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420 So.2d 845 (1982)
Willis PENNINGTON
v.
STATE.
6 Div. 856.
Court of Criminal Appeals of Alabama.
October 12, 1982.
*846 J. Paul Whitehurst of Henley, Whitehurst & Shirley, Northport, for appellant.
Charles A. Graddick, Atty. Gen., and Helen P. Nelson, Asst. Atty. Gen., for appellee.
TYSON, Judge.
Willis Pennington was charged in a three-count indictment with third degree burglary, second degree theft, and second degree receiving stolen property. The charges arose out of the June 14, 1981, break-in of Smith's Grocery Store located in Tuscaloosa County. Trial was had with the jury returning a verdict of "guilty as charged." Appellant was sentenced to two years' imprisonment. From that conviction he now appeals.
On appeal, appellant questions the sufficiency of the State's corroborating evidence. Thus, a complete statement of the facts is necessary.
Mr. W.D. Smith testified that he owned Smith Grocery Store located on Highway 43 in Tuscaloosa. Around 6 p.m. on Saturday, June 13, 1981, Smith closed and locked his store for the evening. He returned the next morning between 7:30 and 8 a.m. to find a front window broken and the back door unlocked and open. He called the police and Tuscaloosa Sheriff's investigator Hubert Hallman responded. An inventory of the items taken was made. Several cartons of cigarettes and chewing tobacco, numerous bags of popcorn, and several gallons of milk were taken. The aggregate value of the items taken was between $300 and $350.
Tuscaloosa Sheriff's investigator Hubert Hallman testified that he investigated the break-in of the Smith Grocery Store. He interviewed Smith and afterwards began to look for a small, early model white vehicle with a black fender, or vice-versa color. Later that afternoon a white Ford Falcon with a black left front fender was located at the residence of co-defendant Johnny Shelby. After receiving the information, Hallman headed toward the residence only to see Shelby's brother, Mike Shelby, riding a bicycle on Highway 43. He stopped him, advised him of his rights, and questioned him. Afterwards, Hallman proceeded to the residence of appellant's father in Fayette County. Finding no one home, he returned to Tuscaloosa County and spotted the car. He stopped it and found appellant and Johnny Shelby inside. Both were advised of their rights. Subsequent thereto, Hallman went to Shelby's residence and discovered about forty-five bags of popcorn and two gallons of milk.
From the Shelby residence, Hallman returned to the residence of appellant's father. At the time, Mr. Pennington was living with his mother although he owned a vacant home nearby. Hallman informed Mr. Pennington of the possibility that stolen *847 property was hidden in his vacant house. They went to his house and searched it. Inside a washer and dryer, Hallman found about forty cartons of cigarettes and two cartons of chewing tobacco. Hallman returned all of the stolen merchandise with the exception of one bag of popcorn and four cartons of cigarettes to Smith.
Based on his investigation, appellant and Johnny and Mike Shelby were arrested.
On cross-examination, Hallman stated that none of the cartons of cigarettes and chewing tobacco were found in the furniture stacked near the front entrance of Mr. Pennington's house.
Johnny Shelby testified that appellant was his brother-in-law. He knew where appellant's father was living and where his vacant house was located. He also knew where Smith's Grocery Store was located.
Around 7 p.m. on June 13, Shelby, and his brother Mike helped appellant move some furniture to his father's house. Also helping them were Cecil Taylor and his son. Shelby stated that the house was unlocked. Sometime between 10 and 11 p.m. they finished moving the furniture and left.
Shortly thereafter, appellant and Shelby met Mike, who had ridden with Taylor, at Fuller's Grocery Store, which was located about one mile from Smith's store. Parked at the store was the Ford Falcon which belonged to appellant. Shelby testified that he and appellant discussed going to Smith's store. He stated that appellant said that "he wanted to go into the store" (R. 37), although he did not say what he wanted to do once he got inside.
Appellant drove to Smith's store and Johnny Shelby got out. He broke a front window, entered the store, took numerous cartons of cigarettes and bags of popcorn, several boxes of chewing tobacco, and a few gallons of milk. He placed the items in a box, opened the back door and left. He walked to a dirt road behind the store and waited for appellant and his brother. Shortly thereafter, he was picked up by them and taken to Fuller's Grocery Store where he got in the Falcon and returned to the dirt road to pick up the stolen merchandise that he had left. Afterwards, he drove to a predetermined location and met appellant and his brother. Appellant placed the stolen goods in the trunk of the car. Then they drove to the vacant house of Mr. Pennington. Upon arriving, Shelby backed the car up to the front door and appellant and Mike Shelby removed the cigarettes and chewing tobacco. Shelby stated that it was early Sunday morning about two hours before dawn when they left.
After hiding the cigarettes and chewing tobacco, the trio drove to Shelby's residence where they unloaded the remainder of the stolen merchandise. Appellant then left and Shelby went to sleep.
Later that Sunday morning, appellant returned to Shelby's and they went for a ride in the Falcon. Eventually, they were stopped by Investigator Hallman and later arrested.
The record reflects that appellant had been residing with the Shelbys for some time prior to the commission of the instant offense.
Shelby stated that the charges against him for the instant offense were pending. He stated that the district attorney had not discussed settling them. In addition, Shelby had two unrelated charges pending against him.
Clyde Pennington testified that he was the father of appellant. In June, 1981, he was living with his mother at her house although he owned a home nearby. Sometime prior to June 13, Pennington had given appellant permission to move some furniture into his house. He stated that the house was normally locked and he did not tell appellant how to get in. Pennington stated that on June 14, he and Investigator Hallman went to his house. He opened the door and together they searched it. Pennington stated that Hallman found the stolen cigarettes and chewing tobacco in the washer and dryer. He testified that the washer and dryer belonged to his "oldest son" and had been in his house for about four years. Pennington had not given anyone *848 permission to put the stolen merchandise in his house or in the washer and dryer.
In response to the question concerning the reason for appellant moving the furniture into the house, Pennington replied, "He [appellant] had rented a house down there and it was occupied by another fellow and up there where he lived they had cut the gas or something or other off and he wanted to move his stuff down there until this other house got empty." (R. 84) Mr. Pennington's testimony concluded presentation of the State's case.
I
Appellant contends that the trial court erred in denying his motion to exclude the State's evidence. He argues that no evidence corroborating the testimony of accomplice Johnny Shelby was offered.
The general rules governing the determination of the sufficiency of corroborative evidence were recently stated by this court in Harris v. State, [Ms. 3 Div. 503, Aug. 24, 1982] 420 So.2d 812 (Ala.Cr.App.1982). These rules need not be restated here.
Both the State and appellant admitted that Johnny Shelby was appellant's accomplice. Shelby freely admitted his complicity and voluntarily testified to his participation in the crime. Thus, the question of whether Shelby was an accomplice was not one of disputed fact. Harris, supra.
While speculation and suspicion will not support a conviction based on the uncorroborated testimony of an accomplice, the weakness of the corroborating evidence, in and of itself does not preclude a finding that such evidence tends to connect the defendant with the commission of the offense. Where such a finding is made, the weakness and inconclusiveness, vel non of the corroborating evidence is determined by the jury. Thompson v. State, 374 So.2d 388, 390 (Ala.1979).
A careful review of the evidence reveals the following corroborative evidence tending to connect appellant with the crime: (1) Sometime prior to the commission of the crime, Mr. Pennington had given appellant permission to store some furniture in his vacant home; (2) Mr. Pennington had not given appellant a key to the house which was usually locked; (3) Hallman observed the furniture stored in Mr. Pennington's house; (4) Hallman discovered some of the stolen merchandise in the house; (5) Hallman discovered some of the stolen merchandise at Shelby's residence, and (6) Smith identified the merchandise returned to him by Hallman.
Taken together, we find that the above facts are sufficient corroborative evidence to properly connect appellant with the crime. Ala.Code § 12-21-222 (1975). The trial court properly submitted the evidence to the jury for its consideration. Thus, no error was committed in denying appellant's motion to exclude.
II
Appellant made objection to the trial court's omission to charge on the formula to be applied in determining whether sufficient corroboration of Shelby's testimony existed. Also, he submitted several written requested charges on such, which were refused. Appellant properly objected to their refusal by way of a timely and specific objection. Allen v. State, 414 So.2d 989 (Ala.Cr.App.1981), aff'd, 414 So.2d 993 (Ala. 1982); Chambers v. State, 418 So.2d 948 (Ala.Cr.App.1982); Rowe v. State, 421 So. 2d 1352 (Ala.Cr.App.1982); Grace v. State, [Ms. 1 Div. 355, June 29, 1982] (Ala. Crim.App.1982); A.R.Crim.P.Temp. 14.
Charges 7, 9 and 10 were properly refused as they each contained a misspelled word. Malone v. State, 421 So.2d 1357 (Ala.Cr.App.1982); Gullatt v. State, 409 So.2d 466 (Ala.Cr.App.1981); Kuhlow v. State, 397 So.2d 165 (Ala.Cr.App.1980), cert. denied, 397 So.2d 169 (Ala.1981).
Charge 8 was properly refused as it was abstract. Rogers v. State, 417 So.2d 241 (Ala.Cr.App.1982); See also, Malone, supra; Gullatt, supra.
*849 III
Appellant raises several issues concerning the trial court's denial of his motion for a new trial. All of the issues are based upon appellant's newly discovered evidence relating to the testimony of Johnny Shelby.
Attached to appellant's motion was a transcript of a conversation between his counsel and Shelby. The conversation occurred on December 22, 1981, at the office of appellant's trial counsel. Appellant filed his motion on January 22, 1982, and on February 23, 1982, a hearing was held to consider the grounds stated for granting it. The motion with the attached transcription appears in the record. However, the tape recording is not a part of the record.
At the outset, we note that the trial court's refusal to receive the tape recording into evidence did not constitute reversible error when the transcription thereof was made a part of the motion and thus before the trial court. The tape recording would have been cumulative of that which was already before the trial court. Consequently, to refuse to admit it into evidence was not error.
At the hearing on his motion, appellant called Shelby as a witness. Shelby was represented by counsel and when propounded questions, which were preliminary in nature, he refused to answer and invoked his Fifth Amendment right against self-incrimination. The trial court previously had made it clear that if Shelby testified differently than that to which he had testified at trial, then he would see that perjury charges were brought against him. In addition, the trial court would not compel Shelby to testify or answer appellant's questions.
The transcript of Shelby's conversation with appellant's counsel indicates a recantation of Shelby's trial testimony. It does not implicate appellant in the instant offense whatsoever. Rather, Shelby placed sole guilt for the crime upon himself.
Appellant argues that Shelby, by having testified at trial, waived the right to invoke his Fifth Amendment privilege against self-incrimination at the hearing on his motion for a new trial. In essence, although not specifically alleged, appellant asserts that Shelby testified falsely at trial and the conversation with his attorney reflects the true account of the facts surrounding the instant incident. Consequently, from that it follows that if the substance of the conversation had been admitted into evidence at the hearing on his motion, then Shelby would have committed perjury at the trial. There is no doubt that such a charge would manifest itself through a new proceeding not related to the material facts giving rise to the instant offense.
The privilege of a witness to refuse to incriminate himself by answering pertinent questions is personal to the witness, and cannot be claimed by or against whom he is called to testify. Bailey v. State, 398 So.2d 406 (Ala.Cr.App.1981). Individuals who testify in either civil or criminal proceedings have the right to refuse to answer relevant questions where the answers might tend to incriminate them in future proceedings. Lefkowitz v. Turley, 414 U.S. 70, 94 S.Ct. 316, 38 L.Ed.2d 274 (1973); McCarthy v. Arndstein, 266 U.S. 34, 45 S.Ct. 16, 69 L.Ed. 158 (1924); Vail v. Vail, 360 So.2d 985 (Ala.Civ.App.1977), rev'd, 360 So.2d 992 (Ala.1978).
The Fifth Amendment insures that a person can not be compelled, when acting as a witness, a party to a civil action, or a defendant in a criminal proceeding, to give testimony which might tend to show that he himself had committed a crime. Consequently, in any of these contexts, a witness protected by the privilege may rightfully refuse to answer unless and until he is protected at least against the use of his compelled answers and evidence derived therefrom in any subsequent criminal case in which he is a defendant. Without such protection, if the witness is nevertheless compelled to answer, said answers are inadmissible against him in a later criminal prosecution. Lefkowitz, 414 U.S. at 77-78, 94 S.Ct. at 322-23.
In the instant case, no promise of immunity was granted to Shelby, which is generally done. See Odiorne v. State, 249 Ala. *850 375, 31 So.2d 132 (1947). In fact, charges arising out of the instant incident were brought against Shelby and were in existence at the time he testified at appellant's trial. He had also been charged in two unrelated incidents. Furthermore, the trial court made it clear that charges for perjury would be brought against Shelby if he testified falsely at the trial.
In order to obtain a new trial on the basis of the use of perjured testimony by the State, a defendant must allege and prove (1) that the testimony was perjured; (2) that it was on a matter of such importance that the truth would have prevented a conviction; (3) that the State had knowledge that the testimony was perjured; and (4) that the defendant was not negligent in discovering the falsehood and in raising the issue. Summers v. State, 366 So.2d 336, 343 (Ala.Cr.App.1978); cert. denied, 366 So.2d 346 (Ala.1979). This is in addition to meeting the requirements for establishing the right to a new trial on the basis of newly discovered evidence. Barnes v. State, 415 So.2d 1217 (Ala.Cr.App.1982).
In discussing the principles involved when a witness invokes his privilege against self-incrimination, our Supreme Court in International Brotherhood of Teamsters, Etc., v. Hatas, 287 Ala. 344, 361, 252 So.2d 7, 22 (1971), quoted with approval from Ex Parte Blakey 240 Ala. 517, 522, 199 So. 857, 861 as follows:
"It seems to be the universal holding of the courts of last resort, which have had occasion to deal with cases like the one here under consideration, that when a witness declines to answer a question propounded to him by a court of competent jurisdiction, upon the ground that his answer might tend to incriminate him, two principles of law become at once involved, in determining the question of immunity claimed by the witness, and the court must give them both reasonable construction, so as to preserve them both to a reasonable extent. These two principles are: The state is entitled to the testimony of every citizen, while the citizen is privileged not to accuse himself. Neither of these principles can be entirely ignored and disregarded.
"It seems to be equally well settled, that in such cases, when a witness declines to answer a question upon the ground that his answer may tend to incriminate himself, it is in the first instance the prerogative of the court to consider and decide whether any direct answer to the question can implicate the witness. If it is not apparent such would be the tendency of the answer, the witness is not privileged from testifying. (Emphasis supplied)."
Conversely, if it is apparent that such would be the tendency, as in the instant case through a review of Shelby's trial testimony and his transcribed conversation with appellant's counsel, the witness is privileged from testifying.
It is well established that the granting of a new trial on the grounds of newly discovered evidence which tends to establish that the crime was actually committed by another rests in the sound discretion of the trial court. Robinson v. State, 389 So.2d 144 (Ala.Cr.App.), cert. denied, 389 So.2d 151 (Ala.1980). In reviewing such, this court will indulge every presumption in favor of the correctness of the trial court's ruling. Watson v. State, 398 So.2d 320 (Ala.Cr.App. 1980), cert. denied, 398 So.2d 332 (Ala.1981); Hewitt v. State, 389 So.2d 157 (Ala.Cr.App. 1980).
After a careful review of the record, we are of the opinion that the trial court committed no error in denying appellant's motion for a new trial. It is clear that the trial court recognized the potential violation of Shelby's Fifth Amendment right and, consequently, did not compel him to testify. Lefkowitz, supra. Furthermore, although the trial court did not admit the transcribed conversation into evidence, it is abundantly clear that it was thoroughly and carefully considered.
We have reviewed appellant's contentions on appeal and find no error. Thus, this cause is hereby affirmed.
AFFIRMED.
All the Judges concur; BOWEN, J., in result only.
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State of New York
Supreme Court, Appellate Division
Third Judicial Department
Decided and Entered: December 10, 2015 521081
________________________________
CREATIVE CULINARY CONCEPTS,
LLC, et al.,
Appellants,
v MEMORANDUM AND ORDER
SAM GRECO CONSTRUCTION, INC.,
Respondent.
________________________________
Calendar Date: October 16, 2015
Before: McCarthy, J.P., Rose, Lynch and Devine, JJ.
__________
Linnan & Fallon, LLP, Albany (James D. Linnan of counsel),
for appellants.
Harris Beach, PLLC, Albany (Mark J. McCarthy of counsel),
for respondent.
__________
Lynch, J.
Appeals (1) from an order of the Supreme Court (O'Connor,
J.), entered July 28, 2014 in Albany County, which granted
defendant's motion for summary judgment dismissing the complaint
and for judgment on its counterclaims, and (2) from the judgment
entered thereon.
In January 2009, plaintiff Creative Culinary Concepts, LLC
entered into an agreement with defendant to provide certain
construction services related to the opening of Creative's
restaurant. Two additional agreements were executed in March
2009 to add certain customized work. The restaurant opened at
the end of April 2009, with a total cost of construction of
$382,423. In September 2009, defendant and Creative entered into
-2- 521081
an agreement (hereinafter the promissory note) wherein it was
agreed that the unpaid balance due of $302,573 would be paid
through, among other things, 24 monthly installment payments.
The promissory note (and a subsequent modification) was
personally guaranteed by plaintiff James Linnan, a member of
Creative and its lawyer. After Creative failed to make the
required monthly payments, defendant demanded payment of the
remaining balance in full. In October 2011, plaintiffs commenced
this action asserting claims of negligence, breach of contract
and breach of warranty relative to the work performed at the
restaurant. Plaintiffs also alleged that defendant fraudulently
induced Linnan to sign the promissory note and personally
guarantee Creative's debt to defendant. Defendant asserted two
counterclaims, one to recover the outstanding debt pursuant to
the promissory note and the second seeking counsel fees.
Defendant then moved for summary judgment dismissing the
complaint and for judgment on its counterclaims. Supreme Court
granted defendant's motion in its entirety and a judgment in its
favor was thereafter entered. Plaintiffs now appeal.
We agree with Supreme Court's finding that defendant
demonstrated prima facie entitlement to summary judgment on its
counterclaims through the undisputed evidence of the executed
promissory note and guarantee, as well as plaintiffs' default in
payment (see Waehner v Northwest Bay Partners, Ltd., 30 AD3d 799,
800-801 [2006]; Friends Lbr. v Cornell Dev. Corp., 243 AD2d 886,
887 [1997]). Consequently, the court properly shifted the burden
to plaintiffs to demonstrate "the existence of a triable issue of
fact with respect to a bona fide defense" (Friends Lbr. v Cornell
Dev. Corp., 243 AD2d at 887; accord Mastro v Carroll, 296 AD2d
802, 802 [2002]). To this end, plaintiffs asserted that the
promissory note was not supported by consideration and that the
promissory note and guarantee were induced by defendant's
fraudulent promises to repair or replace defective work.
Generally, lack of consideration (see Samet v Binson, 122
AD3d 710, 711 [2014]) and fraud in the inducement (see Newcourt
Small Bus. Lending Corp. v Grillers Casual Dining Group, 284 AD2d
681, 683 [2001]) may be bona fide defenses to a promissory note.
Here, however, plaintiffs failed to demonstrate the existence of
either defense. First, plaintiffs' wholly conclusory claim that
-3- 521081
defendant represented that it would make certain repairs is
without record support. Moreover, it is belied by the terms of
the note, drafted by Linnan, which expressly states that
defendant "successfully and satisfactorily completed [the]
construction project in a timely manner to [plaintiffs']
satisfaction" (see Security Mut. Life Ins. Co. v Member Servs.,
Inc., 46 AD3d 1077, 1078 [2007]; Friends Lbr. v Cornell Dev.
Corp., 243 AD2d at 887-888). Second, because it is apparent from
its terms that the consideration for the note and guarantee was
an extension and restructuring of plaintiffs' antecedent
obligation to defendant, there are no factual questions with
regard to plaintiffs' lack of consideration defense (see Mills v
Chauvin, 103 AD3d 1041, 1049-1050 [2013]; Friends Lbr. v Cornell
Dev. Corp., 243 AD2d at 887-888).
Finally, the promissory note expressly provided that in the
event of plaintiffs' default, defendant would be entitled to
counsel fees. We discern no abuse of discretion and, therefore,
decline to disturb Supreme Court's award of counsel fees (see
Harris Bay Yacht Club v Harris, 230 AD2d 931, 934 [1996]).
McCarthy, J.P., Rose and Devine, JJ., concur.
ORDERED that the order and judgment are affirmed, with
costs.
ENTER:
Robert D. Mayberger
Clerk of the Court
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564 So.2d 922 (1990)
Mary BEVERLY, as next friend and mother of Yvonne Beverly; and Mary Beverly, individually
v.
Dr. Michael A. CHANDLER.
89-251.
Supreme Court of Alabama.
