper receipt of an on-call report and also that Eubanks had the same duties as any other child-welfare staff worker to follow DHR policy. As with Henderson and Walter, Eubanks's duty to follow DHR policy assumed that Wilson properly turned in her report and that Eubanks received it. Because the trial court found a factual dispute involving whether the report was properly submitted and/or received, it concluded that Eubanks was not entitled to a summary judgment based on State-agent immunity. We agree.
*483 Wilson adamantly insists that she turned in her on-call report concerning her initial investigation of Levert's report of alleged abuse of M.S.; Eubanks just as adamantly insists that she never saw the report. This discrepancy clearly presents a genuine issue of material fact. Wilson testified that she placed her report on the teenager whose case she investigated and her report on the investigation of M.S. in Eubanks's inbox before she left the DHR office shortly before 2:00 a.m. on October 5. She stated that she clipped the two reports together before she placed them into the box. Wilson said she knew that the teenager's case had been properly further investigated based upon her initial report and that she did not understand why Eubanks had not received her report on M.S. as well. If the jury believes Wilson and disbelieves Eubanks, the jury could conclude that Wilson did turn in the report and that Eubanks misplaced or mishandled it after Wilson turned it in. Furthermore, both Henderson and Walter testified that Eubanks instructed them to enter notes from Wilson into the reports they were completing after M.S.'s death. From that testimony, the jury could conclude that Eubanks had not only Wilson's notes before M.S.'s death, but also Wilson's report. Such factual disputes cannot be resolved at the summary-judgment stage of the proceedings.
Eubanks demonstrated that Levert's claims arise from a function that would entitle her to State-agent immunity, i.e.,
"(2) exercising . . . her judgment in the administration of a department or agency of government, including ... examples such as:
. . . .
"(d) . . ., assigning, or supervising personnel; or
"(3) discharging duties imposed on a department or agency by statute, rule, or regulation, insofar as the statute, rule, or regulation prescribes the manner for performing the duties and the State agent performs the duties in that manner. . . ."
Cranman, 792 So.2d at 405. Levert, however, produced testimony that, if believed, would prove that Eubanks acted willfully, maliciously, fraudulently, in bad faith, or beyond her authority in failing to properly act on Wilson's report, thus satisfying her burden of proof under Giambrone v. Douglas, 874 So.2d 1046, 1052 (Ala.2003). We conclude that a genuine issue of material fact exists as to whether Eubanks is entitled to State-agent immunity; therefore, her petition for a writ of mandamus is due to be denied.
B. Case No. 1090781Tyshelle Wilson
Wilson maintains that she placed her report of her on-call investigation of Levert's allegations concerning M.S. in Eubanks's box in her office where such reports were to be placed; therefore, she argues, she cannot be held responsible for the failure of other DHR workers to investigate Levert's report of the alleged abuse of her grandson before M.S.'s death. Wilson consistently testified that she prepared and turned in the report during the early morning hours after she had visited the mother's house and had obtained the copies of the records relating to M.S.'s hospital visit and that her responsibility ended there. She stated that if Eubanks did not see the report, she does not know what happened to it. Levert argues that Wilson had a duty to turn in her on-call report before 7:30 a.m. on the business day next following the completion of the report. Because the trial court found a factual dispute involving whether the report had been properly submitted, it concluded that Wilson was not entitled to State-agent immunity. We agree.
*484 As previously discussed, Wilson adamantly testified that she turned in her on-call report concerning her initial investigation of Levert's report of alleged abuse of M.S.; Eubanks just as adamantly testified that she never saw the report. This discrepancy clearly presents a genuine issue of material fact. If the jury believes Wilson's testimony that she turned in the report on M.S. with her report on the teenager whose case she also handled while on call on the night of October 5, 2007, and disbelieves Eubanks, the jury could conclude that Wilson turned in the report and that Eubanks was responsible for the failure to further investigate that followed. Likewise, as previously noted, testimony from Henderson and Walter indicating that Eubanks instructed them to enter Wilson's notes into their reports after M.S.'s death supports an inference that Wilson had turned in the report and that Eubanks misplaced or mishandled it. However, if the jury believes Eubanks's testimony that she never saw Wilson's report and, thus, never had any reason to know that further investigation into Levert's allegations was necessary, the jury could conclude that Wilson's failure to turn in her report or her mishandling of the report in the process of turning it in resulted in the failure to further investigate Levert's allegations of abuse. We reiterate that such factual disputes cannot be resolved at the summary-judgment stage of the proceedings.
Wilson demonstrated that Levert's claims arise from a function that would entitle her to State-agent immunity, i.e., "(3) discharging duties imposed on a department or agency by statute, rule, or regulation, insofar as the statute, rule, or regulation prescribes the manner for performing the duties and the State agent performs the duties in that manner. . . ." Cranman, 792 So.2d at 405. Levert, however, produced testimony that, if believed, would prove that Wilson acted willfully, maliciously, fraudulently, in bad faith, or beyond her authority in failing to properly turn in her report, thus satisfying her burden of proof under Giambrone, 874 So.2d at 1052. We conclude that a genuine issue of material fact exists as to Wilson's entitlement to State-agent immunity; therefore, her petition for a writ of mandamus is due to be denied.
IV. Conclusion
In case no. 1090762, we conclude that Jones, Henderson, and Walter are entitled to State-agent immunity, and we grant the petition as to them; we deny the petition as to Eubanks's claim that she is entitled to State-agent immunity. In case no. 1090781, we deny the petition as to Wilson's claim that she is entitled to State-agent immunity.
1090762PETITION GRANTED AS TO JONES, HENDERSON, AND WALTER AND DENIED AS TO EUBANKS; WRIT ISSUED.
1090781PETITION DENIED.
COBB, C.J., and STUART, BOLIN, and MURDOCK, JJ., concur.
NOTES
[1] The other DHR workers Levert sued were Janice King, Toni Dollar, Angela Lacy McClintock, Catherine Denard, Terry Beasley, Renecia Swoopes, and Deborah Key. The trial court entered summary judgments in their favor; Levert has not appealed from those judgments.
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3 P.3d 711 (2000)
2000 OK CIV APP 44
Jennifer Lane SPIELMANN, Appellee
v.
Matthew R. HAYES, a minor, By and Through Terri HAYES, parent, Appellant.
No. 93,196.
Court of Civil Appeals of Oklahoma, Division No. 4.
March 7, 2000.
John E. Rooney, Kurston P. McMurray, Moyers, Martin, Santee, Imel & Tetrick, Tulsa, Oklahoma, for Appellee.
J. Townley Price, Tulsa, Oklahoma, for Appellant.
Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 4.
*712 OPINION
GOODMAN, C.J.
¶ 1 This is Matthew R. Hayes' (Student) appeal from the trial court's May 17, 1999, order requiring Student not to harass, threaten, or abuse Appellee Jennifer Spielmann (Teacher), after Student allegedly left a threatening message on Teacher's voice mail system. Student contends Teacher lacked standing to seek a restraining order and failed to provide sufficient evidence to support the order, and the trial judge's decision to issue a continued temporary restraining order rather than dissolve the order was erroneous. Based upon our review of the record and applicable law, we affirm.
Facts
¶ 2 Teacher is Student's 7th Grade science teacher at Union School in Tulsa, Oklahoma. Sometime on the weekend of April 24 or 25, 1999, a message was left on Teacher's voice mail system at the school. The message, according to Student's brief, stated:
This is your secret admirer. All the kids from yesterday and today better not get in trouble and go to the office. 'Cause if they do go to the office, the kids or anybody, *713 your husband is gonna be dead meat and I swear to God this is true. I'll give you a clue, I'm in your second hour. I know your husband. He will not live very long if you do not do what I say. Thank you for your attention.
¶ 3 Teacher retrieved the message and heard it Monday, April 26, 1999. She contacted the principal and two other administrators. Teacher did not immediately recognize the voice, explaining that she was upset when she initially heard it. But by Tuesday she was able to identify the voice as that belonging to Student. Student was expelled from school.
¶ 4 On May 3, 1999, Teacher, on behalf of herself and her husband, filed a petition for a protective order against Student only. Teacher stated that Student threatened imminent physical harm and stalked or harassed her and her husband. She requested Student not come to school. An amended petition for a protective order was filed May 3, 1999, by Teacher only. It named Student and Student's parent as defendants. The allegations in the amended petition remained the same as those set out in the original petition.
¶ 5 On May 17, 1999, the trial court conducted an evidentiary hearing. Student was represented by counsel; Teacher was pro se. At the conclusion of the hearing, the trial court continued the emergency protective order, which was filed May 17, 1999, ordering Student not to abuse, injure, visit, threaten, or harass Teacher. Student was ordered to stay away from Teacher at all times. Student was notified that the trial court would conduct a hearing for a permanent protective order August 29, 1999.
¶ 6 Student filed a timely petition in error June 15, 1999, raising several issues. We address each in turn. Student filed a brief in chief; Teacher filed a notice waiving her right to file a reply brief, citing Supreme Court Rule 1.10(a)(5), 12 O.S. Supp.1998, ch. 15, app. 1. The matter stands submitted on the brief of Student and the designated record.
Standard of Review
¶ 7 Because Student contends the trial court erred in its application of a statute to the facts presented at trial, we review using a de novo standard.
¶ 8 As to legal issuese.g. the meaning and intent of legislative enactmentsa different standard of review applies. Legal questions are reviewed de novo and an appellate court has plenary, independent, and non-deferential authority to reexamine a trial court's legal rulings. See Neil Acquisition, L.L.C. v. Wingrod Investment Corp., 1996 OK 125, ¶ 4, 932 P.2d 1100, 1103 n. 1.
¶ 9 Review of law is called "de novo," which means no deference, not necessarily a full rehearing or new factfinding. Bose Corp. v. Consumers Union of United States, Inc., 466 U.S. 485, 104 S. Ct. 1949, 80 L. Ed. 2d 502 (1984).
Issues
Lack of Standing
¶ 10 Student first contends Teacher lacked standing to obtain a protective order against him, noting the verbal threat was directed to Teacher's husband, but not Teacher. Consequently, student argues Teacher was not a victim of harassment as defined by the Protection From Domestic Abuse Act, 22 O.S. Supp.1998, §§ 60.1 through 60.11(Act), which defines those persons who may invoke its protections.
¶ 11 Title 22 O.S. Supp.1998, § 60.2, states:
A. A . . . victim of harassment, . . . may seek relief under the provisions of the Protection from Domestic Abuse Act.
¶ 12 Harassment is defined in 22 O.S. Supp.1998, § 60.1(3), which states:
"Harassment" means a knowing and willful course or pattern of conduct by . . . [a] minor thirteen (13) years of age or older, directed at a specific person which seriously alarms or annoys the person, and which serves no legitimate purpose. The course of conduct must be such as would cause a reasonable person to suffer substantial emotional distress, and must actually cause substantial distress to the person. "Harassment" shall include, but not be limited *714 to, harassing or obscene telephone calls in violation of Section 1172 of Title 21 of the Oklahoma Statutes and fear of death or bodily injury;
¶ 13 We hold Teacher had standing under the Act and was entitled to seek its protection.[1] The Act specifically prohibits "a knowing and willful course or pattern of conduct by . . . [a] minor thirteen (13) years of age or older, directed at a specific person which seriously alarms or annoys the person, and which serves no legitimate purpose." Student's argument ignores the clear fact that the harassment experienced by Teacher consisted of Student's knowing and willful course of conduct of choosing to leave a voice mail message containing an articulated death threat, which alarmed Teacher, caused her actual substantial emotional distress, and served no other legitimate purpose than to require Teacher to alter her course of conduct and not send any student to the office in order to avoid the death of her husband. Student's argument that only the target of the death threat itself can have standing ignores the impact of that message on the one who actually received it, and to whom the message is clear: don't discipline students under penalty of death. This proposition of error is without merit.
Lack of Evidence Teacher Was Harassed
¶ 14 Student next contends the record does not support the trial court's conclusion Teacher was the victim of abuse, harassment, or stalking. Because Teacher only sought relief from harassment, we do not address Student's arguments relating to abuse or stalking. We have already addressed the standing of Teacher to seek protection under the Act for harassment. We conclude our review of this proposition of error by noting that once Teacher was able to calmly listen to the voice recording, she was the first to identify the voice as that of Student. She testified she was familiar with Student's voice, and was able to identify it without doubt. Because Student did not present any evidence contradicting that of Teacher, we conclude the record supports the trial court's conclusions.
Continued Emergency Protective Order
¶ 15 Student contends once a trial on the merits is conducted, the trial court may either issue a protective order or dissolve the order. The trial court's use of a "continued protective order" is, according to Student, unsupported by law. Student's argument overlooks 22 O.S. Supp.1998, § 60.4(G), which states:
G. Any protective order issued pursuant to subsection C [an order to cease harassment] of this section shall not be for a fixed period but shall be continuous until modified or rescinded upon motion by either party or if the court approves any consent agreement entered into by the plaintiff and defendant.
¶ 16 This proposition of error is without merit.
¶ 17 We conclude the order under review is supported by law and the evidence, and the trial court's order of May 17, 1999, is affirmed.
¶ 18 AFFIRMED.
¶ 19 STUBBLEFIELD, J., and REIF, J., concur.
NOTES
[1] See also, Baker v. Mason, 1998 OK CIV APP 60, 958 P.2d 808, which held the trial court had authority under the Protection from Domestic Abuse Act to issue victims' protective order prohibiting a university student from contacting a secretary for the university's president at her place of employment, though there was no relationship between the student and secretary.
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3 P.3d 857 (2000)
UNICORN DRILLING, INC., a Wyoming corporation, Appellant (Plaintiff),
v.
HEART MOUNTAIN IRRIGATION DISTRICT; The Board of Directors and Commissioners of the Heart Mountain Irrigation District; and Dean House, Appellees (Defendants).
No. 98-122.
Supreme Court of Wyoming.
April 7, 2000.
Representing Appellant: R.E. Rauchfuss and Frank R. Chapman of Beech Street Law Offices, Casper, Wyoming.
Representing Appellees: Mark L. Carman of Williams, Porter, Day & Neville, P.C., Casper, Wyoming, and Michael McCarty and Mary Helen Reed of McCarty & Reed, Cody, Wyoming.
*858 Before LEHMAN, C.J., and THOMAS, MACY, GOLDEN, and HILL, JJ.
THOMAS, Justice.
The major issue in this case is whether Unicorn Drilling, Inc. (Unicorn) has the right to use a section of a road, which is part of the canal works operated by Heart Mountain Irrigation District (the District), for access to its oil and gas operations. The district court granted a Motion for Summary Judgment presented by the District, and, at the same time denied a Motion for Summary Judgment presented by Unicorn. The district court concluded that Unicorn had failed, as a matter of law, to establish its right to use the road. The district court specifically ruled that Unicorn had failed to sustain its theories of easement by prescription, implied easement, and/or a license coupled with an interest because all of the theories would result in a private entity obtaining a right or interest in land held by a governmental entity through operation of law. We hold that the record encompasses genuine issues of material fact relating to the contractual rights of Unicorn to use the road; the acquisition of a right of use as a matter of law against the District; and the facts relating to the historic use of the road so that the entry of a summary judgment was not appropriate. The Order Granting Defendants' Motion for Summary Judgment and Denying Plaintiff's Motion for Summary Judgment is reversed, and the case is remanded for further proceedings in accordance with this opinion.
This statement of the issues is found in the Appellant's Brief:
A. Is Plaintiff entitled to access because an express, implied or quasi easement by grant or implication for ingress and egress into its Federal Oil and Gas Lease existed pursuant to Mountain Fuel Supply Co. v. Smith, 471 F.2d 594 (10th Cir.1973); Kinney-Coastal Oil Company v. Kieffer, 277 U.S. 488, 48 S. Ct. 580, 72 L. Ed. 961 (1928); and Transwestern Pipeline Co. v. Kerr-McGee Corp., 492 F.2d 878 (10th Cir.1974)?
B. Does the trial court lack jurisdiction and is it preempted from taking away Plaintiff's right-of-way to a federal lease approved by the Department of the Interior?
C. Did the trial court err in granting summary judgment denying Plaintiff access to its federal oil and gas lease pursuant to the 1890 Canal Act (43 U.S.C. § 945) without evidence in the record that Plaintiff's use of the canal road interfered with or was inconsistent with the operation and maintenance of the canal or its delivery of water and only upon a finding that the fears of Defendants were "reasonable?"
D. Did the trial court err in granting summary judgment to Defendants since the locked gate and a major portion of the road are located on private property and an irrevocable license coupled with an interest was acquired by Plaintiff?
E. Did the trial court err in granting summary judgment to Defendants as Defendant Heart Mountain Irrigation District approved access or waived their rights to close the road, which equitably estops them from blocking Plaintiff's access and are they barred by the statute of limitations or laches in blocking Plaintiff's usage of the canal road?
F. Did the trial court err in granting summary judgment to Defendants since the locked gate and the road are located on private property and a prescriptive easement exists?
G. Did the trial court err in granting summary judgment to Defendants because a county road or right-of-way across public lands exists pursuant to 43 U.S.C. § 932?
H. Did the trial court err in its finding that:
1. "Each of the legal theories propounded by Plaintiff would result in a private entity obtaining a right or interest in land held by a government entity?"
2. "Plaintiff has not established necessity for usage of the canal road?"
3. "The concerns of the Irrigation District are reasonable?"
I. Based on the record, is either party entitled to summary judgment as a matter of law?
*859 This Statement of the Issues is found in the Appellees' Brief:
I. Did the district court have subject matter jurisdiction?
II. Do governmental statutes or regulations give Unicorn the right to use the canal road to access its federal mineral lease?
A. Mineral Leasing Act of 1920, 30 U.S.C. §§ 181, et seq.;
B. Canal Act of 1890, 43 U.S.C. § 945;
C. Unlawful Inclosures Act, 43 U.S.C. §§ 1061, et seq.; and
D. 43 U.S.C. §§ 932, (R.S. 2477) Repealed by Act Oct. 21, 1976, 90 Stat. 2793, and COUNTY ROAD.
III. Do the actions of Unicorn or Heart Mountain give Unicorn the right to use the canal road to access its federal mineral lease?
A. Express, implied or quasi easement.
B. Irrevocable license coupled with an interest.
C. Equitable estoppel, waiver, laches.
This dispute developed between the lessee under a federal oil and gas lease, Unicorn, and an irrigation district, Heart Mountain, which has contracted with the United States to operate and maintain, and eventually to acquire, the reclamation and irrigation project. The history of the competing interests, both deriving their rights from the same sovereign, is of assistance in gaining a perspective for the contentions of the parties.
Early in the twentieth century, the United States Congress authorized reclamation and irrigation projects in the Reclamation Act of 1902. In 1916, the Secretary of the Interior withdrew Sections 7 and 8 of Township 53 North, Range 101 West, the land that encompasses the road and the oil wells in this case, from public entry. These lands were withdrawn in connection with the implementation of the Shoshone Reclamation Project. In 1938, the United States built the Heart Mountain Canal, a part of the Shoshone Reclamation Project, through Sections 7 and 8. The section of the canal road at issue closely parallels part of the canal, and it also was constructed in 1938. Since its construction, the road has been used in the operation and maintenance of the canal. On December 1, 1958, the United States and the District signed a contract for the operation and maintenance of the Heart Mountain Canal, which also provided for its eventual transfer to the District.
In 1920, the United States issued a prospecting permit to a group of individuals, allowing them to search for oil and gas on the subject land. On July 18, 1938, the same year that the Heart Mountain Canal and the canal road were built, the United States issued the first oil and gas lease on the subject land to one of the individuals named in the prospecting permit. That person, in turn, sold his interest in the lease to Husky Oil Co. on August 25, 1943. Husky Oil completed a well in 1962, and another in 1963. Husky Oil then sold its interest to Marathon Oil, which sold its interest to Unicorn on August 7, 1992. The section of the road in dispute lies entirely within the boundaries of Unicorn's lease. Since 1962, Unicorn and its predecessors have driven tanker trucks over the canal road to reach the wells and transport oil from them. It is the only road that has been used by the oil and gas lessees.
By two separate patents, one in 1956 and one in 1957, the United States granted parcels of land in Sections 7 and 8 to a homesteader, reserving the oil and gas, the right to prospect and remove the oil and gas, and a right of way for canals. Those two parcels, after intervening conveyances, were acquired by the present owner on January 23, 1978. Portions of the canal road and a second road that reaches Unicorn's wells and storage tanks road, alluded to as the alternate road, are located on that land. On October 21, 1988, the current owner granted the District an easement to use the canal road for operation and maintenance of the canal.
District officials asserted that they first became aware that Unicorn was using the canal road to haul crude oil in tanker trucks in the summer of 1994. That information led to a concern that a tanker truck accident might result in an oil spill in the canal and contamination of thousands of acres of crops. A District employee contacted Unicorn to ask that the trucks use the alternate road, but *860 Unicorn refused, saying the alternate road had two sharp turns the heavy trucks could not safely negotiate, was blocked by snow much of the winter, and was under water when the property owner irrigated. The District was not able to negotiate a satisfactory solution with Unicorn, and the District constructed a gate across the road, which it locked in October of 1995. The gate was located on the land of the present surface owners, apparently because it was the most convenient site. Unicorn and its predecessors in interest had a lease agreement with the surface owners which permitted the use of the land for all purposes necessary or convenient with the exercise and enjoyment of its rights under the federal lease.
Unicorn filed a Petition for Preliminary and Permanent Injunction on November 20, 1995, asking the district court to enjoin the District from barring Unicorn's access to the canal road. The district court issued a temporary restraining order on March 6, 1996. After extensive briefing, a hearing, and a viewing, the district court granted summary judgment to the District. The district court determined that there were no issues of material fact, and that each theory upon which Unicorn sought relief would impermissibly result in Unicorn obtaining a right or interest in land held by a governmental entity. The district court also found as a fact that the District's concerns over a possible oil spill into the canal were reasonable. Unicorn filed a timely appeal with this Court.
Recently, we summarized our review function in cases involving summary judgments in this way:
Summary judgment is proper only when there are no genuine issues of material fact and the prevailing party is entitled to judgment as a matter of law. Mountain Cement Co. v. Johnson, 884 P.2d 30, 32 (Wyo. 1994); W.R.C.P. 56(c). We review a summary judgment in the same light as the district court, using the same materials and following the same standards. "We examine the record from the vantage point most favorable to the party opposing the motion, and we give that party the benefit of all favorable inferences which may fairly be drawn from the record." Four Nines Gold, Inc. v. 71 Constr., Inc., 809 P.2d 236, 238 (Wyo.1991). Summary judgment serves the purpose of eliminating formal trials where only questions of law are involved. Blagrove v. JB Mechanical, Inc., 934 P.2d 1273, 1275 (Wyo.1997); England v. Simmons, 728 P.2d 1137, 1141 (Wyo. 1986). We review a grant of summary judgment by deciding a question of law de novo and afford no deference to the district court's ruling on that question. Sammons v. American Auto. Ass'n, 912 P.2d 1103, 1105 (Wyo.1996); Blagrove, 934 P.2d at 1275.
Gray v. Norwest Bank Wyoming, N.A., 984 P.2d 1088, 1091 (Wyo.1999). A material fact is any fact that, if proved, would have the effect of establishing or refuting an essential element of a claim or defense asserted by a party. Century Ready-Mix Co. v. Campbell County School Dist., 816 P.2d 795, 799 (Wyo. 1991).
This case is an unusual real property dispute because neither party claims to own the surface of the land. Instead, Unicorn and the District each claim a non-possessory interest in private land each of which originated from the federal government. Pursuant to 43 U.S.C. § 945,[1] the United States has a perpetual easement over the private owner's land for construction, maintenance, and operation of the canal. Northern Pac. Ry. Co. v. United States, 277 F.2d 615, 618, appeal dismissed, 287 F.2d 884 (10th Cir.1960); Green v. Wilhite, 14 Idaho 238, 93 P. 971, 973 (1908). The United States has assigned its right of way under 43 U.S.C. § 945 to the District. The parties agree that, pursuant to 43 C.F.R. § 3101.1-2,[2] Unicorn has the right *861 to access its oil and gas lease and to transport the oil. The dispute places in question the District's right to prevent Unicorn from using the canal road.
The District's right-of-way is not exclusive; the landowners and third parties with the landowners' permission may use the road if their use is not inconsistent with the operation and maintenance of the canal. The United States Department of the Interior also has the right to reach the canal for inspections. As a matter of law, we hold that Unicorn, as a federal lessee, is within the class of parties who may use the canal road, provided they do so in a manner consistent with the operation and maintenance of the canal. Thus, the question becomes not whether Unicorn can acquire an easement against the federal government, but whether Unicorn's use of the road is consistent with the operation and maintenance of the canal.
That question is an issue of fact, and it concerns a material fact. The question cannot be resolved merely because the District says Unicorn's use is not consistent with the operation and maintenance of the Heart Mountain Canal. The district judge went to the land in question to view the canal road and made a factual finding that the District's concerns about an oil spill were reasonable. The record, however, contains substantial evidence, admissible at a trial, that Unicorn and its predecessors in interest had used the canal road for the same purpose for a long number of years without any adverse consequences. The district court did not explain how its viewing, or any of the evidence presented, supported the finding that the concerns of the District were reasonable. We find nothing in the record demonstrating the reasonableness of the concern. The only evidence presented on the potential for an oil spill was to the effect that there is "no real probability that an oil truck would go into the canal" and that in the unlikely event one did, there is "no reasonable probability the vessel would rupture or spill oil into the canal."
Since an unresolved genuine issue of material fact exists as to whether the continued use of the canal road by Unicorn is consistent with the operation and maintenance of the canal, we hold that summary judgment was not appropriate in this case. The Order Granting Defendant's Motion for Summary Judgment and Denying Plaintiff's Motion for Summary Judgment is reversed, and the case is remanded to the district court for further proceedings consistent with this opinion.
NOTES
[1] 43 U.S.C. § 945 reads:
In all patents for lands taken up after August 30, 1890, under any of the land laws of the United States or on entries or claims validated by this act west of the one hundredth meridian, it shall be expressed that there is reserved from the lands in said patent described, a right of way thereon for ditches or canals constructed by the authority of the United States.
[2] 43 C.F.R. § 3101.1-2 reads, in relevant part:
A lessee shall have the right to use so much of the leased lands as is necessary to explore for, drill for, mine, extract, remove and dispose of all the leased resource in a leasehold[.]
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360 S.W.3d 511 (2008)
Christa C. LENK, Administratrix of the Estate of John Albert Thompson, Appellant,
v.
GUARANTY BANK, Appellee.
No. 04-07-00503-CV.
Court of Appeals of Texas, San Antonio.
July 2, 2008.
Rehearing Overruled September 15, 2008.
*513 S. Mark Murray, Law Office of S. Mark Murray, Inc., Don Krause, Bayne, Snell & Krause, P.C., San Antonio, TX, for Appellant.
Michael L. Dinnin, Tricia R. DeLeon, Bracewell & Giuliani, L.L.P., Dallas, TX, Richard C. Danysh, Bracewell & Giuliani L.L.P., San Antonio, TX, for Appellee.
Sitting: KAREN ANGELINI, Justice, REBECCA SIMMONS, Justice, STEVEN C. HILBIG, Justice.
MEMORANDUM OPINION
Opinion by: KAREN ANGELINI, Justice.
This is an appeal from an order granting Guaranty Bank's partial motion for summary judgment and denying the administratrix of the estate of John Albert Thompson, Christa C. Lenk's ("Lenk"), partial motion for summary judgment. We reverse the trial court's judgment.
FACTUAL AND PROCEDURAL BACKGROUND
On January 30, 2000, John Albert Thompson ("Thompson") died leaving approximately $3,026.33 in an account at Guaranty Bank. On or about March 23, 2000, Melvyn Morris Spillman ("Spillman"), a former Bexar County clerk, falsely represented to Guaranty Bank that he was Thompson's nephew and the administrator for Thompson's estate. Spillman provided forged letters of administration to Guaranty Bank, as well as a death certificate, and requested that he be named on Thompson's account. After Guaranty Bank named Spillman on the account, Spillman made two deposits: one for $3,356.05; and a second for $164,064.99. The check for $164,064.99 was made payable to "the Estate A. [sic] Thompson, Mel Spillman, Administrator." Spillman then began withdrawing funds and by August 17, 2001, had withdrawn all but $40.00 of the funds on deposit in Thompson's account. As a result, on or about September 13, 2001, the account was closed.