June 15, 1990.
John F. Kizer, Jr. of Kizer & Bennitt, Birmingham, for appellant.
Walter W. Bates and Silas G. Cross, Jr. of Starnes & Atchison, Birmingham, for appellee.
SHORES, Justice.
This is an appeal from a summary judgment for one defendant in a case involving a medical malpractice claim brought pursuant to the Alabama Medical Liability Act and a products liability claim brought pursuant to the Alabama Extended Manufacturer's Liability Doctrine. Yvonne Beverly, minor daughter of Mary Beverly, came to Cooper Green Hospital in Jefferson County, Alabama, in labor, on January 2, 1983. Doctors at Cooper Green Hospital delivered her baby boy and discharged her three days later. She returned to the hospital the day after she was discharged, complaining of chills and fever and pain in her pelvic region. She was seen by Dr. Michael Chandler at that time. Dr. Chandler noted that she had a post-partum infection and prescribed antibiotics and medications to relieve pain and fever. This is the only instance in which Dr. Chandler saw Yvonne Beverly.
On January 8, 1983, Yvonne Beverly returned again to the hospital, complaining of seizures. She was treated by another doctor, who diagnosed eclampsia and ordered that she be given four milligrams of magnesium sulfate IV soluset. She collapsed while in the X-ray department of the hospital. A blood sample revealed that Yvonne Beverly had been given approximately ten times the prescribed dosage. Her mother, Mary Beverly, filed this action against Cooper Green Hospital; a nurse; certain named doctors, including the defendant involved *923 in this appeal, Dr. Michael A. Chandler; and American Quinine, Inc., the manufacturer of the magnesium sulfate IV soluset. Her complaint asserted that Yvonne Beverly had suffered brain damage and neurological injuries as a result of the overdose, and she sought general damages and costs.
Over the course of the case, the trial court entered summary judgment for various defendant doctors. Defendants Cooper Green Hospital and Lanette Wilkerson, R.N., entered into a pro tanto, pro ami settlement with Mary Beverly, as did American Quinine, Inc. After the settlement with Cooper Green Hospital, an article was published in the Birmingham Post-Herald on December 21, 1988, which contained a statement by one of Mary Beverly's attorneys, Jeffrey W. Bennitt, in which Mr. Bennitt said, in essence, that Dr. Chandler had committed professional negligence in his treatment of Yvonne Beverly. Discussions ensued between Dr. Chandler's attorney and Mr. Bennitt, culminating in Mr. Bennitt's promising to dismiss the case against Dr. Chandler in return for Dr. Chandler's promise to refrain from bringing a lawsuit alleging abuse of process or malicious prosecution or based upon what Dr. Chandler claimed was a defamatory statement.
This agreement, that Dr. Chandler would be dismissed as a party defendant, was confirmed in a letter dated January 10, 1989. However, on April 10, 1989, Mr. Bennitt's law partner and co-counsel, John F. Kizer, Jr., advised the attorney for Dr. Chandler that Mary Beverly had decided to repudiate the agreement. On September 12, 1989, Dr. Chandler filed a motion for summary judgment, supported by his own affidavit and that of his attorney, Walter W. Bates. Mary Beverly filed a motion in opposition, with the supporting affidavit of Jeffrey W. Bennitt. Mr. Bennitt contended, in opposition, that while he had informed Mr. Bates that Dr. Chandler would be dismissed as a party defendant, he had done so without authority from Mary Beverly.
The trial court held an in camera examination of the employment contract between Mary Beverly and her attorneys. The trial court entered a summary judgment, made final pursuant to Rule 54(b), A.R.Civ.P., on the grounds that "plaintiff specifically authorized and gave authority to counsel to settle or resolve the case." (C.R. 859.) Mary Beverly appeals from this judgment.
We must determine whether Mrs. Beverly can repudiate a settlement agreement entered into by her attorney who has a written contract authorizing him to settle or resolve the case on her behalf. Her attorneys now argue that the contract of employment between them and Mary Beverly is void as against public policy, and thus that the trial court erred in entering the summary judgment for Dr. Chandler. We have carefully reviewed the record and the evidence in this case. Because of the specific authority given to the attorneys by the contract, we must affirm the summary judgment.
The contract Mary Beverly made with her attorneys and the settlement agreement made by her attorneys with Dr. Chandler are both governed by principles of contract law and are as binding on the parties as any other contract is. It is elementary that an agreement, with consideration, between two or more contracting parties, with a legal object and with legal capacity, is binding on the parties. Gray v. Reynolds, 514 So.2d 973 (Ala.1987), quoting Freeman v. First State Bank of Albertville, 401 So.2d 11 (Ala.1981).
This Court has stated that agreements made in settlement of litigation are as binding on the parties as any other contracts are:
"Section 34-3-21, Code of Alabama 1975, as amended, vests in an attorney authority to bind his or her client in all matters that relate to the cause, including the right to settle all questions involved in the case. Such agreements are not only authorized, but encouraged, to promote justice and fair dealing and to terminate properly or prevent litigation."
King v. Travelers Ins. Co., 513 So.2d 1023 (Ala.1987), quoting Brocato v. Brocato, 332 *924 So.2d 722 (Ala.1976). Indeed, there is a strong policy in the law favoring compromise and settlement of litigation. Porter v. Porter, 441 So.2d 921, 923 (Ala.Civ.App. 1983).
Usually, an attorney cannot settle a client's case without consultation with the client. Davis v. Black, 406 So.2d 408 (Ala. Civ.App.1981), Nero v. Material Sales Co., 340 So.2d 454 (Ala.Civ.App.1976). Canon 7 of the Code of Professional Responsibility of the Alabama State Bar addresses this as well. However, a client can give express authority to his or her attorney to act, by signing an employment contract that gives this authority, as was done in this case.
The case before us presents a situation similar to the one we considered in Mitchum v. Hudgens, 533 So.2d 194 (Ala.1988). We held in Mitchum that an attorney, employed by a liability insurer to defend a medical malpractice claim filed against its insured, could settle the claim against his client without prior notice to or consent from the client, by virtue of a contractual provision expressly authorizing the insurance company to settle the claim at its discretion. In Mitchum, the language in the policy read: "We have the right to investigate, negotiate and settle any suit or claim, if we think that is appropriate." Id. at 196. This language is very similar to the language contained in the contract between Mary Beverly and her attorneys. The relevant portion of their agreement read: "I give and grant unto him full power to act as my attorney, to institute suit on said claim, to prosecute said suit, to settle said claim at his discretion before or after suit is instituted and to take any and all steps which he deems proper and desirable."
In this case, the contract entered into between Mary Beverly and her attorneys expressly authorized them to settle or resolve her case. The authority given them was clear and unequivocal, with no limitations or restrictions expressly placed upon the power to compromise or settle. Furthermore, the record is devoid of any evidence to indicate that Mary Beverly ever revoked this express grant of authority to her attorneys.
As stated above, Mary Beverly contends that the agreement she had with her attorneys is void as an illegal contract against public policy. The rule has been stated as follows:
"As a general principle, a party may not enforce a void or illegal contract either at law or in equity. Thompson v. Wiik, Reimer & Sweet, 391 So.2d 1016 (Ala.1980). However, the principle that contracts in contravention of public policy are not enforceable should be applied with caution and only in cases plainly within the reason on which the doctrine rests. Ex parte Rice, 258 Ala. 132, 61 So.2d 7 (1952); Lowery v. Zorn, 243 Ala. 285, 9 So.2d 872 (1942). The true test to determine whether a contract is unenforceable because of public policy is whether the public interest is injuriously affected in such a substantial manner that private rights thereunder should yield to the public interest. Colston v. Gulf States Paper Corporation, 291 Ala. 423, 282 So.2d 251 (1973)."
Taylor v. Martin, 466 So.2d 977, 979 (Ala. Civ.App.1985). This contract between Mary Beverly and her attorneys does not meet this test and is therefore not void or illegal.
While we conclude, for the reasons stated above, that the judgment of the trial court is due to be affirmed, we would note that this case presents an example of the need for open and complete communication between attorney and client, so as to avoid any possible misunderstanding.
AFFIRMED.
HORNSBY, C.J., and JONES, HOUSTON and KENNEDY, JJ., concur.
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19 So.3d 45 (2009)
Michelle Cronin, Wife of/and Robert CRONIN, Jr.
v.
DEPARTMENT OF PUBLIC SAFETY AND CORRECTIONS, OFFICE OF MOTOR VEHICLES, and St. Bernard Port, Harbor and Terminal District.
No. 2009-CA-0256.
Court of Appeal of Louisiana, Fourth Circuit.
August 26, 2009.
Rehearing Denied September 15, 2009.
*47 Thomas A. Gennusa, II, Joseph S. Piacun, Gennusa Piacun & Ruli, Leonard J. Cline, Leonard J. Cline, P.L.C., Metairie, LA, for Plaintiff/Appellant, Robert J. Cronin, Jr.
Thomas J. Wagner, Thomas A. Rayer, Jr., Jonathan D. Shaver, Wagner & Bagot, LLP, New Orleans, LA, for Defendant/Appellee, St. Bernard Port, Harbor and Terminal District.
(Court composed of Judge MAX N. TOBIAS, JR., Judge DAVID S. GORBATY, Judge PAUL A. BONIN).
DAVID S. GORBATY, Judge.
Plaintiff Robert Cronin appeals a judgment of the trial court which found him 100% liable for injuries he sustained while exiting a building owned by defendant St. Bernard Port, Harbor and Terminal District. For the following reasons, we reverse and render.
FACTS AND PROCEDURAL HISTORY:
Robert Cronin was injured as he exited a building owned by the St. Bernard Port, Harbor and Terminal District (hereinafter "the Port"). He sustained cuts to his forehead, *48 left arm, and nostril when the plate glass in a door broke and fell on him.
Suit was originally filed against the Department of Public Safety and Corrections, Office of Motor Vehicles (hereinafter "OMV") and the Port by Mr. Cronin and his wife, Michelle; however, the OMV was dismissed from the suit on summary judgment, and Michelle Cronin was voluntarily dismissed as a plaintiff.[1]
Following a bench trial and the submission of post-trial memoranda, the trial court rendered judgment finding that "the Plaintiff was leaving the Port building in an agitated state and did not exercise the care and self control of the average reasonable man, which led to his own injury."
This appeal followed. The Port answered the appeal seeking to recover its costs incurred in the litigation.
STANDARD OF REVIEW:
Our review of the trial court's findings in the present case is subject to the manifest error rule. It is well settled that an appellate court may not set aside a trial court's finding of fact in the absence of manifest error or unless it is clearly wrong, and where two permissible views of the evidence exist, the fact finder's choice between them cannot be manifestly erroneous or clearly wrong. Cole v. State Department of Public Safety & Corrections, 01-2123, p. 14 (La.9/4/02), 825 So.2d 1134, 1144, citing Stobart v. State through Dept. of Transp. and Dev., 617 So.2d 880 (La. 1993).
Even though an appellate court may feel its own evaluations and inferences are more reasonable than the fact finder's, reasonable evaluations of credibility and reasonable inferences of fact should not be disturbed upon review where conflict exists in the testimony. Rosell v. ESCO, 549 So.2d 840, 844 (La.1989). When the findings are based on determinations regarding the credibility of witnesses, the manifest error-clearly wrong standard demands great deference to the findings of fact, for only the fact finder is cognizant 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. Where 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 fact finder would not credit the witness's story, the court of appeal may well find manifest error or clear wrongness even in a finding purportedly based upon a credibility determination. Id. at 845.
Application of the manifest error standard of review does not mandate an affirmance of a lower court decision with respect to findings of fact. Where an appellate court finds manifest error, the factual findings of the trier of fact may be reversed. Alexander v. Pellerin Marble & Granite, 93-1698 (La.1/14/94), 630 So.2d 706, 710.
ASSIGNMENT OF ERROR NO. 1:
Mr. Cronin argues that the trial court erred in not finding in his favor because the trial court relied on the contradictory, biased and inconsistent deposition testimony of Ernest Labat, who did not testify at trial. We agree.
The only evidence introduced at trial that Mr. Cronin was out of control as he left the Port's building was that of Ernest Labat, a Port employee, via pre-trial deposition testimony.[2] Mr. Labat was never *49 listed on any incident report, nor was his presence at the scene even disclosed until almost four years after the incident. No one at the scene recalls him being there, including the OMV employees who testified that they left their office and looked down the very hallway Mr. Labat claims to have been standing in. Mr. Labat's testimony was fraught with conflicting versions of how he happened to be in the building, whether he "locked" the door involved in the accident after bringing in his supplies, and whether the door to the office where he was working was open or closed.
Mr. Labat explained that he was in the building preparing to paint an office on the date of the accident. He was adamant that the set of two side-by-side doors in question were key-locked every night after hours; however, Mr. McCaskell, the OMV employee who had worked in the building since 1994, testified that the doors were left unlocked due to their close proximity to the guard shack. Mr. Labat was equally adamant that he had unlocked the right side door as one exited the building to place his equipment in the building, and that the door was working perfectly. He was sure that he had relocked the door when he was finished. Mr. Labat claimed that he heard Mr. Cronin "huffing and puffing" as he came down the hallway. He stated that he saw Mr. Cronin as he "went kind of over the little bar railing" and "went through" the glass of the locked door. He reiterated upon questioning that "he [Mr. Cronin] hit that bar and busted the glass out."
Mr. Labat claimed to have been standing in the doorway as Mr. Cronin passed; however, on cross-examination, he stated that he had closed the door to the office where he was working taping walls in preparation to paint. He also said that he closed the door of the office to prevent dust from going into the hallway. Mr. Labat stated that he did not go to Mr. Cronin's aid because other people were taking care of him. Mr. Labat was told by his supervisor, Buddy Lagman, to get some water to clean up the blood. He testified that three or four people from the OMV office came out to the scene. No one took a statement from him at that time, although he testified that he spoke to his supervisor about what he had seen. When asked on cross-examination if he talked to anyone from the Port at the time, he responded "Well, it always on that accident deal, no matter who it involves, I talked to Drew [the assistant director of the Port] and I talked to Bobby Scafidel [the executive director of the Port]."
David McCaskell, a motor vehicle compliance analyst supervisor employed by the OMV who worked in the building since 1994, testified contrary to Mr. Labat that the doorway involved in the accident was never key locked for security at any time of day because the set of doors was near the guard shack. Mr. McCaskell testified that he had reported as early as 1994 to both the secretary in the Port office and the security supervisor, John Cantrelle, that the door was broken. Although he remembers seeing various people working on the door, the problem with the door sticking was never corrected. Mr. McCaskell claimed that he was the person who had locked the right hand door with the pins, and that the Port was aware of it. No signs were ever placed on the door to indicate that it was locked. Mr. McCaskell testified that he did not see the accident, but heard the glass crash. He went into the hallway, saw Mr. Cronin bleeding, returned to his office and called the Port. He was told that 911 had already been notified; he did not go out to assist Mr. Cronin.
*50 Pam Lanier, the OMV employee who assisted Mr. Cronin, testified that Mr. Cronin had earlier that morning passed a test for a chauffeur license, but was not issued the license because of blocks placed by the State, and was instructed to go to her office to get it cleared. Mr. Cronin signed the log, and waited slightly more than an hour before being assisted. She explained to him that the two blocks on his license were for his vehicles being uninsured, but that the blocks could be removed if Mr. Cronin either provided proof that the vehicles were insured on the dates they left his ownership, or if he could not provide such proof, paid a fine. Mr. Cronin left the office to return home to get the necessary paperwork for the vehicles.
Ms. Lanier testified that Mr. Cronin was not happy with the prospect of paying a fine, but she stated he remained claim and polite throughout their meeting. She testified the Mr. Cronin did not cause any trouble, and she did not hear him cursing or yelling after he left her desk. A few minutes later, however, she heard a crash in the hallway, went out to look, and saw Mr. Cronin. She did not go down the hallway to offer assistance.
Mr. Cronin testified that there were no other people in the hallway as he left the building. He approached the right side door to exit the building and pushed the metal bar to open the door. The door opened a few inches, but then jammed, and his right hand slipped off of the bar and went through the glass door. The glass broke into large pieces, one of which hit him across his forehead and nose. He instinctively lifted his left arm, and glass also struck him on his elbow. Mr. Cronin, who wore prescription eyeglasses, testified that blood was covering his glasses so he pulled his shirt up over his head in an attempt to stop the bleeding. He exited through the left side door and sat against the building. He did not remember anyone coming to his aid, but testified that approximately ten or fifteen minutes after the accident, paramedics arrived and took him to Chalmette Medical Center.
The incident report completed by the security officer at the Port indicated that a person, Corey Campbell, was actually behind Mr. Cronin in the hallway and saw the incident happen. The person related that Mr. Cronin pushed the door open causing the glass to break.[3] The eyewitness did not report that Mr. Cronin was agitated, but that he merely pushed on the door and the glass broke. When Mr. Labat was asked about the presence of Mr. Campbell, Mr. Labat had no idea who he was, nor did he recall seeing anyone else in the hallway.
There was also a pedestrian accident report prepared by Jennifer Carreras, a compliance supervisor for the OMV. Her report does not mention Mr. Labat as a witness, but does list Corey Campbell as an eyewitness.
In reviewing Mr. Labat's testimony, we note that the issue of his credibility based on the trial court's observations of variations of demeanor, tone of voice, and body language, is not present in this case because the trial court did not have the benefit of live testimony from Mr. Labat. Our review of his testimony reveals substantial inconsistencies in his testimony that call into question whether his testimony is worthy of belief.
Accordingly, we find that the trial court erred in relying on the questionable testimony of Ernest Labat in finding Mr. *51 Cronin solely responsible for his injuries. Ms. Lanier testified that Mr. Cronin was agitated about the possibility of paying a fine, but he was calm, not cursing or yelling, when he left her office.
ASSIGNMENT OF ERROR NO. 2:
Mr. Cronin argues that the trial court erred in not awarding him damages for his injuries. Before deciding this issue, however, we must determine if the Port bears any responsibility for this incident. The trial court made no findings of fact regarding the liability of the Port; however, we can infer from its findings that it found the Port had none. After a thorough review of the record, we find the trial court was manifestly erroneous.
A. Liability of the Port:
Louisiana Civil Code Article 2317 provides that "we are responsible, not only for the damage occasioned by our own act, but for that which is caused by the act of persons for whom we are answerable, or of the things which we have in our custody."
Louisiana Revised Statute 9:2800, which limits the Port's liability as a public entity, states, in pertinent part:
A. A public entity is responsible under Civil Code Article 2317 for damages caused by the condition of buildings within its care and custody.
* * *
C. Except as provided for in Subsections A and B of this Section, no person shall have a cause of action based solely upon liability imposed under Civil Code Article 2317 against a public entity for damages caused by the condition of things within its care and custody unless the public entity had actual or constructive notice of the particular vice or defect which caused the damage prior to the occurrence, and the public entity had a reasonable opportunity to remedy the defect and has failed to do so.
D. Constructive notice shall mean the existence of facts which infer actual knowledge.
Because of the limitations set forth in R.S. 9:2800, the duty owed by the Port under either strict liability or negligence theories is the same. See Henderson v. Nissan Motor Corp. U.S.A., 03-606, pp. 5-6 (La.2/6/04), 869 So.2d 62, 66; Graves v. Page, 96-2201, p. 9 (La.11/7/97), 703 So.2d 566, 570. The plaintiff must prove that the Port had custody and control of the door in question, that there was a defect in the door that created an unreasonable risk of harm, that the defective condition caused plaintiff's injuries, and that the Port had knowledge of the hazardous condition. Williams v. Cooper, 05-0654, 05-0655, p. 5 (La.App. 4 Cir. 1/25/06), 926 So.2d 571, 574.
It is undisputed that the Port had custody of the building and was responsible for repairs and maintenance. Robert Scafidel, the executive director of the Port, testified that the Port was responsible for maintenance of the building and the grounds. The Port had its own maintenance department. It is further undisputed that the Port was aware of the defect in the door. Mr. McCaskell testified that he had reported the problems with the door to Port personnel on numerous occasions, and although attempts were made to repair it, it was never fixed. Ms. Lanier also testified that she reported problems with the door to John Cantrelle, the security guard for the Port. There was no testimony from any Port personnel that they were not aware of the problem with the door. Although argued by the Port, we find it irrelevant that no recent reports had been made about the door. The fact exists that there were reported problems with the *52 door, and that Port maintenance had unsuccessfully attempted to fix them.
In 1972, the Louisiana legislature enacted La. R.S. 40:1711 and 40:1713 dealing with the use of safety glass in hazardous locations. Hazardous locations included installations in framed or unframed entrance doors in commercial or public buildings. Justice Lemmon, in a concurrence, noted that although the above statutes could not be used to impose criminal sanctions as to buildings constructed prior to enactment of the statutes, they could be applied by analogy as one of the factors to be considered in determining the civil duty to replace plate glass with safety glass in dangerous areas of existing buildings. Wilkinson v. Hartford Accident and Indemnity Co., 411 So.2d 22, 25, n. 1 (La. 1982).