In September of 2003, after the fraudulent schemes of Spillman came to light, Lenk was appointed to serve as the administratrix of Thompson's estate. On June 4, 2005, Lenk made written demand upon Guaranty Bank for $163,064.99 "plus any other sums belonging to Mr. Thompson on deposit since the date of his death on January 30, 2000." When Guaranty Bank informed Lenk there were no funds left in Thompson's account to disburse, Lenk sued for breach of the deposit agreement, seeking actual damages, interest, and attorneys' fees. A separate suit was also filed against Spillman, alleging fraud, theft and conversion; however, Guaranty Bank joined Spillman to the suit filed against it, arguing that Spillman was the sole cause of Lenk's alleged damages.
*514 Both parties filed motions for summary judgment; the trial court denied Lenk's partial motion for summary judgment but granted Guaranty Bank's motion for partial summary judgment. Spillman was subsequently nonsuited, resulting in a final, take-nothing summary judgment in favor of Guaranty Bank upon Lenk's claim for breach of the deposit contract.
In two issues on appeal, Lenk argues that the trial court erred in granting Guaranty Bank's motion for summary judgment and in denying her motion for summary judgment.
STANDARD OF REVIEW
When the order granting summary judgment does not specify the grounds upon which the trial court relied, we must affirm the judgment if any of the theories raised in the motion for summary judgment are meritorious. See State Farm Fire & Cas. Co. v. S.S., 858 S.W.2d 374, 380 (Tex.1993). We review the trial court's summary judgment de novo. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex.2003).
To obtain a traditional summary judgment, a party moving for summary judgment must show that no genuine issue of material fact exists and that the party is entitled to judgment as a matter of law. TEX.R. CIV. P. 166a(c); Randall's Food Mkts., Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex.1995); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex.1985). In reviewing the grant of a summary judgment, we must indulge every reasonable inference and resolve any doubts in favor of the respondent. Johnson, 891 S.W.2d at 644; Nixon, 690 S.W.2d at 549. In addition, we must assume all evidence favorable to the respondent is true. Johnson, 891 S.W.2d at 644; Nixon, 690 S.W.2d at 548-49. A defendant is entitled to summary judgment only if the evidence disproves as a matter of law at least one element of the plaintiff's cause of action. Lear Siegler, Inc. v. Perez, 819 S.W.2d 470, 471 (Tex.1991). Once the movant has established a right to summary judgment, the burden shifts to the respondent to present evidence that would raise a genuine issue of material fact. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979).
Here, Lenk is appealing not only the trial court's order granting Guaranty Bank's motion for summary judgment, but also the trial court's order denying her motion for summary judgment. When both sides move for summary judgment on the same issue and the court grants one but denies the other, the denial is reviewable as a part of the appeal from the granted motion. See Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex.2005); Basse Truck Line, Inc. v. First State Bank, 949 S.W.2d 17, 22 (Tex.App.-San Antonio 1997, writ denied). If we determine that the trial court erred, we render the judgment the trial court should have rendered after considering the summary judgment evidence presented by both sides, and determining all questions presented. See Valence Operating Co., 164 S.W.3d 656, 661 (Tex.2005) (citing FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex.2000)).
APPLICABLE LAW
A deposit contract between a bank and an account holder is considered a contract in writing for all purposes. TEX. FIN.CODE ANN. § 34.301 (Vernon 1998 & Supp. 2007). The elements of a breach of a contract claim are: (1) a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach by the defendant; and (4) damages sustained by the plaintiff as a result of the breach. MG Bldg. Materials, Ltd. v. Moses Lopez Custom *515 Homes, Inc., 179 S.W.3d 51, 61 (Tex. App.-San Antonio 2005, pet. denied); McLaughlin, Inc. v. Northstar Drilling Tech., Inc., 138 S.W.3d 24, 27 (Tex.App.-San Antonio 2004, no pet.). In suits to recover deposits, the bank has the burden of proving payment under authority from the depositor and is obligated to pay out funds on deposit according to the directions of the depositor. See Mesquite State Bank v. Prof'l Inv. Corp., 488 S.W.2d 73, 75 (Tex.1972).
Bank deposits are typically classified as either "general deposits" or "special deposits." See Hodge v. Northern Trust Bank of Texas, N.A., 54 S.W.3d 518, 522 (Tex.App.-Eastland 2001, pet. denied) (citing Bandy v. First State Bank, 835 S.W.2d 609, 618-19 (Tex.1992)). A general deposit of money with a bank typically creates a creditor-debtor relationship between the depositor and the bank with title to the money passing to the bank, subject to the depositor's demand for payment. See id.; see also Mesquite State Bank, 488 S.W.2d at 75-76. A "special deposit," on the other hand, creates a bailor-bailee relationship, and the bank keeps or conveys identical property or funds entrusted to it. See Hodge, 54 S.W.3d at 522.
"[W]hen a bank makes a `wrongful payment' from a general deposit, there is no violation of the deposit agreement because the bank has title to the funds." Id. at 525-26. This is because the general depositor is a creditor of the bank, and it is only upon the bank refusing a demand for payment of the general deposit that the bank breaches its relationship with the depositor. See id. at 526. Thus, an action for breach of a depository agreement does not begin to run against the depositor until demand is made and refused or an adverse claim is asserted. See id. at 524 (citing Hinds v. Southwestern Sav. Ass'n, 562 S.W.2d 4 (Tex.Civ.App.-Beaumont 1977, writ ref'd n.r.e.)).
DISCUSSION
Lenk initially filed a motion for partial summary judgment, asserting that "[t]he Summary Judgment evidence in this case establishes that there is no genuine issue of material fact regarding [Lenk's] claim against [Guaranty Bank], and that [Lenk] is entitled to judgment upon her claim of breach of contract as a matter of law." Specifically, Lenk maintained that following Thompson's death on January 30, 2000, she was the only person to qualify as the personal representative of the estate, having done so on September 24, 2003. Therefore, Lenk argued, on June 4, 2005, when she made written demand upon Guaranty Bank for "all sums on deposit or deposited in Decedent's account on and since the date of his death" and Guaranty Bank refused to pay, Guaranty Bank breached the terms of the depositor's agreement as a matter of law.
Guaranty Bank admits that the parties had a valid contract and that Thompson performed or tendered performance of the contractual obligation by virtue of his deposit of money into the bank; however, Guaranty Bank disputes that it breached this contract or that it caused the damages in question. However, Thompson's deposit was a general deposit of money creating a creditor-debtor relationship between Thompson and Guaranty Bank with title to the money passing to Guaranty Bank, subject to Thompson's demand for payment. See Hodge, 54 S.W.3d at 522. Upon Thompson's death, Guaranty Bank became indebted to Thompson's estate in the amount of the deposit. Young v. Marlin Nat'l Bank, 458 S.W.2d 506, 507 (Tex.Civ. App.-Waco 1970, writ ref'd n.r.e.). Therefore, Guaranty Bank was required to ensure that payment was made to Thompson's *516 duly appointed legal representative, and "payment to any other person [was] at the peril of the bank." See id. (holding that bank's payment to adjudicated heirs of the deceased did not relieve the bank of its liability to the duly appointed legal representative of the deceased depositor).
Thus, when Lenk, the administrator for Thompson's estate, and "duly appointed legal representative," made a demand for payment, Guaranty Bank was required to tender the amount of the deposit to Lenk. See id. Guaranty Bank failed to do so but nevertheless, argues that no breach resulted from this failure because when demand for payment was made, Thompson's account was closed and no funds remained in the account. However, in this suit to recover deposits, the burden was on Guaranty Bank to prove payment under Thompson's authority. See Mesquite State Bank, 488 S.W.2d at 75. Guaranty attempted to meet this burden by presenting evidence that it relied upon forged documents presented by Spillman in paying Spillman the funds in Thompson's account. Nevertheless, as Lenk, and not Spillman, was the duly appointed legal representative, Guaranty Bank's payment to Spillman did not relieve Guaranty Bank of its indebtedness to Thompson's estate in the full amount of the deposit. See Young, 458 S.W.2d at 507. Finally, Guaranty Bank asserts that because the bulk of the money was deposited after Thompson's death by Spillman who later withdrew this money, the "bank cannot be in debt to the customer for more than what the customer has deposited into his account." We disagree.
It is well settled that where a person makes a deposit in the name of another, the bank becomes the debtor of the person for whom and in whose name the deposit is made, and the funds cannot be withdrawn by the person making the deposit unless it is proven that he, instead of the person in whose name the deposit was made, is the actual owner of the funds. Peavy-Moore Lumber Co. v. First Nat'l Bank, 133 Tex. 467, 128 S.W.2d 1158, 1162 (Tex. Comm'n App.1939). Further, once the depositor, or his duly appointed legal representative, proves the balance in his account and sues the bank for this amount, the bank must justify its withdrawal from the depositor's account. Sears v. Continental Bank & Trust Co., 562 S.W.2d 843, 844 (Tex.1977) (citing Mesquite State Bank, 488 S.W.2d at 75-76).
Here, the summary judgment evidence reflects that the $164,064.99 check from Charles Schwab, that was deposited into Thompson's account by Spillman, was payable to "The Estate A. Thompson, Mel Spillman, Administrator." And although it is unclear to whom Spillman's first deposit, in the amount of $3,356.05, was made payable to, it was clearly deposited into the estate's account. Thus, the funds belonged to Thompson's estate and should only have been paid to the duly appointed legal representative of Thompson's estate, which, in this case, was Lenk rather than Spillman. See Peavy-Moore Lumber Co., 133 Tex. at 476, 128 S.W.2d at 1162; Young, 458 S.W.2d at 507. As no evidence was presented controverting the estate's ownership of the funds, Lenk was entitled to recover "all sums on deposit or deposited in Decedent's account on and since the date of his death." This amount accurately reflects the proper measure of damages. See Qaddura v. Indo-European Foods, Inc., 141 S.W.3d 882, 888-89 (Tex.App.-Dallas 2004, pet. denied) (explaining that plaintiff suing for breach of contract can recover the benefit of the bargain by putting the plaintiff in as good a position as it would have been if the contract had been performed).
CONCLUSION
We conclude that Lenk established the elements of a breach of contract case as a *517 matter of law. Accordingly, we reverse the trial court's judgment and render judgment for Lenk, Administrator of the Estate of Thompson, in the amount of $148,430.28.[1]
NOTES
[1] Appellant states in her brief that although the amount originally claimed was $168,371.04, a written trial amendment was offered and agreed to reducing the amount of plaintiff's claim to $148,430.28.
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358 S.W.3d 514 (2011)
William and Suzanne STONER, Appellants,
v.
DIRECTOR OF REVENUE, State of Missouri, Respondent.
No. WD 73415.
Missouri Court of Appeals, Western District.
December 6, 2011.
As Modified on Denial of Rehearing January 31, 2012.
*516 Raymond I. Plaster, Springfield, MO, for Appellants.
Chris Koster, Attorney General, Mark E. Long, Assistant Attorney General, Jefferson City, MO, for Respondent.
Before Division II: MARK D. PFEIFFER, Presiding Judge, and JOSEPH M. ELLIS and VICTOR C. HOWARD, Judges.
MARK D. PFEIFFER, Presiding Judge.
William and Suzanne Stoner appeal from the judgment of the Circuit Court of Cole County, Missouri ("trial court"), in favor of the Director ("Director") of the Missouri Department of Revenue ("MO-DOR") on the Director's claim against the Stoners for breach of a 2007 delinquent tax repayment agreement that the Stoners entered into for the repayment of delinquent 1993 and 1994 tax debts. We affirm.
Factual and Procedural Background[1]
William and Suzanne Stoner, husband and wife, were part owners of Branson Hills Associates, LP, and Croston-Everett *517 Development Corporationtwo businesses that bought and developed land outside of Branson, Missouri, in the early 1990s. The companies intended to turn the land into a mixed-use planned community. But the land-development deals eventually turned sour, causing the Stoners' businesses to close in 1996. After the businesses closed, the Internal Revenue Service ("IRS") audited the Stoners.
In November and December 2001, the IRS determined that the Stoners owed additional taxes for tax years 1993 and 1994. For tax year 1993, the IRS determined the Stoners owed $118,476.23. For tax year 1994, the IRS determined that the Stoners owed $57,184.80. However, the IRS did not notify the MO-DOR of the increased tax assessment until May 3, 2002.[2] Thereafter, the MO-DOR sent the Stoners two notices of adjustment later in 2002, informing them that they owed back taxes for 1993 and 1994.
In January 2007, the Clerk of the Missouri Supreme Court sent Mr. Stoner, a Greene County attorney, notice that his law license would be suspended for his failure to pay the 1993 and 1994 taxes. On March 1, 2007, the Stoners entered into a repayment agreement ("Delinquent Tax Payment Agreement") to pay the delinquent taxes to the MO-DOR. The Delinquent Tax Payment Agreement signed by the Stoners required payments of $1,000 each month for the months of March, April, and May of 2007, and then a final balloon payment in June 2007 in the amount of $193,638.57.
The Stoners made the first three payments of $1,000, but instead of paying the June 2007 balance-due payment, they filed a petition against the Director on May 29, 2007, seeking a declaration that the Director was time-barred from pursuing collection of the 1993 and 1994 delinquent tax debts and from notifying the Missouri Supreme Court that Mr. Stoner was delinquent on a past tax obligation. The Director responded by filing a counterclaim against the Stoners in August 2007 seeking the remaining payment obligation due under the Delinquent Tax Payment Agreement. After a bench trial, the trial court entered judgment in favor of the Director on all claims by and between the parties. The Stoners timely appeal.
Standard of Review
On appeal from a court-tried civil case, the judgment of the trial court will be sustained "unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law." Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). "Appellate courts should exercise the power to set aside a decree or judgment on the ground that it is `against the weight of the evidence' with caution and with a firm *518 belief that the decree or judgment is wrong." Id.
Point I
In their first point on appeal, the Stoners contend the trial court erred in finding that the statute of limitations on their tax liability did not bar the Director's counterclaim. According to the Stoners, under the "Implementing Agreement for the Agreement on Coordination of Tax Administration" between the IRS[3] and MO-DOR, the Director should have received notice about the IRS determinations of the subject additional tax liability obligations of the Stoners no later than January 2002, not May 2002.[4] Thus, the Stoners argue, the Director's counterclaim was filed outside what they claim to be the applicable statute of limitations.
The statute of limitations is an affirmative defense, and the Stoners bear the burden of proving that it bars the Director's claim. Powel v. Chaminade Coll. Preparatory, Inc., 197 S.W.3d 576, 580 (Mo. banc 2006). The statute begins to run "when the damage resulting therefrom was sustained and capable of ascertainment." Id. Under section 143.861.3,[5] recovery of back taxes shall be pursued by the Director "in the same manner as provided by law in civil actions." A civil action for liability under a statute, other than a penalty or forfeiture, has a statute of limitations of five years. § 516.120(2).[6] The Director's counterclaim, however, did not assert a section 143.861.3 statutory entitlement to payment of delinquent taxes. Instead, the Director sued the Stoners on a breach of contract theory resulting from the Stoners' breach of the written Delinquent Tax Payment Agreement, an agreement subject to a ten-year statute of limitations. § 516.110(1).
While the Director did not file suit against the Stoners pursuant to section 143.861.3 within five years of May 3, 2002the date the trial court expressly concluded that the Director had notice of the Stoners' tax delinquency from the IRSthe Director did enter into a Delinquent Tax Payment Agreement with the Stoners on March 1, 2007. Under the Delinquent Tax Payment Agreement, the Stoners were to make three consecutive monthly $1,000 payments beginning in March 2007 (which they did) and a final lump sum payment of $193,638.57 in June 2007 (which they did not).[7] Thus, the written *519 Delinquent Tax Payment Agreement triggered a ten-year statute of limitations time period under section 516.110(1),[8] and the Director's counterclaim against the Stoners to enforce the written terms of payment of the Delinquent Tax Payment Agreement was clearly filed within the applicable statute of limitations time period.[9]
Point I is denied.
Point II
In their second point on appeal, the Stoners argue that because the Greene and Webster County tax liens filed against them[10] were not converted into judgments under section 143.902, within five years, any claims arising under the liens are time-barred. Because the Director's counterclaim against the Stoners was a breach of contract claim and not a tax lien enforcement claim, the Stoners' second argument on appeal is legally irrelevant. As the following analysis reflects, tax lien enforcement via section 143.902 is cumulative of all other remedies available to the Director for the collection of tax debts.
Under section 143.902.1(2), if a taxpayer does not pay taxes when due and for which there is a final assessment, the Director may file a certificate of lien with the clerk of the county court where the taxpayer lives, owns property, or has a place of business. In this case, the Director filed such liens against the Stoners in Webster and Greene Counties.
Once a lien is filed, the clerk of the circuit court is to "file such certificate and enter it in the record of the circuit court for judgments and decrees." § 143.902.1(2). "From the time of the filing of the certificate of lien ... with the clerk of the circuit court, the amount of the tax, interest, additions to tax and penalties specified therein shall have the full force and effect of a default judgment of the circuit court until satisfied." § 143.902.1(2). "Execution shall issue at the request of the director of revenue or his agent as provided in the case of other judgments." § 143.902.1(2). Further, under section 143.902.1(1), a tax lien "shall expire ten years after the certificate of lien was filed" with the recorder's office. The Director can re-file a tax lien within that ten-year period, extending the lien for another ten years. § 143.902.1(1). Unless the liens are released by the Director, they remain in place for that ten-year period. During that time period, the lien is attached to the Stoners' "real or personal property or interest in real or personal property owned by the [Stoners] or acquired in any manner *520 by the [Stoners] after the filing of the certificate of the lien." § 143.902.1(1). If the Stoners do not satisfy the tax liens, the Director may request that the liens be executed. § 143.902.1(2). The Director can request that they be so executed but is not required to do so under the statutory language.
The Stoners essentially argue that section 516.120(2)[11] operates to reduce the legal effect and enforcement of a ten-year certificate of lien created under section 143.902.1. While the Stoners' argument is a novel theory, it is irrelevant to the subject proceeding in that the Director's judgment is based upon a contract, not statutory, theory. And, clearly, the lien-judgment remedy contemplated in section 143.902.1(2) is not the exclusive method of pursuing a tax debt. The lien-judgment remedy can be taken "in addition to other collection methods given the director of revenue," such as the Director's counterclaim in this case. § 143.902.1(3).
For the reasons addressed in our analysis of Point I, the Director was not time-barred from seeking enforcement of the Stoners' breach of the Delinquent Tax Payment Agreement, a legal theory that was cumulative to any rights the Director may have possessed under section 143.902.1.
Point II is denied.
Point III
In their third point on appeal, the Stoners argue that they[12] did not voluntarily *521 enter into the Delinquent Tax Payment Agreement or voluntarily make payments pursuant to any such agreement, but instead, the agreement and payments were the product of duress. They also argue that the Delinquent Tax Payment Agreement was, in fact, not an "agreement." Thus, the Stoners again claim that the Director's breach of contract counterclaim was actually a time-barred statutory claim for enforcement of their delinquent tax obligations. Again, we disagree.
Duress Argument
At trial, Mr. Stoner claimed he was under duress to enter into the Delinquent Tax Payment Agreement and make payments under the agreement and, as such, his conduct in doing so was not voluntary. Mr. Stoner claimed that because his law license would be suspended if he did not agree to repay the debt, he would suffer humiliation from such an "untenable situation," and the prospect of license suspension was "just awful" and "notorious" and "open," his conduct in entering into the agreement and making payments under the agreement could not be deemed voluntary. And, as Mr. Stoner argues, because his and Mrs. Stoner's conduct in entering into the agreement and making payments could not be deemed "voluntary," those actions could not be used to defeat his argument that the Director's contract claim was really nothing more than a time-barred statutory claim to enforce the Stoners' tax obligations.
It is true that a "payment under fraud or duress cannot be voluntary." Cridlebaugh v. Putnam Cnty. State Bank of Milan, 192 S.W.3d 540, 544 (Mo.App. W.D.2006). But for a claim of duress to succeed in Missouri, the person under duress must be "`prevented from exercising his free will by the threats or wrongful conduct of the other'" party. Andes v. Albano, 853 S.W.2d 936, 942 (Mo. banc 1993) (emphasis added) (citation omitted).
A claim of duress centers on oppression caused by wrongful conduct of another that deprives the party under duress of his free will. Schmalz v. Hardy Salt Co., 739 S.W.2d 765, 768 (Mo.App. E.D.1987).[13] A duress claim will fail when "`there is full knowledge of the facts of the situation and ample time for full and free investigation, deliberation, and reflection.'" Ensign v. Home for Jewish Aged, 274 S.W.2d 502, 508 (Mo.App.1955) (citation omitted).
Under section 484.053, RSMo Cum. Supp.2010, the Director is authorized to develop a cooperative agreement with the Clerk of the Missouri Supreme Court to report attorneys who owe back taxes. Under such cooperative agreement with the Clerk of the Missouri Supreme Court, the Director is authorized to report tax-delinquent attorneys to the clerk and, upon doing so, "the clerk shall notify the lawyer[14]*522 that the lawyer's license to practice law is subject to automatic suspension unless the matter is satisfactorily resolved within 30 days of the date of the last notice sent by the clerk." Rule 5.245(a). The first notice from the clerk shall be sent "within 30 days after the clerk receives the lawyer's name from the director." Rule 5.245(b).
In this case, the Director's conduct in advising Mr. Stoner that she intended to initiate the Rule 5.245 process of notifying the Clerk of the Missouri Supreme Court of Mr. Stoner's tax delinquency was not "wrongful conduct."[15] It was based on application of Missouri law. As the trial court pointed out, "application of a Missouri statute and a Missouri Supreme Court rule is not a wrongful act. Likewise, wanting to avoid the application of a Missouri statute and Missouri Supreme Court rule is not `duress.'"
Furthermore, there was substantial evidence in the record to support the trial court's judgment that Mr. Stoner was not so pressured as to be "bereft of the quality of mind essential to the making of a contract." Thomas v. Thomas (In re Marriage of Thomas), 199 S.W.3d 847, 859 (Mo.App. S.D.2006). Mr. Stoner had full knowledge of the facts. There was ample timefrom December 2001, when he received notice of his back taxes, through March 1, 2007, when he signed the agreementto consider his options and find a way to satisfactorily resolve the matter and avoid suspension of his law license. He did not do so, and his failure to do so is not the product of duress.
Voluntary Nature of Agreement
The Stoners also argue the agreement was involuntary and rely upon Green v. Boothe, 239 Mo.App. 73, 188 S.W.2d 84, 89 (Mo.App.1945):
[I]t appears that in order for the cause of action to be saved from the running of the statutes of limitations, not only that the debtor make a payment upon the obligation, but that it be made under circumstances showing an intention to pay the balance, and the burden of proof to show such intent is upon the creditor.... However, if [the debtor] accompanies his acknowledgment, either directly or by part payment of the debt, with the statement that he does not recognize an obligation to pay the balance, the acknowledgement is ineffectual.
The Stoners claim the Delinquent Tax Payment Agreement was entered into for the express purpose "to dispute the debt and not pay the balance." The Delinquent Tax Payment Agreement, however, shows just the opposite, as does the actual conduct of the Stoners after entering into the agreement. The Delinquent Tax Payment Agreement expressly states that it was entered into "for the purpose of liquidating the delinquent individual tax liability due the State of Missouri for the period(s): 1993 and 1994." It is undisputed that *523 these tax obligations related to both Mr. and Mrs. Stoner for their jointly filed tax returns for the years 1993 and 1994. While Mrs. Stoner claims for the first time on appeal that Mr. Stoner was not authorized to sign her name and obligate her to the terms of the Delinquent Tax Payment Agreement, it is undisputed that, after entering into the Delinquent Tax Payment Agreement, the Stoners did make voluntary payments pursuant to the terms of the Delinquent Tax Payment Agreement. There is no evidence in the record that Mrs. Stoner claims she was unaware of these payments or that she did not authorize these payments on behalf of both she and her husband.
"An acknowledgement in writing of a debt to remove the bar of the statute of limitations must contain an unqualified and direct admission of a present subsisting debt," and must be unaccompanied by a voiced intention to not pay the debt. Forry v. Dep't of Nat. Res., 889 S.W.2d 838, 843-44 (Mo.App. W.D.1994) (citing Green, 188 S.W.2d at 88).
Neither the trial court nor we are persuaded that the Stoners voiced or followed through with an expressed intention to protest and refuse to pay the tax debt that was agreed to be paid under the terms of the Delinquent Tax Payment Agreement (and was partially paid pursuant to those terms) at the time of entering into the Delinquent Tax Payment Agreement. By his own admission, Mr. Stoner was "cagey" about how he communicated with MO-DOR employees because he didn't want someone "monkeying with the documents" showing when the MO-DOR received notice of his tax liability. At best, Mr. Stoner predicted that he would not have to pay the entire tax obligation referenced by the Delinquent Tax Payment Agreement because he had "things cooking in the tax process." That is hardly a statement of "involuntariness." Simply put, the Stoners have not made a persuasive argument that the agreement they entered into with MO-DOR and their corresponding payments thereunder were involuntarily made.
Accord Executory[16]
Relying on Ingram v. Rinehart, 108 S.W.3d 783 (Mo.App. W.D.2003), the Stoners contend that the Delinquent Tax Agreement was an accord executory and not an enforceable agreement. In Ingram, Rinehart was sued for injuries arising out of an automobile accident. Before the jury trial, Rinehart moved to enforce a settlement agreement purportedly reached by the parties. At trial, Rinehart admitted his liability for the accident and liability for Ingram's medical and economic damages; the jury "returned substantial verdicts" in favor of Ingram on the remaining issue of non-economic damages but denied her punitive damages claim. Id. at 785. On appeal, Rinehart argued that "the trial court erred in refusing to permit the jury to hear evidence regarding his affirmative defense of settlement." Id. The court determined there was, at best, an accord executory between Ingram and Rinehart because there was never any payment made to Ingram under the proposed settlement. Id. at 790-92. Consequently, the Ingram court concluded that there was insufficient evidence of a settlement agreement where the alleged agreement was nothing more than an expression by one of the parties of a "willingness" to make future payments without any corresponding action leading to an actual and enforceable agreement to do so or any *524 conduct (i.e. payment) reflecting that such an agreement had been made. Id.
Unlike Ingram, the Stoners have made payments under the Delinquent Tax Payment Agreement that they now claim is an accord executory. Unlike Ingram, the Stoners did not communicate a "willingness" to pay; instead, they entered into an agreement acknowledging an "obligation" to pay and, in fact, have made payments under the Delinquent Tax Payment Agreement. Quite simply, there is nothing "executory" about the Delinquent Tax Payment Agreement, and the Stoners' reliance on Ingram is misplaced.
Point III is denied.
Point IV
In their final point, the Stoners argue that the trial court erred in refusing to grant Mr. Stoner declaratory relief forbidding the Director from submitting his name to the Clerk of the Missouri Supreme Court as an attorney delinquent in his tax obligations. The Stoners contend that since their personal tax liability should be barred by the statute of limitations, the trial court erroneously failed to instruct the Director that no tax obligation delinquency should be communicated to the Clerk of the Missouri Supreme Court.
Missouri courts "`have long held that declaratory relief power does not abolish or provide an additional existing remedy but instead addresses a deficiency or bridges a superfluity in the law.'" Huff v. Dewey & LeBoeuf, LLP, 340 S.W.3d 623, 627 (Mo.App. W.D.2011) (citation omitted).
"[I]t serves no sensible end to allow a defendant to seek a declaration by the trial court that he has a meritorious defense to the pending action." Therefore, "a declaratory judgment action will not lie where the declaration is being sought to defend against an action brought against the party seeking declaratory relief." "This rule is especially applicable where the issues sought to be declared have been asserted as a defense in the same litigation."
Id. at 628 (citations omitted).
Here, the Stoners sought just thata declaration that they possessed a meritorious defense to any claim by the Director that the Stoners owed tax deficiencies. Not only does Huff procedurally prevent the relief requested by the Stoners in this regard, there is also no substantive basis to the Stoners' alleged meritorious defenseas addressed in Points I-III.
Point IV is denied.
Conclusion
The trial court's judgment is supported by substantial evidence, is not against the weight of the evidence, and does not erroneously declare or apply the law. Therefore, the judgment is affirmed.
JOSEPH M. ELLIS, and VICTOR C. HOWARD, Judges, concur.
NOTES
[1] In our review of a court-tried case, we view the evidence and inferences therefrom in the light most favorable to the judgment and disregard all contrary evidence and inferences. Kolb v. DeVille I Props., LLC, 326 S.W.3d 896, 900 (Mo.App. W.D.2010).
[2] The Stoners argued to the trial court that, pursuant to the "Implementing Agreement for the Agreement on Coordination of Tax Administration Between the MO-DOR and the IRS," the MO-DOR should have received the information regarding the IRS calculation of additional assessed tax obligations for 1993 and 1994 by no later than January 2002. However, as the trial court pointed out, the Stoners presented no credible evidence that the MO-DOR had actually received such notice prior to May 3, 2002, the date that was consistent with the "date stamp" on the IRS written notification to the MO-DOR and consistent with the date that representatives of MO-DOR testified that they actually received such notice from the IRS. Ultimately, the trial court was free to believe the testimony and evidence of the MO-DOR on this topic and, likewise, free to disbelieve the speculative "notice theory" of the Stoners. See Tadych v. Horner, 336 S.W.3d 174, 177 (Mo.App. W.D.2011) (the trial court, as the trier of fact, is free to believe or disbelieve all or part of a witness's testimony, even if that testimony is uncontroverted).
[3] Under this agreement, the sharing of information was completely dependent on the IRS sending documentation to the MO-DOR. As a MO-DOR employee stated via deposition testimony, the "department doesn't have any control on when that information" is transferred.
[4] The Stoners' argument over when the MO-DOR received notice from the IRS regarding additional assessments of tax liability to the Stoners is, as they say, "much ado about nothing." The Director did not sue the Stoners for civil liability under a statute (i.e. five-year statute of limitations); instead, the Director sued the Stoners for breach of a written agreement (i.e. ten-year statute of limitations).
[5] All statutory citations are to RSMo 2000 as updated through the 2010 Cumulative Supplement, unless otherwise indicated.
[6] The five-year statute of limitations for civil actions under section 516.120, not the three-year limit of section 143.951, applies to statutory tax collection actions. State ex rel. Lohman v. Black, 980 S.W.2d 41, 42-43 (Mo.App. W.D.1998).
[7] We suspect that the trial court found little coincidence in the Stoners agreeing to make modest ($1,000) monthly payments from March 2007 through May 2007 and agreeing to the lump sum payment in June 2007, such that the bulk of the tax obligation remained outstanding in June 2007the time period the Stoners claim is in excess of five years of MO-DOR's admission of receiving notice of the tax obligations in May 2002.
[8] "An action upon any writing ... for the payment of money" shall be filed "[w]ithin ten years." § 516.110(1).
[9] Even assuming arguendo that the Stoners could successfully argue that an applicable statute of limitations period had expired, "voluntary payment rendered after expiration of the statute of limitations demonstrates a debtor's acknowledgement of the outstanding debt and intent to renew the promise to pay, thereby taking the case out of the statute." Crockett v. Polen, 225 S.W.3d 419, 420 (Mo. banc 2007). Here, the Stoners made not one but three payments on the outstanding debt in 2007, indicating their intent to repay the more than $196,000 tax debt owed.
[10] In January 2000, the Director filed a tax lien against the Stoners (unrelated to the subject 1993 and 1994 tax obligation deficiencies) in Webster County and later re-filed that tax lien in December 2009. In December 2009, when the Webster County tax lien was re-filed, the 1993 and 1994 tax obligations were added to the certificate of lien. Also in December 2009, the Director filed a tax lien against the Stoners in Greene County, the subject of which was the 1993 and 1994 tax obligation deficiencies.
[11] "An action upon a liability created by a statute" shall be filed "[w]ithin five years."
[12] For the first time on appeal, the Stoners briefly argue that Mrs. Stoner is not liable on the Delinquent Tax Payment Agreement because Mr. Stoner signed Mrs. Stoner's name on the agreement without her authorization. While Mr. Stoner did testify that he signed for Mrs. Stoner and Mrs. Stoner said in her deposition that she did not authorize Mr. Stoner to sign for her, this argument was not made to the trial courtMrs. Stoner did not raise any affirmative defense in her argument or pleading to the trial court that stemmed from this purportedly unauthorized signature. "Claims which were not presented to the [trial] court cannot be raised for the first time on appeal." Amrine v. State, 785 S.W.2d 531, 535 (Mo. banc 1990). To allow an argument to be made for the first time on appeal deprives the trial court of its opportunity to thoughtfully consider and make a ruling on the argument.
Though the Stoners raise the argument for the first time on appeal, it does warrant some brief consideration. While there is no agency relationship between Mr. and Mrs. Stoner simply because of their marital relationship, a husband can have implied authority to contract on behalf of himself and his wife if "the facts and circumstances surrounding the transaction give rise to a reasonable and logical inference that the non-acting spouse empowered the acting spouse to act for him or her." Rosehill Gardens, Inc. v. Luttrell, 67 S.W.3d 641, 647 (Mo.App. W.D.2002) (internal quotation omitted). In addition, a non-signing spouse will be bound on the contract if he or she later ratifies the contract. Id. In this case, the trial court did not specifically rule on the issue of whether Mrs. Stoner was bound to the agreement via Mr. Stoner's signaturesbecause the Stoners did not raise the argument at the trial court levelbut even so, this court views all evidence and inferences therefrom in the light most favorable to the trial court's judgment and the trial court is free to believe or disbelieve any evidence, even if the evidence is uncontroverted. Kolb, 326 S.W.3d at 900; Tadych, 336 S.W.3d at 177. Therefore, the trial court was free to disbelieve any testimony from Mr. or Mrs. Stoner that Mr. Stoner did not have Mrs. Stoner's authority to sign her name to the contract and the inference most favorable to the judgment, in this case, is that Mr. Stoner did have such authority or that Mrs. Stoner later ratified his actions.
Further, even though their third Point Relied On mentions the fact that Mrs. Stoner did not sign the agreement, the Stoners have not provided this court with any legal support for the contention that Mr. Stoner could not bind his wife to the agreement by signing her name. The Stoners, as appellants, bore the burden of providing this court with the relevant legal support for their argument. Rule 84.04(e). Without such support, their argument is deemed abandoned and must fail. Lueker v. Mo. W. State Univ., 241 S.W.3d 865, 868 (Mo.App. W.D.2008) ("An appellant has the obligation to cite appropriate and available precedent or explain why such authority is not available if she expects to prevail.").
[13] "Where an experienced business man takes sufficient time, seeks the advice of counsel and understands the content of what he is signing he cannot claim the execution of the release is the product of duress." Schmalz v. Hardy Salt Co., 739 S.W.2d 765, 768 (Mo.App. E.D.1987). Here, Mr. Stoner had approximately thirty years' experience as a licensed attorney, and the trial court was entitled to believe that he knew what he was signing, why he was signing it, and that he entered into the agreement with free will as opposed to duress.
[14] Stoner was notified by the clerk on January 29, 2007, over a month before the Stoners entered into the Delinquent Tax Payment Agreement.
[15] An argument similar to the Stoners' was addressed in United States v. Martin, 274 F. Supp. 1002 (E.D.Mo.1967). In Martin, the taxpayer was assessed back taxes and signed an agreement stating he owed the same. Id. at 1003. According to Martin, he only signed the agreement because the IRS agent told him "`you had better get down here and sign these papers or I will drag you into court.'" Id. at 1005. Martin claimed the agreement was signed under duress and, therefore, could not extend the statute of limitations. The Missouri federal district court held that "[t]he assertion of an intention to pursue a legal remedy is not ordinarily considered duress, and this is especially true when there is ample time for investigation and deliberation." Id.
[16] An accord executory is defined as "`an agreement for the future discharge of an existing claim by a substituted performance.'" Ingram v. Rinehart, 108 S.W.3d 783, 790 (Mo. App. W.D.2003) (citation omitted).
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3 P.3d 665 (2000)
Marc CRAMER, Appellant,
v.
Charles Warren PEAVY, Nevada Checker Cab Corporation, A Nevada Corporation, d/b/a Checker Cab Co., d/b/a Checker Cab, Respondents.
No. 33128.
Supreme Court of Nevada.
July 14, 2000.
*666 Hale Lane Peek Dennison Howard and Anderson and Robert D. Martin, Las Vegas, for Appellant.
Kirby R. Wells & Associates, Las Vegas, for Respondents.
Beckett & Yott, Carson City, for Amicus Curiae Employers Insurance Company of Nevada.
BEFORE ROSE, C.J., YOUNG and AGOSTI, JJ.
OPINION
PER CURIAM:
Appellant Marc Cramer was injured when the taxi he was driving collided with a taxi driven by respondent Charles Warren Peavy and owned by respondent Nevada Checker Cab Corporation. The jury returned a verdict in favor of the respondents (hereinafter "Checker Cab").
On appeal, Cramer contends that: (1) the district court erred in denying his motions for mistrial made when the jury was told he had received compensation from the State *667 Industrial Insurance System ("SIIS"); (2) NRS 616C.215(10) violates the separation of powers doctrine; and (3) the district court abused its discretion in denying his motion for a new trial on the ground that the jury manifestly disregarded the court's instructions in reaching a verdict.
We conclude first that the district court did not err in denying Cramer's motions for a mistrial, second that NRS 616C.215(10) is constitutional, and finally that Cramer failed to preserve the issue of whether the jury manifestly disregarded the court's instructions. Therefore, we affirm the judgment entered below.
FACTS
In January 1995 Marc Cramer was employed by Desert Cab. On January 19, 1995, a Checker Cab driven by Charles Warren Peavy ran a red light and collided with the taxi driven by Cramer. Checker Cab stipulated at trial that it was liable in causing the accident.
Cramer has been involved in three serious automobile accidents. One was approximately two years prior to and the other approximately one year subsequent to the accident at issue here. Cramer sustained injuries in all three accidents. At trial, the central issue was which, if any, of his permanent injuries were caused by the January 1995 accident.
During trial, Checker Cab primarily sought to undermine Cramer's credibility. While Cramer sought approximately $350,000.00 in damages for various injuries and pain and suffering, the defendants argued that the only injuries attributable to this accident were nothing more than cuts and bruises. The jury returned a verdict for Checker Cab.
Cramer eventually consulted with eight doctors after the accident. Five of the doctors testified at trial, and the reports of the other three were entered into evidence. The medical evidence was frequently contradictory.
The most seriously contested of Cramer's damage claims was an injury Cramer claimed he received to his coccyx.[1] Both Dr. Frederick C. Redfern, who was Cramer's treating physician, and a different doctor, who examined Cramer later, found that Cramer had injured his coccyx in the accident. Another doctor testified that Cramer could not have injured his coccyx in the accident. A fourth doctor testified that, theoretically, under exact conditions, Cramer could have injured his coccyx in the accident, but that if he had, he would have been in pain at the time he was examined, which he was not. Finally, yet another doctor testified that a fracture to the coccyx would not cause the symptoms that Cramer was experiencing.
At trial, Checker Cab made several references to the fact that SIIS had paid some of Cramer's medical expenses.
In his opening statement, counsel for Checker Cab stated, "Surprise, surprise .... Dr. Redfern, first thing he does is he insists that the SIIS ... pay for MRIs for Mr. Cramer's knees. The SIIS is ... the entity that is responsible to pay for all the medical and disability that Mr. Cramer has gotten so far. That's what workman's comp is about." Checker Cab also stated, "[T]he evidence is going to show, to a certain extent, poor old SIIS held the bag in this case."
During its cross-examination of Dr. Redfern, Checker Cab asked how much he was reimbursed by SIIS in contrast to what he had charged. The doctor was also questioned at length as to the intricacies of his billing procedures.
The next day Cramer moved for a mistrial on the ground that Checker Cab had violated the collateral source rule by telling the jury that Cramer did not have to pay his medical bills. The motion was denied. However, the court said that it would give an instruction on it if Cramer wished.
Checker Cab referred to the SIIS benefits again during its closing argument stating, "Mr. Cramer, of course, had all of the medical bills that were generated in this case paid *668 for by SIIS and got a PPD [permanent partial disability] award on top of that." Checker Cab then reread to the jury part of the SIIS instruction given earlier by the court[2] and stated: "That means regardless of how much you award Mr. Cramer in this case, he doesn't have to repay the SIIS for what he's already gotten." At that point Cramer objected to the statement as being an incorrect statement of the law and moved again for a mistrial. Before the motion was denied, the following exchange took place:
COUNSEL FOR CRAMER: Your Honor, I hate to object, but he just made a statement that's incorrect as to the law.
THE COURT: I think you misstated.
COUNSEL FOR CRAMER: He stated the exact opposite of what's legally true.
THE COURT: I don't think he meant to do that. I think you
COUNSEL FOR CHECKER CAB: If the plaintiff does not obtain a judgment in his favor
THE COURT:that's receiving enough.
COUNSEL FOR CRAMER: You said if he receives an award, he doesn't have to repay.
COUNSEL FOR CHECKER CAB: I apologize, Your Honor. You're right. I misspoke.
COUNSEL FOR CRAMER: Your Honor, based on that comment, I'd move for a mistrial.
THE COURT: Counsel, we are clearing it up right now. He just misspoke.
COUNSEL FOR CHECKER CAB: I misspoke about the SIIS. What I was trying to get at was the system, the SIIS system, doesn't depend upon fault.
Before the jury commenced deliberations, the district court attempted to clarify any confusion created by Checker Cab's misstatement of the law. The court told the jurors that:
On Instruction Number 21, it's really a quite simple instruction. All you have to remember, ladies and gentlemen, is that you come back with the judgment, the amount of money, if any, that you deem appropriate without any deductions. That's all you have to remember. You come back with a judgment, if any, that you deem it's [sic] appropriate; no deductions.
Prior to closing arguments, the jury was given the statutory instruction on workers' compensation as required by NRS 616C.215(10).[3] The jury was also told that Checker Cab had admitted liability for any of Cramer's injuries that were proximately caused by the accident, and was instructed on proximate cause and damages.
The jury returned a verdict for Checker Cab. Cramer moved for a new trial under NRCP 59 on the grounds that the district court erred as a matter of law because Checker Cab's references to SIIS violated the collateral source rule and that the jury disregarded the court's instructions in reaching the verdict. The motion was denied. Cramer then filed this appeal.
DISCUSSION
References to SIIS
Cramer contends that the district court's failure to grant a mistrial on the ground that *669 Checker Cab repeatedly informed the jury of SIIS benefits is reversible error. We disagree.
"Denial of a motion for mistrial can only be reversed where there is a clear showing of an abuse of discretion." Mortensen v. State, 115 Nev. 273, 281, 986 P.2d 1105, 1111 (1999). NRS 616C.215(10) provides that:
In any trial of an action by the injured employee ... against a person other than the employer ... the jury must receive proof of the amount of all payments made or to be made by the insurer or the administrator.
Based upon the language of the statute, we conclude that the district court did not abuse its discretion in failing to grant a mistrial on the ground that the jury was informed that Cramer received SIIS benefits.
However, we note that the way in which Checker Cab chose to handle the SIIS issue skirted the edges of propriety. Having reviewed the legislative history of NRS 616C.215(10), we conclude that the legislature did not intend NRS 616C.215(10) to eviscerate the collateral source rule. Rather, the statute creates a narrow exception to the rule. "The intent of the legislature is the controlling factor in statutory interpretation." Cleghorn v. Hess, 109 Nev. 544, 548, 853 P.2d 1260, 1262 (1993).
The legislative history of NRS 616C.215(10) shows that the legislature expressed concern about the practice of informing the jury that the plaintiff had received workers' compensation benefits. Minutes of the Meeting on S.B. 211 Before the Senate Judiciary Comm., 59th Leg. at 4 (Nev., February 23, 1977). Senate Bill 211 amended what was then NRS 616.560(5) and is currently NRS 616C.215(10) by adding the jury instructions that are now at issue. In considering the jury instructions, the legislature expressed its view that cases involving SIIS benefits are unique from other insurance cases because the jury already knows that the plaintiff has received SIIS benefits if the injury was work related. Id. at 3 (April 4, 1977). The legislature received evidence that under the system as it then existed, the jury was usually under the mistaken belief that the plaintiff was not required to repay SIIS from any damage award. Id. at Exhibit E. In an attempt to reach a just verdict, the jury would speculate as to how much the plaintiff had received from SIIS and reduce the award accordingly. Id. Thus, NRS 616C.215(10) was intended to curtail this practice.
Accordingly, NRS 616C.215(10) cannot be used by the defense to imply that the plaintiff has already been compensated, will receive a double recovery if awarded a judgment or has overcharged SIIS. The statute properly informs the jury that the plaintiff has received SIIS benefits and that there is a procedure in place for repaying SIIS from any damage award.
We conclude that the references made by Checker Cab concerning SIIS payments were improper. However, the references were neither so egregious nor so numerous as to confuse the jury or affect the verdict reached.
Cramer's prior and subsequent accidents created a factual question for the jury as to which of his permanent injuries, if any, were caused by the accident of January 1995. See Mulder v. State, 116 Nev. ___, ___, 992 P.2d 845, 853-54 (2000) ("The trier of fact determines the weight and credibility to give conflicting testimony."). This case was primarily about Cramer's credibility. The jury received ample evidence to support a finding that his permanent injuries were either non-existent or unrelated to this accident. In fact, in Cramer's closing argument, his attorney invited the jury to return a defense verdict if they did not believe his client.[4]*670 The jury was properly instructed on SIIS payments, and its verdict is supported by substantial evidence and not clearly erroneous in light of all the evidence presented. Frances v. Plaza Pacific Equities, 109 Nev. 91, 94, 847 P.2d 722, 724 (1993). Accordingly, the district court did not abuse its discretion in declining to grant a mistrial.
Constitutionality of NRS 616C.215(10)
Cramer also contends that NRS 616C.215(10) is unconstitutional because the legislatively mandated jury instruction infringes on a judicial function and therefore violates the separation of powers doctrine. In Proctor v. Castelletti, 112 Nev. 88, 911 P.2d 853 (1996), we adopted "a per se rule barring the admission of a collateral source of payment for an injury into evidence for any purpose." Id. at 90, 911 P.2d at 854. Cramer argues that NRS 616C.215(10) cannot be reconciled with Proctor, and that the statute is therefore unconstitutional.
When a statute is challenged on constitutional grounds, it is "to be construed in favor of the legislative power." Galloway v. Truesdell, 83 Nev. 13, 20, 422 P.2d 237, 242 (1967). The legislature has the power to enact rules of evidence. Barrett v.Baird, 111 Nev. 1496, 1512, 908 P.2d 689, 700 (1995). Furthermore, "no person has a vested right in a rule of law, nor can anyone assert a vested right in any particular mode of procedure." Nevada Industrial Comm'n v. Reese, 93 Nev. 115, 123, 560 P.2d 1352, 1357 (1977). We conclude that the legislature did not exceed its authority in enacting NRS 616C.215(10), and that NRS 616C.215(10) is not superseded by Proctor, but rather is an exception to the per se rule against collateral sources we articulated in that case.
Jury verdict
Cramer argues that the jury's verdict is inconsistent because in its closing arguments the defense conceded that Cramer was entitled to approximately $20,000.00 in damages, yet the jury awarded him nothing. We conclude that Cramer's argument lacks merit. As noted, Cramer's attorney repeatedly invited the jury to award Cramer nothing if it believed he was untruthful. We cannot say that the jury acted improperly when it apparently followed the direction of Cramer's attorney. Moreover, Cramer has failed to preserve the question of whether the jury manifestly disregarded the court's instructions.
One of this court's "primary objective[s]" is to promote the "efficient administration of justice." Eberhard Mfg. Co. v. Baldwin, 97 Nev. 271, 273, 628 P.2d 681, 682 (1981). The efficient administration of justice requires that any doubts concerning a verdict's consistency with Nevada law be addressed before the court dismisses the jury. Carlson v. Locatelli, 109 Nev. 257, 262-63, 849 P.2d 313, 316 (1993). "Where possible, the verdict should be salvaged so that no new trial is required." Id. at 263, 849 P.2d at 316-17. In furtherance of this goal, we have formulated the policy that "failure to timely object to the filing of the verdict or to move that the case be resubmitted to the jury" constitutes a waiver of the issue of an inconsistent verdict. Eberhard, 97 Nev. at 273, 628 P.2d at 682. See also Brascia v. Johnson, 105 Nev. 592, 596 n. 2, 781 P.2d 765, 768 n. 2 (1989); Carlson, 109 Nev. at 262-63, 849 P.2d at 316-17. Accordingly, to preserve the issue for appeal, Cramer was required to object to the verdict before the jury was discharged. The trial court would then have had the opportunity to consider whether it was impossible for the jury to return a defense verdict as a matter of law, and if so, the matter could have been returned to the jury with additional instructions. This procedure would have promoted fairness and the efficient administration of justice. Cramer failed to make a timely objection. Therefore, we will not consider his argument now.
CONCLUSION
We conclude that the district court did not abuse its discretion in denying a mistrial. *671 We also conclude that NRS 616C.215(10) is constitutional. Finally, Cramer failed to preserve the issue of whether the jury manifestly disregarded the court's instructions in reaching a verdict. We therefore affirm the district court's judgment and the order denying Cramer's motion for a new trial.
NOTES
[1] The coccyx is the last bone of the spinal column. J.E. Schmidt, M.D., 2 Attorneys' Dictionary of Medicine, C-335 (1999).
[2] Checker Cab read to the jury as follows: "If the plaintiff does not obtain a judgment in his favor in this case, he is not required to repay his employer, the insurer or the administrator."
[3] NRS 616C.215(10) requires that the jury be instructed that:
Payment of workmen's compensation benefits by the insurer, or in the case of claims involving the uninsured employers' claim fund or a subsequent injury fund the administrator, is based upon the fact that a compensable industrial accident occurred, and does not depend upon blame or fault. If the plaintiff does not obtain a judgment in his favor in this case, he is not required to repay his employer, the insurer or the administrator any amount paid to him or paid on his behalf by his employer, the insurer or the administrator.
If you decide that the plaintiff is entitled to judgment against the defendant, you shall find his damages in accordance with the court's instructions on damages and return your verdict in the plaintiff's favor in the amount so found without deducting the amount of any compensation benefits paid to or for the plaintiff. The law provides a means by which any compensation benefits will be repaid from your award.
[4] Cramer's attorney told the jury on three occasions during closing arguments to award Cramer nothing if it did not believe him, saying at one point:
[Cramer]'s the one who gets put on trial. He's the one who there are daggers being thrown at him throughout the trial, throughout the discovery process; he's a liar, he's dishonest; this is all baloney; this is all crap; none of it is true.
If you believe that, don't award him a dime. If you think he's a liar, if you think everything he's told you is untrue, if you think those pictures are false, if you think they have been doctored, award zero dollars in this case; find for the defense.
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52 So. 3d 240 (2010)
Jeanette Garnett PICHON, Roland L. Pichon, Mark P. Pichon, Patrice Pichon Robinson, Tracy Pichon Baham, Veronica Pichon Joseph, and Cade Pichon Hagger
v.
ASBESTOS DEFENDANTS, et al.; Bayer Cropscience, Inc. (as Successor of Liaibility to Rhone-Poulenc AG Company f/k/a Amchem Products, Inc., f/k/a Benjamin Foster Company), Seville, Inc. formerly, Branton Insulations, Inc.; Continental Insurance Company; et al.
No. 2010-CA-0570.
Court of Appeal of Louisiana, Fourth Circuit.
November 17, 2010.
*241 Gerolyn P. Roussel, Perry J. Roussel, Jr., Jonathan B. Clement, Lauren R. Clement, Roussel & Clement LaPlace, LA, for Plaintiffs/Appellants.
Lee B. Ziffer, Deborah Kuchler, Monique Weiner, Janika Polk, Jonique Martin Hall, Kuchler Polk Schell Weiner & Richeson, LLC, New Orleans, LA, for Defendant/Appellee Detroit Diesel Corporation.
(Court composed of Judge PATRICIA RIVET MURRAY, Judge MICHAEL E. KIRBY, Judge ROLAND L. BELSOME).
PATRICIA RIVET MURRAY, Judge.
The plaintiffs appeal the trial court's granting of summary judgment in favor of defendant Detroit Diesel Corporation ["DDC"] and the dismissal with prejudice of all claims against said defendant. For the reasons that follow, we affirm.
FACTS AND PROCEEDINGS BELOW
On November 21, 2007, the plaintiffs, the surviving spouse and children of Leon Roland Pichon, filed a petition against numerous defendants, including DDC, as the alleged manufacturers, distributors and/or sellers of various asbestos-containing products to which Mr. Pichon had been exposed during his employment by Halter Marine from approximately 1955 through 2004. The plaintiffs alleged that as a result of his exposure, Mr. Pichon contracted lung cancer and mesothelioma, which was first diagnosed in September, 2006, and which caused Mr. Pichon's death on November 25, 2006.
On November 2, 2009, DDC filed a motion for summary judgment seeking the dismissal of plaintiffs' claims against it on the grounds that it could not have any liability for damages caused by Mr. Pichon's exposure to asbestos prior to 1988, the year DDC first came into existence, nor could it have any liability for his exposure after that time because DDC has never manufactured any products containing asbestos. On December 4, 2009, the trial court denied DDC's motion for summary judgment because DDC had not yet responded to the plaintiffs' requests for discovery; the court also ordered DDC to so respond. Five days after the denial of its motion, DDC submitted its responses to the plaintiffs' discovery requests and filed a motion for new trial from the trial court's denial of summary judgment. The trial court granted the motion for new trial. On January 4, 2010, the trial court again heard DDC's motion for summary judgment. At the conclusion of that hearing, the trial court granted the motion for summary judgment. A written judgment granting the motion was signed January *242 19, 2010. From this judgment, the plaintiffs appeal.
ISSUES
There are two issues on appeal:
(1) Did the trial court err by determining that DDC legally cannot be held responsible under the theory of successor liability for any damages resulting from Mr. Pichon's pre-1988 exposure to asbestos-containing products manufactured and/or sold by General Motors ["GM"]?
(2) Did the trial court err by determining there is no genuine issue of fact that, from the time DDC was incorporated on January 1, 1988, Mr. Pichon was not exposed to any asbestos-containing products manufactured or sold by DDC?
STANDARD OF REVIEW
We note that, although the first issue presents primarily a legal question and the second issue is factual, the appellate standard of review is the same when this court considers the trial court's granting of summary judgment.
Appellate courts review summary judgments de novo under the same criteria that govern the district court's consideration of whether summary judgment is appropriate. Schroeder v. Board of Sup'rs of Louisiana State University, 591 So. 2d 342, 345 (La.1991). Thus, the appellate court must determine whether the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact, and that the mover is entitled to judgment as a matter of law. Id. According to La.Code Civ. Pro. art. 966 A(2), the summary judgment procedure is favored and is designed to secure the just, speedy and inexpensive determination of an action. The article further states:
The burden of proof remains with the movant. However, if the movant will not bear the burden of proof at trial on the matter that is before the court on the motion for summary judgment, the movant's burden on the motion does not require him to negate all essential elements of the adverse party's claim, action, or defense, but rather to point out to the court that there is an absence of factual support for one or more elements essential to the adverse party's claim, action, or defense. Thereafter, if the adverse party fails to produce factual support sufficient to establish that he will be able to satisfy his evidentiary burden of proof at trial, there is no genuine issue of material fact.
La.Code Civ. Pro. Art. 966 C(2)
DISCUSSION
I. Successor Liability (Pre-1988 Exposure)
Because DDC did not come into existence until 1988, it cannot be held liable for any damages resulting from Mr. Pichon's pre-1988 exposure except by application of the legal theory of successor liability. The plaintiffs argue that, pursuant to this theory, liability can be imposed upon DDC as the successor to a former division of GM.
The following facts are pertinent to the issue of successor liability. In 1938, GM created its Detroit Diesel Division, an unincorporated manufacturing arm of GM. This division manufactured Detroit Diesel branded engines. In 1970, GM merged this division with another division of the company, the Allison Division, to form the Detroit Diesel-Allison Division. This division continued to manufacture Detroit Diesel branded marine engines. Plaintiffs allege these marine engines, used at Halter Marine, were a source of Mr. Pichon's *243 exposure to asbestos. On January 1, 1988, DDC was formed as a joint venture between GM and the Penske Corporation. DDC purchased the assets of a portion of GM's Detroit Diesel-Allison Division (the portion that had manufactured marine engines).[1] The written Sales Agreement between the parties stipulated:
[DDC] shall not assume or become liable for and GM shall indemnify and hold [DDC] harmless against any liabilities, obligations or commitments of GM or of any of its Affiliates, whether contingent or otherwise, fixed or absolute, known or unknown, present or future or otherwise, relating, directly or indirectly, to (i) the conduct of GM Operations or the ownership of the Assets prior to the Closing, including, without limitation ... product liability claims, litigation ..., (ii) claims relating, directly or indirectly, to products manufactured, distributed or sold by GM prior to the Closing.