Michael Franzel, an expert safety professional with expertise in accident reconstruction and hazard recognition and control, testified for the plaintiff. It was his opinion that exit doors should not be locked while a building is occupied. If, however, doors are locked for any reason, at a minimum, the locked door should be clearly marked. He further opined that if the door Mr. Cronin attempted to use to exit the building had opened properly, the accident would not have occurred.
The Port offered no expert testimony to controvert Mr. Franzel's testimony. Rather, it argues on appeal that the plaintiff's argument because there was plate glass in door, it was unreasonably dangerous is flawed. The Port argues that Mr. Cronin attempts to circumvent the trial court's well supported factual findings that the door did not pose an unreasonable risk of harm. First, we note that the trial court did not make any explicit findings of fact in this regard; rather, the factual findings are inferable from the trial court's allocation of fault, i.e., one hundred percent fault to Mr. Cronin.
The Port also correctly notes that cases cited by Mr. Cronin do not hold that plate glass, alone, in unreasonably dangerous. Instead, the cases were decided on the specific factual scenarios of each case. While we agree with the Port's assessment of the holdings, we are also directed by the jurisprudence to examine the specific and unique facts of the case at hand.
Despite the Port's contention that the record contains an abundance of evidence to support that the door did not pose an unreasonable risk of harm, this Court has not discovered such evidence in this record. The door in question was unquestionably in a high volume passageway for people entering and leaving the OMV. Both Mr. McCaskell and Ms. Lanier testified that both employees and customers used these particular doors almost exclusively due to their proximity to the parking lot. It was also uncontroverted that the door in question was defective in that it was difficult to open completely because it would "stick" and then quickly close. Ms. Lanier testified that she stopped using the door entirely. Mr. McCaskell resorted to locking the door after his efforts to get it fixed failed.
Furthermore, the breach of duty owed by the Port cannot be totally excused on the basis of victim fault. There is simply insufficient evidence in this record to support that Mr. Cronin was agitated to such a degree that he slammed his hand through the glass door. There is evidence that Mr. Cronin was upset, but not that he ignored the metal bar on the door. Mr. Cronin testified that he pushed on the metal bar on the door, but that his hand slipped off and went through the glass. Neither Mr. Campbell, the eyewitness named on the accident reports, nor Mr. Labat testified that Mr. Cronin did not at *53 least attempt to use the metal bar to open the door. Whether the door was locked or unlocked is of no moment. If the door had been locked, there was no sign to warn a person exiting the building. If the door had been left unlocked by Mr. Labat, there is ample evidence that the door was heavy and would stick and not open entirely. Either scenario created an unreasonable risk of harm, especially in light of the fact that the door contained plate glass.
B. Quantum:
Having decided that the Port bore some responsibility for Mr. Cronin's injuries, and because the record before us is complete, we will decide the issue of quantum.
1. Past and future medicals, pain and suffering:
The record reveals that Mr. Cronin suffered a cut to his forehead from his hairline to his eyebrow, that his nostril was almost completely cut off, and that he had a cut to his elbow. His head injuries were sutured without anesthesia and his elbow was sutured with local anesthesia. Dr. Shamsnia, a neurologist, testified at trial that he treated Mr. Cronin almost exclusively after the accident. Mr. Cronin initially presented with evidence of a deep cut to his forehead, right nostril and left elbow. He complained of headaches, insomnia, numbness in his left arm and hand and neck pain. On examination, Mr. Cronin had neck spasms, a differentiation in temperature from right hand to left, indicating possible reflex sympathetic dystrophy (explained as a nerve injury that wraps around blood vessels). An MRI revealed a mild brain atrophy related to the plate glass falling and striking his head.
Over the course of his treatment, Dr. Shamsnia prescribed various medications in an attempt to relieve Mr. Cronin's headache pain. He also prescribed a variety of muscle relaxants and anti-depressants.
Approximately 3½ years after the incident, Dr. Shamsnia allowed Mr. Cronin to return to light duty work; however, the doctor did not instruct Mr. Cronin as to what light duty meant. Mr. Cronin attempted to return to work painting or hanging drywall, both jobs he had performed prior to the accident. However, because of the loss of use of two fingers on his left hand, it was almost impossible to hold a mud tray for hanging drywall or a can of paint. Because of his headaches, his balance was unstable, causing him to fall backwards off of a ladder. Despite these difficulties, Mr. Cronin would still wait in front of Home Depot or Lowe's stores looking for day jobs to support his family. Dr. Shamsnia eventually told Mr. Cronin that he should stop working as a laborer.
Dr. Shamsnia made five separate diagnoses: 1) mild brain injury; 2) post-traumatic headaches; 3) hemifacial spasm; 4) ulnar neuropathy; and 5) cervical radiculopathy. After five years of treatment, it was his opinion that Mr. Cronin had reached maximum medical improvement. He testified that all injuries were directly related to the accident on January 11, 2002.
Dr. Susan Andrews, a neuropsychologist, testified that she performed a battery of tests on Mr. Cronin. She concluded that he had mild deficits in judgment, alertness and humor. She also found that he had significant depression, anxiety and general demoralization. Mr. Cronin displayed no signs of malingering. Dr. Andrews recommended that Mr. Cronin attend vocational rehabilitation, long-term occupational therapy for his arm and hand issues, and psychotherapy for his depression, anxiety and sleep issues.
*54 The Port submitted the deposition testimony of Dr. F. William Black, a neuropsychologist. Dr. Black examined Mr. Cronin and found he had no brain or cognitive dysfunction. His language function and memory function were within normal ranges. His visual confrontation looking at pictured objects and naming them was within the low average range. His motor skills with his dominant right hand were normal, but his left hand was slightly impaired, which the doctor related to a mild ulnar neuropathy. Dr. Black concluded that Mr. Cronin had a generalized anxiety disorder, a major depressive disorder, an ulnar nerve injury, occupational and economic problems, physical discomfort and a mild sensory/pain disorder. He recommended, similarly to Dr. Andrews, that Mr. Cronin seek psychiatric help to determine the source of his emotional distress. He also recommended vocational rehabilitation and to continue his course of treatment with Dr. Shamsnia relative to his sleep disorder.
On cross-examination, Dr. Black admitted that his opinions about Mr. Cronin's ability to work were from a purely neuropsychological perspective.
The Port argues that Dr. Black determined Mr. Cronin had no residual brain injury as Dr. Shamsnia concluded; however, Mr. Cronin points out that Dr. Black is not a medical doctor and is therefore unqualified to express a medical opinion on this subject.
The Port also argues that because Mr. Cronin only spent a few hours in the emergency room and was not admitted to the hospital, his injuries are mild. Our review of the records indicates that Mr. Cronin was not admitted because the bleeding had been stopped and the cuts had been sutured. A CT scan appeared to be normal. The Port also argues that Mr. Cronin has not had any surgeries to correct his "ailments." Dr. Shamsnia explained that a surgery recommended by a plastic surgeon Mr. Cronin had seen to remove his sutures, was not one he would recommend. He testified that the surgery was to attempt to realign nerve endings that had been severed, and had a low success rate. Other than that surgery, Dr. Shamsnia did not identify, nor did any physician retained by the Port, any surgeries from which Mr. Cronin would benefit.
According to the record, Mr. Cronin has incurred past medical expenses of $38,168.17. Mr. Cronin continues to treat with Dr. Shamsnia approximately every three months at $125.00 per visit. Dr. Shamsnia also recommended Mr. Cronin submit to physical therapy for his neck, and Botox injections for management of the pain and spasms in his forehead at a cost of $1,000 per injection. The doctor estimated that Mr. Cronin would require approximately $1,000 in future medications.
Jurisprudence reveals a range of awards from $450,000 to $220,000 for brain injuries. In Dang v. New Hampshire Ins. Co., 00-1554 (La.App. 4 Cir. 10/10/01), 798 So.2d 1204, this Court affirmed the granting of a judgment notwithstanding the verdict whereby the trial court increased the jury award from $10,000 to $250,000. Ms. Dang was struck by a vehicle while crossing the street, and sustained a closed-head injury resulting in chronic headaches, depression, difficulty with concentration, attention and reduced motor skills. The injuries appear to be closely aligned with those proven to have been suffered by Mr. Cronin. We therefore award $250,000 for his brain injury.
The neurological injuries and scarring incurred by Mr. Cronin are two-fold. He has a permanent, disfiguring scar across his forehead that also causes him *55 spasms and hemi-facial pain. He has a scar on his elbow resulting from a deep cut that damaged the ulnar nerve. Dr. Shamsnia also reported cervical radiculopathy probably caused by the blow to his head.
In Brumfield v. Coastal Cargo Co., 99-2756 (La.App. 4 Cir. 6/28/00), 768 So.2d 634, this Court affirmed a general damage award of $200,000 for a plaintiff who was struck in the face with an object during a fight. He sustained small facial scars and suffered from headaches that prevented him from returning to work.
In Jones v. Peyton Place, Inc., 95-0574 (La.App. 4 Cir. 5/22/96), 675 So.2d 754, the plaintiff tripped over a ripple in carpet, causing him to crash through a glass door. He sustained cuts with residual scarring to his face, and injuries to his neck and lower back. The appeals court affirmed an award of $5,000 for his neck injury, $80,000 for pain and suffering relative to the cuts and lacerations, and reduced the jury's award to $25,000 for permanent disfigurement.
Based on the above, we award Mr. Cronin $200,000 for his neurological injuries, scarring, and physical pain and suffering. Both of the above awards encompass the cost of future medical treatment. We also award $38,168.17 for past medicals.
2. Lost past and future wages:
Dr. Randy Rice, an expert economist, testified that, using figures provided to him by Bobby Roberts, plaintiff's vocational evaluation expert, Mr. Cronin had an earning capacity as a painter of $18,000 per year. However, the evidence reveals that Mr. Cronin left school after the ninth grade to work as a painter, and from 1995 through 2001, earned an average of $5,000 per year. Wages reported for 2002 were $7,000, no wages were reported for 2003, 2004 or 2005, wages for 2006 were $7667, and for 2007 were $2800. Thus, from the time of the accident until trial, Mr. Cronin's actual wages were $17,467, or an average of $2,405. Based on the above, we calculate his past lost wages at $16,000.
Dr. Rice also calculated Mr. Cronin's work life expectancy from the time of trial to be 26.14 years. Although Dr. Kenneth Boudreaux, whose deposition was entered into evidence, found that Mr. Cronin had no future lost wages considering that he could find sedentary work paying more than he earned pre-accident, we must consider his injuries, particularly his depression and headaches, when calculating his future lost wages. In calculating lost future wages we consider that Mr. Cronin was only 23 years old at the time of this accident and had not reached his full earning potential at that time, and that Nancy Favalora, the Port's vocational rehabilitation counselor, testified that there are sedentary jobs available that Mr. Cronin is capable of performing.
To arrive at our future lost wage award, we calculated the difference between what Dr. Rice testified Mr. Cronin could make as a painter and the average wage of the jobs listed by Ms. Favalora, and multiplied that figure by Mr. Cronin's work life expectancy. We award Mr. Cronin $78,000 in lost future wages.
B. Comparative Fault:
Although we find that the trial court was manifestly erroneous in finding Mr. Cronin solely at fault for his injuries, we cannot ignore the testimony of Ms. Lanier, who stated that Mr. Cronin was upset with the prospect of a fine, despite his being polite with her. We also must take note of the incident report completed by the OMV that indicated Ms. Lanier said Mr. Cronin was "very agitated" when he *56 left her desk. Thus, we find Mr. Cronin ten percent at fault for his injuries.
CONCLUSION:
Accordingly, we reverse the judgment of the trial court and award Mr. Cronin $523,951.35, plus interest from the date of judicial demand, each party to bear its own costs.
REVERSED AND RENDERED.
NOTES
[1] Michelle and Robert Cronin were married prior to accident, but divorced. They were not remarried until after the accident.
[2] Mr. Labat died prior to trial.
[3] This accident occurred prior to Hurricane Katrina. The person named on the incident report was not called to testify.
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IN THE COURT OF CRIMINAL APPEALS
OF TEXAS
NO. AP-76,237
Ex parte YOKAMON LANEAL HEARN, Applicant
ON APPLICATION FOR A WRIT OF HABEAS CORPUS
FROM DALLAS COUNTY
Johnson, J., delivered the opinion for a unanimous Court.
O P I N I O N
Applicant, Yokamon Laneal Hearn, was convicted of capital murder and sentenced to death.
In this subsequent application for habeas corpus, applicant asserts that he is mentally retarded and,
pursuant to the United States Supreme Court holding in Atkins v. Virginia, 536 U.S. 304 (2002),
constitutionally exempt from a death sentence.
In our statutes and case law, "mental retardation" is defined by: (1) significantly subaverage
general intellectual functioning; (2) accompanied by related limitations in adaptive functioning; (3)
the onset of which occurs prior to the age of 18. Ex parte Briseno, 135 S.W. 3d 1, 7 n.26 (Tex.
Crim. App. 2004) (citing American Association of Mental Retardation (AAMR), Mental
Retardation: Definition, Classification, and Systems of Support 5 (9th ed. 1992)). See also
American Association on Mental Deficiency (AAMD), Classification in Mental
Retardation 1 (Grossman ed. 1983). The issue before this court is whether alternative assessment
measures can be substituted for full-scale IQ scores in supporting a finding of subaverage intellectual
functioning. We hold that alternative assessment measures can not be substituted for full-scale IQ
scores.
Procedural History
In December 1998, applicant was convicted of capital murder and sentenced to death. This
Court affirmed his conviction and sentence, (1) and the United States Supreme Court denied his petition
for writ of certiorari. (2)
While his appeal was pending in this Court, applicant filed his initial application for writ of
habeas corpus in the 282nd District Court of Dallas County (state district court). That court
recommended that all relief be denied. Ex parte Hearn, No. W98-46232-S(A) (282nd Dist. Ct.,
Dallas County, Aug. 1, 2001). Upon review of the record, this Court denied relief in an unpublished
order. Ex parte Hearn, No. 50,116-01 (Tex. Crim. App. Nov. 14, 2001).
Subsequently, applicant sought habeas corpus relief from his conviction and sentence in
federal court. The United States District Court for the Northern District of Texas (federal district
court) denied relief on his application for writ of habeas corpus. Hearn v. Cockrell, 2002 WL
1544815 (N.D. Tex. July 11, 2002). Thereafter, the United States Court of Appeals for the Fifth
Circuit (Fifth Circuit) (3) and the United States Supreme Court (4) each refused applicant's petitions for
review.
After the United States Supreme Court refused applicant's petition for writ of certiorari,
applicant's counsel concluded her representation of applicant. Applicant then sought the help of the
Texas Defender Service. In March 2004, with the assistance of the Texas Defender Service
attorneys, applicant filed a motion for stay of execution and appointment of counsel to assist him in
investigating an Atkins claim. We denied both requests, finding that applicant failed to make a prima
facie showing of mental retardation. Ex parte Yokamon Laneal Hearn, No. 50,116-02 (Tex. Crim.
App. Mar. 3, 2004).
At about the same time, in the federal district court, applicant moved for appointment of
counsel and stay of execution. The federal district court transferred the motions to the Fifth Circuit
sua sponte. Applicant then filed a separate notice of appeal, asking the Fifth Circuit to reverse the
order, appoint counsel, and stay the execution. The Fifth Circuit granted a stay of execution in order
to determine whether applicant was entitled to counsel and services under 21 U.S.C. § 848(q). It
held that applicant was entitled to such counsel, granted applicant's request for appointment of
counsel, and remanded his case to the federal district court. In re Hearn and Hearn v. Dretke, 376
F.3d 447 (5th Cir. 2004), reh. denied, 389 F.3d 122 (5th Cir. 2004).
On remand, the federal district court held that applicant had not made a showing of mental
retardation, as is required in order to proceed on his successive habeas corpus petition. Hearn v.
Quarterman, 2007 WL 2809908 (N.D. Tex. Sep. 27, 2007). Applicant then filed a Rule 59(e)
motion to vacate the judgment and supported that motion with two new expert reports. After
reviewing these reports, the federal district court held that applicant did make a prima facie case for
an Atkins claim and stayed the federal proceedings to allow applicant to present his Atkins claim to
the state court. Hearn v. Quarterman, 2008 WL 3362041 (N.D. Tex. Aug. 12, 2008).
In October 2008, applicant filed, in the state district court, a subsequent application that is
based on an Atkins claim and seeks post-conviction relief from his death sentence. It was forwarded
to this Court in June 2009. In September 2009, the Court filed and set this case in order to determine
whether alternative-assessment measures can be substituted for full-scale IQ scores in supporting a
finding of subaverage intellectual functioning.
Applying Atkins
In Atkins, the Supreme Court held that executing persons who are mentally retarded is a
violation of the Eighth Amendment. Atkins, 536 U.S. at 320. The Supreme Court "le[ft] to the
States the task of developing appropriate ways to enforce the constitutional restriction upon their
execution of sentences." Id. at 317. Post-Atkins, we have received a significant number of habeas
corpus applications from death row inmates who allege they suffer from mental retardation and are
therefore exempt from execution. "This Court does not, under normal circumstances, create law.
We interpret and apply the law as written by the Texas Legislature or as announced by the United
States Supreme Court." Briseno, 135 S.W.3d at 4. However, the Texas Legislature has not yet
enacted legislative guidelines for enforcing the Atkins mandate. Consequently, we have set out
guidelines by which to address Atkins claims until the legislature acts. Briseno, 135 S.W.3d at 4.
In Briseno we announced that "[u]ntil the Texas Legislature provides an alternate statutory
definition of 'mental retardation,' . . . we will follow the AAMR or section 591.003(13) of the Texas
Health and Safety Code criteria in addressing Atkins mental retardation claims." (5) Briseno, 135
S.W.3d at 8. The AAMR defines mental retardation as a disability characterized by: (1)
significantly subaverage general intellectual functioning; (2) accompanied by related limitations in
adaptive functioning; (3) the onset of which occurs prior to the age of 18. (6) Briseno, 135 S.W. 3d at
7 n.26 (citing AAMR at 5). See also AAMD at 1.
Determining whether one has significantly subaverage intellectual functioning is a question
of fact. It is defined as an IQ of about 70 or below. (7) American Psychiatric Association
Diagnostic and Statistical Manual of Mental Disorders 41 (DSM-IV). There is "a
measurement error of approximately 5 points in assessing IQ," which may vary from instrument to
instrument. (8) Id. Thus, any score could actually represent a score that is five points higher or five
points lower than the actual IQ. Id.; see also Wilson v. Quarterman, 2009 WL 900807 *4 (E.D. Tex.
Mar. 31, 2009).
The IQ score is not, however, the exclusive measure of mental retardation. A finding of
mental retardation also requires a showing of "significant limitations in adaptive functioning."
DSM-IV at 41. According to the AAMR, three adaptive-behavior areas are applicable to
determining mental retardation: conceptual skills, social skills, and practical skills. (9) Limitations in
adaptive behavior can be determined by using standardized tests. (10) According to the DSM-IV,
"significant limitation" is defined by a score of at least two standard deviations below either (1) the
mean in one of the three adaptive behavior skills areas or (2) the overall score on a standardized
measure of conceptual, social, and practical skills. Id. Although standardized tests are not the sole
measure of adaptive functioning, they may be helpful to the factfinder, who has the ultimate
responsibility for determining mental retardation.
In addition to demonstrating that one has subaverage intellectual functioning and significant
limitations in adaptive functioning, he or she must demonstrate that the two are linked-the adaptive
limitations must be related to a deficit in intellectual functioning and not a personality disorder. To
help distinguish the two, this court has set forth evidentiary factors that "fact-finders in the criminal
trial context might also focus upon in weighing evidence as indicative of mental retardation or of a
personality disorder." (11) Briseno, 135 S.W.3d at 8.
Applicant's prima facie case for mental retardation
In 2005, defense psychologist Dr. Alice Conroy administered a WAIS-III test to applicant;
applicant obtained a full-scale IQ score of 74. Defense expert Dr. James Patton concluded that
applicant's full scale IQ score of 74 was within the standard error of measurement. (12) Therefore,
applicant argues that because his IQ score of 74 is within the standard error of measurement, he has
met the requirement of significant subaverage intellectual functioning.