Louisiana Civil Code article 1821 provides that one person's assumption of the obligation of another must be in writing to be enforceable against third parties. The Code further provides that a person who assumes, by agreement, the obligation of another "is bound only to the extent of his assumption" La. C.C. art. 1822. Applying this law to the above-quoted language of the Sales Agreement, it is undisputable that DDC did not assume any of the liabilities or obligations of GM when DDC purchased certain assets of the Detroit Diesel Allison Division in 1988.
Nevertheless, the plaintiffs contend that DDC legally may be found liable for Mr. Pichon's pre-1988 exposure to Detroit Diesel engines by application of the theory of successor liability. We disagree.
The basic principle of corporate successor liability was set forth by the U.S. Supreme Court in Golden State Bottling Co. v. National Labor Relations Board:
[T]he general rule of corporate liability is that, when a corporation sells all of its assets to another, the latter is not responsible for the seller's debts or liabilities, except where (1) the purchaser expressly or impliedly agrees to assume the obligations; (2) the purchaser is merely a continuation of the selling corporation; or (3) the transaction is entered into to escape liability. See 15 W. Fletcher, Cyclopedia Corporations ss 7122-7123 (1961 rev. ed.); Kloberdanz v. Joy Mfg. Co., 288 F. Supp. 817 (D.Colo.1968).
414 U.S. 168, 182 n. 5; 94 S. Ct. 414, 424, 38 L. Ed. 2d 388 (1973).
As stated above, the first exception does not apply in this instance because DDC clearly did not assume any obligations or liabilities of GM, as is reflected by the Sales Agreement. Nevertheless, the plaintiffs argue on appeal, as they did in response to DDC's motion for summary judgment in the trial court, that exception # 2 applies here because DDC is "merely a continuation" of GM's former Detroit Diesel-Allison Division. We find, however, that the plaintiffs failed to submit factual support sufficient to establish that they would be able to satisfy their evidentiary burden at trial on the issue of successor liability. See La. C.C.P. art. 966 C(2).
First, the written agreement whereby DDC expressly declines to assume any obligations or liabilities of GM presents a *244 hurdle that must be overcome if successor liability is to be imposed In the absence of a transaction entered into for the sole purpose of escaping liability, which is covered by exception # 3 above,[2] we believe the facts showing one corporation to be merely a continuation of the other would have to be especially compelling to impose liability upon a corporation that has expressly contracted out of such liability. In the instant case, however, we do not reach that issue because the plaintiffs have not established sufficient factual support to show that DDC is "merely a continuation" of either GM or of GM's former Detroit Diesel-Allison Division.
A threshold requirement to trigger a determination of whether successor liability is applicable under the "continuation" exception is that one corporation must have purchased "all" the assets of another. Golden State Bottling Co., supra. See also, e.g.: Wolff v. Shreveport Gas, Electric Light & Power Co., 138 La. 743, 70 So. 789 (1916); National Sur. Corp. v. Pope Park, Inc., 240 La. 63, 121 So. 2d 240 (1960). Obviously, in the instant case DDC did not purchase all the assets of GM. Nevertheless, plaintiffs contend DDC is the successor of GM's former Detroit Diesel-Allison Division. Although plaintiffs have not cited a single Louisiana case in which one corporation has been found to be the successor of a former division or part of another corporation, they rely upon the following language in dicta from Bourque v. Lemann Lathe, Inc., for the proposition that the two parties involved need not be corporations, but only "business entities":
[T]his rationale for liability [the "continuation" exception noted in Golden State Bottling Co.] would include some non-merger sales in which one corporation or other business entity sells all its assets to another legal entity.
476 So. 2d 1125, 1127 (La.App. 3 Cir. 1985) (emphasis added).
Nevertheless, the plaintiffs' argument ignores the holding in Bourque, which was that the Third Circuit refused to impose successor liability upon a corporation that had only purchased some of the assets of the predecessor corporation at a bankruptcy sale but had continued to manufacture essentially the same product as the bankrupt corporation. Id. at 1129.
Pretermitting the issue of whether successor liability can be applied when the predecessor is not a corporation but only a division of one, we conclude that the plaintiffs' argument fails because they have not shown that DDC purchased all the assets of the Detroit Diesel-Allison Division. DDC submitted the affidavit of David Merrion as proof of that some of the assets of that division were excluded from the sale.[3] In response, the plaintiffs have cited only the language of the Sales Agreement, which states that "GM shall ... sell, transfer, assign convey and deliver to [DDC]... all the assets and properties ... relating to the Redford Operations...." This language clearly does not refute DDC's claim that less than all the assets of the division were sold, but rather confirms that only those assets related to the Redford Operations (the location where the marine engines were manufactured) were transferred to DDC.
The court in Bourque, supra, recognized that jurisdictions other than Louisiana have taken a more liberal approach to imposing successor liability in products liability *245 cases such as the instant one.[4] However, the rationale for a more liberal imposition of successor liability is not present in the instant case. In Bourque, supra, the court explained that when a person is injured by a defective product years after that product has been manufactured and placed into commerce by the selling corporation, the rationale for imposing successor liability is that the disappearance of the selling corporation before the injury occurs leaves the injured party with no one to sue and therefore with no remedy. Id., 476 So.2d at 1128. In the instant case, however, GM was clearly a viable defendant at the time the instant suit was filed and is, in fact, a named defendant herein.[5]
As we therefore find no basis in Louisiana law for extending the theory of successor liability to impose liability upon DDC under these particular facts, we conclude that the trial court properly granted summary judgment with respect to this issue.
II. Direct Liability (Exposure from 1988 forward)
The law requires us to consider the evidence put forth by both parties to determine whether there is a genuine issue of fact as to Mr. Pichon's exposure to asbestos-containing products manufactured or sold by DDC from its inception in 1988 through the end of Mr. Pichon's employment at Halter Marine.
DDC asserted in its motion for summary judgment that it has never manufactured or sold any asbestos-containing products. In support of this assertion, DDC submitted the deposition testimony of David Merrion, a former employee of GM and the corporate representative of DDC, who stated that GM began to phase out the use of asbestos in its Detroit Diesel engines in 1980 and had completely phased it out by 1987. In an attempt to refute this testimony, the plaintiffs have submitted a copy of a 1986 GM gasket specification sheet that calls for the use of asbestos on the gaskets of Detroit Diesel engines. In the trial court, plaintiffs argued that the failure of DDC to provide documentary evidence showing that the 1986 specifications had been subsequently modified indicated that asbestos had not been completely phased out and therefore was still being used in 1988. DDC countered that it had properly responded to the plaintiffs' discovery, which had not resulted in the production of any evidence indicating the use of asbestos in DDC's products.
We cannot accept the plaintiffs' argument that a 1986 gasket specification sheet is sufficient factual support to rebut DDC's assertion that it never used asbestos supported by Mr. Merrion's unrefuted testimony that asbestos use in the gaskets of Detroit Diesel engines had been discontinued by 1987. Nor can we accept that DDC's failure to produce a subsequently-dated gasket specification sheet, in the absence of a specific request to do so, is sufficient to raise a genuine issue of fact in this respect.
In its motion, DDC also asserted that the plaintiffs could not prove that Mr. Pichon was ever exposed to any asbestos-containing product manufactured by DDC. In an attempt to refute this assertion, the plaintiffs submitted the deposition testimony of four individuals: Donald Varnado, *246 David Merrion, Louis Frierson, and Jessie Robertson.
Donald Varnado, a co-worker of Mr. Pichon at Halter Marine, stated that asbestos blankets were used on the engines at Halter Marine, and that Mr. Pichon handled asbestos half-round insulation during his career at Halter Marine. However, Mr. Varnado was not able to connect these asbestos products to DDC. In fact, he stated that the asbestos blankets were made and delivered to Halter Marine by Reilly-Benton, a co-defendant in the instant case. Nor did Mr. Varnado ever suggest that the half-round insulation was manufactured by or in any way connected to DDC. Finally, Mr. Varnado testified that he probably left Halter Marine "around '87", which indicates that his testimony cannot have any relevance to Mr. Pichon's exposure to products made by DDC in 1988 and thereafter.
The plaintiffs also cite Mr. Merrion's testimony concerning the specially-made asbestos blankets used with Detroit Diesel branded engines. However, this testimony was in response to a question concerning the time period from 1945 to 1978, and is therefore not probative on the issue of Mr. Pichon's exposure from 1988 forward.
Similarly, the part of Mr. Frierson's testimony cited by the plaintiffs involves asbestos blankets made by George Engine Company, not DDC. George Engine Company, which was a distributor of GM's Detroit Diesel engines, went out of business in 1987 prior to the creation of DDC.
Finally, plaintiffs cite certain testimony of Mr. Robertson, a co-worker of Mr. Pichon at Halter Marine from 1968 to 1982 and from 1987 forward. Again, our review of Mr. Robertson's testimony reveals no reference to any post-1987 exposure of Mr. Pichon to asbestos-containing products made by DDC.
In summary, we conclude, as did the trial court, that the plaintiffs failed to meet their burden of providing factual support sufficient to rebut DDC's evidence that it never manufactured or sold any asbestos-containing product to which Mr. Pichon could have been exposed. We therefore conclude no genuine issue of fact exists regarding Mr. Pichon's non-exposure to any asbestos-containing products attributable to DDC. The trial court properly granted summary judgment on this issue.
CONCLUSION
Accordingly, for the reasons stated, we find that the trial court properly granted summary judgment dismissing the plaintiffs' claims against DDC. We therefore affirm that judgment.
AFFIRMED.
BELSOME, J., dissents with reasons.
I dissent.
In our de novo review of the trail court's grant of summary judgment in favor of DDC, we are limited to determining whether the plaintiffs have established a genuine issue of material fact, regarding DDC's successor liability as to pre-1988 asbestos exposure and direct liability as to post-1988 asbestos exposure, sufficient to overcome summary judgment. A review of the record indicates that the plaintiffs have met this burden.
The issue of successor liability directs us to the applicability of the "mere continuation rule." The "mere continuation rule" is a rule of successor corporation liability whereby liability is generally imposed when an acquiring corporation is a mere continuation of the selling corporation. Bourque v. Lehmann Lathe, Inc., 476 So. 2d 1125, 1127 (La.App. 3 Cir.1985), citing Golden State Bottling Co. v. NLRB, 414 U.S. 168, 94 S. Ct. 414, 38 L. Ed. 2d 388 (1973). Here the plaintiffs have asserted *247 that DDC is clearly a continuation of GM's Detroit Diesel-Allison Division.
The Hollowell court offered three instances in which a new corporation can be a successor corporation for liability purposes:
(1) The new company expressly assumed the liabilities of the old company; or (2) The formation of the new company was entered into to defraud the creditors of the old company; or (3) The circumstances attending the creation of the new company and its succession to the business and property of the old company are such that the new company was merely a continuation of the old company.
Hollowell v. Orleans Regional Hospital LLC, et al, 217 F.3d 379 (5th Cir.2000). The mere continuation doctrine premises liability on whether and to what extent there is a "continued de facto existence of the seller." Bourque v. Lehmann Lathe, Inc., 476 So. 2d 1125, 1128 (La.App. 3 Cir. 1985). The determination of whether a new corporation is simply a continuation of the old corporation is fact intensive.
In Hollowell. the court provided eight factors to apply in making the mere continuation determination:
(1) retention of the same employees;
(2) retention of the same supervisory personnel;
(3) retention of the same production facility in the same physical location;
(4) production of the same product;
(5) retention of the same name;
(6) continuity of assets;
(7) continuity of general business operations; and
(8) whether the successor holds itself out as the continuation of the previous enterprise.
Hollowell, 217 F.3d 379.
The majority of the elements mentioned above are addressed within the sales agreement between GM and DDC, and the affidavit of DDC's corporate representative, Dave Merrion. Those documents indicate that Detroit Diesel-Allison Division manufactured Detroit Diesel branded engines. On January 1, 1988, Detroit Diesel Corporation (DDC) was formed as a partnership between GM and Penske Corporation. DDC proceeded to purchase the assets of GM's Detroit Diesel-Allison Division.
The sales agreement specifically required DDC to offer employment to approximately 2700 salaried and hourly employees and provide them with benefit programs comparable to those previously offered by GM. When addressing the facility location and assets to be transferred, the agreement reads:
The purpose of this Agreement is to set forth the conditions of transfer of the business and assets currently carried on by General Motors Corporation ... through its Detroit Diesel Allison Division... at its manufacturing facilities at Redford Township and adjoining Detroit, Michigan ... to Detroit Diesel Corporation or its successors or assigns, including, but not limited to, the business of development, manufacture, assembly and sale of diesel engines.
* * * *
GM shall ... sell, transfer, assign, convey and deliver to DD and DD shall purchase, accept and acquire from GM or any Affiliate as hereinafter provided all the assets and properties ... relating to the Redford Operations ...
Essentially, the product, the Detroit Diesel name, the production location, the employees and the overall general business operations remained the same. Clearly the inquiries into the relevant factors support plaintiffs' assertion that DDC is a mere *248 continuation of GM's Detroit Diesel-Allison Division. The plaintiffs have more than met their burden to overcome summary judgment and allow the question of successor liability to be submitted to the jury.
However, the majority opinion, citing to Golden State Bottling Co., contends that the one fatal issue that prevents the plaintiffs from being able to assert successor liability under the continuation exception, is that the continuation exception mandates that one corporation purchase all the assets of another. The majority's opinion claims that based on David Marrion's affidavit, GM retained certain assets pertaining to specific engines and therefore, the plaintiffs cannot overcome that hurdle. Significantly, the sales agreement does not reference the retention of those assets in its "Excluded Assets" provision. That alone, creates a genuine issue of material fact as to whether all GM owned assets relating to the Detroit Diesel-Allison Division were purchased by DDC. Thus, DDC is not entitled to judgment as a matter of law. La. C.C.P. art. 966(B); Ocean Energy, Inc. v. Plaquemines Parish Government, 04-0066, p. 5 (La.7/6/04), 880 So. 2d 1, 5. Considering the record, we are required to allow the issue of successor liability to be presented to the fact finder.
Additionally, based solely on David Marrion's affidavit statement, the lower court and majority's opinion found that DDC, from its inception in 1988, never sold or manufactured asbestos-containing products. Although I do not find that the plaintiffs have proven otherwise, as late as 1986, the specification sheet for DDC's diesel engines still identified asbestos containing materials. The record is void of any later specification evidencing all asbestos containing materials had been phased out of the diesel engines. At a minimum, this raises a question of fact sufficient to warrant additional discovery. Accordingly, I would reverse the trial court's grant of summary judgment in favor of Detroit Diesel Corporation and remand.
NOTES
[1] The affidavit of David Merrion, former employee of GM who became a senior vice-president of DDC in 1988, states that upon the creation of DDC, Penske, which at that time owned 60% of DDC, purchased from GM all the assets of the Detroit Diesel-Allison Division "except for the assets related to Allison transmissions and the 6.2 liter and 8.2 liter engines used in General Motors' truck products."
[2] No such allegation has been made in the instant case.
[3] See footnote 1, supra.
[4] Louisiana has not adopted the more liberal "continued product line" theory of successor liability that has been used in products liability cases in California. See Bourque v. Lehmann Lathe, Inc., supra, 476 So.2d at 1127-1129.
[5] The fact that GM subsequently filed for bankruptcy (but has not been dissolved) is irrelevant to the determination of the legal question presented here.
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3 P.3d 242 (2000)
Randy HUTCHISON, Mary Hutchison, and Jerry Yennie, Appellants (Plaintiffs),
v.
Albert HILL, a/k/a Bud Hill, Karyl Hill and Agents of Bud Hill, namely Bob Arey, Contractor, Appellees (Defendants).
No. 98-350.
Supreme Court of Wyoming.
April 4, 2000.
*243 Representing Appellants: Donald J. Rissler of Central Wyoming Law Associates, P.C., Riverton, Wyoming.
Representing Appellees: Donald J. Keenan of Keenan Law Office, P.C., Riverton, Wyoming.
Before LEHMAN, C.J., and THOMAS, MACY, GOLDEN and HILL, JJ.
GOLDEN, Justice.
Randy and Mary Hutchinson and Jerry Yenne appeal from an order of the district court finding appellees Albert "Bud" and Karyl Hill's intended use of their property is not in violation of the Restrictive Covenants on the Use of Land in Sunburst Estates Subdivision in Riverton, Wyoming, and denying appellants' request for a permanent injunction.
We affirm.
ISSUES
Appellants present the following issues:
ISSUE I: Did the trial court err as a matter of law in holding that appellees' manufactured home did not fall within the definition of "trailer" as defined by the Sunburst Estates Subdivision's restrictive covenants?
ISSUE II: Did the trial court err in finding that appellee's manufactured home was not excluded as a metal framed home within the meaning of Sunburst Estates Subdivision's restrictive covenants?
Appellees contend the following:
I. Did the trial court err, as a matter of law, in holding that appellee's manufactured home is not a "trailer" under the covenants of Sunburst Estates Subdivision.
II. Did the trial court err in finding that appellees' manufactured home is not a "metal framed home."
FACTS
On December 29, 1980, G.L. Heckart, Dorothy A. Heckart, Dennis G. Heckart, Elaine S. Heckart, James R. Schaefer and Karalee H. Schaefer deeded lands to Sunburst, Inc., which were developed as Sunburst Estates, a subdivision located in Riverton, Wyoming. On May 21, 1981, Gerald L. Heckart, Dennis G. Heckart and Karalee H. Schaefer executed "Restrictive Covenants on Use of Land in SUNBURST ESTATES SUBDIVISION." The signatories were, at that time, officers of Sunburst, Inc., although the covenants do not reflect execution in their corporate capacity. Paragraph 3 of the covenants states:
USE: All lots herein shall be limited to private residential use and no commercial or business use will be permitted within the subdivision. No lot shall have constructed upon it more than one (1) single residence with appropriate out buildings. No unlicensed or inoperable motor vehicle *244 shall be stored or parked within the legal subdivision. No trailer house shall be stored or parked within the subdivision other than for the purpose of temporarily maintaining a residence during the construction of a building in conformity with the requirements as hereinafter set forth and not to exceed one (1) year; provided, however unoccupied campers and camp trailers may be stored upon the premises by the beneficial owners of the property. Double wide or any metal framed homes are to be considered trailers and will not be allowed.
Before purchasing a lot in Sunburst Estates, appellees, the Hills, sought to determine whether their manufactured home, which they planned to move in two halves and locate in the subdivision, would violate the subdivision covenants. The Hills intended to remove the axles, wheels and towing devices before permanently installing the home on a concrete foundation engineered to Uniform Building Code (UBC) standards. The frame of the home from the floor to the roof is constructed primarily of wood, although steel beams run the length of the floor. The Hills reviewed the covenants and met with Dennis Heckart, who informed them that he was not qualified to determine whether the Hills' home would violate the covenants. The Hills queried David Young, building official for the city of Riverton, who gave no opinion. Finally, the Hills contacted a banker who reviewed the covenants and agreed to loan the Hills money for purchase of the land. The Hills purchased the property and began construction of a foundation for their home.
A verified petition for declaratory judgment and permanent and temporary injunction was filed by Donald R. Yost and other residents of Sunburst Estates Subdivision, seeking to prohibit the Hills from constructing a concrete foundation for the placement of their manufactured home. The district court issued a temporary restraining order; however, following a hearing on August 26, 1998, the district court denied appellants' petition for temporary injunction, quashed the temporary restraining order, and set the case for trial. The Hills counterclaimed, arguing the restrictive covenants were invalid and unenforceable, lacked an accurate description of the lands subject to the covenants and the signatories had no right, title or interest in the land at the time the covenants were created and filed.
At a bench trial on September 14, 1998, Dennis Heckart testified the covenants were intended to exclude "double-wide trailers," which he described as, "two halves of a house put together." Citing changes in codes and standards over the years, Heckart testified he was not qualified to state whether the Hills' home was prohibited by the covenants.
Licensed real estate appraiser Mike McDonald testified the Hills' home was a double-wide manufactured home. According to McDonald, a double-wide manufactured home comes in two pieces, has a steel frame underneath, with wheels and tongue attached and, depending on the year it was manufactured, displays a Housing and Urban Development (HUD) tag, indicating it was built to HUD code. In contrast, a modular home which is built to UBC standards does not have a steel frame, although it also is transported to site by trailer. Because the floor of the Hills' home is constructed of metal, McDonald considered the home to have a steel frame and stated that removing the wheels, tongue and axles would not change its character. According to McDonald, the term "double-wide" now only refers to manufactured homes.
David Young testified the term "manufactured home" can apply to either a HUD standard home or a UBC factory-built home. Young defined a double-wide as a structure that comes in two halves and agreed that many, if not all, UBC factory-built structures come in two halves. Young considered the house frame to include walls, floor, load-bearing walls, and floor joists, and despite the two steel beams that run the length of the floor, considered the structure of a manufactured HUD home as mainly wood-framed.
Appraiser Robert Tomb testified that "double-wide" was a nebulous term that really did not have a definition and was not used in appraisal terminology, nor did "trailer" in and of itself have any meaning. Tomb considered a manufactured house one that bears *245 a HUD sticker and defined the frame of a house to include the floor system, roof and exterior support and walls.
On September 23, 1998, the district court determined the Hills' intended use of their property was not a violation of the subdivision covenants and denied the request for permanent injunction. Confining its decision to the interpretation of paragraph 3 of the Sunburst Estates Covenants, the court found, in part, the following:
3. The Court heard credible testimony that the term double wide defined a pre-1976 mobile home. Since 1976, the term double wide has been commonly used to refer to both HUD inspected homes and two piece modular Uniform Building Code homes. Based on that testimony, and the other confusing, circular and contradictory testimony, the term double wide does not have a definite and ascertainable meaning in reference to homes built after the adoption of the HUD code in 1976.
* * *
6. The frame of Defendants' house ... is a combination of metal and wood with more of the frame being made up of wood than metal.
7. Based on the evidence and testimony presented to the Court, Defendants' house is not a trailer house stored or parked within the subdivision as defined by the Sunburst Estates Covenants.
8. Based on the evidence and testimony presented to the Court, Defendants' house is not a metal framed home. The home is a metal and wood framed home, not excluded by the Sunburst Estates Covenants.
Following the district court's order, the parties stipulated to the dismissal of the Hills' counterclaim, and the district court ordered dismissal of defendants' counterclaim and plaintiff's response motion on October 26, 1998. As a result of the parties' stipulation and dismissal by the district court, we do not address the issues in Hills' counterclaim.
DISCUSSION
Standard of Review
This Court considers the district court's conclusions of law under de novo review. Anderson v. Bommer, 926 P.2d 959, 961 (Wyo.1996) (citing Samuel v. Zwerin, 868 P.2d 265, 266 (Wyo.1994)). However, unless the district court's findings are clearly erroneous or against the great weight of the evidence, we will not disturb them on appeal. Samuel, 868 P.2d at 267.
We treat restrictive covenants as contractual in nature and interpret them in accordance with the principles of contract law. McLain v. Anderson, 933 P.2d 468, 474 (Wyo.1997); Anderson, 926 P.2d at 961; McHuron v. Grand Teton Lodge Co., 899 P.2d 38, 40 (Wyo.1995). Most importantly, "[w]e seek to determine and effectuate the intention of the parties, especially the grantor(s), as it may appear or be implied from the instrument itself." Anderson, 926 P.2d at 961. We ascertain the true intention of the parties by looking at the writings as a whole, construing them to effectuate the intent of the parties. Sierra Trading Post, Inc. v. Hinson, 996 P.2d 1144, 1148 (Wyo. 2000) (citing Kindler v. Anderson, 433 P.2d 268, 270-271 (Wyo.1967)); McHuron, 899 P.2d at 41.
Whether language is ambiguous is a question subject to de novo review by this Court. Samuel, 868 P.2d at 266. "Language is ambiguous if it contains a double meaning." Id. (citing McNeiley v. Ayres Jewelry Co., 855 P.2d 1242, 1244 (Wyo.1993) (citing Cliff & Co., Ltd. v. Anderson, 777 P.2d 595, 599 (Wyo.1989))). Restrictive covenant language that is clear and unambiguous is construed according to its plain and ordinary meaning without reference to attendant facts, circumstances or extrinsic evidence. McLain, 933 P.2d at 474 (citing American Holidays, Inc. v. Foxtail Owners Ass'n, 821 P.2d 577, 579 (Wyo.1991); Klutznick v. Thulin, 814 P.2d 1267, 1270 (Wyo.1991); Knadler v. Adams, 661 P.2d 1052, 1053 (Wyo.1983)). Restrictions upon the use of land are not favored, will not be extended by implication and, when in doubt, will be construed in favor of the free use of the land. Kindler, 433 P.2d at 271.
Double Wide Trailer
The issue before the district court was whether the Hills' home was a "double *246 wide" or metal framed home and, therefore, a "trailer" under the restrictive covenants and excluded from the subdivision. Looking first to the drafters' intent, we note Mr. Heckart, an officer of Sunburst, Inc., and signatory of the covenants, refused to opine whether the Hills' manufactured home was permitted under the covenants. Although Mr. Heckart testified the intent of the covenants was to exclude "double-wide trailers," because interpretations, codes and standards had changed over the years, he simply could not say whether the Hills' home was permitted under the covenants. The district court determined that since 1976, the term "double wide" had been used to describe both HUD inspected homes and modular homes constructed to UBC standards. Finding the testimony "confusing, circular and contradictory," the district court ascertained no definite meaning for the term "double wide."
With the intent of the covenants' drafters in question as applied to the Hills' home, we look further to the covenants to ascertain their possible meaning. Paragraph 3 of the covenants discusses "trailer" in reference to a trailer house, which may not be stored or parked, except as a temporary residence not to exceed one year, and notes a camper and camp trailer may be stored, if unoccupied. In these instances, the type of structures referred to, i.e. house trailer, camper, and camp trailer, share the common attribute of mobility. Therefore, it would seem that for a double wide to be considered a trailer under the covenants, it would need to be mobile.
Noting that Wyoming statutes do not define "double wide," we seek a definition of "trailer" and find the statutes provide the following:
(xxiii) "Trailer" means a vehicle without propelling power designed to be drawn by a motor vehicle, but excludes converter gear, dollies and connecting mechanisms. The term includes the following vehicles as hereafter defined:
(A) "House trailer" means every trailer which is:
(I) Designed, constructed and equipped as a dwelling place, living abode or sleeping place, either permanently or temporarily;
(II) Equipped for use as a conveyance on streets and highways; and
(III) Eight and one-half (8 ½) feet or less in width, excluding appurtenances, or more than eight and one-half (8 ½) feet in width and used primarily as a mobile laboratory or mobile office.
Wyo. Stat. Ann. § 31-1-101(a)(xxiii) (LEXIS 1999).
The Hills' home will not be useable as a conveyance on streets and highways following its attachment to a permanent foundation, and though it exceeds eight and one-half feet in width, it will be used as a residence, not a mobile laboratory or mobile office. The Hills' home does not meet the statutory definition of house trailer.
Recently, a Colorado court considered whether double wide mobile homes and manufactured homes were trailer houses. Tucker v. Wolfe, 968 P.2d 179 (Colo.App.1998). The Colorado court determined a trailer house to be a temporary and transient structure, mounted on wheels and axles, capable of being moved, requiring a motor vehicle title if transported and whose main characteristic is mobility. Id. at 181. Although a double wide mobile home may be moved from place to place, the court discounted the notion that that alone was sufficient to consider it a temporary structure, finding mobility secondary to the primary function of providing a permanent dwelling. Id. at 182. That court stated, "[T]he greater sense of permanency and residential character attributable to double-wide mobile homes and manufactured housing distinguishes them from the commonly understood meaning of trailer houses." Id. at 183.
An Ohio court concluded the focus of the determination centered on when the manufactured home should be evaluated and its mobility once installed. Benner v. Hammond, 109 Ohio App. 3d 822, 673 N.E.2d 205, 208 (1996). Finding the construction of a foundation eliminated the indicia of mobility, that court determined a strange result would occur if the state of the housing were considered before it arrived on the property as opposed to being considered once it is in place. Benner, 673 N.E.2d at 208.
*247 We conclude the Hill's home is not a temporary and transient structure whose main characteristic is mobility and, therefore, is not a house trailer stored or parked within the subdivision and prohibited by the restrictive covenants.[1] See A.G. Barnett, Annotation, Use of Trailer or Similar Structure for Residence Purposes as within Limitation of Restrictive Covenant, Zoning Provision, or Building Regulation, 96 A.L.R. 2d 232, §§ 15 and 16 (1964).
Metal Framed Home
The second point at issue regards the frame of the Hills' home. Metal framed homes are considered trailers under the covenants and excluded. Young and Tomb testified the house frame included the floor, walls and roof. Although the floor of the Hills' home contains runners of steel through the length of the floor, it is constructed primarily of wood and cannot be considered a metal framed home for purposes of the covenants.
CONCLUSION
We hold, as a matter of law, the covenant in question was ambiguous as to whether or not a manufactured home was permissible in the subdivision, and sufficient evidence was provided to support the district court's conclusion that the Hills' home was not a double wide or metal framed home and thus excluded as a trailer under the covenants.
NOTES
[1] We note the following definitions are provided for state sales tax purposes:
(a)(xiii) "Transportable home" means and includes the following as defined:
(A) "Modular home" means a residential dwelling constructed in a factory to a residential construction code other than the Federal Manufactured Home Construction and Safety Standards;
(B) "Prebuilt home" means any residential dwelling that is wholly, or in substantial part, made, fabricated, formed or assembled in manufacturing facilities for installation or assembly on a building site. Prebuilt home shall include, but not be limited to, a manufactured home, modular home and mobile home.
(C) "Manufactured home" means a residential dwelling built in accordance with the Federal Manufactured Home Construction and Safety Standards which is a unit more than eight and one-half (8 ½) feet in width which is designed, constructed and equipped as a dwelling place or place of business to which wheels may be attached for movement upon streets or highways. Transportable homes are not included within the meanings of trailer houses or trailers.
Wyo. Stat. Ann. § 39-15-101(a)(xiii) (LEXIS 1999). We can also conclude, at least for tax purposes, the Hills' transportable home is not considered a trailer house or trailer.
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55 So. 3d 1179 (2010)
Lindsey Osborn BEASLEY, individually and as trustee of the Joseph Waintraub Management Trust; Kourtney Osborn Naish; and Susan W. Stocks
v.
Alan M. WELLS.
1080823.
Supreme Court of Alabama.
August 13, 2010.
*1180 C. Fred Daniels and Melanie M. Atha of Cabaniss, Johnston, Gardner, Dumas & O'Neal LLP, Birmingham, for appellants.
Joshua J. Wright and Greg W. Foster of Hollis, Wright & Harrington, P.C., Birmingham, for appellee.
PER CURIAM.
Lindsey Osborn Beasley, individually and as trustee of the Joseph Waintraub Management Trust; Kourtney Osborn Naish; and Susan W. Stocks (hereinafter collectively referred to as "the respondents") appeal from a summary judgment entered in favor of Alan M. Wells.[1] We reverse and remand.
Facts and Procedural History
Joseph Waintraub, the father of Wells and Stocks, died on January 21, 2007. Waintraub had executed a will in 2002 ("the will"). Among other things, the will deposited the residue of the estate into a trust, known as the Joseph Waintraub Management Trust, created contemporaneously with the will. Stocks, Beasley, and Naish are the beneficiaries of that trust. Waintraub's wife predeceased him. A petition to probate the will was filed in the Jefferson County Probate Court on February 1, 2007. The will stated, in part, as follows:
"ITEM III
"DISPOSITION OF PERSONAL EFFECTS
"(a) I give and devise all of my wearing apparel, jewelry, books, pictures, household furniture and furnishings, both useful and ornamental, any automobile that I may own, and all other objects of my personal use, to my wife, Faye Waintraub, absolutely, if she is living at the time of my death. There is excluded from this devise all cash on hand or on deposit, stocks, bonds, notes, evidences of debts, other choses in action, *1181 intangibles and all other property held for investment. In the event my said wife shall predecease me, I give and devise all of said objects of property, in equal shares, absolutely, to my children, Alan M. Waintraub[[2]] and Susan W. Stocks. If either of my children should predecease me, then I give and devise said child's share of said property to his or her then living lineal descendants, per stirpes, if any, and if none, to my other child, or to his or her then living lineal descendants if he or she should predecease me, per stirpes. In the event that my said wife and my said children should all predecease me, leaving no lineal descendants of mine surviving, then this devise shall lapse, and the aforesaid property shall become a part of the residue of my estate. I hereby vest in my said Personal Representative, hereinafter named, full power and authority to determine what objects of property are included in the foregoing description contained in this Item of my Will, and, in the event my wife shall not be living, to make such division of said objects of property among my descendants as, in the opinion of my Personal Representative, may be desirable, having due regard for the personal preferences of my descendants."
On July 3, 2007, Wells filed in the probate court a "petition for determination of share and an order that no distribution be made and for inventory of estate." That petition asked the probate court to direct the personal representative, Regions Bank ("Regions"), to include "cash on hand or on deposit, stocks, bonds, notes, evidences of debts, other choses in action, intangibles and all other property held for investment" in the devise of "all of said objects of property, in equal shares, absolutely, to [Waintraub's] children" in Item III(a) of the will. Regions had determined that the "said objects of property" given to Waintraub's children in Item III(a) of the will did not include Waintraub's cash or investment property excluded by the second sentence of Item III(a). Wells's petition also asked the court to order Regions to file an inventory of the estate and to make no distribution of the estate until there was a final resolution concerning Wells's share of the estate. On August 8, 2007, the respondents filed a response to Wells's petition; Regions also filed a response that same day.
On July 1, 2008, Wells moved for a summary judgment, arguing that the phrase "all of said objects of property" in the third sentence in Item III(a) of the will is unambiguous and should be interpreted to include "all cash on hand or on deposit, stocks, bonds, notes, evidences of debts, other choses in action, intangibles and all other property held for investment," referenced in the second sentence. On July 18, 2008, Regions moved for a summary judgment, arguing that the unambiguous meaning of the phrase "all of said objects of property" in the third sentence in Item III(a) of the will does not include "all cash on hand or on deposit, stocks, bonds, notes, evidences of debts, other choses in action, intangibles and all other property held for investment" referenced in the second sentence and that "the express language of the will vests `full power and authority' in the personal representative to determine what objects are to be included in the Item III devise of the will." That same day, the respondents also moved for a summary judgment. Like Regions, the respondents argued that the unambiguous language of Item III(a) of the will does not include cash or investment property in the devise of "all of said objects of property" *1182 to Waintraub's children and that the express language of Item III(a) of the will delegates to the personal representative "full power and authority" to determine what objects are to be included in the devise to Waintraub's children. Additionally, the respondents argued that certain trusts, including the Joseph Waintraub Management Trust, that were controlled by Waintraub evidenced an intent to prevent Wells from inheriting any of Waintraub's financial assets.
On February 12, 2009, the probate court entered a summary judgment in favor of Wells, holding:
"After review of the Last Will and Testament of Joseph Waintraub (`the Waintraub Will') and its Codicils, and after oral argument, the Court finds as follows:
"1. Extrinsic evidence is unnecessary to consider in this case if there is no latent ambiguity. Given the language itself, there is no ambiguity in the language of the Will and/or Codicils. As such, no extrinsic evidence submitted herein was considered in this ruling. This Court rules based on the language of the Will and/or Codicils themselves, regardless of the arguments and extrinsic evidence presented by either of the parties.
"2. Item III(a) of the Waintraub Will contains two separate devises. The first devise is to Mr. Waintraub's wife, Faye Waintraub, and would control had Faye survived Mr. Waintraub, which she did not. The second devise is to Mr. Waintraub's children, Alan M. Waintraub (Wells) and Susan W. Stocks; it is the controlling devise in this case because Faye Waintraub predeceased her husband.
"3. The first devise in Item III(a), gave `all of [Mr. Waintraub's] wearing apparel, jewelry, books, pictures, household furniture and furnishings, both useful and ornamental, any automobile that [Mr. Waintraub owned], and all other objects of [his] personal use' to Faye Waintraub, if she were living at the time of Mr. Waintraub's death. Mr. Waintraub excluded from this devise `all cash on hand or on deposit, stocks, bonds, notes evidences of debts, other choses in action, intangibles and all other property held for investment.'
"4. The second devise in Item III(a) states that in the event Faye Waintraub were to predecease her husband, then Mr. Waintraub gives `all of said objects of property, in equal shares, absolutely to [his] children, Alan M. Waintraub (Wells) and Susan W. Stocks. The plain language of this devise incorporates both the `objects of personal use' given to Faye Waintraub in the first devise and the cash, stocks, and other intangibles that were excluded from the devise to Ms. Waintraub by use of the phrase `all of said objects of property.' The court finds that `all of said objects of property' in the third sentence in Item III(a) refers to both preceding sentences in Item III(a) of the Last Will And Testament.
"5. Mr. Waintraub gave Regions Bank, as the Personal Representative of his estate, `full power and authority' to determine the objects of property contained in the categories of property devised by Item III(a) of the Waintraub Will. Regions Bank's authority, however, is not unlimited and cannot be exercised expressly contrary to Mr. Waintraub's intent as expressed by the plain language of the Waintraub Will. See, e.g., Martin v. First Nat'l Bank of Mobile, 412 So. 2d 250 (Ala.1980[1982]); Elliott v. Elliott, 349 So. 2d 1092 (Ala. 1972[1977]). Such an exercise of executory authority may be challenged by a *1183 will's beneficiaries, as Mr. Wells has done in this case. Baker v. Wright, [257 Ala. 697,] 60 So. 2d 825, 832 (Ala.1952). Thus, the actions of Regions Bank as Personal Representative are not conclusive in this case.
"6. Martin v. First National Bank of Mobile does not bar this Court from exercising its proper authority in this case, contrary to Respondents' assertion that there is `no room for [this Court's] construction;' those words, as used in Martin, applied to the court's role in deciding the meaning of the discrete phrase `personal property.' Martin, 412 So.2d at 254. In the present case, intervening language in Mr. Waintraub's Will, and the fact that it contains two devises, instead of only one like the Will at issue in Martin, support this Court's ruling. This Court followed the true holdings of Martin, that extrinsic evidence is improper unless a will contains latent ambiguities, and that rules of construction cannot be applied to an unambiguous will, Martin, 412 So. 2d 250.
"Thus, it is hereby ORDERED and ADJUDGED as follows:
"1. The MOTION FOR SUMMARY JUDGMENT filed by Petitioner Alan M. Wells is GRANTED.
"2. The MOTION FOR SUMMARY JUDGMENT filed by Regions Bank as Personal Representative of the Estate of Joseph Waintraub, and the WAINTRAUB RESPONDENTS' MOTION FOR SUMMARY JUDGMENT filed by Lindsey Osborn Beasley, individually and as Trustee of the Joseph Waintraub Management Trust, Kourtney Osborn Naish, individually, and Susan W. Stocks, individually, on behalf of themselves in such capacities and as representatives of their minor and unborn issue, are both DENIED.
"3. Mr. Wells is entitled to receive one-half of Mr. Waintraub's `wearing apparel, jewelry, books, pictures, household furniture and furnishings, both useful and ornamental, any automobile that [Mr. Waintraub] may own, and all other objects of [Mr. Waintraub's] personal use,' and one-half of all of Mr. Waintraub's `cash on hand or on deposit, stocks, bonds, notes, evidences of debts, other choses in action, intangibles and all other property held for investment' at the time of Mr. Waintraub's death.
"4. Regions Bank, as Personal Representative, shall make an accounting to Mr. Wells and Ms. Stocks, of all of the `cash on hand or on deposit, stocks, bonds, notes, evidences of debts, other choses in action, intangibles and all other property held for investment' contained in the Estate of Joseph Waintraub at the time of Mr. Waintraub's death.
"5. Costs of Court are hereby taxed against the estate."
(Footnote omitted.) The respondents appealed.
Standard of Review
In Pittman v. United Toll Systems, LLC, 882 So. 2d 842 (Ala.2003), this Court set forth the standard of review applicable to a summary judgment:
"This Court's review of a summary judgment is de novo.
"`In reviewing the disposition of a motion for summary judgment, "we utilize the same standard as the trial court in determining whether the evidence before [it] made out a genuine issue of material fact," Bussey v. John Deere Co., 531 So. 2d 860, 862 (Ala. 1988), and whether the movant was "entitled to a judgment as a matter of law." Wright v. Wright, 654 So. 2d 542 (Ala.1995); Rule 56(c), Ala. R. Civ. *1184 P. When the movant makes a prima facie showing that there is no genuine issue of material fact, the burden shifts to the nonmovant to present substantial evidence creating such an issue. Bass v. SouthTrust Bank of Baldwin County, 538 So. 2d 794, 797-98 (Ala.1989). Evidence is "substantial" if it is of "such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." Wright, 654 So.2d at 543 (quoting West v. Founders Life Assurance Co. of Florida, 547 So. 2d 870, 871 (Ala.1989)). Our review is further subject to the caveat that this Court must review the record in a light most favorable to the nonmovant and must resolve all reasonable doubts against the movant. Wilma Corp. v. Fleming Foods of Alabama, Inc., 613 So. 2d 359 (Ala. 1993) [overruled on other grounds, Bruce v. Cole, 854 So. 2d 47 (Ala. 2003)]; Hanners v. Balfour Guthrie, Inc., 564 So. 2d 412, 413 (Ala.1990).'"
882 So.2d at 844 (quoting Hobson v. American Cast Iron Pipe Co., 690 So. 2d 341, 344 (Ala.1997)).
Discussion
The issue before this Court is whether the devise to Waintraub's children of "all of said objects of property" in the third sentence in Item III(a) of the will includes Waintraub's "cash on hand or on deposit, stocks, bonds, notes, evidences of debts, other choses in action, intangibles and all other property held for investment" referred to in the second sentence in Item III(a). Both Wells and the respondents contend that the language of the will is unambiguous. However, the respondents argue that the devise to Waintraub's children in Item III(a) includes only Waintraub's "wearing apparel, jewelry, books, pictures, household furniture and furnishings, both useful and ornamental, any automobile that [he] may own, and all other objects of [his] personal use," as described in the first sentence in Item III(a). The respondents contend that Waintraub's intent in Item III(a) was to make the children contingent beneficiaries of the objects Waintraub devised to his wife in the first sentence in Item III(a). On the other hand, as the probate court held, Wells contends that Item III(a) of the will contains two separate devisesone to Waintraub's wife and one to his children. Wells argues that the phrase "all of said objects of property" includes both the objects of personal use described in the first sentence in Item III(a) and "cash on hand or on deposit, stocks, bonds, notes, evidences of debts, other choses in action, intangibles and all other property held for investment," described in the second sentence in Item III(a).
In Cottingham v. McKee, 821 So. 2d 169 (Ala.2001), this Court summarized the principles of law applicable when a court is construing a will:
"The Alabama Legislature has established that `[t]he intention of a testator as expressed in his will controls the legal effect of his dispositions.' § 43-8-222, Ala.Code 1975. `In Alabama the law is well settled that "the intention of the testator is always the polestar in the construction of wills, and that the cardinal rule is to give that intention effect if it is not prohibited by law."' Hansel v. Head, 706 So. 2d 1142, 1144 (Ala.1997), quoting deGraaf v. Owen, 598 So. 2d 892, 895 (Ala.1992). `To determine the intent of a testator or testatrix, the court must look to the four corners of the instrument, and if the language is unambiguous and clearly expresses the testator's or testatrix's intent, then that language *1185 must govern.' Born v. Clark, 662 So. 2d 669, 671 (Ala.1995)."
821 So.2d at 171-72. Furthermore, this Court has stated: "The rule, of course, is that the intention of the testator governs the construction of a will, but if by its terms it is unambiguous there is no room for construction and it will be taken as written." Fuller v. Nazal, 259 Ala. 598, 603, 67 So. 2d 806, 810 (1953).
In the present case, the terms of Item III(a) of the will are unambiguous and must be taken as written. Considering Item III(a) as a whole, we conclude that Waintraub's intent was not to include "cash on hand or on deposit, stocks, bonds, notes, evidences of debts, other choses in action, intangibles and all other property held for investment" in the devise of "all of said objects of property" to his children in Item III(a) of the will. Item III(a) is entitled "Disposition of Personal Effects." As the Court of Appeals of Nebraska has held, "[t]he term `personal effects' ordinarily designates only such property that is worn or carried about the person." Clausen v. Columbia Nat'l Ins. Co., 1 Neb. Ct. App. 808, 811, 510 N.W.2d 399, 402 (1993) (citing In re Estate of Stengel, 557 S.W.2d 255 (Mo.Ct.App.1977); In re Estate of Reitz, 213 Kan. 534, 516 P.2d 909 (1973); Estate of Johnson, 5 Cal. App. 3d 173, 84 Cal. Rptr. 914 (1970); and Black's Law Dictionary 1143 (6th ed. 1990)). The term "personal effects" ordinarily does not include cash and property held for investment. In the second sentence in Item III(a) of the will, Waintraub clarified what he intended to include in his personal effects by specifically stating that "cash on hand or on deposit, stocks, bonds, notes, evidences of debts, other choses in action, intangibles and all other property held for investment" are "excluded from this devise." Waintraub did not manifest any intention in Item III(a) of the will to include the property listed in the second sentence in any devise.
Also, the property included in the first sentence in Item III(a) is specifically described as "objects of [his] personal use." Likewise, in the third sentence in Item III(a), Waintraub's children are given "objects of property." The property excluded from the devise in the second sentence in Item III(a) is never described as "objects."
Furthermore, Waintraub's clearly stated intent was for the devise to his children in the third sentence in Item III(a) of the will to take effect only "[i]n the event [his] said wife shall predecease [him]." There is no indication that Waintraub intended for the devise to his children and the devise to his wife in Item III(a) to be completely separate devises in which his children would receive certain property if his wife predeceased him that neither his children nor his wife would receive under Item III(a) if she did not predecease him. As the respondents contend, Item III(a) of the will is clearly one devise of Waintraub's personal effects, with contingent beneficiaries. Waintraub's intent in Item III(a) was to make his wife the primary beneficiary and his children the contingent beneficiaries of the objects listed in the first sentence in Item III(a) of the will.
We hold that the language of Item III(a) of the will is unambiguous and that it clearly expresses Waintraub's intent to give "all of [his] wearing apparel, jewelry, books, pictures, household furniture and furnishings, both useful and ornamental, any automobile that [he] may own, and all other objects of [his] personal use" to his children if his wife predeceased him. Item III(a) of the will clearly expresses Waintraub's intent to exclude from that devise "cash on hand or on deposit, stocks, bonds, notes, evidences of debts, other choses in action, intangibles and all other property held for investment." Therefore, the probate *1186 court erred in entering a summary judgment in favor of Wells.
Conclusion
Based on the foregoing, we reverse the probate court's judgment and remand this case for proceedings consistent with this opinion.
REVERSED AND REMANDED.
COBB, C.J., and WOODALL, STUART, PARKER, and SHAW, JJ., concur.
NOTES
[1] Lindsey Osborn Beasley and Kourtney Osborn Naish are Stocks's daughters and Joseph Waintraub's granddaughters.
[2] Alan M. Waintraub changed his name to Alan M. Wells in August 2006.
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2010 Ark. 223
Stark LIGON, Executive Director, Supreme Court Committee on Professional Conduct, Appellant,
v.
Frank David REES, Ark. Bar No. 79238, Appellee.
No. 09-555.
Supreme Court of Arkansas.
May 13, 2010.
*21 Stark Ligon, Office of Professional Conduct, Little Rock, for appellant.
Friday, Eldredge & Clark, LLP, Little Rock, by: Donald H. Bacon and Martin A. Kasten, and Asa Hutchinson Law Group, PLC, Rogers, by: Asa Hutchinson and Asa Hutchinson, III, Little Rock, for appellee/cross-appellant.
JIM GUNTER, Justice.
Appellant Stark Ligon, the Executive Director of the Office of Professional Conduct (OPC), appeals the order of the Supreme Court Committee on Professional Conduct (the Committee) finding that David Rees violated Rules 1.2(d) and 8.4(c) of the Rules of Professional Conduct (the Rules).[1] This appeal is one of four involving David Rees, submitted to this court for decision and handed down this same day. See Ligon v. Rees, 364 S.W.3d 28, No. 09-556; Ligon v. Rees, 364 S.W.3d 7, No. 09-559; Ligon v. Rees, 364 S.W.3d 1, No. 09-560. On appeal in this case, appellant argues that the Committee erred in (1) not implementing a more substantial and appropriate sanction for Rees's misconduct, (2) failing to make findings on two alleged rule violations, and (3) finding no violation of Rule 1.5(a) in Count C.1 of the complaint. Appellee David Rees cross-appeals and argues that the Committee erred in not granting his motion to dismiss for failing to prosecute in a timely manner. Because this appeal involves the discipline of attorneys, this court has jurisdiction under Ark. Sup.Ct. R. 1-2(a)(5). We affirm on direct appeal and cross-appeal.
On November 14, 2006, appellee was notified by mail that a complaint had been filed against him with the OPC in the name of a former client, Johnny Lee Ford. According to the complaint, appellee had represented Ford in 1995 on a murder charge that was tried to a jury twice and resulted in a hung jury both times. Appellee's fee for this representation was $25,000, of which Ford only paid him $5,000. On March 6, 1999, Ford was injured in an automobile accident, and appellee agreed to represent him on a 40% contingency-fee basis. On April 23, 1999, appellee filed suit on behalf of Ford against Donald Jones and his minor son, who was driving the vehicle that struck Ford's backhoe, and Farm Bureau made a policy-limits offer of $100,000 to settle the case. The defendant's attorney, Bill Bristow, also told appellee that his client could give appellee another $25,000. Appellee encouraged Ford to go along with a scheme against his medical creditors, in which the creditors would only be told about the $100,000 recovery. Appellee and the Fords signed an undated "settlement *22 sheet" based on $100,000 in April 1999. The settlement showed appellee taking a fee of 33%, instead of 40%, and also showed appellee recovering additional fees, specifically the $20,000 from the earlier criminal case and $1500 from a custody case. Under this arrangement, the total percentage of fees that would be taken by appellee was actually 55%, which the complaint alleged was clearly unreasonable.
While appellee was representing Ford, Ford also consulted with another attorney, Kent Rubens. Ford ultimately terminated appellee's representation, and Rubens became Ford's attorney in the automobile-accident suit. Rubens amended the complaint to add the passenger in the car with Jones as a defendant on a joint-venture allegation. Rubens eventually negotiated a $200,000 settlement and gave appellee notice of the settlement and a hearing on September 19, 2003, at which he could pursue an attorney's fee lien claim. Appellee's claim was for a fee lien of $32,000, but after the court found that he had no statutory fee lien on Ford's recovery but could pursue a quantum meruit claim, appellee dropped all claims to a fee on the Ford case and agreed not to appeal.
The complaint alleged violations of the following Model Rules of Professional Conduct: Rule 1.1, which requires a lawyer to provide competent representation to a client; Rule 1.2(d), which provides that a lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent; Rule 1.5(a), which requires a lawyer's fee to be reasonable; Rule 4.4, which requires that, in representing a client, a lawyer shall not use means that have no substantial purpose other than to embarrass, delay, or burden a third person; and Rule 8.4(c), which requires that a lawyer not engage in conduct involving dishonesty, fraud, deceit, or misrepresentation. The OPC also sought costs for the investigation and hearing of the proceedings in this case, fines, and restitution.
Appellee filed a response on March 19, 2007, in which he denied any wrongdoing under the Professional Rules of Conduct. After a proposed discipline by consent, which encompassed this complaint and three other complaints, was rejected by this court on May 8, 2008, the complaint was sent to the Committee on Professional Conduct-Panel A. Appellee was notified in a letter dated July 25, 2008, that the panel found that his conduct had violated the Rules of Professional Conduct. Appellee requested a de novo public hearing, pursuant to Section 10.D.3 of the Procedures of the Arkansas Supreme Court Regulating Professional Conduct of Attorneys at Law (the Procedures), on August 11, 2008. The Ford complaint, along with the three other complaints, were set for hearing on February 3-5, 2009.
On January 9, 2009, appellee filed a motion to dismiss the Ford complaint. Appellee argued that the OPC received the original complaint in this matter, filed by Kent Rubens, on or about December 9, 2003, but waited three years before filing a complaint against appellee in December 2006. Appellee argued that this delay was not justified, was prejudicial, and rendered him incapable of adequately defending himself against the charges, most notably because Rubens died in 2008, so appellee contended that he had no chance to depose or cross-examine him. Rubens was also in possession of original tape recordings between appellee and Ford, which is part of the evidence offered against appellee, and appellee intended to question Rubens regarding the authenticity, accuracy, and chain of custody of the recordings. Appellant responded on January 12, 2009, arguing that appellee had waived these arguments by not previously moving to *23 dismiss in response to the complaint. Appellant also argued that appellee had failed to demonstrate any difficulty in preparing a defense and thus failed to show that any delay was prejudicial. At a pre-hearing conference held on January 13, 2009, the panel chairman announced that the motion would be denied "because there is no statute of limitations." There was also some discussion of whether the Committee would announce sanctions after deliberating each case separately or would wait until all four cases had been deliberated before imposing sanctions. The chairman stated that, although it seemed logical to wait until all the cases were over to impose sanctions, it appeared that the rules required the Committee to make the sanctions decision after each case. So, unless the parties agreed otherwise, sanctions would be imposed after each case was decided. On January 23, 2009, an order was entered consolidating these rulings made in the pre-hearing conference.
The public hearing on the four complaints began on February 3, 2009, and the Ford complaint was the first to be heard. After hearing testimony from numerous witnesses and closing arguments from counsel, the Committee took the complaint under advisement and stated that it would reconvene in the morning to announce a decision. The next morning, February 4, 2009, it was announced that every decision was unanimous among the panelists, and that the panel had found violations only of Rules 1.2(d) and 8.4(c). The Committee also announced that it was accepting appellee's motion that the Committee not look at sanctions until after the conclusion of all four of the cases. On February 5, 2009, after all four cases had been heard, the Committee announced that the sanction in the Ford case would be a six-week suspension plus costs.
A written order was entered on February 23, 2009, in which the Committee explained that, while appellee had testified at the hearing that the purpose of the settlement sheet was to show Ford how a settlement worked, "the evidence is conclusive that the purpose of preparing the settlement sheet was to show Mr. Ford's medical creditors, who had approximately $117,000 in liens, that only $100,000 was available for the settlement." Thus, the Committee found that appellee had violated Rules 1.2(d) and 8.4(c), in that he advised Ford to go along with a scheme he devised by which the medical-lien claimants would be told that only $100,000 was recovered in his suit. The Committee found no violations of Rules 1.1, 1.5(a), or 4.4. The Committee ordered that appellee's law license be suspended for forty-two days, effective on the date the order was filed with the Clerk of the Arkansas Supreme Court. Appellee was also ordered to pay $1,022.82 in costs for the hearing. On March 16, 2009, the OPC filed a notice of appeal, and on March 26, 2009, appellee filed a notice of cross-appeal.
Our standard of review when reviewing decisions of the Arkansas Committee on Professional Conduct is de novo review on the record, and we affirm the Committee's actions and findings unless they are clearly erroneous. Gillaspie v. Ligon, 357 Ark. 50, 160 S.W.3d 332 (2004). A finding is clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been committed. Ligon v. Stewart, 369 Ark. 380, 255 S.W.3d 435 (2007). Due deference is given to the Committee's superior position to determine the credibility of the witnesses and the weight to be accorded to their testimony. Stilley v. Supreme Court Comm. on *24 Prof'l Conduct, 370 Ark. 294, 259 S.W.3d 395 (2007).
For his first point on appeal, appellant asserts that the forty-two-day suspension imposed by the Committee was not appropriately or proportionately substantial or severe. Much of appellant's argument on this point consists of short summaries of ten other attorney disciplinary actions, including one from Oklahoma, to use as a comparison. These ten other cases, in which the attorney received a more severe punishment than appellee did in the present case, involved various levels of serious misconduct and, in most cases, also involved a larger number of violations. Appellant also asks this court to consider several "aggravating factors," including (1) an alleged conversation between appellee and Ford, in which appellee stated he was going to "kick his [Ford's] ass," and (2) the possible impropriety of conversations between appellee and Judge Burnett about the judge's possible employment with him after he retired.