However, three additional IQ test scores yielded results that are materially above 70. In
January 2007, the district court held an evidentiary hearing on applicant's Atkins claim. In
preparation for the hearing, the two state experts administered the WAIS-III and Stanford-Binet
Intelligence Scales (5th Edition). Applicant's resulting full-scale IQ scores on those tests were 88
and 93 respectively. (13)
The defense then asked Dr. Dale G. Watson to review applicant's previous test results. As
a part of his evaluation of applicant's mental health, Dr. Watson administered an additional IQ test
using the Woodcock Johnson Test of Cognitive Abilities (3rd Edition); applicant's resulting full-scale
IQ score on that test was 87. Id. After reviewing applicant's results on that test, Dr. Watson found
that it did not demonstrate subaverage intellectual functioning, but did demonstrate deficits in
adaptive behavior. (14) In an effort to better understand the inconsistency between applicant's above-70
full-scale IQ scores and his significant deficits in adaptive functioning, Dr. Watson administered a
neuropsychological test battery. After reviewing the results, Dr. Watson concluded that applicant's
neuropsychological deficits "appear" to underlie previous findings of deficits in adaptive functions,
and are "likely" developmental in nature.
The defense then asked Dr. Stephen Greenspan to consider whether neuropsychological
deficits such as those revealed by neuropsychological testing of applicant could satisfy the
requirement of significantly subaverage general intellectual functioning, despite full-scale IQ scores
ranging from 87 to 93. Dr. Greenspan opined that substituting neuropsychological measures for full-scale IQ scores is "justified when there is a medical diagnosis of a brain syndrome or lesion, such
as Fetal Alcohol Spectrum Disorder . . . because it is well known that such conditions cause a mixed
pattern of intellectual impairments that, while just as serious and handicapping as those found in
people with a diagnosis of MR, are not adequately summarized" by full-scale IQ scores. (15) Dr.
Greenspan concluded that, under a more expansive definition of mental retardation, applicant could
establish a mental-retardation claim.
In view of all the evidence, applicant argues that he is mentally retarded. He notes that, in
spite of the new IQ test results, Dr. Patton concluded that applicant is mentally retarded.
"Neuropsychological testing, together with the diagnosis of fetal alcohol syndrome, has
demonstrated that the significant limitations I have identified in Mr. Hearn's adaptive behavior are,
nevertheless, a product of intellectual deficits. . . . I am satisfied that Mr. Hearn has mental
retardation." Id.
In making his Atkins claim, applicant asks this Court to significantly alter the current
definition of mental retardation. Applicant correctly notes that the assessment of "about 70 or
below" is flexible; "[s]ometimes a person whose IQ has tested above 70 may be diagnosed as
mentally retarded while a person whose IQ tests below 70 may not be mentally retarded." (16) Briseno,
135 S.W.3d at 7 n.24 (citing AAMD at 23). Applicant, however, misconstrues this language to mean
that clinical judgment can completely replace full-scale IQ scores in measuring intellectual
functioning.
This court has expressly declined to establish a "mental retardation" bright-line exemption
from execution without "significantly greater assistance from the [] legislature." Briseno, 135
S.W.3d at 6. Instead, this court interprets the "about 70" language of the AAMR's definition of
mental retardation to represent a rough ceiling, above which a finding of mental retardation in the
capital context is precluded. (17)
In the present case, applicant attempts to use neuropsychological measures to wholly replace
full-scale IQ scores in measuring intellectual functioning. (18) However, this court has regarded non-IQ
evidence as relevant to an assessment of intellectual functioning only where a full-scale IQ score was
within the margin of error for standardized IQ testing. (19)
Thus, we hold that, while applicants should
be given the opportunity to present clinical assessment to demonstrate why his or her full-scale IQ
score is within that margin of error, applicants may not use clinical assessment as a replacement for
full-scale IQ scores in measuring intellectual functioning.
The evidence before us in this application does not demonstrate significantly subaverage
intellectual functioning by applicant. Accordingly, we dismiss the application.
Delivered: April 28, 2010
Publish
1. Hearn v. State, No. 73,371, slip op. (Tex. Crim. App. Oct. 3, 2001).
2. Hearn v. Texas, 535 U.S. 991 (2002).
3. Hearn v. Dretke, 73 Fed.Appx. 79 (5th Cir. Jun. 23, 2003).
4. Hearn v. Dretke, 540 U.S. 1022 (2003).
5. According to § 591.003(13) of the Texas Health and Safety Code, mental retardation "means significantly
subaverage general intellectual functioning that is concurrent with deficits in adaptive behavior and originates during
the developmental period." Tex. Heath & Safety Code § 591.003(13).
6. A jury determination of mental retardation is not required. Briseno, 135 S.W.3d at 9.
7. General intellectual functioning is defined by the intelligence quotient (IQ). It is obtained by assessment with a
standardized, individually administered intelligence test (i.e. Wechsler Intelligence Scales for Children, 3rd Edition;
Stanford-Binet, 4th Edition; and Kaufman Assessment Battery for Children). DSM-IV at 41.
8. A Wechsler IQ score of 70 would represent a score range of 65 to 75. DSM-IV at 41.
9. Conceptual skills include skills related to language, reading and writing, money concepts, and self-direction. Social
skills include skills related to interpersonal relationships, responsibility, self-esteem, gullibility, naivete, following
rules, obeying laws, and avoiding victimization. Practical skills are skills related to activities of daily living and
include occupational skills and maintaining a safe environment. AAMR at 82.
10. Several scales that have been designed to measure adaptive functioning: Vineland Adaptive Behavior Scales, the
AAMR Adaptive Behavior Scale, the Scales of Independent Behavior, and the Adaptive Behavior Assessment
System. DSM-IV at 42; Ex parte Woods, 296 S.W.3d 587, 596-97 (Tex. Crim. App. 2009); Hunter v. State, 243
S.W.3d 664 at 670-71 (Tex. Crim. App. 2007).
11. This court has set forth the following evidentiary factors:
Did those who knew the offender during the developmental stage-his family, friends, teachers, employers,
authorities-think he was mentally retarded at that time, and, if so, act in accordance with that
determination?
Has the person formulated plans and carried them through or is his conduct impulsive?
Does his conduct show leadership or does it show that he is led around by others?
Is his conduct in response to external stimuli rational and appropriate, regardless of whether it is socially
acceptable?
Does he respond coherently, rationally, and on point to oral and written questions or do his responses
wander from subject to subject?
Can the person hide facts or lie effectively in his own or others' interests?
Putting aside any heinousness or gruesomeness surrounding the capital offense, did the commission of that
offense require forethought, planning and complex execution of purpose?
Briseno, 135 S.W.3d at 8-9.
12. Dr. Watson specifically stated that applicant's full-scale score of 74 is "in the IQ range that can be considered
approximately two standard deviations below the mean of 100." Applicant's Habeas Application, Ex. 2 at 46.
13. An entry in the clinic notes of the Texas Department of Criminal Justice-institutional division on January 5, 1999,
notes that applicant's estimated full-scale IQ on a WAIS-R short-form test was 82.
14. Dr. Watson testified that there were errors in the scoring of the WAIS-III completed by Dr. Conroy and the WAIS-III completed by Dr. Price. None of the errors changed any score by more than one point.
15. Dr. Pablo Stewart previously found that applicant suffers from Fetal Alcohol Syndrome and Dr. Greenspan
adopted this finding in conducting his evaluation of applicant's mental health. Applicant's Habeas Application, Ex.
4 at 64-65. Dr. Greenspan also noted that, in the past, other experts have argued that "full-scale IQ is not an
adequate indicator of significant intellectual impairment in someone with brain damage," and that extremely
deficient verbal IQ could be a better index. Id. at 11-12 (discussing People v. Superior Court (Vidal), 155 P.3d 259
(Cal. 2007)).
16. The AAMD states that, "[t]he maximum specified IQ is not to be taken as an exact value, but as a commonly
accepted guideline" and that "clinical assessment must be flexible." AAMD at 22.
17. See, e.g., Ex parte Woods, 296 S.W.3d at 608 n.35 & 36; Williams, 270 S.W.3d at 132 ; Neal v. State, 256
S.W.3d 264, 273 (Tex. Crim. App. 2008); Hunter, 243 S.W.3d at 671; Gallo v. State, 239 S.W.3d 757, 771 (Tex.
Crim. App. 2007); Ex parte Blue, 230 S.W. 3d 151, 165 (Tex. Crim. App. 2007); Ex parte Lewis, 223 S.W.3d 372,
378 n.21 (Cochran, J. concurring) (Tex. Crim. App. 2006); Hall v. State, 160 S.W.3d 24, 36 (Tex. Crim. App.
2004); Briseno, 135 S.W.3d at 14 n.53. Compare, Ex parte Van Alstyne, 239 S.W.3d 815 (Tex. Crim. App. 2007);
Ex parte Bell, 152 S.W.3d 103 (Tex. Crim. App. 2004); Ex parte Modden, 147 S.W.3d 293 (Tex. Crim. App. 2004).
18. In support, applicant cited Dr. Greenspan's conclusion that substituting neuropsychological measures for full-scale
IQ in cases of apparent brain damage "is justified when there is a medical diagnosis of a brain syndrome or lesion,
such as Fetal Alcohol Spectrum Disorder." Applicant's Habeas Application, Ex. 4 at 68.
19. In Hunter, the expert discussed the band of confidence for the particular IQ test implemented and how applicant's
mild depression and having been handcuffed at the time of taking an IQ test may have affected his score. Hunter,
243 S.W.3d at 670.
| {
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} |
337 So.2d 553 (1976)
Joe BONOMO and Maurice Glorioso, Plaintiffs-Appellants,
v.
LOUISIANA DOWNS, INC., et al., Defendants-Appellees.
Nos. 12964, 12965.
Court of Appeal of Louisiana, Second Circuit.
August 31, 1976.
Rehearing Denied September 27, 1976.
*554 Gamm, Greenburg & Kaplan, by Jack H. Kaplan, Shreveport, for plaintiffs-appellants.
John E. Jackson, Jr., Asst. Atty. Gen., New Orleans, for La. State Racing Commission, defendant-appellee.
Lunn, Irion, Switzer, Johnson & Salley, by Charles W. Salley, Shreveport, for Louisiana Downs, Inc., defendant-appellee.
Smith & LaGrone by Dewey J. Smith, and Bodenheimer, Jones, Klotz & Simmons by G. M. Bodenheimer, Jr., Shreveport, for Southern Research, Inc., defendant-appellee.
Before HALL, MARVIN and JONES, JJ.
En Banc. Rehearing Denied September 27, 1976.
MARVIN, Judge.
The issue in these consolidated cases is whether persons who have been convicted of the crime of bookmaking may be barred *555 from attending horse races at a race track operating under license of the Louisiana State Racing Commission. As did the lower court, we answer affirmatively.
In 1974, Joe Bonomo and Maurice Glorioso of Bossier City pleaded guilty and were sentenced by the U. S. District Court in Shreveport for the crime of conspiracy to commit illegal gambling, bookmaking on football games (18 U.S.C. § 1955).
In January, 1975, private security officials at the track (Louisiana Downs) told Bonomo and Glorioso they were not welcome and caused them to leave the track. In August, 1975, a successor private security agency (Southern Research, Inc.) for Louisiana Downs informed Glorioso at its Shreveport offices that he and Bonomo would not be allowed to attend races during the forthcoming racing season. In both instances the reason given for the barring was the bookmaking conviction.
Shortly after the August, 1975, incident, Bonomo and Glorioso filed separate suits against (1) the race track (Louisiana Downs, Inc.); (2) the private security company (Southern Research, Inc.); and (3) the Louisiana State Racing Commission. Each petitioner sought to enjoin his being barred from the track and sought damages under the federal civil rights law (42 U.S.C. § 2000a, et seq.) and under Art. 1, Section 12, Louisiana Constitution 1974.[1]
After the suits were filed but before trial, the stewards of the track[2] on December 5, 1975, informed Bonomo and Glorioso of a hearing at which time the stewards would consider a formal order of ejection against them under R.S.4:172(D) because of "your present convictions in federal court and your previous criminal record." After obtaining a brief delay, counsel for Bonomo and Glorioso informed the stewards by letter that inasmuch as suits had been filed and that "exhaustion of state legal or equitable remedies is not necessary to an action under the Civil Rights Act . . .," Bonomo and Glorioso would not attend the hearing. The hearing was held and the stewards formally barred Bonomo and Glorioso from the track and notified them in writing of the stewards' action.
Defendants excepted to the petitions under several labels (prematurity, jurisdiction, no cause and no right of action), the primary thrust of which was that petitioners had not exhausted the administrative remedies available to them under Title 4 (governing racing) and under R.S. 49:951, et seq. (the Administrative Procedure Act, especially applicable by reason of R.S. 4:154).
The cases were consolidated below and were heard in the district court two days after the stewards held their hearing. The lower court referred all exceptions to the merits and eventually rejected the demands of Bonomo and Glorioso.
Expert testimony established that bookmaking is an element of organized crime; that it saps the ability of a race track to *556 successfully operate and to maintain public confidence; that bookmaking siphons away revenues from the pari-mutuel betting pool, various amounts and percentages of which are statutorily dedicated to a number of worthy public purposes; that funds derived from bookmaking are not reported as income and produce no revenues for services to our citizens; and that bookmaking, especially on race track premises where the bookmaker is accompanied by his own customers, is almost impossible to detect and police.
Horse racing in Louisiana is regulated by law (Act 276 of 1940 as amended, now R.S. 4:141, et seq.). The Legislature has delegated authority to the Louisiana State Racing Commission to adopt uniform rules and regulations for the "holding, conducting and operating of all race tracks, race meets and races held in Louisiana . . ." R.S. 4:147(6). This delegation of authority was generally upheld in Dudoussat v. Louisiana State Racing Commission, 133 So.2d 155 (La.App. 4th Cir. 1961). See also 18 La.L.R. 79.
Part I of Title 4 of the Revised Statutes (Horse Racing), contains many expressions of State policy. Section 141 states in part:
"It is the policy of the State of Louisiana in furtherance of its responsibility to provide revenues for the operation of state government for its people, to encourage forceful and honest state-wide control of horse racing for the public health, safety and welfare by safeguarding the people of this state against corrupt, incompetent, dishonest and unprincipled horse racing practices."
Racing Commission members are required to be persons of "good moral character" (Section 144). The commission is authorized to make rules, regulations and conditions for the operation of race tracks and providing against "conduct detrimental to the best interest of racing" (Section 148(A)(53)) and to suspend the license of anyone who violates any rule or condition of the commission "... when the violation is detrimental to the state's interest in the regulation of horse racing ..." (148(B)). In this same paragraph the Legislature has declared two instances by way of illustration, which are detrimental to the state's interest. They are: "(1) not properly policing the grounds; and (2) violations which will unjustly deprive the state of revenue."
Section 149 limits wagering on horse races to "pari-mutuel wagering . . . within the race meeting grounds" and further declares:
". . . All other forms of wagering on the result of horse races are illegal, and all wagering on horse races outside the enclosure where horse races have been licensed by the commission is illegal."
Section 150 concerns the granting, refusing, suspending and withdrawing of licenses to "anyone," involved in racing operations, with the provision that "... no license shall be revoked without just cause." Under this section an applicant for a license is required to be "... of good character and reputation ... [who] has not ... knowingly associated ... with any ... persons who have been convicted of a felony ... or ... with bookmakers, touts, or persons of similar pursuits ..."
Among the duties imposed on stewards in the daily conduct of races is the duty to ". . . order ejected from the grounds . . . any improper or objectionable persons." Section 172(D).
The Rules of Racing adopted by the Racing Commission provide in part in its preface:
"No sport is more closely supervised than the racing of thoroughbred horses and quarter horses. The main purposes of this close supervision are to assure the spectator public and competing owners of horses:
"1. That the association conducting a race meeting is operated by responsible management; * * *"
The Rules generally track the legislative policy contained in R.S. Title 4 and provide that "any person making a handbook or *557 betting with a handbook shall be ejected from the grounds and denied any further admission." Rule 20 (w-1). This Rule also prohibits ". . . petty games of chance" on the grounds of the track. The Louisiana State Racing Commission in the Preface and Foreword of its Rules of Racing declares itself to be a member of the National Association of State Racing Commissions and bound by the constitution and by-laws of the national organization.
It is not contended here and no evidence was introduced to show that Bonomo and Glorioso were guilty of any violation of rules against illegal wagering while on the track premises during the January, 1975, incident. It is shown here that it is the policy of Louisiana Downs, Inc. and other race tracks across the nation to bar from attendance those persons known to be or who have been convicted of bookmaking. Indeed some states, unlike Louisiana, make it a crime for a person who has been convicted of bookmaking to be present in any area where pari-mutuel wagering is conducted. See People v. Licata, 28 N.Y.2d 113, 320 N.Y.S.2d 53, 54, 268 N.E.2d 787, 788 (1971) and Flores v. Los Angeles Turf Club, Inc., 55 Cal.2d 736, 13 Cal.Rptr. 201, 202, 361 P.2d 921, 922 (1961).[3]
The contentions of Bonomo and Glorioso on appeal may be generally summarized:
(1) Defendants' actions in barring them from the track violates 42 U.S.C. § 2000a(a), the 14th Amendment of the federal constitution, and Art. 1, Section 12 of the Louisiana Constitution;
(2) R.S. 4:172(D) and Rule 40(a) of the Rules of Racing adopted by the Louisiana State Racing Commission are unconstitutionally vague and indefinite; and
(3) Administrative remedies need not be exhausted before courts take jurisdiction where civil rights violations are alleged.
While these contentions are made against all defendants, the first contention relates primarily to the action of the track and its security arm in barring Bonomo and Glorioso before they filed suit. The second and third contentions relate primarily to the action of the stewards in formally barring Bonomo and Glorioso after the suits were filed in a hearing which they determined not to attend, apparently on advice of counsel.
THE CIVIL RIGHTS ISSUE
Applicable jurisprudential principles, whether derived from the state constitution, the federal constitutions or from the federal civil rights law are well established and are essentially the same. No person shall be denied access to or enjoyment of public facilities or accommodations because of that person's race, color, religion or national ancestry. It is conceded by defendants that the defendant race track is a place of public accommodation under the Civil Rights Law (See Miller v. Amusement Enterprises, Inc., 394 F.2d 342 (C.A. 5th La. 1968)).
The federal and state authorities prohibit any discrimination based on race, religion or national ancestry. They do not prohibit discrimination based on other reasons which are not arbitrary, capricious, or unreasonable, or which are not applied in that fashion, under particular circumstances which may be in question.
The Louisiana Constitution (1974) recognizes that discrimination based on "age, sex or physical condition" which is not "arbitrary, capricious or unreasonable" may lawfully exist. See Art. 1, Section 12. Examples which immediately come to mind as a reasonable discrimination (1) based on sex is the civilized custom and practice, at least in this nation, of having separate restrooms in public places for men and women (2) based on age is the practice of excluding persons *558 below or above particular ages from riding upon thrill rides in amusement parks and (3) based on physical condition is the practice of requiring participants in other public amusement or accommodation functions to be of minimum (or maximum) heights, weights and to be free of debilitating ailments such as cardiovascular diseases. See also our opinion of this date, In re Geiger, 337 So.2d 549 (La.App.2d Cir. 1976), upholding as not unreasonable, hair length and moustache regulations of the Shreveport Fire Department.
The barring of convicted bookmakers from a race track is not discrimination based on race, religion or national ancestry which is proscribed by the authorities mentioned. Plaintiffs concede that they were not barred on any of these grounds. Thus we are to determine whether the barring of plaintiffs from Louisiana Downs under the circumstances mentioned, constitutes unreasonable, or arbitrary discrimination on other accounts. See Annotation, "Exclusion of Person (for reason other than color or race) from place of Public Entertainment," 1 A.L.R.2d 1165. See also In re Cox, 3 Cal.3d 205, 90 Cal.Rptr. 24, 474 P.2d 992 (1970).
The exclusion of convicted felons such as Bonomo and Glorioso, or even known bookmakers, from race tracks has been upheld in most states where racing is legal. The Supreme Court of our sister state has correctly stated the controlling rules of law in this area as ". . . firmly settled by many decisions in many jurisdictions. The proprietor of a privately owned . . . race track . . . is not under a common carrier's duty to render service to everyone who seeks it. It is uniformly held that the proprietor may refuse to admit, or may eject from his premises [undesirable persons] . . ." See Griffin v. Southland Racing Corporation, 236 Ark. 872, 370 S.W.2d 429, 430 (1963) and cases cited in 1 A.L.R.2d 1165, as supplemented, from New York, New Jersey, California and other states. The basis for excluding persons of a particular category from a business open to the public (other than because or race, religion or national ancestry) is done at the proprietor's risk, and must be done for a purpose which is reasonable and not contrary to public policy or constitutional principles.
The purpose to be achieved by barring convicted bookmakers from a race track is to maintain the public's confidence in horse racing and pari-mutuel betting. This purpose is reasonable. It is not against public policy or constitutional principles.
In People v. Licata, 28 N.Y.2d 113, 320 N.Y.S.2d 53, 55, 268 N.E.2d 787, 788 (1971), where a convicted bookmaker was barred from Aqueduct Race Track, the court said:
"The rule is well established that the operator of a race track can `exclude a person from attending its races * * * as long as the exclusion is not founded on race, creed, color or national origin.' * * * Moreover, the rules and regulations of the New York State Racing Commission specifically provide: `[Undesirable persons to be ejected] No person who is known or reputed to be a bookmaker or a vagrant within the meaning of the statutes of the State of New York, * * * shall enter or remain upon the premises of any licensed association conducting a race meeting under the jurisdiction of the commission; and all such persons shall upon discovery or recognition be forthwith ejected * * *' The regulation imposes upon the licensed association the burden of carefully screening its patrons, and excluding or expelling any undesirable persons." (Emphasis supplied).
While Louisiana is not as explicit as New York in making it a crime for a bookmaker to enter a race track, the public policy of Louisiana is to the same effect as the policy of New York. See our comments on Title 4 of the Revised statutes, supra. The exclusion of convicted bookmakers from a race track is in keeping with the public policy of this state. Louisiana Downs, through its security agency (Southern Research) in this instance, did not unreasonably discriminate against plaintiffs. Plaintiffs do complain that other bookmakers known to them who have not been convicted of the crime, have *559 been seen at the track from which they were excluded. The record shows that Louisiana Downs has barred other convicted bookmakers and that its policy in this respect is uniform and not unreasonably discriminatory against plaintiffs. While R.S. Title 4 and the Rules of Racing adopted by the Racing Commission could be much more explicit, their letter, spirit and policy impose upon Louisiana Downs, Inc., as a race track operator, a general duty to exclude convicted bookmakers from the race track and pari-mutuel premises because their exclusion is in the interest of racing and the state's interest in racing.
THE ISSUES ARISING FROM THE STEWARDS' ACTION
Plaintiffs' primary contention here is that the term "improper and objectionable persons" in R.S. 4:172(D) and Rule 40(a) of the Rules of Racing is unconstitutionally vague and indefinite. There is a distinction in construing civil statutes where admittedly vague words are employed and where no criminal penalty is imposed (with terms such as just cause, good moral character, financial ability) from criminal statutes. See Annotation of U.S. Supreme Court cases on this subject, 40 L.Ed.2d 823 (1975).
On the basis of the evidence and our analysis of R.S. Title 4, made supra, we can and do deduce that the term improper and objectionable person has acquired a definite and recognized meaning within thoroughbred racing associations and state racing commissions who are affiliated with the National Association of State Racing Commissioners and that within the accepted meaning of the term is a person who has been convicted of bookmaking. We need not, however, conclude with this finding, because plaintiffs' contentions regarding the action of the stewards can and should be resolved against plaintiffs because they did not exhaust administrative remedies which were available to them.
Federal cases which accept jurisdiction notwithstanding available administrative remedies, do so because of alleged arbitrary and unreasonable discrimination in violation of the 14th Amendment and the federal Civil Rights Law. See Salkay v. Williams, 445 F.2d 599 (C.A. 5th Fla.1971). In the instant case, after a hearing below, we have initially held that the proprietor of a race track is not in violation of the anti-discrimination provisions of the state or federal constitutions or the Civil Rights Law by barring convicted bookmakers from attending horse races.
We are concerned then, not with alleged discrimination under state or federal law, but with plaintiffs' contentions as to indefiniteness of the state racing law and rules adopted thereunder by the Commission and the authority of the stewards generally, and specifically the stewards' exercise of authority in this instance. The stewards' action occurred after suit was filed and was based on Bonomo and Glorioso being improper and objectionable persons under R.S. 4:172(D) and Rule 40(a) of the Commission's Rules of Racing.
The stewards' action, after the hearing which plaintiffs elected not to attend, was appealable to the Racing Commission.[4] Plaintiffs did not appeal the stewards' decision to the Commission (or failed to timely appeal as plaintiffs themselves contend in appellate briefs) and the Commission did not have the opportunity to decide whether convicted bookmakers were objectionable and improper persons within the meaning of its rules. The Commission did not have the opportunity to decide whether two of *560 the three stewards at Louisiana Downs could conduct a hearing as plaintiffs complain they did. The Racing Commission is superior to the stewards and is empowered to correct errors of the stewards. If the stewards were in error, the Racing Commission was afforded no opportunity to correct them. The appeal from action or a decision of the stewards lies not to the courts, but to the Racing Commission.
R.S. 49:963, 964 provide for judicial review of the Commission's actions. Courts are empowered to reverse or modify the Commission's adjudication only for stated reasons:
"* * * G. The court may affirm the decision of the agency or remand the case for further proceedings. The court may reverse or modify the decision if substantial rights of the appellant have been prejudiced because the administrative findings, inferences, conclusions, or decisions are:
(1) In violation of constitutional or statutory provisions;
(2) In excess of the statutory authority of the agency;
(3) Made upon lawful procedure;
(4) Affected by other error of law;
(5) Arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion; or
(6) Manifestly erroneous in view of the reliable, probative, and substantial evidence on the whole record. In the application of the rule, where the agency has the opportunity to judge of the credibility of witnesses by firsthand observation of demeanor on the witness stand and the reviewing court does not, due regard shall be given to the agency's determination of credibility issues. Acts 1966, No. 382, § 14, eff. July 1, 1967."
In McKart v. United States, 395 U.S. 185, 193, 89 S.Ct. 1657, 1662, 23 L.Ed.2d 194 (1969), the United States Supreme Court said:
"The doctrine of exhaustion of administrative remedies is well established in the jurisprudence of administrative law. See generally 3 K. Davis, Administrative Law Treatise § 20.01 et seq. (1958 ed., 1965 Supp.); L. Jaffe, Judicial Control of Administrative Action 424-458 (1965). The doctrine provides `that no one is entitled to judicial relief for a supposed or threatened injury until the prescribed administrative remedy has been exhausted.' Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 50-51, 58 S.Ct. 459, 463, 82 L.Ed. 638 (1938). The doctrine is applied in a number of different situations and is, like most judicial doctrines, subject to numerous exceptions. Application of the doctrine to specific cases requires an understanding of its purposes and of the particular administrative scheme involved."
The "understanding" of the doctrine, to use McKart terminology was summarized in Ecology Center of Louisiana, Inc. v. Coleman, 515 F.2d 860, 865-866 (C.A. 5th La. 1975):
"Moreover, we note that the doctrine of administrative exhaustion is not a strict jurisdictional matter but a flexible concept tailored to the administrative statutes and circumstances . . . It does dictate a balancing of interests in which the previous availability of a corrective administrative procedure weighs heavily. The criteria used in the balancing process were explicated in McKart, supra, and they include the following factors: 1) how harsh is the penalty that plaintiff will suffer if barred from asserting his claims in court; 2) even if the penalty is not overwhelmingly harsh, will allowing a by-pass of administrative procedure seriously impair the ability of the agency to perform its functions; 3) does the issue upon which the decision turns involve matters of particular agency expertise; (4) would judicial review be significantly aided by an additional administrative decision, through allowing the agency to make a factual record, apply its expertise or exercise, its discretion; 5) how likely is it that the judiciary will be overburdened with suits stemming from the same administrative failure when such suits might have been resolved through the administrative process; and 6) how significant *561 is the role of administrative autonomythe notion that the courts should not usurp powers and duties entrusted to the agency, and the related notion that `the agency [ought to] be given a chance to discover and correct its own errors'?"
See also O'Meara v. Union Oil Co. of California, 212 La. 745, 33 So.2d 506 (1947); State Board of Education v. Anthony, 289 So.2d 279 (La.App. 1st Cir. 1974), writs refused, La., 292 So.2d 246; and Bagert v. Moreau, 325 So.2d 702 (La.App. 4th Cir. 1976).
In view of our holding that Louisiana Downs may exclude Bonomo and Glorioso, as convicted bookmakers from the race trace in the first instance, we find no "harsh penalty" factor or other McKart factors which will warrant our concluding that Bonomo and Glorioso should not be required to exercise available administrative remedies before complaining to a Louisiana court about the actions of Louisiana Racing stewards. The trial court was correct in rejecting plaintiffs' demands even as against the Louisiana Racing Commission on this basis.
At appellants' cost, the judgment in each consolidated case is
AFFIRMED.
NOTES
[1] 42 U.S.C. § 2000a(a) provides that all persons shall be entitled to enjoy any place of public accommodation ". . . without discrimination or segregation on the ground of race, color, religion or national origin."
Art. 1, Section 12 of the Louisiana Constitution provides that in access to public facilities, every person shall be free from discrimination based on ". . . race, religion or national ancestry, and from arbitrary, capricious or unreasonable discrimination based on age, sex or physical condition."
[2] R.S. 4:147 provides that the racing commission shall name three stewards who shall have supervision of the daily conduct of racing.
R.S. 4:172 provides in part:
"A. . . . The stewards have full authority to investigate, inspect, search and inquire into all matters under their supervision.
"B. Should any case occur which may not be covered herein or by the Rules of Racing, it shall be determined by the commission and implemented by the stewards but only insofar as such determination is consistent with justice, the best interest of racing and with powers and authority herein granted; . . .
* * * * * *
"D. The stewards shall order ejected from the grounds of the association any improper or objectionable persons.
* * * * * *
"Q. In addition to the above, the stewards shall have those authorities, powers and duties as are prescribed and conferred by the commission not inconsistent with this Part, including by way of illustration those provided by the rules of racing."
(Emphasis ours)
[3] Art. 103.1(A)(4), La.Cr.C., provides that a person may be guilty of the crime of disturbing the peace when he "refuses to leave the premises of another when requested to do so by any owner, lessee, or any employee thereof. . ." In the absence of a refusal to leave the race track premises when requested to do so by track officials, a bookmaker has not violated any provision of Title 4 or of the Criminal Code which would impose criminal sanctions on him.
[4] R.S. 4:156 reads in part:
"A. A final appeal, in the case of any person penalized, or disciplined by the stewards, may be taken to the commission.
"B. Such an appeal must be filed in writing at the office of the commission within five days of the date of said penalty or imposition of said discipline. * * *
"D. An appeal from the decision of the stewards to the commission shall not affect such decision until the appeal has been acted upon by the commission. * * *"
R.S. 4:154 provides:
"The commission's hearings, practice and procedure and rule making procedure are as provided in Title 49, Chapter 13, Administrative Procedure, R.S. 49:951 et seq."
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969 S.W.2d 154 (1998)
333 Ark. 41
Bill GOLDEN, Appellant,
v.
WESTARK COMMUNITY COLLEGE and Public Employee Claims Division, Appellees.
No. 97-846.
Supreme Court of Arkansas.
April 30, 1998.
*155 William J. Kropp, III, Ft. Smith, for appellant.
Nathan C. Culp, Little Rock, for appellees.
BROWN, Justice.
This case is before us on review from the Arkansas Court of Appeals. The Court of Appeals concluded that substantial evidence existed to support the Workers' Compensation Commission's decision of 20% permanent partial disability to appellant Bill Golden's body as a whole. Golden v. Westark Community College, 58 Ark.App. 209, 948 S.W.2d 108 (1997). The Court of Appeals further affirmed the Commission's determination that benefits for this disability would be offset, dollar-for-dollar, pursuant to Ark.Code Ann. § 11-9-522(f) (Repl.1996), by any social security retirement benefits received by Golden and that § 11-9-522(f) did not violate the Equal Protection Clause of the Fourteenth Amendment. Id. We affirm the decision of the Commission and the Court of Appeals with respect to the 20% disability rating but reverse with respect to the constitutionality of § 11-9-522(f), which, we hold, runs counter to the Equal Protection Clause. We remand this matter to the Commission for an order awarding benefits in accordance with this opinion.
On November 26, 1993, appellant Bill Golden was employed as a security guard by appellee Westark Community College (Westark) when he slipped on an icy ramp and suffered a compensable injury to his neck and back. Westark and its workers' compensation insurance carrier, appellee Public Employee Claims Division (PECD), accepted a 5% permanent physical impairment rating but contested the extent of Golden's permanent partial disability rating. Westark and PECD also argued that any benefits received by Golden, who was 67 years old at the time of his injury, should be offset by any retirement benefits received as provided by § 11-9-522(f). Golden, in turn, challenged the constitutionality of the offset provision.
In a hearing before the Administrative Law Judge (ALJ), Golden testified that he had neither completed high school nor achieved a General Equivalency Diploma. He testified that he had been in the army from 1943 to 1946; that he had worked as a route salesman for cigarette companies from 1948 to 1954; that he was a laborer and manager for pest-control companies from 1954 to 1985; and that he began his employment with Westark as a security guard in 1986. According to Golden, each of these jobs required physical activity such as lifting objects, crawling under buildings, climbing stairs, and prolonged periods of standing.
With respect to his employment at Westark, he explained that his primary duties were to guard and protect the property, which involved walking from building to building, and that the job had the potential for the use of physical force. Golden stated that after his fall on the ice, he promptly sought treatment from physicians and specialists and claimed that he still suffered from consistent and sharp pains from his lower back up through his neck. His treating physician assigned a permanent physical impairment rating of 5% and instructed him to avoid bending, stooping, climbing stairs, lifting objects weighing in excess of fifteen pounds, standing or walking for prolonged periods of time, and engaging in activities requiring the use of physical force. Because of these limitations, Golden contended that Westark had effectively terminated his employment on January 10, 1995, and that his subsequent attempts to gain suitable employment were in vain.
The ALJ entered an order finding that Golden had suffered a 5% permanent physical impairment rating and a 15% permanent partial disability, or loss-of-income, rating. As a result, the ALJ awarded Golden benefits at the rate of $119 per week for twenty-two and one-half weeks for his 5% permanent physical impairment and concluded that the offset statute, § 11-9-522(f), did not apply to these benefits. With respect to the 15% permanent partial disability rating, the ALJ determined that any weekly compensation benefits would be set off, dollar-for-dollar, pursuant to § 11-9-522(f) against the $575 *156 per month received by Golden in social security retirement benefits. Because of the offset, the ALJ concluded that Golden was not entitled to receive any benefits for his permanent partial disability.
The case was appealed to the full Workers' Compensation Commission. On August 14, 1996, the Commission, with one dissenter, determined that the term "disability," as used in the Workers' Compensation Act, included both a physical-impairment component and a loss-of-earning-capacity component. The Commission, accordingly, concluded that Golden had suffered a 20% permanent partial disability and that the entire amount of Golden's benefits should be set off, dollar-for-dollar, against the $575 per month award of social security retirement benefits. Hence, the Commission concluded that Golden was entitled to no award. The Commission also determined that the offset provision of § 11-9-522(f) did not violate the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution.
I. Substantial Evidence of 20% Disability
We first consider the Commission's conclusion that Golden suffered a permanent partial disability of 20% to the body as a whole, with 5% representing the permanent anatomical impairment and 15% representing his loss in earning capacity. Golden contends that there was no substantial evidence to support the Commission's determination that he only be awarded compensation based on a 20% permanent partial disability. Nonetheless, although he requests a higher disability rating, he does not submit a figure to this court which he deems appropriate but relies instead on this court to fix an appropriate percentage.
In reviewing appeals from the Commission, we view the evidence in the light most favorable to the Commission's decision and affirm when it is supported by substantial evidence. Olsten Kimberly Quality Care v. Pettey, 328 Ark. 381, 944 S.W.2d 524 (1997); Gansky v. Hi-Tech Eng'g, 325 Ark. 163, 924 S.W.2d 790 (1996). Substantial evidence exists if reasonable minds could reach the same conclusion. Kuhn v. Majestic Hotel, 324 Ark. 21, 918 S.W.2d 158 (1996); Plante v. Tyson Foods, Inc., 319 Ark. 126, 890 S.W.2d 253 (1994). This court will not reverse the Commission's decision unless fair-minded persons considering the same facts could not have reached the same conclusion. Id.
The Commission reached a 20% permanent partial disability rating for Golden after agreeing with the same conclusion reached by the ALJ. In examining the evidence presented, we note where Golden's treating physician, Dr. Peter Irwin, opined that Golden had suffered a 5% physical impairment rating, and the ALJ and the Commission added a 15% permanent partial disability rating for loss of income. Taking into consideration Golden's testimony about what he could do and could not do, his physical limitations, age, education, previous work experience and the opinion of his treating physician, we cannot say that substantial evidence does not support the Commission's conclusion that there was suitable employment available to him in both the private security and janitorial fields. Nor do we conclude that this conclusion is unreasonable. Were we to raise the disability rating under these facts, we would simply be substituting our finding for that of the Commission, which we will not do. Arkansas Power & Light Co. v. Hooks, 295 Ark. 296, 749 S.W.2d 291 (1988).
Invoking our standard of review, we hold that substantial evidence exists to sustain the Commission's determination of 20% permanent partial disability.
II. Equal Protection Violation
Golden next argues that the Commission erred in upholding the constitutionality of Ark.Code Ann. § 11-9-522(f) (Repl.1996), which provides:
(1) Any permanent partial disability benefits payable to an injured worker age sixty-five (65) or older shall be reduced in an amount equal to, dollar-for-dollar, the amount of benefits the injured worker received or is eligible to receive from a publicly or privately funded retirement or pension plan but not reduced by the employee's *157 contributions to a privately funded retirement or pension plan.
(2) The purpose and intent of this subsection is to prohibit workers' compensation from becoming a retirement supplement.
Id.[1] A similar offset statute applied to permanent total disability benefits (Ark.Code Ann. § 11-9-519(g) (Repl.1996)), but this statute was repealed by Act 251 of 1997.
We initially observe that statutes are presumed constitutional and the burden of proving otherwise is placed on the party challenging the legislative enactment. ACW, Inc. v. Weiss, 329 Ark. 302, 947 S.W.2d 770 (1997); McCutchen v. Huckabee, 328 Ark. 202, 943 S.W.2d 225 (1997). In the same vein, all doubts are resolved in favor of a statute's constitutionality. Foster v. Jefferson County Bd. of Election Comm'rs, 328 Ark. 223, 944 S.W.2d 93 (1997); Reed v. Glover, 319 Ark. 16, 889 S.W.2d 729 (1994).
The question which confronts us on the front end is whether § 11-9-522(f) presents a classification of injured workers for equal-protection purposes, that is, whether people in the same situation are being treated differently. We focus first on the category of injured workers who are receiving both workers' compensation benefits and social security retirement benefits. Under § 11-9-522(f), it is impermissible for injured workers, age 65 or older, to receive permanent partial disability benefits and social security retirement benefits without an offset for social security benefits received.[2] However, as Golden makes clear, injured workers below the age of 65 can receive both workers' compensation benefits and social security retirement benefits, and the offset statute does not prevent this. Indeed, social security retirement benefits may be drawn early between the ages of 62 and 64. 42 U.S.C. § 402(a) (1994).
Golden claims that the General Assembly's use of age 65 as the cutoff for full receipt of workers' compensation benefits and social security retirement benefits was an arbitrary and capricious benchmark which was employed without any rational basis and which does not further a legitimate governmental interest. He asserts, as a consequence, that the provision was enacted in violation of his equal protection rights under both the United States and Arkansas Constitutions.[3] Westark and PECD, however, point to the fact that the General Assembly provides twin reasons for the disparate treatment under § 11-9-522(f). The stated justification for the classification under § 11-9-522(f)(2) is to prevent workers' compensation benefits from becoming a "retirement supplement." There is a further purpose set out in Ark.Code Ann. § 11-9-101(b) (Repl.1996), that the workers' compensation system "must be returned to a state of economic viability."
With regard to whether § 11-9-522(f) sets out an impermissible classification, the United States Supreme Court has stated repeatedly that age is not a suspect classification for purposes of the Equal Protection Clause. See, e.g., Gregory v. Ashcroft, 501 U.S. 452, 111 S.Ct. 2395, 115 L.Ed.2d 410, (1991); Cleburne v. Cleburne Living Center, Inc., 473 U.S. 432, 105 S.Ct. 3249, 87 L.Ed.2d 313 (1985); Vance v. Bradley, 440 U.S. 93, 99 S.Ct. 939, 59 L.Ed.2d 171 (1979); Massachusetts Bd. of Retirement v. Murgia, 427 U.S. 307, 96 S.Ct. 2562, 49 L.Ed.2d 520 (1976). Moreover, Golden advances no fundamental right to receive full workers' compensation benefits. Thus, we analyze his equal protection claim of age-based discrimination in the payment of disability benefits using the rational-basis standard. Id.
In deciding whether a rational basis for a classification exists, this court looks to whether the Act is reasonably related to any *158 legitimate government object. Hamilton v. Hamilton, 317 Ark. 572, 879 S.W.2d 416 (1994); Arkansas Hosp. Ass'n v. Arkansas State Bd. of Pharmacy, 297 Ark. 454, 763 S.W.2d 73 (1989). See also Streight v. Ragland, 280 Ark. 206, 655 S.W.2d 459 (1983). Golden urges that there is no rational basis to support the disparate treatment under § 11-9-522(f). He relies in large part on a decision by the Colorado Supreme Court in Industrial Claim Appeals Office v. Romero, 912 P.2d 62 (Colo.1996), where that court struck down a statute on equal protection grounds that prevented employees from receiving permanent total disability benefits together with social security retirement benefits once they reached age 65 but allowed receipt of both benefits when permanent partial disability was involved.