In response, appellee argues that we should reject appellant's suggestion that we compare the sanction in this case to sanctions in other cases and should instead focus on the facts of the present case. Appellee also notes case law in which this court rejected such use of comparison in attorney-discipline cases. In Colvin v. Comm. on Prof'l Conduct, 309 Ark. 592, 832 S.W.2d 246 (1992), this court stated
Appellant recognizes that, upon a finding of a violation of the Model Rules, the Committee may suspend him. He alternatively argues that, even if the Committee's decision that he violated the rule is affirmed, it should be modified to conform to precedents established by the Committee. Without authority or convincing argument he asserts that the sanctions made public and published "in the larger state newspapers and the Arkansas Bar Journal" should be considered as precedent and applied to this case. The argument is without merit for a number of reasons. First, there is reason to question the validity of appellant's statistics used in his argument because he uses statistics compiled from only August through October of 1989. Second, subject to certain exceptions, confidentiality of all communications, complaints, formal complaints, testimony, and evidence based upon a complaint is absolutely privileged. As a result, the facts of each Committee decision made public are not revealed or made known to this court for any consideration or determination of precedential value. Third, even if the statistics were valid, we have stated in the context of criminal law that we will not reduce or compare sentences that are imposed within statutory limits. In the civil context of damages awards, a comparison of awards made in other cases cannot be relied on as a measure of excessiveness. Thus, we reject the argument.
Id. at 594-95, 832 S.W.2d at 247-48 (internal citations omitted). See also Clark v. Supreme Court Comm. on Prof'l Conduct, 320 Ark. 597, 898 S.W.2d 446 (1995) (rejecting appellant's argument that punishment was excessive and stating that when the Committee's action was within the range of sanctions for a violation of a provision of the Model Rules, we affirmed the Committee's decision). Appellee contends that, under the facts and circumstances of this case, the sanction imposed was adequate. And finally, appellee argues that appellant requested no consideration of the "aggravating factors" below and should be barred from doing so on appeal.
Section 17(E)(2) of the Procedures provides that when the Committee finds that an attorney has violated any provision of *25 the Rules, the Committee is authorized to suspend the attorney for a period up to but not exceeding five years. We find that appellant has failed to demonstrate that the Committee's action of imposing a six-week sanction in this case was clearly erroneous, and pursuant to Colvin, supra, we reject appellant's suggestion to compare this sanction with sanctions imposed in other cases. We therefore affirm the sanction imposed by the Committee as it is within the range of sanctions authorized for a violation of a provision of the Rules. See Clark, supra.
On his second point on appeal, appellant argues that eight separate counts were contained in the complaint, but the Committee only announced decisions on five of those counts. This is factually incorrect; appellant claims there is no decision on Count C.2, but the Committee clearly announced on page four of its order that it found no violation as alleged in Count C.2. Appellant is correct, however, that there was no announced decision on Counts B.2 and E.2. The Committee decided that, having found a violation of Rule 1.2(d) in Count B.1, it would not vote separately on Count B.2, and having found a violation of Rule 8.4(c) in Count E.1, it would not vote separately on Count E.2. Count B.2 alleged a violation of Rule 1.2(d) in that appellee attempted to set up a settlement on the basis of a total recovery of $100,000 for Ford in which appellee's nonlien claims would receive preference over the general medical creditors; Count E.2 alleged a violation of Rule 8.4(c) in that appellee engaged in conduct involving dishonesty, fraud, deceit, or misrepresentation when he attempted to set up such a settlement. Appellant suggests that, on this court's de novo review, we should find that the above counts were proven and impose further sanctions accordingly.
In response, appellee argues that appellant failed to obtain rulings on the above counts, so the argument is not preserved for our review. See Wilson v. Neal, 332 Ark. 148, 964 S.W.2d 199 (1998) (refusing to address appellant's arguments on appeal because he did not raise them below or seek a ruling from the court in a disbarment action). After the Committee had announced its findings, appellant did not request a ruling on the above counts, inquire as to why no ruling was made, or file a motion to modify the findings or otherwise obtain a ruling. We agree with appellee that we have no ruling on this argument and, thus, find that it is not preserved for appellate review. We also note that, as appellant himself has recognized, there is no requirement in the Procedures that the Committee issue a ruling on each and every count in the complaint.
For his final point on appeal, appellant takes issue with the Committee's ruling that there was no violation of Rule 1.5(a), which requires a lawyer's fee to be reasonable. Appellant argues that, by charging nonrelated fees of $20,000 and $1500 in the proposed settlement agreement of Ford's personal-injury suit, appellee was "improperly making his law firm a preferred creditor of Ford over the rights and financial interests of medical providers who had cared for Ford in his 1999 injury." The fact that appellee "lowered" his fee claim to $32,000 after the case had settled "clearly" shows that his attempt to get the nonrelated fees was inappropriate and excessive under Rule 1.5(a).
In response, appellee notes that the actual sum of fees collected for all of his representations of Ford were minimal: $5,000 for two murder trials and no fee at all for his work on the personal-injury case. Appellee also points to witness testimony that stated that the fees charged were reasonable and somewhat low in *26 some cases. Appellee also argues that appellant seems to be mixing his allegations of misconduct. Appellant argues a violation of Rule 1.5(a) based on the alleged attempt to defraud a lienholder, but whether a fee is unreasonable under the rule is a determination made regarding the attorney's conduct toward the client, irrespective of the interests of third parties.
Considering the deference given to the Committee's superior position to determine the credibility of the witnesses and the weight to be accorded to their testimony, Stilley, supra, coupled with the fact that appellee ultimately collected very little in fees from Ford, we find that appellant has failed to show that the Committee's decision on this point was clearly erroneous. Thus, we affirm on this point.
On cross-appeal, appellee argues that it was error for the Committee to deny his motion to dismiss. Appellee acknowledges there is no statute of limitations for violations of the rules of professional conduct, but argues that where an accused suffers from prejudice from a prosecutorial delay, the action should be dismissed. Appellee bases this argument on criminal law, and specifically cites Scott v. State, 263 Ark. 669, 566 S.W.2d 737 (1978), in which this court stated
Apparently the court and the prosecutor assumed that because there is no statute of limitations for murder, charges can be filed at any time. ... Just because the statute of limitations does not run on a murder charge does not mean that a person can be brought to trial at any time. The prosecution cannot delay simply for the purpose of gaining a tactical advantage over the accused.
Id. at 673-74, 566 S.W.2d at 740 (internal citations omitted). This court stated that if it could not be shown that the State had good cause for its delay in filing charges, then the charges should be dismissed, and we remanded to give the State an opportunity to explain the delay.
Appellee argues that his case parallels the Scott case. Appellant was first notified of appellee's alleged violations in December 2003, via a letter from Kent Rubens[2], but the complaint was not filed until December 2006. Appellee contends that such a delay was unjustified and unduly prejudiced him. Appellant offers no explanation for the delay, and appellee was substantially prejudiced, most notably because Rubens died in November 2008, and appellee was therefore unable to cross-examine him at the hearing on these charges. Appellee argues that the delay significantly interfered with his ability to defend himself.
In response, appellant first asserts that appellee's cross-appeal is moot because appellee has already served his suspension and paid the costs imposed on him by the Committee's order. With regard to the three-year delay in filing the complaint, appellant cites generally to the "substantial" demands on the "time, limited staff, and resources of the Office of Professional Conduct." And, other than the Rubens matter, appellant claims that appellee makes no specific allegation of any actual prejudice. Appellant also notes that appellee requested a public hearing in this matter on August 11, 2008, and Rubens did not pass away until November 2008. Appellant argues that appellee could have deposed Rubens within that period of time, in preparation for the hearing, but he did not do so. Appellant also asserts that the Rubens material is mostly opinion, and the substantive factual matters set out by *27 Rubens were verified by other proof in the record.
In reply, appellee argues that appellant has still not provided a satisfactory explanation for the delay and suggests that, by timing the filing with the three other complaints, it may have been a tactic to increase the likelihood of the finding of a violation by the Committee. Appellee also reiterates that without the three-year delay, Rubens would have been required to testify before the Committee, and appellee would have had the chance to cross-examine him regarding several important matters, including (1) any bias Rubens had against appellee and (2) why Rubens told Ford to tape-record his conversations with appellee. Finally, appellee contends that his cross-appeal is not moot, because whether there was a valid sanction imposed in this case will affect the outcome of other cases, as a lawyer's prior disciplinary record can be considered when sanctions are imposed. Appellee also notes that any finding of an ethical violation is a permanent blemish on an attorney's record, both in the eyes of the court and the professional community.
We agree with appellee that the cross-appeal is not moot. We also find that appellee has failed to demonstrate that the Committee's denial of his motion to dismiss was clearly erroneous, and specifically, that appellee failed to show any prejudice in the delay to the extent that it was reversible error not to dismiss. Therefore, we affirm on this point.
Affirmed on direct appeal; affirmed on cross-appeal.
BROWN, J., concurs.
BROWN, J., concurring.
I concur with the majority opinion in its entirety and write separately to urge the Committee on Professional Conduct to consider adopting formal guidelines on the time period in which a formal complaint should be lodged and an attorney notified when an allegation of professional misconduct has been made against him or her. In this particular case, the time between the original complaint and the making of a formal allegation by the Committee was more than three years. Admittedly, there may be a reasonable explanation for such a delay in some cases. But the delay seemed largely unexplained in this case.
According to the American Bar Association, as of 2007, the most recent year for which data is available, twelve states had adopted such guidelines.[1] American Bar Association Center for Professional Responsibility, 2007 SURVEY ON LAWYER DISCIPLINE SYSTEMS, CHART V: CASE PROCESSING TIMES. In my view, the Committee should examine what other states have done and consider promulgating formal time-processing standards. Without question, in some instances, an unreasonable delay in bringing a formal complaint can prejudice the ability of a lawyer to mount a defense to the allegation.
NOTES
[1] All references to the Rules herein refer to the rules in effect in 2003, as an attorney can only be charged with violating a rule that was in effect at the time of the alleged misconduct. Sexton v. Supreme Court Comm. on Prof'l Conduct, 295 Ark. 141, 747 S.W.2d 94 (1988). We note that the 2003 versions of Rules 1.2(d) and 8.4(c) are identical to the 2009 versions.
[2] This original 2003 letter is not a part of the record; however, Rubens references this letter in his 2006 affidavit, which is part of the record.
[1] The states with formally-adopted time standards are Alaska, Arizona, California, Louisiana, Maryland, Nevada, North Dakota, Ohio, Oregon, Pennsylvania, Texas, and Wisconsin.
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3 P.3d 1110 (2000)
197 Ariz. 190
STATE of Arizona, Appellee,
v.
Thomas Dale WOLTER, Appellant.
No. 1 CA-CR 98-0971.
Court of Appeals of Arizona, Division 1, Department A.
January 20, 2000.
*1111 Janet Napolitano, Attorney General by Paul J. McMurdie, Chief Counsel Criminal Appeals Section and Toni Marie Valadez, Assistant Attorney General, Phoenix, for Appellee.
Dean W. Trebesch, Maricopa County Public Defender by Garrett W. Simpson, Deputy Public Defender, Phoenix, for Appellant.
OPINION
FIDEL, Presiding Judge.
¶ 1 One may commit the felony of theft not only by stealing property from its owner, but also by controlling property of another, knowing or having reason to know it has been stolen. See Ariz.Rev.Stat. Ann. ("A.R.S.") § 13-1802(A)(5) (1998). The level of felony is determined by the value of the property. See A.R.S. § 13-1802(D) (1998). But the value of property may decline, by virtue of rough handling or other factors, as time elapses between the original theft and the subsequent control by the defendant. Under such circumstances, when a defendant has been charged only with a later felonious control of the property and not with participation in the original taking, is the value of the stolen property determined as of the time of original taking or as of the time the defendant obtained control of the property? The answer to that question determines whether the defendant in this case was convicted of a class 4 or class 6 felony. We conclude that it was the latter.
I.
¶ 2 On May 1, 1998, while riding a 1984 Honda motorcycle, defendant Thomas Dale Wolter was stopped by a Phoenix police officer for speeding. When a records check revealed that the motorcycle had been reported stolen in May 1997, the officer arrested defendant for theft. Defendant informed the officer that he had purchased the motorcycle for $500 three weeks earlier at a Phoenix swap meet. Although its ignition system had been bypassed so that it could be started without a key, and although the seller could not supply a title, defendant denied knowing that the motorcycle was stolen.
¶ 3 The State charged defendant with one count of controlling property of another, knowing or having reason to know that the property was stolen. See A.R.S. § 13-1802(A)(5). The State alleged that the crime occurred on May 1, 1998, which was the date of defendant's arrest. The State did not refute defendant's claim that he purchased the motorcycle at the swap meet; nor did it allege that he had participated in the original theft; it merely maintained that he knew or had reason to know the motorcycle was stolen when he bought it.
¶ 4 The State alleged that the stolen motorcycle had a value between $2000 and $3000. To support this allegation, the State presented testimony by the owner that he bought the motorcycle for $2200 in May 1997. Theft of property with a value of $2000 or more but less than $3000 is a class 4 felony. See A.R.S. § 13-1802(D). The State did not contest, however, defendant's testimony that he paid only $500 for the motorcycle when he bought it in damaged condition at the swap meet in April 1998. Nor did the State introduce evidence that the motorcycle had a fair market value of more than $500 when defendant bought it. Theft of property with a value of $250 or more but less than $1000 is a class 6 felony. See id.
¶ 5 Before instructing the jury, the trial court and counsel discussed the meaning of A.R.S. § 13-1801(A)(14) (1998), which provides, "`Value' means the fair market value of the property or services at the time of the theft." The court advised counsel that he read the statute "to mean that the value is to be determined at the time that the vehicle was reported stolen, which was back roughly a year before the defendant was arrested." The State concurred. Defense counsel objected that value must be determined as of the date of the theft that his client was charged to have committed-specifically, the swap meet purchase in April 1998. The trial court nonetheless instructed the jurors that, if they concluded defendant was guilty of the charge, they were to determine value as of the time of the theft, which the court identified as May 1997.
*1112 ¶ 6 The jury found defendant guilty and, consistent with the court's instruction, found the value of the motorcycle to be $2000 or more but less than $3000, rendering defendant's conviction a class 4 felony. See A.R.S. § 13-1802(D). At sentencing, the trial court imposed a three-year term of probation and ordered defendant to pay $2954.96 in restitution. Defendant filed a timely appeal.
II.
¶ 7 Defendant contends, and we agree, that the trial court erred in instructing the jurors to determine the value of the motorcycle as of May 1997. The court based its decision on A.R.S. § 13-1801(A)(14), which defines "value" to mean "the fair market value of the property or services at the time of the theft." We recognize that in a case such as this, when time has passed and value has changed between the original theft and the later theft of knowing purchase, the words "at the time of the theft" are susceptible to two constructions. For four reasons, however, we find defendant's construction and not the trial court's construction to be correct.
¶ 8 When a statute is susceptible to more than one construction, we attempt to relieve the ambiguity by examining the statute in the context of related statutes "as though they constituted one law," and we determine legislative intent "from the view of the whole system of related statutes." See State ex rel. Larson v. Farley, 106 Ariz. 119, 122, 471 P.2d 731, 734 (1970); State v. Buhman, 181 Ariz. 52, 55, 887 P.2d 582, 585 (App.1994). Sections 13-1801 and -1802 are related statutes that constitute one law. Section 13-1802 defines a variety of means of committing theft, any number of which might occur as property changes hands in the passage of time from original taking to retrieval. To read the statutes in harmony, in our view, one must interpret the reference to "time of the theft" in § 13-1801 as contextually grounded in § 13-1802 and to relate to the specific § 13-1802 theft that a defendant is charged to have committed.
¶ 9 This interpretation not only lends more specificity and clarity to § 13-1801, it is also fairer to defendants. The State has discretion, when prosecuting a theft, to allege the time and type of theft best suited to the evidence that it has gathered. The State may have evidence to support prosecuting a defendant for complicity in the original theft; the State may, as here, deem it more appropriate to the evidence to prosecute a defendant for a later knowing-purchase theft. When the State selects and notifies the defendant of a time frame for the criminal acts that it sets out to prove, the State commensurately selects and notifies the defendant of the time frame for determination of the value of the property for which it seeks to hold the defendant responsible.
¶ 10 A third basis for our interpretation is that it serves the objective set forth in A.R.S. § 13-101(3), which establishes as a general purpose of the criminal code, "To define the act or omission and the accompanying mental state which constitute each offense and limit the condemnation of conduct as criminal when it does not fall within the purposes set forth." Our interpretation limits the level of condemnation to the act and mental state that the State proved. In simpler terms, it makes the punishment fit the crime.
¶ 11 The fourth basis for our interpretation is the rule of lenity. If a criminal statute is "susceptible to more than one interpretation, the rule of lenity dictates that any doubt should be resolved in favor of the defendant." State v. Tarango, 185 Ariz. 208, 210, 914 P.2d 1300, 1302 (1996) (quoting State v. Pena, 140 Ariz. 545, 549-50, 683 P.2d 744, 748-49 (App. 1983)).
¶ 12 Because the value of the property stolen determines the felony classification assigned to a particular theft, see A.R.S. § 13-1802(D), the trier of fact in a theft case must assign a value to the property. See State v. Brokaw, 134 Ariz. 532, 535, 658 P.2d 185, 188 (App.1982). But because the trial court misinterpreted "time of the theft" in A.R.S. § 13-1801, it instructed the jury to establish a value for the stolen property as of May 1997, when it should instead have told the jury to establish property value as of April 1998. And on this record, the value of the property in April 1998 was not disputed; the only evidence of record concerning value at the time of purchase consists of defendant's *1113 undisputed testimony that he bought the motorcycle for $500 and a notation in the police report, based on defendant's statements, that the motorcycle was worth $500. Because the evidence supports only a class 6 felony, we must at a minimum reduce defendant's conviction from class 4 to class 6.
¶ 13 Defendant argues, however, that he is entitled to a reversal of his conviction altogether on the ground that the trial court, by instructing the jury to value the property as of May 1997, made an impermissible comment on the evidence and unconstitutionally shifted the burden of proof to defendant to disprove an element of theft. We disagree.
¶ 14 A trial court "comments on the evidence" when it expresses its opinion to the jury as to what the evidence shows, or when it misinforms the jury that a fact has been proven when the fact remains a subject of dispute. See State v. Vann, 11 Ariz.App. 180, 183, 463 P.2d 75, 78 (1970). The Arizona Constitution forbids trial judges from making such comments to a jury. See Ariz. Const. art. 6, § 27. But this is not such a case. The parties did not dispute the date the motorcycle was originally stolen, nor did they dispute the approximate date of defendant's alleged theft. Neither party contended, and no evidence suggested, that defendant was involved in the initial theft of the motorcycle in May 1997; neither party disputed that, if defendant committed a theft, he did so at a time shortly before May 1, 1998. Accordingly, the trial court's instruction to the jury neither constituted a comment on the evidence nor shifted the burden of proof to defendant concerning a disputed issue of material fact; it constituted only a legal misinterpretation of the statute applicable to the facts.
¶ 15 In conclusion, the trial court's error did not affect the fairness of defendant's trial or the validity of his conviction for the offense of controlling property of another, knowing or having reason to know that it was stolen. The trial court's error did, however, result in a mistaken attribution of value by the jury that improperly elevated defendant's felony from class 6 to class 4. Because the evidence supports only conviction for theft as a class 6 felony, we affirm defendant's conviction as modified to a class 6 felony, and we remand for resentencing. See Ariz. R.Crim. P. 31.17(d); State v. Grannis, 183 Ariz. 52, 57 n. 1, 900 P.2d 1, 6 n. 1 (1995); State v. Rushing, 156 Ariz. 1, 4-5, 749 P.2d 910, 913-14 (1988). As modified, defendant's conviction is affirmed.
CONCURRING: THOMAS C. KLEINSCHMIDT, Judge, and E.G. NOYES, Jr., Judge.
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124 P.3d 1260 (2005)
203 Or. App. 179
STATE of Oregon, Respondent,
v.
David Charles CARR, Appellant.
03C-52930; A124994.
Court of Appeals of Oregon.
Submitted on Record and Briefs July 28, 2005.
Decided December 14, 2005.
Peter A. Ozanne, Executive Director, and Peter Gartlan, Chief Defender, and Louis R. Miles, Deputy Public Defender, Office of Public Defense Services, filed the brief for appellant.
Hardy Myers, Attorney General, and Mary H. Williams, Solicitor General, and Susan G. Howe, Assistant Attorney General, filed the brief for respondent.
Before LANDAU, Presiding Judge, and SCHUMAN[*] and ORTEGA, Judges.
LANDAU, P.J.
Defendant pleaded guilty to delivery of a controlled substance to a minor (DCS), ORS 475.995, and contributing to the sexual delinquency of a minor, ORS 163.435. The trial court determined that defendant's criminal history score for the purpose of the DCS conviction was F, resulting in a presumptive sentence of 23 to 24 months. Based on the *1261 aggravating factors that defendant was on both probation and post-prison supervision (PPS) at the time he committed the offense, that previous sanctions had not deterred defendant from criminal behavior, and that other charges had been dismissed pursuant to plea negotiations, the trial court imposed an upward durational departure sentence of 48 months' imprisonment.[1] The court also denied defendant consideration for "alternative incarceration programs," that is, sentence modifications. ORS 137.750.
On appeal, defendant argues that, under Blakely v. Washington, 542 U.S. 296, 124 S.Ct. 2531, 159 L.Ed.2d 403 (2004), and Apprendi v. New Jersey, 530 U.S. 466, 120 S.Ct. 2348, 147 L.Ed.2d 435 (2000), he was entitled to a jury determination of his criminal history score, of the upward departure factors relied on by the trial court, and of the facts on which the trial court based its denial under ORS 137.750 of consideration for sentence modifications. Defendant concedes that he did not preserve any of his challenges to the relevant sentence but argues that the asserted errors are plain error. The state responds that defendant admitted his criminal history score in his plea agreement, that he admitted the facts supporting the upward departure sentence, and that the denial of consideration for sentence modification programs was not plain error.
In State v. Allen, 198 Or.App. 392, 396, 108 P.3d 651, adh'd to as clarified on recons., 202 Or.App. 565, 123 P.3d 331 (2005), we held that, although the defendant in that case had admitted his "parole status," an upward departure sentence based on a defendant's supervisory status "requires further inferences about the malevolent quality of the offender and the failure of his [supervisory] status to serve as an effective deterrent" and that, where the defendant did not admit those further facts, he "was entitled to have a jury determine whether those inferences were appropriate to draw by a standard of proof beyond a reasonable doubt." See also State v. Jenkins, 199 Or.App. 384, 111 P.3d 782 (2005) (departure factor of being on supervision implicates whether that status failed to deter the defendant from committing further offenses); State v. Perez, 196 Or.App. 364, 102 P.3d 705 (2004), rev. allowed, 338 Or. 488, 113 P.3d 434 (2005) (factor of being on supervision falls outside the exception in Apprendi for "the fact of a prior conviction").
The equivalent analysis applies here. Thus, notwithstanding defendant's admission of his probationary and PPS status, imposition of a departure sentence based in part on that factor was plain error, which, for the reason stated in Perez, we exercise our discretion to reach. We therefore vacate defendant's sentences and remand the case for resentencing.
Because we are vacating defendant's sentences, we need not address his other sentence-based challenges.
Sentences vacated; remanded for resentencing; otherwise affirmed.
NOTES
[*] Schuman, J., vice Richardson, S.J.
[1] The trial court did not state that any one of the aggravating factors was independently sufficient to support imposition of the departure sentence.
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340 S.W.3d 717 (2011)
James Garrett FREEMAN, Appellant,
v.
The STATE of Texas.
No. AP-76052.
Court of Criminal Appeals of Texas.
March 16, 2011.
Rehearing Denied June 29, 2011.
*720 Patrick F. McCann, Houston, for Appellant.
Robinson C. Ramsey, Special Prosecutor, San Antonio, Jeffrey L. Van Horn, State's Attorney, Austin, for State.
MEYERS, J., delivered the opinion of the unanimous Court.
OPINION
In November 2008, a jury convicted appellant of the capital murder of Texas Game Warden Justin Hurst committed in March 2007. TEX. PENAL CODE ANN. § 19.03(a)(1). Based on the jury's answers to the special issues set forth in Texas Code of Criminal Procedure Article 37.071, sections 2(b) and 2(e), the trial court sentenced *721 appellant to death. Art. 37.071, § 2(g).[1] Direct appeal to this Court is automatic. Art. 37.071, § 2(h). After reviewing appellant's twelve points of error, we find them to be without merit. Consequently, we affirm the trial court's judgment and sentence of death.
FACTS
On Friday, March 16, 2007, Texas Game Warden Jonathan Blackburn was conducting surveillance in an area where residents had complained of shots being fired at night. He parked his truck on the side of the road with its lights off, and around 11:00 p.m., he saw a truck driving very slowly in his direction. He heard a single gunshot, which he thought came from a .22 caliber or smaller rifle. Blackburn intended to investigate the shot because it is illegal to fire shots or hunt from the side of the road.[2] Blackburn drove toward the truck and activated his "red and blue lights" and in-car video camera system when he was within thirty to forty yards of it. The truck continued driving toward Blackburn, and rather than stopping when Blackburn activated his lights, the truck "sped off" once it passed him. Blackburn did not recognize the driver at that time and described him as a white or Hispanic male with a goatee and wearing a stocking cap.
Blackburn followed the fleeing truck down several gravel and paved roads at speeds ranging from 45 to 100 miles per hour (mph). He requested backup from the Wharton County Sheriff's Office. Constable John Szymanski and Deputy Constable Jeremy Hyde joined the pursuit in their marked patrol car with lights activated and took over the lead from Blackburn because their car was faster than Blackburn's truck. The constables' patrol car followed the fleeing truck at speeds up to 130 mph on the paved roads. They were joined by Deputies Mark Tijerina, Roddy Rodriguez, and Chris French, all in marked patrol cars with lights activated. It was obvious to Blackburn that the driver knew the area and was familiar with the roads, and eventually Blackburn realized that the driver of the fleeing truck was traveling in a circular route back to near where the pursuit began.
Not yet a part of the pursuit, Texas Game Warden Hurst communicated that he was going to attempt to set up a roadblock at an intersection. The fleeing driver was able to steer his truck around the roadblock without going into the ditch but sideswiped Hurst's truck in the process. Hurst joined the pursuit, which continued for approximately another 30 minutes on predominately gravel roads. According to Blackburn, there was no viable spot to force the driver to stop. The law enforcement officers were forced to follow and wait. Texas Department of Public Safety (DPS) troopers and the constables attempted to deploy spike strips several times, but the driver of the fleeing truck managed to avoid the spikes each time.
By this time, the dispatcher had completed a check on the fleeing truck's license plates. The license plates identified the truck as being registered to appellant. Blackburn and Szymanski were familiar with appellant. Blackburn had written him a ticket the previous year without incident but had not recognized him as the driver of the truck when the pursuit began. Officers believed the truck was stolen because the behavior of the driver was not consistent with what they knew about *722 appellant. Appellant, however, was later identified as the driver.
Eventually, appellant drove over a set of spikes deployed by a DPS trooper. Appellant steered his disabled truck into a driveway in front of the Lissie Cemetery. He parked the truck with the driver's side door away from the pursuit vehicles, putting the truck between himself and the law enforcement officers. Blackburn and Rodriguez believed, as they parked their own vehicles, that appellant would attempt to flee. However, as appellant exited his truck, he began firing a handgun at officers. According to Blackburn, appellant's manner was aggressive, and he took a protected position from which he could see the three officers in front. Appellant continued to shoot the handgun until it seemed to be out of ammunition, and the officers returned fire. Appellant "disappeared" for a "second" and "[came] back out with a long gun" that Blackburn identified as a semi-automatic rifle by the number of shots fired. Tijerina, who was trapped in his patrol car, immediately recognized the rifle as an AK-47 assault rifle and realized that his car would offer little protection from the rifle's bullets. Officers retreated to the backs of their vehicles for better cover. Appellant never exposed himself to open fire or moved out from behind the bed of his truck as he shot at officers. It "seemed to [Tijerina] like he was trying to kill somebody."
Blackburn watched as Hurst left his cover and moved into the open where he had a clear shot at appellant. Hurst fired at appellant from a low, crouched position while other officers were not able to return appellant's fire. Appellant saw Hurst, aimed the rifle at him, and shot. Blackburn did not actually see Hurst fall when appellant shot at him but saw him lying face down on the ground afterward. Blackburn initially thought that Hurst was taking a more protected position flat on the ground but soon realized that he had been shot. Hurst died from a penetrating gunshot wound in his left arm and torso.
CHANGE OF VENUE
In his first point of error, appellant alleges that the trial court erred in denying his requested change of venue because he could not obtain a fair and impartial trial in Wharton County. Appellant states that "[t]he single most important issue in this entire case was the trial court's refusal to recognize reality and move this high profile case out of Wharton County." He alleges that "despite extraordinary evidence of the difficulty of obtaining a fair trial," the trial court erroneously denied appellant's Motion for Change of Venue.
Appellant complains that the pretrial publicity began to taint the Wharton County jury pool almost immediately after the offense. According to appellant, because Wharton County has a small population of around 40,000 residents, local publicity and gossip concerning the offense was extensive. Appellant points out that the community quickly hosted fund-raisers and created a memorial fund to help the victim's widow. Appellant theorizes that the organizers' true intentions were to keep the victim's death fresh in the minds of the public, thus prejudicing the jury pool. He also alleges that false rumors from "known and trusted sources" quickly spread throughout the community.
Appellant also complains that the State's response to the Motion for Change of Venue exacerbated the prejudice against him. After appellant filed his motion and supporting affidavits, the State began collecting controverting affidavits. Appellant claims that in doing so, the State further publicized the murder. Appellant takes issue with the number of controverting affidavits collected and the manner in *723 which some were collected. The State collected 372 controverting affidavits, which appellant characterizes as "an overt attempt to influence the judicial process" by keeping appellant's trial in Wharton County that demonstrates a "hundreds-large combination aligned against [appellant] and one that was so aligned by influential government officials." Appellant argues that this large number of controverting affidavits is evidence of a prejudice in the county because there was a concerted public effort to influence the process and keep the trial in Wharton County.
Appellant additionally complains that thirteen of the fifty-one notaries who validated the affidavits also signed controverting affidavits themselves. Further, he complains that one of the notaries was an elected constable who was involved in the chase preceding the offense and ultimately testified during trial. This notary collected twenty affidavits while in uniform, which appellant argues "means that elected and other County officials were actively involved in collecting these affidavits and were asking people to try to keep the trial in Wharton County." Appellant further argues that a uniformed official among those collecting affidavits made it more likely that people would have drawn negative inferences about appellant or might have been intimidated into signing an affidavit.
Appellant further complains that the sheer size of the venire pool evidenced the community prejudice against him. The trial court ultimately requested two special venires of 600 people each, for a total of 1,200 potential jurors. Appellant characterizes the size of the first special venire as evidence that the trial court was "suspicious" of whether appellant could receive a fair trial. Appellant claims that the need for a second special venire was further proof that he could not receive a fair trial in Wharton County.
The initial qualification of the venire was held on September 9, 2007, and fewer than 200 of the 600 called appeared in person. Twenty-nine potential jurors were excused before the venire was seated. The trial court conducted group voir dire with 162 qualified jurors. Only 28 of the 162 had not read about the case in the newspaper. At the conclusion of the trial court's voire dire, 121 potential jurors remained to complete questionnaires. Of those, 62 potential jurors were questioned in individual voir dire. Eleven jurors were seated from this panel, and the trial court requested an additional 600-person special venire from which to seat the twelfth juror and two alternate jurors. The trial court conducted group voir dire of the second special venire with 161 qualified jurors. Only fifteen had not heard about the case. Following the trial court's group voir dire, 84 potential jurors remained to fill out questionnaires. The remaining juror and two alternate jurors were chosen from this panel following the individual voir dire of eight potential jurors. Appellant argues that the large number of potential jurors who had some knowledge of the case, as well as the need to call 1,200 potential jurors, was indicative of the fact that he could not receive a fair trial in Wharton County.
Article 31.03(a) of the Texas Code of Criminal Procedure provides that a change of venue may be granted if the defendant establishes that:
1. [T]here exists in the county where the prosecution is commenced so great a prejudice against him that he cannot obtain a fair and impartial trial; and
2. [T]here is a dangerous combination against him instigated by influential *724 persons, by reason of which he cannot expect a fair trial.
Appellant's primary argument, as understood by the Court, concerns the pervasiveness and the inflammatory nature of local pretrial publicity. He claims that the pretrial publicity poisoned the jury pool, which denied him the opportunity of a fair trial, and thus, it was erroneous for the trial court to deny his motion.
We review a trial court's ruling on a motion for change of venue for abuse of discretion. Gonzalez v. State, 222 S.W.3d 446, 449 (Tex.Crim.App.2007). If the trial court's decision falls within the zone of reasonable disagreement, it will be upheld. Id.; see also Narvaiz v. State, 840 S.W.2d 415, 428 (Tex.Crim.App.1992). The two primary means for discerning whether publicity is pervasive are a hearing on the motion to change venue and the voir dire process. Gonzalez, 222 S.W.3d at 449. In this case, the trial court used both.
At the hearing on the motion to change venue, appellant introduced into evidence four articles about the offense published by local newspapers: Siegler Shares Thoughts on Emotions of Trials, Public Seating To Be Limited During Freeman Murder Trial, Siegler Now Able to Focus on Trial Without Playing Politics, and Former Harris County ADA Joins Prosecution Team For Freeman Trial. He also introduced lists of law enforcement officers who attended Hurst's funeral, a transcript of the radio broadcast of the funeral, a list of contributions made to memorial funds honoring Hurst, and copies of thirty-two controverting affidavits that were faxed to the District Attorney's office from the El Campo Police Department and seven that were faxed to the District Attorney's office from El Campo High School. Appellant did not present evidence of how many people heard the radio broadcast. Similarly, he did not present evidence as to how many people read the newspaper coverage of the case. During the hearing, appellant agreed that the shooting of a game warden would likely create statewide, and not just local, publicity. The trial court pointed out that whether a potential juror had contributed to a memorial fund was a matter that could be investigated during voir dire.
In regard to the voir dire process, appellant argues that the number of jurors who were unable to serve on the jury in this case shows the extent to which local pretrial publicity permeated the community. Out of 323 members of the two special venires, 280 were familiar with the case. Appellant reasons that the high percentage of special venire members who had heard about the case is reason enough to consider the entire community "poisoned" by the pretrial publicity.
Appellant's conclusion, however, does not comport with this Court's precedent. In the past, this Court has found that trial courts acted within their discretion in not granting a motion for a change of venue even where a large portion of the venire had seen publicity about the case. See, e.g., id. at 450 (121 of 180 venire members were familiar with the case); Von Byrd v. State, 569 S.W.2d 883, 890-91 (Tex.Crim. App.1978) (69 of 109 venire members were familiar with the case). We have also found no abuse of discretion even when many of the venire members stated that they had formed an opinion that they could not set aside. See, e.g., Gonzalez, 222 S.W.3d at 450 (58 of the 180 venire members indicated that they could not set aside their opinions); see also Gardner v. State, 733 S.W.2d 195, 204-05 (Tex.Crim.App. 1987).
The trial court heard responses from prospective jurors regarding their knowledge of the case and their ability to be fair *725 and impartial. The trial court was within its discretion to believe prospective jurors' statements that they were not unduly influenced and could deliver a fair verdict. That there were a large number of venire members who had heard of the case, or who could not set aside their opinions about the case, does not establish that pretrial publicity permeated the community to such an extent that it was impossible to seat a fair and impartial jury. The trial court's decision to deny the Motion for Change of Venue was not outside the zone of reasonable disagreement.
Regarding appellant's brief claim of a "dangerous combination against him," he has presented nothing other than speculation to convince this Court that the trial court abused its discretion in denying his Motion for Change of Venue on this basis. Appellant's complaint that a "hundreds-large combination aligned against [appellant] and one that was so aligned by influential government officials" is not persuasive and is not supported by the record. Point of error one is overruled.
FUTURE DANGEROUSNESS
In his second point of error, appellant challenges the legal sufficiency of the evidence supporting the jury's determination regarding the future dangerousness issue. He specifically points to his lack of significant criminal history, the character testimony in his favor, and his lack of disciplinary history while awaiting trial.
A jury may consider a variety of factors when determining whether a defendant will pose a continuing threat to society. Wardrip v. State, 56 S.W.3d 588, 594 & n. 7 (Tex.Crim.App.2001); Keeton v. State, 724 S.W.2d 58, 61 (Tex.Crim.App. 1987). For example, the facts of the offense alone may be sufficient to sustain the jury's finding of future dangerousness. Fuller v. State, 253 S.W.3d 220, 231-32 (Tex.Crim.App.2008); Sonnier v. State, 913 S.W.2d 511, 517 (Tex.Crim.App.1995); Kunkle v. State, 771 S.W.2d 435, 449 (Tex. Crim.App.1986). We must view all of the evidence in the light most favorable to the jury's finding and determine whether, based on that evidence and reasonable inferences therefrom, a rational jury could have found beyond a reasonable doubt that the answer to the future dangerousness issue was "yes." Ladd v. State, 3 S.W.3d 547, 557-58 (Tex.Crim.App.1999).
The jury heard a variety of testimony during the punishment phase. Over forty witnesses testified on appellant's behalf. His former employer and teachers, friends, customers of his father's welding shop, family members, and friends' parents all described appellant as polite and respectful. Former teachers testified that he was an average student, quiet, and had no discipline problems. Customers told the jury that appellant was earnest and courteous. The defense witnesses testified that this offense was completely out of character for appellant and that they were shocked he was involved. The arresting officers in this case testified that appellant was cooperative once he was in custody, and jailors testified that appellant was peaceful and had no disciplinary problems while awaiting trial.
On cross-examination, however, there was testimony that appellant was easily irritated and angered and quick-tempered. His temper was unpredictable, and he had inappropriate reactions to stressful circumstances. Additionally, the jury learned that the neuropsychologist, Dr. Daneen Milam, was told that when appellant lost his temper and had an outburst, it would seem like he was unable to hear what anyone was saying to him. Several defense witnesses also described how appellant's behavior had changed in the months preceding the offense. They described appellant *726 as becoming withdrawn and not participating in activities as he once had.
According to Milam, who interviewed and tested appellant, he was not exhibiting signs of depression at the time of his interview. However, in her review of prior interviews and records, she saw a pattern of clinical depression beginning about a year before the offense. Milam also testified that she found no evidence of brain damage and that, by all accounts, appellant had a happy childhood. Milam told the jury that appellant had a progressive history of alcohol abuse, evidenced by his history of alcohol-related incidents, which included a Minor in Possession citation and a Minor Driving Under the Influence citation.
Various law enforcement officers testified that appellant had also been cited for driving his all-terrain vehicle on the roadway and in a creek bed, for speeding 114 mph in a 70 mph zone, and for having an illegal tint on his truck windows. At the time of the offense, appellant was serving a probated sentence for DWI, but he had not been successfully completing the terms of his probation. He had been notified by his probation officer that a motion to revoke his probation would be filed. According to Milam, appellant stated that he "didn't care whether [he] lived or died." He related to Milam that he had a short temper and would do things such as throwing a hammer to relieve stress, but that while such actions relieved some of his stress, they did not solve any of his problems.
The jury learned during the guilt phase that appellant had reported to Dr. Jerome Brown that he shot at the officers because he was mad. While appellant told Texas Ranger David Maxwell that he felt terrible that he had killed the game warden, Maxwell testified that appellant did not seem remorseful. Appellant's answers to an anger-control survey revealed that he had "snapped" and broken things while angry. Appellant also related on the survey that he had done things in anger that he was unable to remember the next day. On the Inventory of Offender Risk, Needs, and Strengths (IORNS test), appellant scored high in the areas of irresponsibility, manipulativeness, angry detachment, and hostility.
The jury also had before it the facts of the offense. Rather than pulling over when Blackburn activated his red-and-blue lights, appellant sped away, leading Blackburn and other officers on a chase that reached speeds of 130 mph. Once officers successfully disabled appellant's truck, rather than stopping and peacefully surrendering, appellant exited his truck and fired a handgun at officers. Appellant then deliberately exchanged his handgun for a semi-automatic assault rifle. He raised the assault rifle to his shoulder and began firing at officers with metal-piercing bullets. Appellant then aimed his rifle at Justin Hurst and fired. Hurst did not survive.
Appellant relies on this Court's decision in Berry v. State, 233 S.W.3d 847 (Tex. Crim.App.2007), to support his argument that, despite the evidence heard by the jury, he would not pose a continuing threat to society within prison. We understand appellant to argue that Berry should be read to require the jury to consider, within its future dangerousness determination, whether a capital defendant sentenced to life imprisonment would be a continuing threat to prison society. This Court has interpreted the future dangerousness special issue to ask whether a defendant would be a continuing threat "whether in or out of prison." Estrada v. State, 313 S.W.3d 274, 281 (Tex.Crim.App.2010) (quoting Druery v. State, 225 S.W.3d 491, 507 (Tex.Crim.App.2007)); see also Broxton *727 v. State, 909 S.W.2d 912, 919 (Tex. Crim.App.1995) (adopting the reasoning of the plurality opinion in Smith v. State, 898 S.W.2d 838, 846 (Tex.Crim.App.1995) (plurality op.), which stated that the term "society" includes both the prison and non-prison populations). Appellant's reasoning does not persuade us that our interpretation of "society" is in error.
Having viewed all of the evidence in the light most favorable to the jury's finding, we determine, based on that evidence and reasonable inferences therefrom, that a rational jury could have found beyond a reasonable doubt a probability that appellant would pose a continuing threat to society. Point of error two is overruled.
JURY ARGUMENT
Appellant complains that the trial court erred in overruling his objections to the prosecutor's arguments at the close of both the guilt and punishment phases of trial. This Court has stated that proper jury argument generally falls within one of four areas: (1) summation of the evidence, (2) reasonable deduction from the evidence, (3) answer to an argument of opposing counsel, and (4) plea for law enforcement. Brown v. State, 270 S.W.3d 564, 570 (Tex. Crim.App.2008).
In point of error three, appellant complains that it was harmful, reversible error when the prosecutor compared him to a serial killer and described his experts as "hired guns" during the State's closing arguments at the guilt phase. Appellant first complains of the following comments:
[Prosecutor]: Let's talk about the psychological testimony for a minute. The testimony was he wasn't seriously depressed. He does score a one on part of the test, same as serial killers score.
Defense counsel objected, and the trial court overruled the objection.
Previously, Brown testified on cross-examination that appellant scored a "1" on the Warmth Primary Factor Scale of the Sixteen Personality Factors Questionnaire, scoring as "reserved, detached, [and] formal." The prosecutor asked Brown "[w]here would someone who was a serial killer score on that scale?" Brown responded that he thought that "they would score at the low end on that scale." Brown agreed with the prosecutor that a "1" is the low end of the scale.
The prosecutor's argument to the jury that appellant scored similarly to serial killers on one part of the test was a reiteration of Brown's testimony and thus falls within one of the areas of proper jury argument. The trial court did not err in overruling appellant's objection to the prosecutor's argument.
Appellant also complains of the following argument:
[Prosecutor]: So, what happened? You got a man who nobody tells what to do in a situation where he knows he's fixing to have to do exactly what he doesn't want to do. And now you know, after hearing from his own mom and dad, and his own hired defense experts what kind of
Defense counsel objected to "the comment about hired experts." In his brief, appellant argues that the prosecutor described his experts as "hired guns." The record reflects that the prosecutor did not use this specific term. In any event, the trial court sustained appellant's objection to the prosecutor's reference to "hired experts" and instructed the jury to disregard the prosecutor's comment. Appellant's motion for mistrial was denied.
An instruction to disregard will generally cure error if a prosecutor mentions *728 facts outside the record. See Gamboa v. State, 296 S.W.3d 574, 580 n. 12 (Tex.Crim.App.2009). In this case, the fact that the defense experts were hired was not outside the record. Both of the defense experts revealed their payment during cross-examination. Further, when the prosecutor resumed her closing following the complained-of argument, she reiterated without objection: "Dr. Jerome Brown and Vivian Lord both told you they made over $3,000."
Even if the prosecutor's statement that appellant had "hired experts" was improper, that statement was not so extreme that the trial court's instruction to disregard was ineffective. Accordingly, we find that the trial court's instruction to disregard the prosecutor's comment cured any error. Point of error three is overruled.
In point of error four, appellant alleges that the trial court erred in overruling his objection to the prosecutor's argument at the guilt phase that he tried "to commit the worst criminal act on law enforcement ever in the United States' history." The prosecutor argued to the jury:
[Prosecutor:] [Appellant] did everything he could to try and kill every officer that was out there that night. And just because some metal on a car saved some lives, and just because a couple of his angled shots didn't quite ring true, he doesn't get the benefit of that. He tried with all he could to massacre seven officers, to commit the worst criminal act on law enforcement ever in the United States' history.
Defense counsel objected that the prosecutor's argument was "purely outside the record and not supported" and that it was not a reasonable deduction from the evidence. The trial court, while overruling the objection, took the opportunity to sua sponte remind the jury that, "[T]his is argument. This is not evidence."
A prosecutor may not use closing arguments to present evidence that is outside the record. Improper references to facts that are neither in evidence nor inferable from the evidence are generally designed to arouse the passion and prejudice of the jury and, as such, are inappropriate. Borjan v. State, 787 S.W.2d 53, 57 (Tex.Crim.App.1990). The complained-of argument referred to facts (criminal acts against law enforcement in United States history) that were neither in evidence nor inferable from the evidence. Therefore, the argument was improper, and the trial court erred in failing to sustain appellant's objection to the argument.
Our inquiry does not end here, however. Improper-argument error of this type is non-constitutional in nature, and a non-constitutional error "that does not affect substantial rights must be disregarded." TEX.R.APP. P. 44.2(b); Martinez v. State, 17 S.W.3d 677, 692-93 (Tex.Crim. App.2000). To determine whether appellant's substantial rights were affected, we balance the severity of the misconduct (i.e., the prejudicial effect), any curative measures, and the certainty of conviction absent the misconduct. Martinez, 17 S.W.3d at 692-93; Mosley v. State, 983 S.W.2d 249, 259 (Tex.Crim.App.1998).
The prosecutor's comments were a very small portion of the State's entire closing argument at the guilt phase. The State did not emphasize the comments. Viewing the State's closing argument as a whole, we cannot conclude that there was a willful and calculated effort to deprive appellant of a fair and impartial trial. Further, viewing the record as a whole, we cannot conclude that appellant was prejudiced by the prosecutor's comments.
While the trial court did sua sponte remind the jury that closing arguments *729 were not evidence, there was no curative instruction. However, the evidence presented during the guilt phase showed quite clearly that appellant was responsible for the murder of a peace officer discharging his duties and for attempting to shoot many other officers. Given the brevity of the prosecutor's comments, the lack of prejudice, and the strength of the evidence supporting appellant's conviction, we find that any errors associated with those comments were harmless. Point of error four is overruled.
In point of error five, appellant claims that the prosecutor improperly argued that "the consequences of a conviction for killing a police officer was (sic) always a death sentence" which is "contrary to existing `capital murder law' as defined by the [United States] Supreme Court." During the State's closing argument at the punishment phase, the prosecutor argued to the jury:
The very first definition of capital murder in the State of Texas is the killing of a peace officer in the lawful discharge of his duty acting in the line of duty. The very first one.
Why do you think that is? Think maybe it might be because even criminals need to know what the consequence is when you kill a cop? We were all raised to know what it means. All of us, including the defendant, knows what ought to happen when you choose to gun down a cop. Because, see, when you don't have that consequence, then what's going to happen to our society?
And that lawthis law of capital murder that we have, when this sort of tragedy and crime happens, they have the right to know that every day when they get up and they go to work, we understand what they're doing. We appreciate what they're doing. And we know that they're putting their lives on the line and making that sacrifice for us every single day.
And they have the right to know that we believe that when someone guns down one of them, who is only trying to protect us, what's going to happen to them?
And their wives and their mothers and their fathers need to also know that we appreciate the sacrifice that they make every day of their life. And defendants need to know that when you kill a cop, that is unacceptable. It is not tolerated. And it's certainly not going to be tolerated in Wharton County, Texas.
Because if that's not the consequence defense [sic], then where are we?
Defense counsel objected that the prosecutor was asking jurors to negate their obligation and automatically answer the special issues in a way that appellant would receive the death penalty because a peace officer was killed. The prosecutor responded that she was making a plea for law enforcement, and the trial court overruled the objection.
The State is generally not permitted to argue that the community or any segment of the community demands or is expecting a certain verdict or punishment. Cortez v. State, 683 S.W.2d 419, 420-21 (Tex.Crim.App.1984). On the other hand, the State is not prohibited from addressing the concerns of the community. Borjan, 787 S.W.2d at 55-56. For example, the State may argue the relationship between the jury's verdict and the general deterrence of crime. Id. at 55. The State may also argue that juries should deter certain crimes by their verdicts. Id.
The prosecutor referred to "the consequence" of killing a police officer and followed with asking, "[W]hen you don't have that consequence, then what's going to happen to our society?" Within the complained-of argument, she asked the jury to *730 send a deterrent message to criminals that killing a peace officer is unacceptable. This is similar to arguments that we have permitted in the past.
We find nothing in the complained-of remarks to reflect that the prosecutor was asking the jury to forgo its duty and automatically answer the special issues in such a way that appellant would receive the death penalty because the victim was a peace officer. Appellant was found guilty of the capital murder of a peace officer, and one of the possible punishments for that offense is the death penalty. The complained-of argument was a mere plea for law enforcement, and the trial court did not err in overruling appellant's objection. Point of error five is overruled.
CONSTITUTIONALITY OF TEXAS PENAL CODE
In point of error six, appellant alleges that the "Texas capital murder statute regarding the killing of a peace officer in the course of his duties is unconstitutional as applied and on its face." Appellant argues that Section 19.03(a)(1) of the Texas Penal Code, as interpreted by this Court, is facially unconstitutional for failing to limit the scope of the aggravator to the ordinary and commonly accepted meaning of "lawful."[3] Appellant further argues that a rational juror might have deemed the officers' decision and efforts to arrest and detain appellant to be reckless or negligent rather than "lawful" under the facts and circumstances of this case.
In his brief, appellant asserts that these complaints were timely raised in an oral motion for directed verdict and by written motions prior to trial. Appellant fails to identify in which written motions these complaints were raised. He also does not provide citation to the record for the oral motion for directed verdict. Thus, this point of error is inadequately briefed. See TEX.R.APP. P. 38.1.
Nevertheless, in the interest of justice, the Court has examined the record. A review of the clerk's record revealed that appellant filed one pretrial motion to declare Article 37.071 of the Texas Code of Criminal Procedure facially unconstitutional and a second pretrial motion to declare Article 37.071 unconstitutional as applied. The first motion does not contain any reference to Texas Penal Code Section 19.03. In the second motion, appellant discusses the expansion of capital crimes from five in 1974 to eleven at the present time. He discusses the definition of "individual" and the law of parties, but nowhere within this or any other motion does he complain that the scope of the aggravator in Section 19.03 should be limited to the ordinary and commonly accepted meaning of "lawful" as he does in his brief on appeal.
Additionally, a review of the reporter's record revealed that, at the time the State rested, appellant requested a directed verdict simply by stating, "[a]sk for instructed verdict of acquittal at this point." Appellant did not complain of the constitutionality of Texas Penal Code Section 19.03 or request a limitation of the meaning of "lawful" as he does on appeal. This point of error has not been properly preserved for appellate review. See TEX.R.APP. P. 33.1. Point of error six is overruled.
VOIR DIRE
In point of error seven, appellant complains that the trial court "continually den[ied] defense counsel's attempts to explore mercy as a consideration during the *731 individual voir dire." Appellant argues that because "[m]ercy is a permissible factor in determining and evaluat[ing] mitigation in a capital context[,]" it was improper for the trial court to sustain the State's objections. He claims that the trial court "essentially forbade" appellant from exploring potential jurors' responses to the concept of mercy. He specifically cites to the individual voir dire of three potential jurors as examples of the trial court's errors. Appellant claims that because the trial court prohibited inquiry on the topic of mercy, he had no ability to intelligently use his peremptory challenges or make challenges for cause.
In order to show harm, applicant must show that (1) he exhausted all of his peremptory challenges, (2) he requested more challenges, (3) that request was denied, and (4) he identified "an objectionable person seated on the jury on whom he would have exercised a peremptory challenge." Sanchez v. State, 165 S.W.3d 707, 712 (Tex.Crim.App.2005). Even if this Court were to assume that appellant properly preserved this issue and the trial court erroneously prevented him from exploring the concept of mercy as a consideration for mitigation, appellant has not shown harm. The record reflects that appellant used only twelve of his fifteen peremptory challenges during selection of the jury panel and used one peremptory challenge during the selection of alternate jurors. Appellant has not shown that he was forced to accept any objectionable jurors. Point of error seven is overruled.
CONSTITUTIONALITY OF ARTICLE 37.071
In point of error eight, appellant alleges that the Texas death penalty scheme is unconstitutional because jurors cannot be told of the effect of even one life vote. He also briefly complains of the 10-12 Rule. We have previously rejected these allegations. See, e.g., Lawton v. State, 913 S.W.2d 542, 558-59 (Tex.Crim.App.1995). We decline to overrule our precedent in this area. Point of error eight is overruled.
In point of error nine, appellant alleges that the Texas death penalty scheme is unconstitutional because it does not provide for the definition of "key terms" and the jury is left unguided as to the meaning of those terms. Appellant, however, does not identify which "key terms" he believes should have been defined for the jury's guidance. This point of error is inadequately briefed. TEX.R.APP. P. 38.1. Point of error nine is overruled.
INDICTMENT
In point of error ten, appellant complains that the indictment against him is void under the Texas Constitution "for failing to provide the grand jury with the allegations which would warrant a sentence of death." Appellant asserts that because the grand jury did not participate in the decision to seek the death penalty, he has been denied his right to due course of law under the Texas Constitution. Appellant argues that "in order to prevent unusual application of the death penalty, and in order to provide the guarantees accorded under the State constitution, this must require the use of the grand jury to review the prosecutor's decision to seek death, and must of necessity place the facts relied upon to answer the Special Issues before the grand jury, or else the guarantees are meaningless." As support for his argument, appellant points to the language of Article I, Sections 10 and 13, of the Texas Constitution, as well as this Court's opinion in Heitman v. State, 815 S.W.2d 681 (Tex.Crim.App.1991).
Article I, Section 10, of the Texas Constitution provides that no person shall be *732 held to answer for a criminal offense except by indictment returned by a grand jury. Article I, Section 13, states: "Excessive bail shall not be required, nor excessive fines imposed, nor cruel or unusual punishment inflicted. All courts shall be open, and every person for an injury done him, in his lands, goods, person, or reputation, shall have remedy by due course of law."
This Court has previously found that the United States Constitution does not compel the State to allege the special issues under Article 37.071 in the indictment and does not require that the grand jury pass on the punishment special issues when deciding whether to indict a defendant. Roberts v. State, 220 S.W.3d 521, 535 (Tex. Crim.App.2007); Russeau v. State, 171 S.W.3d 871, 885-86 (Tex.Crim.App.2005); Rayford v. State, 125 S.W.3d 521, 533 (Tex. Crim.App.2003). Appellant points out that we may interpret our State constitutional guarantees more broadly than those contained in the United States Constitution. See Heitman, 815 S.W.2d at 685-88. He generally argues that we should do so here because (1) the Texas Bill of Rights is not an amendment but an integral part of the framework of the Texas Constitution, (2) the Texas Bill of Rights "is placed first in [the Texas Constitution]," and (3) "[the Texas Constitution] was never intended to be subservient to the federal [constitution]." However, he does not specifically explain how the protections offered by the Texas Constitution differ from the protections guaranteed by the United States Constitution. We are not inclined to make appellant's arguments for him. TEX.R.APP. P. 38.1. Point of error ten is overruled.
MOTION FOR NEW TRIAL
In points of error eleven and twelve, appellant alleges that the trial court erred in refusing to grant a hearing on his motion for new trial on the following grounds: (1) there was unauthorized communication between the bailiff and the jury that violated his Sixth Amendment right to an impartial jury, and (2) the future dangerousness question violates due process.