In Romero, the Colorado Supreme Court summarily rejected the primary legislative justification for the classification set out in the contested statute. That justification was that the statute was enacted to prevent a double recovery in the form of both social security retirement benefits and workers' compensation benefits. In rejecting this notion, the Colorado Supreme Court took issue with the conclusion that workers' compensation benefits and retirement benefits represent duplicate benefits:
Social security retirement benefits are provided to persons over age sixty-five regardless of injury, as long as the recipient has reached the statutory age after having been employed and having contributed to the Social Security Trust Fund. These benefits are not disability benefits, but are old-age entitlements serving the same function as pension payments. In contrast, workers' compensation benefits are provided to compensate employees who suffer work-related injuries for loss of income resulting from such injuries. Workers' compensation benefits are paid from insurance provided by employers in exchange for the employee's forbearance from suing the employer in tort. Thus, withholding workers' compensation benefits from persons age sixty-five and older because they presumably receive retirement benefits is not rationally related to the goal of preventing duplicate benefits because workers' compensation benefits do not serve the same purpose as retirement benefits.
Id. at 67-68 (citations omitted). We agree with the reasoning of the Colorado Supreme Court.
A second case which fits the Romero mold is State v. Richardson, 198 W. Va. 545, 482 S.E.2d 162 (1996). In Richardson, the West Virginia Supreme Court of Appeals acknowledged the legislature's interest in preserving the fiscal viability of that state's workers' compensation system. Yet, it issued a writ of prohibition to prevent the enforcement of a West Virginia statute that reduced permanent total disability benefits under workers' compensation by one-half of the sum of social security retirement benefits received by the injured workers. The Workers' Compensation Commission had contended that the offset statute was permissible because the legislature had dual goals comparable to the goals in the instant case of (1) preserving the fiscal integrity of the workers' compensation program, and (2) elimination of duplicate benefits.
The West Virginia Supreme Court, however, deemed the duplication argument to be without a rational footing because the purposes behind the two programs were so differentadditional compensation during retirement years for a life's work in the case of social security versus compensation for a workplace injury in the case of workers' compensation. The court went on to emphasize that workers' compensation benefits are a substitute for access to the courts for redress for torts and are not a welfare benefit for wage loss. Quoting from Sasso v. Ram Property Management, 431 So.2d 204 (Fla. App.1983), aff'd, 452 So.2d 932 (1984), the court in Richardson further noted that because a worker age 65 or older can supplement his or her social security retirement benefits by income from gainful employment, social security benefits have evolved into a benefit more associated with advanced years than a replacement for wage loss. The West Virginia court then concluded that the lack of a commonality of purpose between the two programs sapped the contested statute of rationality. The court held that the statute *159 violated the Equal Protection Clause of the West Virginia Constitution.
Westark and PECD cite this court to several states which have upheld the constitutionality of offset provisions comparable to § 11-9-522(f) on the basis that the provisions were rationally related to the legitimate government purpose of foreclosing a duplication of benefits. See, e.g., Injured Workers of Kansas v. Franklin, 262 Kan. 840, 942 P.2d 591 (1997); Berry v. H.R. Beal & Sons, 649 A.2d 1101 (Me.1994); Case of Tobin, 424 Mass. 250, 675 N.E.2d 781 (1997); McClanathan v. Smith, 186 Mont. 56, 606 P.2d 507 (1980); Vogel v. Wells Fargo Guard Servs., 937 S.W.2d 856 (Tenn.1996); Harris v. State, 120 Wash.2d 461, 843 P.2d 1056 (1993). See also 9 Arthur Larson and Lex K. Larson, Larson's Workers' Compensation Law § 97.35(b) (1997).
The justification for this result, as explained in Professor Larson's treatise, has been that both workers' compensation benefits and social security retirement benefits are intended to substitute for a wage loss and that recipients should not recover more than what was his or her actual wage at time of injury. Id. § 97.10, at 18-9. According to the theory, the injured worker is experiencing only one wage loss and should receive only one wage-loss benefit. Id. In this connection, Westark and PECD underscore that the workers' compensation system in this state must be "returned to a state of economic viability." Ark.Code Ann. § 11-9-101(b) (Repl.1996). They further contend that one means of accomplishing that goal is to "prohibit workers' compensation from becoming a retirement supplement." Ark.Code Ann. § 11-9-522(f)(2) (Repl.1996).
Though we recognize that the states are divided on this issue, we are persuaded by the reasoning in the Romero and Richardson decisions. Furthermore, we cannot accept the premise posited by our General Assembly in the offset statute that workers' compensation benefits received by one who is age 65 or older fall into the category of a "retirement supplement." Ark.Code Ann. § 11-9-522(f). All parties agree that Bill Golden could legitimately accept social security retirement benefits after attaining age 65 and, at the same time, supplement his retirement benefits with income from work at his Westark job without any offset. Yet, illogically, Westark and PECD maintain that if Golden could no longer work due to a work-related injury, any benefits flowing from the workers' compensation program, which are meant to ease the loss in earnings, suddenly become verboten. Not only is the reasoning illogical, but the net effect of the statute is to work a disincentive on those age 65 or older to seek gainful employment to supplement social security benefits. We fail to see the rationale behind this inconsistency in treatment. The effect, of course, is to weed these older workers out of the work force.
Plus, the starting points for workers' compensation and social security are so completely different. As the Romero decision makes abundantly clear, a work-related injury resulting in a disability such as a leg amputation with severe limitation on earning capacity calls into play drastically different policy considerations than social security which is meant to ease the financial burden during later years, whether the recipient age 65 or older is working or not. Suffice it to say that we find no logical premise for the legislative conclusion that social security retirement benefits and workers' compensation benefits are duplicative and should offset one another.
In sum, it is not the mere age-based classification that is troublesome to this court, though there is clearly disparate treatment by the General Assembly for those age 62 through 64 and those age 65 and older, but the fact that we perceive no rational basis for offsetting these two benefits irrespective of the age. To be sure, economic viability of the workers' compensation program and eradication of duplicate benefits are worthy and lofty goals, but we fail to see how workers' compensation benefits paid for loss of the ability to earn the same wages and a retirement benefit under social security are duplicative in any respect. The economic objective behind § 11-9-522(f) to save money may be reasonable but the means for achieving that particular end are not and, hence, the statute fails to withstand constitutional scrutiny.
*160 We affirm the Commission's finding that Golden was 20% disabled. We reverse the decision of the Commission and the Court of Appeals on the constitutional point and hold that § 11-9-522(f) violates the Equal Protection Clause of the United States Constitution because the justification for the age-based classification for groups receiving both workers' compensation benefits and social security retirement benefits is not rationally related to a legitimate government purpose. Accordingly, § 11-9-522(f) is void on its face and of no effect.
Affirmed in part. Reversed in part and remanded.
NOTES
[1] This provision has since been amended to contain a 50% reduction as opposed to a dollar-for-dollar reduction. See 1997 Ark. Acts. 251 § 3.
[2] In 1996, it was also impermissible for injured workers to receive both permanent total disability benefits and social security retirement benefits without an offset under § 11-9-519(g), as it existed at that time.
[3] The Commission did not rule on whether § 11-9-522(f) violated the Equal Protection Clause of the Arkansas Constitution, although the Court of Appeals, in its review, concluded that the statute passed muster under both constitutions.
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63 Cal.App.3d 276 (1976)
133 Cal. Rptr. 709
MARJORIE A. LEHRER, Plaintiff and Respondent,
v.
ALFRED LEHRER, Defendant and Appellant.
Docket No. 47564.
Court of Appeals of California, Second District, Division Five.
November 1, 1976.
*278 COUNSEL
Richard T. Sykes for Defendant and Appellant.
Merilyn C. Goldberg for Plaintiff and Respondent.
OPINION
ASHBY, J.
Respondent Marjorie A. Lehrer (hereinafter Wife) obtained a writ of execution against appellant Alfred Lehrer (hereinafter Husband) for arrearages in Husband's child support payments for their eldest minor daughter (hereinafter Daughter). Husband appeals from the trial court's order denying his motion to quash the writ of execution.
The parties were married in 1952 and separated in 1961. They had three children. The interlocutory and final judgments of divorce gave custody of the children to Wife and ordered that Husband pay for their support $20 per week per child "continuing until each child marries, attains her majority, or by further order of the Court." The amount was modified to $22 in 1965.
Daughter completed high school in June 1972 and became 18 on October 8, 1972.[1] At that time she decided to travel, and went to Mexico with a young man for six months. Husband learned of the trip when he received a letter from Daughter from Mexico on October 29, 1972. He disapproved of the idea. After speaking with Wife on the telephone the week of January 5, 1973, Husband quit sending the child support payments for Daughter.
In July 1974, Wife obtained a writ of execution against Husband in the amount of $1,892 for the unpaid payments accruing between February 1973 and June 1974. On August 29, 1974, Husband filed a notice of motion to quash the writ of execution. Husband contended that Daughter had become "emancipated" and that the writ of execution should be quashed because he was not legally obligated to make any payments after her emancipation. Wife's position was that Husband should have obtained a modification of the divorce decree based upon *279 the alleged emancipation, and, Husband having failed to do so, the decree could not be modified retroactively.
The trial court agreed with Wife's position. With her consent, the court treated the motion to quash as a request for modification of the decree, effective August 29, 1974. After hearing evidence,[2] the trial court determined that Daughter was emancipated as of October 29, 1972; modified the decree to provide that no further support be required after August 29, 1974; and denied Husband's motion to quash the writ as to any payments accruing before August 29, 1974. Husband appeals from the order denying his motion to quash the writ.
DISCUSSION
(1a) Husband contends that the trial court's finding of Daughter's emancipation relieved him of all obligation to support her, as of the date of emancipation, and that the court therefore should have quashed the writ of execution in its entirety. This contention is without merit.
The divorce decree did not specify, as it could have,[3] that Husband's obligation to support Daughter would terminate upon her emancipation by leaving home and becoming self-supporting. It specified that the obligation was to continue "until each child marries, attains her majority, or by further order of the Court." Neither of the contingencies specified in the order having occurred, it was up to Husband to seek a modification of the decree based upon changed circumstances if he felt Daughter's conduct justified a termination of support. (See Civ. Code, § 4700, subd. (a); Primm v. Primm, 46 Cal.2d 690, 694 [299 P.2d 231].) Such modification cannot be made retroactive. (Civ. Code, § 4700, subd. (a); Armstrong v. Armstrong, 15 Cal.3d 942, 947, 950 [126 Cal. Rptr. 805, 544 P.2d 941]; In re Marriage of Hancock, 32 Cal. App.3d 264, 266-267 [107 Cal. Rptr. 897].)
*280 In Hancock, supra, the 1962 support order required the husband to support the children until further order of the court. In July 1970 the trial court terminated support for the eldest child, finding that the child left home and became self-supporting in April 1969. The husband later attempted to interpret that order to mean his obligation ceased as of April 1969 rather than July 1970, and he sought credit for payments he had made during that period. The appellate court held he was not entitled to any credit and that the 1962 support order could not be modified retroactively.[4]
Husband cites no authority for the proposition that in the absence of a prior order for such contingency his obligation to support his child automatically terminates upon her "emancipation" by leaving home and becoming self-supporting. He does cite some cases involving a child who reached the age of majority or who married, in which the father was permitted to resist a writ of execution for support payments claimed after such date. (See Codorniz v. Codorniz, 34 Cal.2d 811, 817 [215 P.2d 32]; Hale v. Hale, 6 Cal. App.2d 661, 663-664 [45 P.2d 246]; see also Wilkins v. Wilkins, 95 Cal. App.2d 605, 607, 609 [213 P.2d 748]; Anderson v. Anderson, 129 Cal. App.2d 403, 406 [276 P.2d 862].) These cases are inapposite since the type of emancipation claimed here is unlike marriage or reaching the age of majority. The alleged emancipation occurred not as a result of a simple and determinable event such as a marriage ceremony or a birthday but based upon the totality of circumstances and a variety of acts and attitudes. (See Martinez v. Southern Pacific Co., 45 Cal.2d 244, 253 [288 P.2d 868]; Perkins v. Robertson, 140 Cal. App.2d 536, 540-541 [295 P.2d 972]; Annot., 32 A.L.R.3d 1055.) (2) The relinquishment by the parent of control or of the right to the child's earnings does not automatically terminate the parent's obligation of support. (6 Witkin, Summary of Cal. Law (8th ed. 1974) Parent and Child, § 130, pp. 4647-4648.)
(1b) Having failed to avail himself of the proper procedure of seeking modification of the 1961 order, Husband is in no position to demand retroactive approval of his conduct. (Spivey v. Furtado, 242 *281 Cal. App.2d 259, 265, 267 [51 Cal. Rptr. 362].) In Spivey v. Furtado, supra, when the children went to college the husband quit sending child support payments to the wife but sent support money directly to the children. In a suit by the wife against the husband's estate for the arrearages, the estate contended that it was entitled to credit for the amounts sent directly to the children. The court noted that the prior support order could not be modified retroactively, and held that even if credit could be given the estate in equitable circumstances, the equities did not favor granting such relief, in part because the husband had not sought modification of the order but decided for himself to disregard the terms of the order. (See also Slevats v. Feustal, 213 Cal. App.2d 113, 119 [28 Cal. Rptr. 517].)
The order appealed from is affirmed.
Kaus, P.J., and Hastings, J., concurred.
NOTES
[1] It was agreed at trial that the phrase "her majority" in the 1961 interlocutory judgment referred to 21 years of age. (See Atwell v. Atwell, 39 Cal. App.3d 383, 388 [114 Cal. Rptr. 324].)
[2] Husband and Wife gave conflicting testimony as to whether she told him, in the January 1973 conversation, that he should stop sending the payments. The testimony of Daughter and Wife at the hearing indicated that in Mexico Daughter lived cheaply by camping out and supported herself with $200 to $300 of her savings and prior earnings; that following the Mexican trip Daughter returned to her mother's home from May to September of 1973; that from September 1973 until March 1974, Daughter worked at a kibbutz in Israel earning her room and board and taking classes, her air fare to Israel having been paid by her grandmother; that Daughter returned to her mother's house in March 1974 until September 1974, when she went to Santa Cruz where she attends Cabrillo College. Wife sends her $25 per month for school. Wife does not question the sufficiency of evidence to support the trial court's finding of emancipation.
[3] See, e.g., In re Marriage of Phillips, 39 Cal. App.3d 723, 725 [114 Cal. Rptr. 362].
[4] The court pointed out that Civil Code section 4700, subdivision (b), which reads in part, "When a court orders a person to make specified payments for support of a child during the child's minority, or until such child is married or otherwise emancipated, the liability of such person terminates upon the happening of such contingency," was not applicable because the 1962 support order did not refer to emancipation. (See also Crowe v. Crowe, 1 Cal. App.3d 109, 114, fn. 1 [81 Cal. Rptr. 570], stating that this statutory provision is inapplicable to a pre-1970 judgment.) Similarly here, the 1961 support order made no provision for termination of support based on emancipation.
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4 N.Y.3d 739 (2004)
AVILES
v.
SAN RAFAEL COOPERATIVA DE AHORRO Y CREDITO
Court of Appeals of the State of New York.
Decided December 16, 2004.
Motions for leave to appeal/appeals dismissed on finality ground.
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FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
STEPHEN MORRIS; KELLY No. 13-16599
MCDANIEL, on behalf of
themselves and all others D.C. No.
similarly situated, 5:12-cv-04964-RMW
Plaintiffs-Appellants,
v. OPINION
ERNST & YOUNG, LLP;
ERNST & YOUNG U.S., LLP,
Defendants-Appellees.
On Remand from the United States Supreme Court
Filed July 9, 2018
Before: Sidney R. Thomas, Chief Judge, and Sandra S.
Ikuta and Andrew D. Hurwitz, Circuit Judges.
Per Curiam Opinion
2 MORRIS V. ERNST & YOUNG
OPINION
PER CURIAM:
In light of the Supreme Court’s opinion dated May 21,
2018, the opinion of this Court dated August 22, 2016,
834 F.3d 975 is VACATED and judgment is entered
AFFIRMING the district court’s grant of Defendant-
Appellees’ motion to compel arbitration.
AFFIRMED.
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TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-04-00750-CV
Capital City Church of Christ, Appellant
v.
Ralph Martin Novak, Jr.; Robert E. Reetz, Jr. and Hilgers & Watkins P.C., Appellees
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 98TH JUDICIAL DISTRICT
NO. GN303974, HONORABLE PETER M. LOWRY, JUDGE PRESIDING
M E M O R A N D U M O P I N I O N
This is an appeal from a summary judgment granted on claims asserted by the Capital
City Church of Christ (the church), (1) against appellees Hilgers & Watkins, P.C. (the firm), and two
of its partners, Ralph Martin Novak, Jr., and Robert E. Reetz, Jr. (2) (the defendants). We affirm. The church sued the defendants for breach of fiduciary duty based on the defendants'
representation of Sam Chen, Inc. (Chen) in a 2003 dispute with the church. The church and Chen
had been co-owners of a six-story building at 804 Congress Avenue in Austin (the building) since
October 1996. Their relationship was governed by a Co-Ownership Agreement that, to summarize,
contemplated that they would rent office space in the building to third parties, made the church
responsible for the building's physical facilities, and made Chen responsible for finances and
accounting under the arrangement. Over time, the relationship between the church (particularly, the
church's contact, Jim Colley (3)) and Chen deteriorated, with Colley accusing Chen of self-dealing or
other malfeasance and Chen accusing Colley of mismanaging the building. In late 2002, the church
and Chen agreed to work toward implementing a condominium regime under which each would own
separate floors of the building. Originally, the law firm of Armbrust & Brown represented the co-owners jointly but, as negotiations deteriorated and conflicts arose, Chen hired Hilgers & Watkins
as its separate counsel.
Upon learning of the firm's representation of Chen, the church and Colley raised
concerns that the firm had a conflict of interest based on its prior representation of the church. (4) We
will discuss this prior representation in detail below, but to summarize, it is undisputed that the
firm's legal work for the church took place between 1996 and early 1998 and principally involved
disputes with tenants in the building. It is also undisputed that the church was represented by other
counsel when executing the 1996 Co-Ownership Agreement and a subsequent 2002 amendment.
The church filed the underlying lawsuit in October 2003. Defendants withdrew from
representing Chen shortly thereafter. Chen and the church ultimately resolved their dispute
through arbitration.
The sole claim that the church asserts is that the firm, Novak, and Reetz breached
their fiduciary duties to the church as a former firm client by misusing confidential information
obtained through that relationship to further their representation of Chen. The elements of a breach-of-fiduciary-duty claim are: (1) a fiduciary relationship between the plaintiff and defendant; (2) a
breach by the defendant of his fiduciary duty to the plaintiff; (3) which must result in injury to the
plaintiff or benefit to the defendant. Jones v. Blume, 196 S.W.3d 440, 447 (Tex. App.--Dallas 2006,
pet. denied). In the context of an attorney-client relationship, "[a]n attorney breaches his fiduciary
duty when he benefits improperly from the attorney-client relationship by, among other things . . .
improperly using client confidences." Gibson v. Ellis, 126 S.W.3d 324, 330 (Tex. App.--Dallas
2004, no pet.) (citing Goffney v. Rabson, 56 S.W.3d 186, 193 (Tex. App.-- Houston [14th Dist.]
2001, pet. denied)); see also Aiken v. Hancock, 115 S.W.3d 26, 28 (Tex. App.--San Antonio 2003,
pet. denied) (distinguishing between breach-of-fiduciary-duty claims against lawyers and malpractice
claims).
The defendants do not dispute that their prior attorney-client relationship with the
church gave rise to a fiduciary relationship. See Meyer v. Cathey, 167 S.W.3d 327, 330-31
(Tex. 2005). Their focus has instead been the remaining elements, existence of a breach and injury
or damages. The defendants sought traditional and no-evidence summary judgment that, as a matter
of law, (1) there was no "substantial relationship" between the facts and issues of their former
representation of the church and their subsequent relationship of Chen; (2) no confidential
information of the church was used or disclosed in their subsequent representation of Chen; and (3)
no injury and no damages were caused by their representation of Chen. The district court granted
the motion explicitly on each ground. The first two summary judgment grounds both relate to the
breach element of the church's breach-of-fiduciary-duty claim. The church appeals from this
ruling--disputing all three summary judgment grounds--and from a discovery ruling that we
will discuss later.