This Court has set out the applicable standard of appellate review:
When examining a trial court's denial of a hearing on a motion for new trial, we review for an abuse of discretion. In so doing, we reverse only when the trial judge's decision was so clearly wrong as to lie outside that zone within which reasonable persons might disagree. And, in the absence of [such] an abuse of discretion, this Court would not be justified in reversing the judgment. Our review, however, is limited to the trial judge's determination of whether the defendant has raised grounds that are both undeterminable from the record and reasonable, meaning they could entitle the defendant to relief. This is because the trial judge's discretion extends only to deciding whether these two requirements are satisfied.
Gonzales v. State, 304 S.W.3d 838, 842 (Tex.Crim.App.2010) (quoting Smith v. State, 286 S.W.3d 333, 339-40 (2009) (internal quotations marks and footnotes omitted)).
In his motion for new trial, appellant complained, among other things, of an alleged unauthorized communication between the bailiff and the jury. Attached to the motion was an affidavit from juror Salinas, in which Salinas stated:
During deliberation there were times where [sic] our discussions were loud. One incident during the punishment phase I remember arguing with the Jury Foreman and the bailiff of the court banged on the door. The door was out of my view and either the foreman or another juror let him in. He *733 then told the Jurors to keep it down, it was too loud and they could hear the shouting in the deliberation room. I stopped my argument at that time.
Appellant argues that a hearing was necessary because "the bailiff did not have the authority to interfere with the jury's deliberations by telling the jury to hold their voices down." Appellant asserts that this was an unauthorized communication because it was without judicial authority and without the consent of the trial court. He further asserts that a hearing would have shown that the jury room was isolated in a bank conference room on the second floor of a building across the street from the court. He argues that a hearing would have shown that the jurors' raised voices would not have disturbed anyone and could not have been heard by anyone.
In support of his contentions, appellant only cites to Parker v. Gladden, 385 U.S. 363, 87 S. Ct. 468, 17 L. Ed. 2d 420 (1966), a case in which the United States Supreme Court found that a bailiff's communications with jurors were in violation of the Sixth Amendment's confrontation requirement and right to trial by an impartial jury. Id. at 365, 87 S. Ct. 468. In Parker, the bailiff told one juror, within the presence of at least one other juror, that the defendant was a "wicked fellow" who was guilty and then told another juror that "the supreme court" would correct any error in finding the defendant guilty. Id. at 363-64, 87 S. Ct. 468. The United States Supreme Court found that the bailiff's actions "involve[d] such a probability that prejudice [would] result that it [was] deemed inherently lacking in due process." Id. at 365, 87 S. Ct. 468 (quoting Estes v. Texas, 381 U.S. 532, 542-43, 85 S. Ct. 1628, 14 L. Ed. 2d 543 (1965)).
The instant case is significantly different from Parker. In this case, the bailiff made no comment to jurors regarding the law or the substance of the case. He made no comments regarding appellant's death worthiness, nor did he make any attempts to influence the jury's punishment determination. The bailiff's direction to jurors to keep their voices down so that they could not be heard from outside the jury room did not implicate appellant's right to an impartial jury. The trial court did not abuse its discretion in denying a hearing on this ground. To the extent that appellant is arguing any other issue, he has not briefed it. See TEX. R.APP. P. 38.1. Point of error eleven is overruled.
Appellant also complains that the trial court refused to grant a hearing on the ground that the future dangerousness special issue violates due process. Appellant argues that the jury was unable to make a future dangerousness determination from the evidence it had before it. He claims that "it is clear" that "`society,' in the case of a person already convicted of a criminal charge of capital murder, is prison." He argues that the jury in his case did not have the benefit of recent research indicating that the State's predictive evidence of future dangerousness is "almost always wrong." Appellant also claims that the jury did not have any insight into the prison system or the ways the prison system "was set up to contain any hint of future problems" that appellant may present. This Court understands appellant's argument to be that the evidence was legally insufficient to support the jury's future dangerousness determination and that the trial court failed to hold a hearing on that issue.
Our review of the trial court's decision to grant or deny a hearing is "limited to the trial judge's determination of whether the defendant has raised grounds that are both undeterminable from the record and reasonable, meaning they could *734 entitle the defendant to relief." Gonzales, 304 S.W.3d at 842. As discussed in the Future Dangerousness section, supra, this Court has stated that a jury may consider a variety of factors in making its future dangerousness determination. See Wardrip, 56 S.W.3d at 594 & n. 7; Keeton, 724 S.W.2d at 61. This Court has never held that a jury must have before it expert testimony regarding the prison classification system or any prison procedures to prevent disciplinary incidents or discipline problem inmates. We have repeatedly stated that the facts of an offense alone may support an affirmative future dangerousness finding. See Fuller, 253 S.W.3d at 231-32; Sonnier, 913 S.W.2d at 517; Kunkle, 771 S.W.2d at 449. We have also stated that "society" includes both prison and non-prison populations. See Estrada, 313 S.W.3d at 281; see also Broxton, 909 S.W.2d at 919.
Because this was not a ground that could entitle appellant to relief, the trial court did not abuse its discretion in refusing to grant a hearing on the ground that the future dangerousness special issue violates due process. Point of error twelve is overruled.
We affirm the judgment of the trial court.
NOTES
[1] Unless otherwise indicated all references to Articles refer to the Code of Criminal Procedure.
[2] It was later discovered that the shot had killed a possum.
[3] Section 19.03(a)(1) of the Texas Penal Code provides that a person commits the offense of capital murder if he murders a peace officer "who is acting in the lawful discharge of an official duty and who [he] knows is a peace officer."
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54 So. 3d 593 (2011)
HUDSON PROTECTION GROUP, INC., etc., Appellant,
v.
PCG SECURITY INT'L LLC, etc., Appellee.
No. 3D10-1390.
District Court of Appeal of Florida, Third District.
February 16, 2011.
Mary Ann Huey and Erica Cañas, Coral Gables for appellant.
A. Patricia Barwick, for appellee.
Before GERSTEN and SUAREZ, JJ., and SCHWARTZ, Senior Judge.
*594 SUAREZ, J.
Hudson Protection Group, Inc. ("Hudson"), a Florida corporation and plaintiff below, seeks to reverse a non-final order granting the defendant's, PCG Security International, LLC ("PCG"), motion to change venue and transferring the case to Hernando County. We reverse.
Hudson is a security company based in Miami-Dade County. Former co-defendant, WHLS of Florida, LLC ("WHLS"), is a for-profit charter school operator that hired Hudson to provide security for a number of its schools in Florida. Hudson subcontracted with PCG, a security services company, to provide security personnel for WHLS's schools in west and north Florida. The subcontract agreement included a noncompete clause that prohibited PCG from directly providing any security services to any WHLS-managed facility for three years after termination of the subcontract agreement. PCG allegedly breached the agreement by taking over Hudson's role as security provider for several WHLS schools in south Florida, including Miami-Dade County. Hudson sued for breach of the noncompete agreement in Miami-Dade County because two of the schools that PCG allegedly took over are located there. On amended complaint, PCG responded with a motion to change venue to either Hernando Countybecause its registered agent and managing member is there, or to Hillsborough Countybecause PCG executed the contract there. At hearing, the trial court determined that the motion was brought under section 47.011, Florida Statutes (2009). PCG's manager, Steven Lugo, testified that he signed the noncompete agreement in Hernando County, and that payments were made in Hillsborough County, where the corporation is located. Lugo also admitted, however, that PCG took over the security contracts for WHLS in Miami-Dade, Palm Beach and Broward counties at WHLS's request. The trial court granted PCG's motion for change of venue and transferred the case to Hernando County.
Actions must be brought in the county where the defendant resides, where the cause of action accrued, or where the property in litigation is located. § 47.011. For venue purposes, a breach of contract action accrues where the contract was breached or, in other words, where the defendant failed to perform the covenant that was allegedly breached. See McDaniel Reserve Realty Holdings, LLC v. B.S.E. Consultants, Inc., 39 So. 3d 504 (Fla. 4th DCA 2010); Symbol Mattress of Fla., Inc. v. Royal Sleep Prods., Inc., 832 So. 2d 233 (Fla. 5th DCA 2002); Koslow v. Sanders, 4 So. 3d 37, 38 (Fla. 2d DCA 2009) ("[A] cause of action on a contract accrues for venue purposes where the breach of that contract occurs, and if a contract involves performance, the breach occurs where the defaulting party fails to perform an act that it has agreed to do."); see also Tucker v. Fianson, 484 So. 2d 1370, 1372 (Fla. 3d DCA 1986) ("[W]hile lawyer Tucker negligently shot his arrow into the air of Broward County, it did no harm and had no effect until it fell to earth in Dade. It is therefore here that he must answer for his asserted error.").
The evidence presented by both parties at the hearing on PCG's motion to transfer venue clearly showed that the cause of action accrued in Miami-Dade County when PGC admittedly took over security contracts for schools located there. Indeed, venue could also lie in those other Florida counties where PCG allegedly breached its noncompete agreement with Hudson. But Hudson chose Miami-Dade County, and where venue is proper in more than one county, the choice of forum rests with the plaintiff. Am. *595 Vehicle Ins. Co. v. Goheagan, 35 So. 3d 1001 (Fla. 4th DCA 2010); P.V. Holding Corp. v. Tenore, 721 So. 2d 430, 431 (Fla. 3d DCA 1998).
We reverse the non-final order granting PCG's motion to transfer venue to Hernando County and remand with instructions to reinstate venue in Miami-Dade County.
Reversed and remanded with directions.
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345 S.W.3d 867 (2011)
RIVER CITY DEVELOPMENT ASSOCIATES, LLC, Appellant,
v.
ACCURATE DISBURSING COMPANY, LLC and Montgomery Bank, NA, Defendants, and
RCDA, LLC, Respondent.
No. ED 95222.
Missouri Court of Appeals, Eastern District, Division Five.
July 5, 2011.
Motion for Rehearing and/or Transfer to Supreme Court Denied August 22, 2011.
*868 Gary A. Growe, Clayton, MO, for appellant.
David H. Luce, Clayton, MO, for respondent.
PATRICIA L. COHEN, Judge.
Introduction
River City Development Association, LLC (Plaintiff) appeals from the judgment of the Circuit Court of St. Louis County entered after a jury found in favor of RCDA, LLC (Defendant) on Plaintiff's claims for breach of contract and default on a promissory note. Plaintiff contends that the trial court erred in denying its motion for a new trial because: (1) with respect to the breach of contract claim, the judgment was "clearly against the weight of the evidence"; and (2) with respect to the default on a promissory note claim, "the uncontroverted evidence was that Defendant never tendered the proper amount of interest to satisfy its financial obligations under the note." We affirm.
Background
This case concerns a real estate transaction between Plaintiff and Defendant for the sale of property situated in the City of St. Louis. Specifically, Plaintiff agreed to sell Defendant a commercial building known as the Fulton Bag Building, a bar known as Patty O's, and vacant lots adjacent to Patty O's (the Property). Defendant financed the purchase partially through a promissory note (the Promissory Note) for $1.2 million to be paid to Plaintiff.
On August 25, 2009, Plaintiff filed its third amended petition against Defendant alleging breach of contract and default on the Promissory Note. As to the breach of contract claim, Plaintiff alleged that the Defendant failed to pay the agreed upon $9.3 million purchase price for the Property because Defendant did not pay Plaintiff the approximately $1.12 million difference between $3.68 million allocated for renovation costs to the Fulton Bag Building and the $2.56 million in actual costs of the renovation. As to the default on the Promissory Note claim, Plaintiff alleged that Defendant failed to timely tender the proper principal and interest payments. In its answer, Defendant denied Plaintiff's allegations. Plaintiff did not file a motion for judgment on the pleadings or for summary judgment, and the case proceeded to a jury trial.
*869 Breach of Contract Claim
With respect to the breach of contract claim, the only contested issue at trial was whether the parties agreed that the purchase price for the Property was $9.3 million and that Defendant was to pay Plaintiff the $1.12 million difference between $3.68 million allocated for renovation costs and the $2.56 million in actual costs. Evidence of Plaintiff's and Defendant's agreement included three documents signed by the parties: (1) the "Sale Contract"; (2) the "Construction Disbursing Escrow Agreement"; and (3) the "Construction Management Agreement."
Under the Sale Contract, Plaintiff agreed to sell Defendant the Property for a "total sale price" of $9.3 million. Of the $9.3 million, the Sale Contract allocated $3,682,087.92 ($3.68 million) "to be escrowed" for costs associated with the then-ongoing renovation of the Fulton Bag Building to add fifteen residential units.
Under the Construction Disbursing Escrow Agreement, the parties agreed to the terms governing the disbursement of funds from the $3.68 million to be escrowed and used for the renovation of the Fulton Bag Building. The Construction Disbursing Escrow Agreement provided that Defendant was to fund the escrow account with $3.68 million it received under its "Loan Agreement" with its lender, Montgomery Bank. The Construction Disbursing Escrow Agreement stated that "[a]nything to the contrary notwithstanding, [Montgomery Bank] shall not be required to make any disbursement of loan proceeds in contravention with the Loan Agreement . . ." Additionally, the Construction Disbursing Escrow Agreement provided "[t]hat, in the event the actual cost of construction of the improvements to the Property ("Actual Cost") is less than [$3.68 million] ("Projected Cost"), [Defendant] shall pay to [Plaintiff] the difference between the Actual Cost and the Projected Cost . . . ." (parentheticals in the original).
Under the Construction Management Agreement, Plaintiff agreed to manage and supervise the renovation of the Fulton Bag Building. The Construction Management Agreement provided that Plaintiff was to contract with an escrowee and deposit the $3.68 million in an escrow account to be disbursed as agreed upon by Plaintiff and the escrowee. The Construction Management Agreement further stated that the $3.68 million "shall be used to pay all costs of construction, including but not limited to labor and materials in connection with the Project . . . . Upon full completion of the Project, if any amounts in the Escrow Funds remain, such funds shall be paid to [Plaintiff]."
In addition to the documents signed by the parties, Plaintiff and Defendant also called their respective representatives to testify as to the parties' agreement. Plaintiff's and Defendant's representatives disagreed as to whether $9.3 million was the agreed upon purchase price for the Property and whether Defendant was required to disburse the $1.12 million difference to Plaintiff. Plaintiff's managing member, Milton Rothschild, II, testified that he knew Plaintiff would not "net" $9.3 million and a second representative for Plaintiff, Paul Mortelli, testified that he did not know the sale price for the Property. A representative for Defendant, John Sabio, testified that $9.3 million was not the agreed price to purchase the Property and it was his understanding that the $3.68 million was to be used exclusively for the Fulton Bag Building renovations. Similarly, another representative for Defendant, Mr. Dorr, disagreed "[t]hat there was going to be a total of 9.3 million dollars going to sellers," and that it was his understanding that the entire $3.68 million was to be *870 used for the renovations to the Fulton Bag Building.
While the parties' representatives disagreed on the terms of the agreement, the witnesses did not dispute each party's respective performance under the agreement. The representatives agreed that neither party deposited $3.68 million in an escrow account. Instead, RCDA obtained a Construction and Bridge Loan from Montgomery Bank, from which the parties drew money to pay for the renovation costs. Between August 31, 2007 and the completion of the renovation in Spring 2008, River City and RCDA drew $2,566,273.22 ($2.56 million) in loan disbursements to pay the incurred renovation costs. River City requested RCDA to disburse to River City the $1,115,814.70 ($1.12 million) difference between $3.68 million and the $2.56 million incurred renovation costs. RCDA did not disburse the requested funds to River City.
Finally, Plaintiff called the loan officer from Montgomery Bank who authorized Defendant's Construction and Bridge Loan, Dan Wacker. Mr. Wacker testified that under the loan, Montgomery Bank would disburse money for renovation costs only if: (1) Plaintiff and Defendant approved the cost; (2) the cost was allocated pursuant to a Construction Budget prepared by Plaintiff and attached to the loan agreement; and (3) the disbursement was consistent with the loan agreement requiring that funds drawn directly benefit the renovation of the Fulton Bag Building, which served as collateral for the loan. Mr. Wacker further testified that neither the loan agreement nor the budget would have authorized the payment of $1.1 million, or any funds, to a third party, including Plaintiff.
At the close of the evidence, Plaintiff did not move for directed verdict, but submitted a verdict directing instruction for its breach of contract claim. Specifically, the instruction stated:
Your verdict must be for Plaintiff River City and against Defendant RCDA if you believe:
First, Plaintiff and Defendant entered into an agreement whereby Plaintiff agreed to sell to Defendant the Fulton Bag Building with 15 completed residential units, Paddy O's Restaurant and Bar and other lots as described in the Sale Contract, and Defendant agreed to pay $9,300,000.00 for these properties and
Second, Plaintiff performed its agreement, and
Third, Defendant failed to perform its agreement, and
Fourth, Plaintiff was thereby damaged.
The jury returned a verdict in favor of Defendant, and the trial court subsequently entered its judgment consistent with the verdict. Thereafter, Plaintiff filed a motion for a new trial on the ground that "the jury verdict in the case was against the weight of all substantial, credible evidence." The trial court denied the motion.
Default on the Promissory Note Claim
With respect to the default on the Promissory Note claim, the only contested issue at trial was the correct methodology for computing interest payments under the Promissory Note. The Promissory Note, which was admitted at trial, stated in pertinent part:
For value received, the undersigned [Defendant] promises to pay to the order of [Plaintiff], the principal sum of One Million Two Hundred Thousand and No/100 Dollars ($1,200,000.00), with interest at the rate of six percent (6.0%) per annum until this Note is fully paid.
Principal and interest are payable as follows:
*871 (1) Four Hundred Thousand and No/100 ($400,000.00) and all accrued and unpaid interest shall be due on the 30th day of August, 2008;
(2) Four Hundred Thousand and No/100 ($400,000.00) and all accrued and unpaid interest shall be due on the 30th day of August, 2009;
(3) Four Hundred Thousand and No/100 ($400,000.00) and all accrued and unpaid interest shall be due on the 30th day of August, 2010.
In the event default be made in the payment when due, the undersigned agree(s) to pay during the period of delinquency, interest on the unpaid balance of the indebtedness evidenced by this Note, at the rate of twelve percent (12%) per annum, but in no event shall such interest exceed the maximum rate permitted by law.
The parties presented conflicting evidence regarding the correct methodology for computing interest under the Promissory Note. Plaintiff contended that 6% interest accrued on the entire principal and presented evidence that Defendant had previously submitted a check to the clerk of the court consistent with Plaintiff's methodology for computing interest. Conversely, Defendant contended that 6% interest accrued only on each individual installment when paid, and presented evidence that Plaintiff had previously sent Defendant a demand letter indicating a balance consistent with Defendant's methodology for computing interest. Uncontradicted evidence at trial showed that Defendant had made several payments to Plaintiff, and using Plaintiff's methodology for computing interest, Defendant owed $527,059.76, and using Defendant's methodology for computing interest, Defendant had tendered all amounts due under the Promissory Note.
At the close of the evidence, Plaintiff did not move for directed verdict, but submitted a verdict directing instruction, stating:
Your verdict must be for Plaintiff River City and against Defendant RCDA if you believe:
First, Defendant RCDA failed to timely pay the amount of principal and interest due on the Promissory Note, and
Second, Plaintiff was thereby damaged,
Unless you believe Plaintiff is not entitled to recovery by reason of Instruction Number 11.
Instruction Number 11 stated: "Your verdict must be for Defendant RCDA if you believe that Defendant has paid or tendered payment due under the Promissory Note." The jury returned a verdict in favor of Defendant, and the trial court subsequently entered its judgment consistent with the verdict. Thereafter, Plaintiff filed a motion for a new trial on the ground that "the jury verdict in the case was against the weight of all substantial, credible evidence." The trial court denied the motion.
This appeal followed.
Standard of Review
In reviewing a denial of a motion for a new trial, we are mindful that "[c]ourts should not overturn a jury verdict lightly. Trials are costlyfor the litigants, the jurors and taxpayers." Keltner v. K-Mart Corp., 42 S.W.3d 716, 722 (Mo.App. E.D. 2001). We review the denial of a motion for a new trial for an abuse of discretion. Burrows v. Union Pac. R. Co., 218 S.W.3d 527, 533 (Mo.App. E.D.2007). "A trial court abuses its discretion when its ruling shocks the sense of justice, shows a lack of consideration, and is obviously against the logic of the circumstances." Id. at 533-34.
*872 Discussion
In its first Point Relied On, Plaintiff contends that the trial court erred in denying its motion for a new trial because the judgment in favor of Defendant on its breach of contract claim was "clearly against the weight of the evidence."[1] In the argument section of its brief, Plaintiff argues that the evidence was "uncontroverted" and that "there is not one scintilla of evidence to support the Judgment for the Defendant." Plaintiff further alleges that the parties' signed documents were "clear and unambiguous with respect to [Defendant's] contractual obligation to pay to [Plaintiff] the difference between $3.68 million and the cost to complete the renovation," and the trial court abused its discretion by failing in its "duty" to uphold the contracts as written. In response, Defendant asserts that the trial court's denial of Plaintiff's motion for a new trial on the grounds that the jury's verdict is against the weight of the evidence is a "conclusive determination" that cannot be overturned on appeal. Defendant also argues that, in any event, the record contains sufficient evidence to support the jury's verdict that Defendant did not agree to pay $9.3 million for the Property.
As an initial matter, we note that in its Point Relied On, Plaintiff asserts that the judgment is "against the weight of the evidence," yet in the argument section of its brief, Plaintiff argues that the judgment for Defendant is "void of any evidence." In short, Plaintiff appears to conflate two separate bases of appellate review. An "against-the-weight-of-the-evidence challenge presupposes the threshold issue of the existence of substantial evidence supporting a proposition necessary to sustain a judgment but, nevertheless, challenges the probative value of that evidence to induce belief in that proposition when viewed in the context of the entirety of the evidence before the trier of fact." Houston v. Crider, 317 S.W.3d 178, 186 (Mo.App. S.D.2010). By contrast, a "not supported-by-substantial-evidence challenge" is an assertion that the record lacks evidence "which, if true, has probative force upon the issues, and from which the trier of fact can reasonably decide the case." Id. (quoting Williams v. Daus, 114 S.W.3d 351, 359 (Mo.App. S.D.2003)) (internal alterations omitted). Here, Plaintiff's challenge does not presuppose that there is substantial evidence in support of the judgment in favor of Defendant, but rather argues that there is no evidence in support of the judgment. Because Plaintiff adequately addresses its not-supported-by-substantial-evidence challenge in the argument section of its brief, we consider it.
Plaintiff's contention that the jury's verdict in favor of Defendant is not supported by substantial evidence is without merit. Plaintiff bore the burden of proving its breach of contract case. Because Plaintiff bore the burden of proof, "a verdict in [D]efendant's favor need not be supported by any evidence." Warren v. *873 Thompson, 862 S.W.2d 513, 514 (Mo.App. W.D.1993) (citing Bakelite Co. v. Miller, 372 S.W.2d 867, 871-72 (Mo.1963)). Where a party bears the burden of proof, it is within the jury's prerogative to find against that party, even if that party's evidence is uncontradicted and unimpeached. Ratcliff v. Sprint Mo., Inc., 261 S.W.3d 534, 542 (Mo.App. W.D.2008). It is well-settled that "the sufficiency of the evidence to support a defendant's verdict is not a question amenable to appellate review." Warren, 862 S.W.2d at 514.[2]
Additionally, Plaintiff, in arguing that the parties' signed documents were clear and unambiguous and that the trial court failed to uphold the contract as written, contends, in essence, that it was entitled to a judgment as a matter of law that Defendant was in breach of contract. Such a claim "is tantamount to saying that [Plaintiff] was entitled to a directed verdict."[3]Glasscock v. Miller, 720 S.W.2d 771, 773 (Mo.App. S.D.1986). Plaintiff, however, did not move the trial court for a directed verdict, but rather submitted the case to the jury. As a general rule, an appellate court will not convict a trial court of error on an issue which was not before it. Id. (citing Lincoln Credit Co. v. Peach, 636 S.W.2d 31, 36 (Mo. banc 1982)). A corollary rule is that a plaintiff who failed to move the trial court for a directed verdict is precluded from asserting on appeal that it is entitled to a verdict as a matter of law. Id. (citing Parsons Constr. Co. v. Mo. Pub. Serv. Co., 425 S.W.2d 166, 171 (Mo.1968); Stanziale v. Musick, 370 S.W.2d 261, 266 (Mo.1963)); see also Crystal Tire Co. v. Home Serv. Oil Co., 525 S.W.2d 317, 320-21 (Mo. banc 1975) (holding that because the defendant "at no time moved the court for a directed verdict in its favor on its cross-claim . . ., but joined in submitting its case to the jury, . . . [the defendant's] point that it was entitled to judgment as a matter of law on its cross-claim was not preserved for appellate review.").[4] To the extent Plaintiff contends that it was entitled to a judgment as a matter of law, its argument is not preserved for appeal. Point denied.
In its second point, Plaintiff contends that the trial court abused its discretion in denying Plaintiff's motion for a new trial on the Promissory Note claim "because the uncontroverted evidence was that [Defendant] never tendered the proper amount of interest to satisfy its financial obligations under the note." Plaintiff further asserts that under the plain language of the Promissory Note, 6% interest accrued on the entire balance and 12% interest on unpaid balances, and the trial court "abused its discretion in failing to apply the plain language of the Promissory Note to the facts." In response, Defendant asserts that the trial court did not abuse its *874 discretion in denying Plaintiff's motion because "there was substantial probative evidence to support the jury's verdict that Defendant paid the proper amount of interest under the note."
The flaws in Plaintiff's second point mirror those in its first point. Plaintiff's argument that it was entitled to a new trial because its evidence was uncontroverted is without merit because Plaintiff bore the burden of proving its claim and the jury was free to believe or disbelieve Plaintiff's evidence. See Bakelite Co., 372 S.W.2d at 871.[5]
Additionally, Plaintiff, in arguing that under the plain language of the Promissory Note, interest accrued at 6% on the entire balance and 12% on any unpaid balances, and that the trial court failed to apply the plain language of the Promissory Note, asserts, in essence, that it was entitled to a judgment as a matter of law that Defendant was in default on the Promissory Note. As stated above, because Plaintiff did not move the trial court for a directed verdict and submitted its case to the jury, Plaintiff's claim that it was entitled to a judgment as a matter of law is unpreserved. See Glasscock, 720 S.W.2d at 773. Point denied.
Conclusion
The judgment of the trial court is affirmed.
MARY K. HOFF, P.J., and GLENN A. NORTON, J., concur.
NOTES
[1] Plaintiff's first Point Relied On states:
THE TRIAL COURT ERRED IN DENYING PLAINTIFF'S MOTION FOR NEW TRIAL ON VERDICT A (BREACH OF CONTRACT) BECAUSE THE SALES CONTRACT, CONSTRUCTION MANAGEMENT AGREEMENT AND DISBURSING AGREEMENT WERE CLEAR AND UNAMBIGUOUS WITH RESPECT TO DEFENDANT'S CONTRACTUAL OBLIGATION TO PAY TO PLAINTIFF THE DIFFERENCE BETWEEN $3.62 MILLION AND THE COST TO COMPLETE RENOVATION, AND IN THE ABSENCE OF ANY SUBMITTED AFFIRMATIVE DEFENSE OR COUNTERCLAIM, THE VERDICT AND JUDGMENT WERE CLEARLY AGAINST THE WEIGHT OF THE EVIDENCE
(emphasis added).
[2] We note that even if Plaintiff had argued that the judgment was against the weight of the evidence, we would remain unpersuaded because an appellate court will not rule on the weight of the evidence in a jury-tried case. See Woods v. Friendly Ford, Inc., 248 S.W.3d 699, 704 (Mo.App. S.D.2008). (holding that a "trial court's denial of a motion for new trial challenging the verdict as against the weight of the evidence is a conclusive determination that cannot be overturned on appeal.").
[3] At oral argument, counsel for Plaintiff conceded as much when in response to the panel's question, "Are you telling us that the court should have directed a verdict for you?" counsel answered, "Yes. That's why I'm here."
[4] Notably, in addition to failing to move for a directed verdict, Plaintiff also chose not to have the trial court construe the parties' signed documents or determine Defendant's breach of contract as a matter of law in either a motion for summary judgment or a judgment on the pleadings.
[5] To the extent the jury may have reached its verdict based on Defendant's affirmative defense in Instruction 11 (as to which Defendant bore the burden of proof) requiring the jury to believe that Defendant "has paid or tendered payment due under the Promissory Note," the judgment is supported by substantial evidence. Specifically, Ms. Sheffold testified that under RCDA's methodology for computing interest, RCDA had tendered the full payment under the Promissory Note.
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01-03-2023
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10-30-2013
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