We review the district court's summary judgment de novo. Valence Operating Co.
v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005); Provident Life & Accident Ins. Co. v. Knott, 128
S.W.3d 211, 215 (Tex. 2003). When reviewing a summary judgment, we take as true all evidence
favorable to the nonmovant, and we indulge every reasonable inference and resolve any doubts in
the nonmovant's favor. Valence Operating Co., 164 S.W.3d at 661; Knott, 128 S.W.3d at 215.
Summary judgment is proper when there are no disputed issues of material fact and the movant is
entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Shell Oil Co. v. Khan, 138 S.W.3d
288, 291 n.4 (Tex. 2004) (citing Knott, 128 S.W.3d at 215-16). Furthermore, "[a] defendant who
conclusively negates at least one of the essential elements of the plaintiff's cause of action is entitled
to summary judgment." Little v. Texas Dep't of Crim. Justice, 148 S.W.3d 374, 381 (Tex. 2004)
(citing Randall's Food Mkts., Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex. 1995)). (5)
Evidence of breach
Defendants have presented undisputed summary judgment evidence that they have
not actually used or divulged to Chen the church's confidential information. Further, while making
some vague and conclusory allusions that it discussed information regarding "purchase,"
"operation," or "leasing" of the building with defendants, the church has not identified any specific
confidential information that it conveyed to the defendants during their prior representation. To the
contrary, the summary judgment evidence reflects that the prior representation involved
communications with tenants or other third parties (6) and issues principally concerning matters known
to third parties, such as the terms of their lease agreements or the physical features of the building. (7)
The church instead seeks to rely on a series of presumptions (or, the church suggests, at least the
rationale underlying them) that operate when a former client seeks to disqualify a former attorney
from subsequently representing an adverse party.
A former client may seek to disqualify a former attorney from representing a
subsequent adversary based on the threat that the attorney will intentionally or inadvertently reveal
the former client's confidences during the later representation. The former client must establish a
preponderance of the facts demonstrating a "substantial relationship" between the two
representations by proving "the existence of a prior attorney-client relationship in which the factual
matters involved were so related to the facts in the pending litigation that it creates a genuine threat
that confidences revealed to his former counsel will be divulged to his present adversary." NCNB
Tex. Nat'l Bank v. Coker, 765 S.W.2d 398, 400 (Tex. 1989). Sustaining this burden requires
"evidence of specific similarities capable of being recited in the disqualification order." Id. If the
former client can meet this burden, it is conclusively presumed that the former client revealed
confidences and secrets to the attorney that would be at risk of disclosure in the current
representation. Id. "In this manner, the movant is not required to reveal the very confidences he
wishes to protect." Id. Further, by proving the substantial relationship between the two
representations, the movant also establishes as a matter of law that "an appearance of impropriety
exists." Id. As such, "[a]lthough the former attorney will not be presumed to have revealed the
confidences to his present client, the trial court should perform its role in the internal regulation of
the legal profession and disqualify counsel from further representation in the pending litigation." Id.
The church asserts that there is a "substantial relationship" between the defendants'
prior and subsequent representation and that the presumptions that arise in the disqualification
context should serve as a substitute for the traditional proof requirements on its breach-of-fiduciary-duty claim. To date, there is no reported Texas authority to support our applying the "substantial
relationship" analysis in this manner. In the sole reported case presenting that question, the Dallas
Court of Appeals refused to "substitute a conclusive presumption, which exists for disqualification
purposes, for real evidence" in a former client's breach-of-fiduciary-duty claim against a law firm,
and held that the presumption "cannot raise a fact issue on disclosure of confidences." City of
Garland v. Booth, 895 S.W.2d 766, 773 (Tex. App.--Dallas 1995, writ denied). Relying on proof
similar to that which defendants present here, the court affirmed summary judgment in favor of the
firm. Id. at 772-73.
The church counters that an unpublished opinion from the Amarillo Court of Appeals
creates "a split . . . as to whether the presumption of disclosure found in attorney disqualification
cases is applicable to actions for breach of fiduciary duty." See Reppert v. Hooks,
No. 07-97-0302-CV, 1998 Tex. App. LEXIS 5552 (Tex. App.--Amarillo Aug. 28, 1998, pet.
denied). In fact, Reppert follows similar logic as Booth in observing that while "[i]n the
disqualification mode, the applicable test is whether there is a genuine threat of disclosure, rather
than an actual disclosure," a breach-of-fiduciary-duty claim requires the plaintiff "to show an actual
disclosure to recover." 1998 Tex. App. LEXIS 5552, at *28. The Amarillo court found that the
evidence raised a fact issue regarding actual disclosure and, as the church emphasizes, its analysis
appears to give some weight to the "difficulty of showing the revelation of confidences by a former
attorney." However, the court relied upon actual evidence that the former client had conveyed
specific confidential information to the attorney in connection with the client's purchase of a note
that later was the basis for the very claims that the attorney filed against the former client. Id. at *28-29.
We conclude that the presumptions that arise from a "substantial relationship"
between prior and subsequent representations in the attorney disqualification context cannot
substitute for the traditional requirement that the church support its breach-of-fiduciary-duty claim
with evidence. Booth, 895 S.W.2d at 772-73. That is not the purpose or effect of the presumption.
Establishing a "substantial relationship" between the prior and subsequent representation for
disqualification purposes does not give rise to a presumption that confidences obtained in the prior
representation have actually been disclosed to the present adversary. To the contrary, "the former
attorney will not be presumed to have revealed the confidences to his present client." Coker,
765 S.W.2d at 400 (emphasis added). A "substantial relationship" instead gives rise to an
"appearance of impropriety"--a basis for disqualification, not an element of a tort claim--that
derives from the perceived risk that confidential information will be disclosed. Id.
We conclude, as did the Booth court, that a "substantial relationship" between prior
and subsequent representations, standing alone, "cannot raise a fact issue on disclosure of
confidences," 895 S.W.2d at 773, and that the district court properly granted summary judgment on
the ground that, as a matter of law, no confidential information of the church was used or disclosed
in the defendants' subsequent representation of Chen.
Substantial relationship
Alternatively, we agree with the district court that the church failed to raise a fact
issue regarding a "substantial relationship" between the defendants' prior representation of the
church and their subsequent representation of Chen. The "substantial relationship" standard requires
the former client to prove specific factual similarities, liability issues, or strategies from the prior
representation that are so closely related to those of the subsequent representation as to "create[] a
genuine threat that confidences revealed to his former counsel will be divulged to his present
adversary." Texaco, Inc. v. Garcia, 891 S.W.2d 253, 256-57 (Tex. 1995); Coker, 765 S.W.2d at
399-400; see Spears v. Fourth Court of Appeals, 797 S.W.2d 654, 656 (Tex. 1990) ("[M]ere
allegations of unethical conduct or evidence showing a remote possibility of a violation of the
disciplinary rules will not suffice."). Conclusory statements about similarities in the representations
are not sufficient; instead, the standard requires sufficiently specific delineation of subject matter,
issues, and causes of action presented to enable the trial court to engage in a "painstaking analysis
of the facts." J.K. & Susie L. Wadley Research Inst. & Blood Bank v. Morris, 776 S.W.2d 271, 278
(Tex. App.--Dallas 1989, no writ). Likewise, "[a] superficial resemblance between issues is not
enough to constitute a substantial relationship." Id.; see In re Drake, 195 S.W.3d 232, 236-37 (Tex.
App.--San Antonio 2006, no pet.) (mere fact that lawyer had long represented county tax appraisal
district in suits over valuation of property, involving similar defenses and strategies, did not establish
"substantial relationship" with subsequent valuation dispute in which counsel represented property
owner). Nor does an attorney's mere generalized knowledge of a client's "inner workings" in regard
to selecting experts or fact witnesses, "preparing and responding to discovery requests, formulating
defense strategies, trial preparation, and attending settlement conferences" constitute the required
"specific factual similarities" between prior and subsequent representations. In re Drake, 195
S.W.3d at 236-37. Further, a "substantial relationship" cannot be predicated upon the perceived risk
of disclosure of facts that are common knowledge, within the public domain, or that have already
been provided to the present adversary. Metropolitan Life Ins. Co. v. Syntek Fin. Corp., 881 S.W.2d
319, 321 (Tex. 1994); Wadley, 776 S.W.2d at 278.
We begin by comparing the summary judgment evidence regarding defendants' prior
representation of the church and their subsequent representation of Chen.
The church vs. Chen dispute
In 1996, the church purchased the building. In October of that year, the church sold
a 2/3 undivided interest in the building to Chen, retaining an undivided 1/3 share. Also in 1996, the
two entities executed a Co-Ownership Agreement for the purposes of jointly maintaining, renting,
or selling the building as a commercial office building and sharing in revenue and expenses.
Attorney John F. Campbell represented the church in these transactions, while Anthony Goodall of
Goodall & Davison represented Chen.
In its original form, the Co-Ownership Agreement specified that the church and Chen
each would have the right to occupy or sublease certain assigned floors of the building, (8) with no
obligation to pay those rents and charges to the co-ownership, and to jointly lease the remaining
floors. The agreement further provided that the church would manage all physical assets of the Co-Ownership and be responsible for repairs and maintenance of all assets, while Chen would manage
all financial matters and be responsible for collecting and accounting for revenues and payment of
expenses and debt service.
By August 2002, disputes had begun to arise between the church and Chen. There
is evidence suggesting that these conflicts were attributable to some extent to financial strains on the
co-ownership caused by a loss of tenants and difficult market conditions. On or about August 2002,
Comerica Bank, a major tenant of the building, gave notice of its intent to terminate its lease later
that year. Correspondence reflects that counsel Bob Burton of Armbrust & Brown had negotiated
a lease agreement between the church and Comerica in 1996 for tenancy of the first and third floors
of the building, and that, in 2001, Comerica had negotiated a renewal of its lease and a right to
terminate upon six-months' notice. The church proposed to Chen that the co-ownership again retain
Burton "to handle matters regarding the Comerica lease," as he "has represented the Co-ownership's
interests regarding this particular tenant over the past six years." Chen instead engaged
Goodall--the attorney who had represented Chen in purchasing its interest and negotiating the Co-Ownership Agreement--to "draft a letter . . . advising the bank of its obligations regarding the
termination of the lease," including payment of "escalation rents (pass through expenses)." Colley
insisted that Burton should serve as the co-ownership's counsel in connection with the matter,
expressing concern that "the Church and Sam Chen may have conflicting interests with respect to
Comerica Bank's tenancy and/or lease termination." Chen also began the process of hiring a broker,
presumably to assist in re-leasing the Comerica space. Subsequently, Burton, representing the co-owners, communicated to Comerica a willingness to "explore any and all options which would
enable [Comerica] to remain in the Building." The record reflects that Comerica vacated the
building in November 2002, although it paid rent through mid-December.
Also in November, the church and Chen executed a First Amendment to their Co-Ownership Agreement. Among other changes, the parties expanded their respective rights of
occupancy (and corresponding exclusive rights to rent revenues), dividing all remaining floors of the
building between them. (9) They also agreed to negotiate in good faith to replace, within six months,
their tenancy-in-common with a condominium regime under which each would independently own
their respective floors. Burton began work on the necessary instruments and, in February 2003,
transmitted to each co-owner a binder of proposed documents for the "Hogg-Gregory Office
Condominiums." Burton noted that "the co-owners will need to reach agreement on the common
interest allocation for each unit," which "specify the percentage interest in the general common
elements attributable to each unit and determine the percentage of the annual budget of the
Association paid by each unit owner." Burton also requested that the co-owners review the proposed
declarations, articles, and bylaws "with respect to the number of directors and the percentage vote
required for certain actions by the Association."
On March 28, 2003, Chen wrote Burton advising that "[a]fter reviewing your
proposed condominium documents for the Hogg-Gregory Office Condominiums, Sam Chen, Inc.
. . . must completely oppose your proposal." Chen accused Burton of "grossly neglect[ing] Chen's
interest" and that "[i]n order to safeguard the assets of Chen, I must terminate your legal services to
Chen." On March 31, Burton wrote Colley and Chen requesting a conflict waiver to enable him to
continue representing the church. On the same day, Chen met with Reetz, and Hilgers & Watkins
began to provide legal services to Chen.
In the months that followed, Reetz, Novak, and other firm attorneys billed time to
Chen related to the condominium conversion, including research concerning "condominium statutes"
and rules, zoning issues, and the property tax status of nonprofit or tax-exempt organizations. On
June 2, billing records reflect that Reetz began working on a letter "in response to Colley letter."
Colley's letter is not in the summary judgment record, but the record does include a June 17 letter
from Sam Chen to Colley responding to "your letter dated June 2, 2003." Chen appears to take great
offense to whatever Colley's letter said, alluding to "twelve pages and twenty-five exhibits" of
"machinations and delusional lies," urging Colley to "consult a psychiatric counselor," and accusing
him of "childish behavior" and "language inappropriate coming from a minister." Other comments
in Chen's letter suggest that Colley's letter may have been prompted by financial demands that Chen
had made on the church to fund the co-ownership amid dwindling revenues.
Much of Chen's letter concerns Colley's apparent personal attacks of Chen, but
several issues are raised concerning various aspects of Property management and the parties' rights
under the Co-Ownership Agreement:
A dispute over Colley's "questionable" use of petty cash to purchase items
for uses that Chen viewed as unrelated to running an office building or that
were unnecessary in light of building occupancy or existing janitorial service
contracts.
Disputes over the parties' respective efforts to locate tenants for the building.
Chen argued that the building had over 80% occupancy between 1999-2002
and that, after a tenant, BAM!, had vacated fourth-floor space, Chen had
immediately hired a broker on a six-month contract to find a tenant. Chen
attributed the loss of Compass Bank to Colley's "harsh to non-existent
negotiations and unwillingness to compromise to make a deal."
Allegations that Chen "stopped" a $6 million sale of the building. Chen
argued that he was never given a copy of the proposed sale contract; that the
sale was contingent upon persuading an existing third-floor tenant,
FrogDesign, to lease the fourth floor, a "difficult task"; and that Colley had
confided that he did not want to sell because it would reduce his "sphere of
influence."
Other issues that appear to have arisen in the aftermath of Comerica's
departure from the building. Chen alludes to a refinancing proposal subject
to a requirement that "the cash [be] put into a security fund until the bank's
successful releasing and after their one-year escape clause had passed." Chen
accused Colley of having "made it abundantly clear you would not keep the
cash in reserve in case the bank left the building and recalled the loan amount
in full and that you would immediately spend the cash on business or pleasure
elsewhere."
Reference is also made to loan payments owed to Comerica Bank and the
difficulties in making the payments when "4 of our 6 floors have no tenants."
Chen also notes that "[c]urrently, the Co-ownership has no monthly income
and relies entirely on cash calls to cover its expenses." Chen urges that "[i]f
you have a problem paying these cash calls, we must meet to discuss this
problem as soon as possible and work together to resolve any setbacks the
Church may be experiencing instead of writing venomous and disparaging
correspondence."
Chen recounted that he had proposed several possible brokers to Colley,
which Colley had refused or not acted upon. "We had been waiting for your
decision on this matter until November 28, 2002 when we divided the co-owned floors."
The church's "illegal" occupation of the fourth-floor space previously
occupied by BAM! (after the broker's six-month contract expired without
finding a tenant) and failing to pay rentals.
An abortive effort to subdivide the fourth floor.
"Numerous complaints" regarding Colley's "performance as the physical
plant manager." Chen accused Colley of "gross mismanagement" and
"fail[ing] to do the job . . . to any degree of adequacy," noting that "the roof
has been leaking for 7 years despite numerous and repeated complaints from
tenants" and that "[t]he lobby ceiling has endured 7 years without a single
cleaning."
A "fiasco" related to Colley's relocation of air conditioning units within the
building.
Colley's depositing of revenue allegedly owed to Chen into the co-ownership
account.
Responding to Colley's "roaringly proclaiming" having expended $7,500 in
legal expenses in preparing his letter, Chen contends that he had expended
over $32,000 on "various legal firms" "directly related to Mr. Colley's
temper tantrums." Chen complains that while Colley's letters are "totally of
his own accord," Chen "is held hostage, required to respond to each and
every dispatch Mr. Colley sees fit to assault us with."
Chen further denied that he was trying to "starve" the church out of its percentage interest in the
building, urging that "[i]t is common knowledge that the worldwide economy took a major
hit after 9/11/2001."
Chen's letter concludes that "I have no choice other than to call a meeting of the co-owners," and that "[b]ecause of the serious nature of this situation, we will have legal counsel
present. I believe it would be beneficial for the Church to have legal counsel at this meeting as
well." Enclosed was a notice of a meeting of the co-ownership, pursuant to the amended Co-Ownership Agreement, for June 26, 2003, for purposes including "[r]esponding to and discussing
the allegations made to Mr. Sam Chen and Sam Chen, Inc. by Mr. Jim Colley," "discuss[ing]
building operations and the future of the co-ownership of the building," and "[a]ny necessary
amendments to the Co-Ownership Agreement." The notice indicated that the meeting would be held
at Hilgers & Watkin's downtown Austin office.
Between June 2 and 17, the firm undertook research regarding the "General
Partnership Act," the notice provision of the co-ownership agreement, and "remedies for dissolution
of tenancy in common," "methods to sever tenancy in common," and "partition."
On July 3, Reetz wrote attorney John F. Campbell, who was assisting the church,
conveying that Chen had been "disappointed" that the church had not sent a representative to the co-owners' meeting and requesting that Campbell "let us know why Mr. Colley has persisted in sending
letters with such outlandish and unfounded accusations that have produced an intolerable situation
between the Co-owners." It concluded that Chen was interested in selling the building if necessary
to terminate the co-ownership, and invited proposals from the church to either purchase Chen's
interest or sell the church's interest to Chen.
Later that month, Reetz wrote Campbell and referenced Chen's receipt of "the
Agreement of Sale and Purchase of Hogg-Gregory Office Condominiums Units 2 and 3," and
transmitted "our proposal" for the declarations, articles of incorporation, and bylaws "that can be
forwarded on to the buyer."
In September, Reetz, on behalf of Chen, wrote Colley, copying the church trustees,
regarding "numerous items that remain unresolved" and requesting that "you attend to these matters
as soon as possible." These items included (1) the church's response to a term sheet regarding a
refinancing offer on the building; (2) the church's failure to get bids from two roofing companies to
fix a leak on the sixth floor as, Reetz stated, it had earlier promised (10); (3) and "since we have not
heard any response to the condominium documents nor on the proposed sale of the interest owned
by the church, we will consider each one of these issues dead and no longer subject to negotiations."
The letter concluded by requesting that the church
remove you as the Physical Building Manager contact person immediately. Someone
else needs to work on building maintenance and represent the Church on building
matters because you do not cooperate with Sam Chen, Inc. and do not demonstrate
the courtesy and respect to the tenants that Sam Chen, Inc. needs. You have
continued to be unresponsive to our needs as co-owner of the building along with
being rude to the tenants, which directly impacts Sam Chen, Inc.'s ability to earn rent
on its portion of the building.
The firm continued to bill time on work for Chen into September. As noted,
defendants withdrew from representation after the church filed the underlying lawsuit in October.
The parties represent that the church and Chen (with different counsel) ultimately resolved their
dispute through arbitration in 2004.
Prior representation
The church asserts that the defendants' prior representation of it involved the same
"issues, defenses, and strategies" as its later dispute with Chen. The summary judgment evidence
reflects that defendants provided legal services to the church in connection with four matters between
1996 and February 1998. It is undisputed that defendants' representation ended over five years
before they began providing services to Chen in March 2003.
The 1996 representation
Novak averred that between July 2-12, 1996, he and other firm attorneys advised the
church concerning a possible sale of the building to a third party, but this sale was never
consummated. Firm time sheets reflect that, in fact, Novak and other firm attorneys billed time to
the church in regard to matters including "real estate purchase" and "purchase of real estate and
potential resale or lease to third party" between July 2-12, 1996. Novak added that "[a]fter July
1996, I, and to my knowledge no other attorney of Hilgers & Watkins, never provided any further
legal services to [the church] in connection with the attempted sale of the Building."
Colley's testimony is essentially consistent with Novak's, although he maintained that
Novak and the firm also advised the church concerning its purchase of the building and more
generally explored with the church resale, leasing, or other "options for being able to support the
expense of the building." Colley represents that certain of these discussions were between him and
Jack Hightower, then affiliated with the firm. Colley claims to have had a preexisting social
relationship with Hightower that persuaded him to hire the firm in 1996, and asserts that he
"regularly consulted with Judge Hightower" in both professional and social settings "about legal
matters relating to the Church's ownership of the Building, and other matters involving ownership,
seeking investors, management, leasing, and possible sale of the Building, which conversations and
legal advice did not always result in invoices submitted to the Church." (11)
The church urges that this evidence demonstrates that the defendants' 1996
representation of the church involved "the SAME issues, defenses, and strategies" as their 2003
representation of Chen. We disagree. The church emphasizes that the matters involved the same
building and the general subjects of the church's ownership, management, financing, or sale of it.
Such general resemblances in subject matter are not sufficient. See Wadley, 776 S.W.2d at 278
(general discussion of blood bank's potential AIDS-related liability during prior representation did
not demonstrate substantial relationship with specific facts of subsequent AIDS-related lawsuit).
Nor is the mere fact that defendants may have represented the church in its 1996 purchase of the
building and later represented Chen in negotiating the possible termination or buyout of the co-ownership (a transaction that would involve the parties' respective interests under the intervening
Co-Ownership Agreement, among other distinctions). See Drake, 195 S.W.3d at 236-37 (lawyer's
prior work representing appraisal district in property valuation cases was not substantially related
to particular facts and issues in subsequent valuation case in which he represented property owner
against district). The church points to no specific close relationship between the particular facts,
issues, or legal theories involved in defendants' prior and subsequent representations as to "create[]
a genuine threat that confidences revealed to [its] former counsel will be divulged to [its] present
adversary." Garcia, 891 S.W.2d at 256-57; Coker, 765 S.W.2d at 399-400.
1997-98 tenant disputes
Following its purchase of the building and the abortive July 1996 third-party
purchase, it is undisputed that John F. Campbell, not the firm, represented the church in its October
1996 sale of a 2/3 interest in the building to Chen and execution of the Co-Ownership Agreement.
Chen was represented by Goodall & Davison. However, in February 1997, Novak assisted Colley
in resolving a dispute with the Jaffe Companies, a tenant. Shortly after moving into the building,
Jaffe had complained about a leaking roof, the condition of certain carpet, electrical service,
construction in the building, and Comerica's signage. Jaffe asserted the right to withhold its monthly
rent until its complaints were addressed. Novak prepared and transmitted two letters to Jaffe, one
giving notice of default for nonpayment of rent and disputing Jaffe's position that it could withhold
rent under the circumstances, and one addressing the issues Jaffe had raised. A meeting with Jaffe
and Colley soon followed, and Jaffe afterward paid the rent. Around this time, Novak also
researched the validity of a renewal clause in the church's lease with Jaffe, determined that the
provision was unenforceable, but advised the church to "wait and see" if the tenant would renew.
In July 1997, the church retained Novak to respond to complaints from another tenant,
FrogDesign. FrogDesign's complaints included work crews in the building, the use of certain areas
in the building for civic and social functions, and the condition of the elevators and main entrance
doors. FrogDesign apparently also complained of "unsatisfactory management" or
"unanswered complaints."
In February 1998, Novak represented the church in a lease dispute with Compass
Bank. Billing records reflect a "problem with bank finishout." Novak explored with Colley
"strategy for obtaining early move out," which Colley testified referred to an effort to persuade the
Jaffe Companies to vacate early so as to enable Compass Bank to occupy the fourth floor.
Subsequent billing records reflect "tenant decision not to move."
It is undisputed that this representation, completed in February 1998, was defendants'
last work for the church. The work was billed and collected within the succeeding two months.
The church makes essentially two arguments in an attempt to establish a substantial
relationship between defendants' work on landlord-tenant issues and their 2003 representation of
Chen. First, it contends that the representations involved closely-related issues involving building
"management" or "tenant issues." This argument fails for the same reason as the church's arguments
regarding defendants' 1996 representation. We also note that the requisite substantial relationship
cannot be predicated on the perceived risk of disclosure of facts that are common knowledge or
within the public domain, such as facts concerning the physical features of the building. Syntek,
881 S.W.2d at 321; Wadley, 776 S.W.2d at 278.
Second, the church argues that defendants' prior representation involved issues
implicating its rights under the Co-Ownership Agreement, a primary subject of the 2003 dispute.
However, as previously noted, it is undisputed that other counsel represented the church and Chen
in their negotiation of the 1996 transaction and Co-Ownership Agreement. Novak further testified
that the firm was never asked, and did not advise the church, regarding the church's rights under the
Co-Ownership Agreement, and that the firm's work did not involve any issues regarding the
relationships between the church and Chen. The church does not controvert this evidence other than
to attempt to establish that defendants were representing not only the church in the 1997-98 landlord-tenant matters, but also the co-ownership. Even assuming that the summary judgment evidence
presented a fact issue on that point, there is no evidence that defendants ever provided advice
regarding the church's and Chen's respective rights under the Co-Ownership Agreement or the
specific matters in dispute in 2003. (12)
We conclude that the district court did not err in granting summary judgment on the
ground that, as a matter of law, there was no "substantial relationship" between defendants' prior and
subsequent representations. Because we affirm the district court's summary judgment based on the
two alternative grounds regarding the breach element of the church's claim, we need not reach the
church's complaint concerning the element of injury or damages. See Knott, 128 S.W.3d at 216;
Tex. R. Civ. P. 166a(c).
Discovery ruling
Finally, we overrule the church's complaint regarding the district court's discovery
ruling. The church served requests for production on defendants that sought documents from the
firm's 2003 representation of Chen. Defendants objected on the basis of relevance and asserted
attorney-client privilege and work product. The church moved to compel and requested an in
camera inspection of the documents in question. The district court held that the documents were
protected by the attorney-client privilege and that the church had failed to make a prima facie
showing that the discovery sought was "relevant to an issue of breach of duty by a lawyer to a client"
so as to be excepted from the privilege. See Tex. R. Evid. 503(d)(3). The court stated:
[N]owhere is [it] alleged or shown that the previous representation by Defendant
(primarily disputes between owners and their tenants) was substantially related to the
present dispute (a dispute among the owners concerning ownership and management
of the property). The Court notes that the present dispute between the owners does
not involve any issues, defenses or strategies that were in common with the previous
landlord-tenant disputes . . . nor is there any showing that the Defendant's present
representation would present a possibility of misuse of confidential information. In
short, there appears to be no threat that the facts of the present dispute are so related
to the previous landlord tenant disputes, that a genuine threat exists that confidences
revealed to former counsel will be revealed to the present adversary. As such, there
is no prima facie proof or allegation of a breach of fiduciary duty by a lawyer;
therefore, the exception (d)(3) does not apply.
On appeal, the church complains only that the district court abused its discretion by
applying an incorrect legal standard in adjudicating its discovery issue. Specifically, the church
contends that the district court conflated the requirement that the church's sought-after discovery be
relevant to the issue of whether defendants breached their duties, see Tex. R. Evid. 503(d)(3), with
what it views as "the ultimate issue in the case," the existence of a substantial relationship between
the two representations. We disagree. First, because the church has failed to raise a fact issue as to
whether it had actually disclosed specific confidential information to defendants, any error regarding
the church's discovery of information regarding defendants' representation of Chen would be
harmless. See Booth, 895 S.W.2d at 772-73. Second, the scope of discovery relevant to breach of
duty would necessarily reflect the substantive standard of proof--which, under the church's theory
of the case, is that breach can be proven merely by establishing a substantial relationship between
the defendants' prior and subsequent representations. We conclude that the district court did not
abuse its discretion in its discovery ruling.
CONCLUSION
We affirm the judgment of the district court.
____________________________________
Bob Pemberton, Justice
Before Justices Patterson, Pemberton and Henson
Affirmed
Filed: May 23, 2007
1. In the record, appellant is also termed the "Church of Christ, Capital City Congregation,
Inc." or "CCCCC." However, appellant's briefing uses "Capital City Church of Christ," and we will
do the same.
2. The firm has since merged with Brown McCarroll, L.L.P., and Reetz and Novak are both
partners in that entity.
3. Colley identified himself as the church's "Pulpit Minister."
4. In response to this concern, Reetz sent Colley a letter in which he explained that the firm's
"representation was over six years ago and involved lease issues with tenants of the building." Reetz
further explained:
Our code of ethics requires us to either withdraw or obtain a waiver if there is a
conflict of interest wherein the matter is "substantially related" to the prior
representation of the adverse party. I have provided copies of the work that Hilgers
& Watkins did on behalf of Capital City Congregational Church of Christ in 1997 to
Tom Watkins, our senior partner who reviews all ethics questions on behalf of the
firm. It is his opinion that the nature of the prior representation does not meet the
threshold test of "substantially related" matter. . . . Therefore, we maintain that we
may continue representing Sam Chen, Inc. with regards to the co-ownership
agreement.
5. The church objects to our consideration of an exhibit the firm filed with its appellate brief
that purports to demonstrate a timeline of relevant events in this case. We have relied only on the
evidence in the record.
6. Novak, who represented the church in the prior matters, testified that he knew of no
information given to him by the church in the course of that representation that the church asked him
not to share with the third parties involved.
7. E.g., leaks in the roof, elevator carpeting.
8. The church had the right to occupy or sublet the second floor of the six-story building, and
Chen the fifth and sixth floors.
9. In addition to its pre-existing rights to the fifth and sixth floors, Chen was given rights to
the first and fourth floors. The church, which previously had rights to the second floor, also received
rights to the third floor.
10. Reetz added that Chen would proceed with a roofer it had procured "since you have been
unresponsive to the needs of the building and this directly impacts the ability of Chen to receive rent
on the sixth floor."
11. Although ultimately not material, we note that Hightower testified that "[a]fter introducing
Jim Colley to the attorneys who would perform the legal services on behalf of the Church in July
1996, I had no involvement" with the firm's subsequent representation of the church.
12. The basis for the church's claim, again, is defendants' alleged misuse of the church's client
confidences in their subsequent representation of Chen, not that they have violated a duty of loyalty
to joint clients.
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238 Ind. 57 (1958)
148 N.E.2d 563
THE TOWN OF HOMECROFT ET AL.
v.
MACBETH.
No. 29,504.
Supreme Court of Indiana.
Filed March 17, 1958.
*59 Henry M. Coombs and Frank E. Spencer, both of Indianapolis, for appellants.
William F. LeMond and William B. Patrick, both of Indianapolis, for appellee.
EMMERT, C.J.
This is an appeal from a judgment of the trial court reversing a decision of the Board of Zoning Appeals of the Town of Homecroft, Marion County, Indiana, which denied appellee's petition for a variance to erect a filling station on land owned by him in said town, and ordering the Board to issue to said appellee a building permit. No objection was made *60 in the trial court to the form of the judgment, and the errors presented by appellants' argument section of the original brief will be considered in the order therein presented.
The Town of Homecroft was incorporated in 1950, and according to the census of that year had a population of 659 people. On May 12, 1950, the Board of Town Trustees adopted a zoning ordinance, and an official zoning map attached thereto was made a part of the ordinance.
The entire town was zoned as a dwelling house district under Class U1. Section 3 prohibited the building of a dwelling with a back yard less than 25 feet in depth, and a building closer than 8 feet from the adjoining side property line.
Appellee's real estate was located on the southeast corner of the intersection of Madison Avenue and Southview Drive, extending 100.85 feet along Southview Drive and 208.76 feet along Madison Avenue. The building setback line along Madison Avenue was 40 feet, and along Southview Drive was 50 feet. Madison Avenue, which is State Road No. 431, was 40 feet wide; immediately west of this was an abandoned interurban right-of-way 40 feet wide, and immediately west of this was Madison Drive which was 40 feet wide. Southview Drive was 50 feet wide.
Section 18(k) provided:
"A `non-conforming use' is one that does not comply with the regulations of the use in the district, ward, or section in which it is situated. Any such non-conforming building or structure may be continued provided there is no material change other than necessary maintenance and repair to continue the present use. Any part of a building, structure or land occupied by such non-conforming *61 use, which use is abandoned, shall not again be used or occupied as a non-conforming use."
In 1933, the then owners of the land immediately east of appellee's land had constructed the present building at 6801 Madison Avenue for a restaurant. The building was 24 feet by 32 feet over all, but appellee could only obtain 575 square feet floor space for sale and display of his groceries. In 1941, before any zoning regulations were adopted, appellee had purchased the land and the building and has operated it as a grocery store. The trial court was fully warranted in finding that due to the small area of the lot and the present drift of grocery business to large supermarkets with off-street parking, the real estate was wholly unsuited for the operation of a grocery store. In 1952 appellee's business decreased 1%; in 1953 it decreased 6%; in 1954 it decreased 20%. At the time of the trial appellee's chief sales consisted of bread and milk, Coca-Cola and cigarettes. At the hearings it was uncontradicted that although the objectors did not want the grocery store to discontinue business, they were not willing to patronize it in order to keep it in business.
Madison Avenue through the town extends from the south to the north, bearing to the west approximately 15 degrees. North of appellee's real estate and across Southview Drive is a Tydol filling station operated by Paul Kritch. Automobile repair work is also done at this site. State Road 431 sustains a heavy motor vehicle traffic day and night. Most of the platted area of the town is west of this state highway, and at the time of the adoption of the ordinance the south end of appellee's lot was the southern boundary of the town. From the record it is not clear that the Tulip Drive area south of appellee's land has been annexed, but for the *62 purposes of this opinion it will be assumed that it has. There were pictures introduced in evidence of the Tydol filling station and the residence properties immediately east and south of appellee's lot. There were also introduced illustrations of a proposed cottage type filling station to be erected by the Pure Oil Company in the event a variance could be obtained.
In 1952 appellee had the lot listed for sale with the Studebaker Realty Company for 9 months; thereafter it was listed for sale by the Shine Realty Company. During all this time there was no offer received to purchase the real estate for a grocery business, none for a residence, and only one offer, which was reduced to an option, to buy the real estate for $17,000, made by the Pure Oil Company for the construction of a cottage type filling station.
The evidence is uncontradicted that filling stations erected and operated in conformity with the regulations of the State Fire Marshal's office do not increase the insurance rates of surrounding properties. Of the approximately 500 filling stations operated in Indianapolis there is less than one fire per month on an average.
The transcript was made of all the evidence and proceedings taken before the Board of Zoning Appeals, which was introduced in evidence at the hearing in the trial court. The objecting property owners at the hearing before the Board of Zoning Appeals made statements concerning their opinions that a filling station would depreciate the value of their property. None of them offered to rebut the evidence introduced by appellee that the refusal of a variance under the existing circumstances constituted an undue hardship on him by depriving him of the use of his property to such an extent that it became a taking of his property without compensation. The determination *63 of a petition for a variance cannot be determined by a poll of the sentiment of the neighborhood. Benner v. Tribbitt (1947), 190 Md. 6, 57 Atl.2d 346.[1]
Paragraph 16 of the petition for the writ of certiorari did not charge the zoning ordinance was void in its entirety, but asserted that it was invalid and unconstitutional as it affected his property under the existing circumstances. Appellee properly sought his remedy by petition for a variance before the Board of Zoning Appeals. City of E. Chicago v. Sinclair Ref. Co. (1953), 232 Ind. 295, 111 N.E.2d 459, and authorities therein cited. As we said in that case at page 309, "Each case must be determined on its own merits."
Zoning when done in a constitutional manner is a proper exercise of the police power of the state.[2]Euclid v. Amber Realty Co. (1926), 272 U.S. 365, 47 S.Ct. 114, 54 A.L.R. 1016, 71 L.Ed. 303. When it is done by a political subdivision of the state, it must be done pursuant to the statute which authorizes it. But it is also apparent that the power *64 to restrict the uses of private property under the police power should be exercised with caution, and that when the power in the first instance is vested in municipal officers, who are not trained in the history and traditions of the law, and who may be particularly subject to personal and political considerations, there exist grave dangers that owners may be deprived of their constitutional rights in the use of their property. The same dangers exist in this field as were noted by the Supreme Court of the United States in St. Joseph Stock Yards Co. v. United States (1936), 298 U.S. 38, 51, 52, 56 S.Ct. 720, 80 L.Ed. 1033, 1041, 1042. When an issue is presented by an owner that there has been an unlawful taking of his property without just compensation in violation of § 21 of Article 1 of the Indiana Constitution and in violation of the due process clause of the Fourteenth Amendment, it is for the courts to protect ultimately the owner's rights and decide the judicial question presented. In compliance with these constitutional requirements the Zoning Act of 1947, § 53-778, Burns' 1951 Replacement, subsection 4, empowered the Board of Zoning Appeals to "Authorize upon appeal in specific cases such variance from the terms of the ordinance as will not be contrary to the public interest, where, owing to special conditions, a literal enforcement of the provisions of the ordinance will result in unnecessary hardship, and so that the spirit of the ordinance shall be observed and substantial justice done." In order to obtain a judicial review, §§ 53-783 to 53-788, Burns' 1951 Replacement, provided for a review of the decision of the Board of Zoning Appeals by writs of certiorari.
Appellants' first assertion of error involves the question of notice to bring the parties before the trial court *65 in the proceedings had to obtain the writ of certiorari. It arises out of an ambiguity apparent when § 53-784, Burns' 1951 Replacement, is construed with § 53-785, § 53-787 and § 53-788, Burns' 1951 Replacement. We will construe a statute to prevent an absurdity. Helms v. Am. Security Co. (1939), 216 Ind. 1, 22 N.E.2d 822; State ex rel. Glenn v. Smith, Trustee et al. (1949), 227 Ind. 599, 87 N.E.2d 813. Where different parts of a statute are in irreconcilable conflict, the later in position will control. Cox v. Timm (1914), 182 Ind. 7, 105 N.E. 479; Woodring v. McCaslin (1914), 182 Ind. 134, 104 N.E. 759. Where it is clear that words have been omitted which are necessary to make the statute workable and to give it complete sense, such may be read into the act to express the true legislative intent. State ex rel. 1625 E. Wash. Realty Co. v. Markey (1937), 212 Ind. 59, 7 N.E.2d 989.
Under § 53-784, Burns' 1951 Replacement, the Board of Zoning Appeals is not an adverse party. But § 53-785, Burns' 1951 Replacement, makes it quite clear it is a necessary party, or the court would have no jurisdiction to enter a rule against it to show cause why the writ should not issue. The words "and the time fixed for the return of the writ of certiorari by the board of zoning appeals" in the third paragraph of § 53-784, Burns' 1951 Replacement,[3] are in conflict with § 53-785, Burns' 1951 Replacement, for it is impossible to know at the time the petition for the writ is filed and notice thereon given when the *66 court will determine an issue presented by a return to the rule to show cause, or when the court will fix the return day to the writ if issued. The petitioner for the writ cannot know this, and he cannot fix a return day to the writ in the notice he serves on the adverse parties. Therefore, the above quoted words create an absurdity and irreconcilable conflict with the next section, and they are to be disregarded.
Section 53-785, Burns' 1951 Replacement, makes no provision for acquiring jurisdiction over the Board of Zoning Appeals to require it to show cause why the writ should not issue. The Legislature never intended the court should make a void order against the board over which it did not have jurisdiction. It is obvious that the last paragraph of § 53-784, Burns' 1951 Replacement,[4] contemplates notice to the Board of Zoning Appeals of the filing of the petition for the writ of certiorari. If this be given, then the trial court would have jurisdiction to enter the rule to show cause why the writ should not issue. What is contemplated by this section on notice is that notice of the petition for the writ should be served on the Board of Zoning Appeals, and to effectuate the evident legislative intent, the notice required to the Board of Zoning Appeals is notice of the filing of the petition for the writ of certiorari. The trial court did have jurisdiction over the adverse parties and the Board of Zoning Appeals, and the parties were before the court when the special judge was selected and qualified, and *67 there was no error in overruling appellants' objections to his jurisdiction to try the case.
Appellants next object that the Board of Zoning Appeals did not have jurisdiction to grant the relief requested by appellee. We have already quoted § 53-778 (4), Burns' 1951 Replacement, as to the statutory power of the Board to grant a variance, and it is well settled that an owner who asserts a zoning ordinance is unconstitutional as it applies to his property must first present the issue to the Board of Zoning Appeals. City of So. Bend v. Marckle (1939), 215 Ind. 74, 18 N.E.2d 764; City of E. Chicago v. Sinclair Ref. Co. (1953), 232 Ind. 295, 111 N.E.2d 459, supra. These cases overruled O'Conner v. Overall Laundry, Inc. (1933), 98 Ind. App. 29, 183 N.E. 134. The petition for the writ did state a cause of action, and there was no error in overruling the demurrer thereto.
Appellants' final ground for reversal is that the finding by the trial court was not sustained by sufficient evidence and was contrary to law. The operation of a filling station is a legitimate business, and under our present American system of transportation, it is a necessary and proper part of modern vehicle travel and transportation. The conduct of such a business is not a nuisance per se. If the operation of a filling station on appellee's land should become a nuisance, any nearby land owner affected thereby has his remedy. The State has the control of 160 ft. right-of-way, 40 ft. of it presently being used as State Road 431 that carries a heavy traffic day and night. There is nothing to prevent the State from making this a dual lane highway which will increase the traffic. The Town of Homecroft is not in a position to stop or curtail any of the traffic on this highway. The zoning authorities knew *68 the highway was there when this area was zoned for residence use on the east side. Such traffic necessarily causes noise, smoke, fumes, dust and at times the throwing of some dirt, grime and road scum into the air. The prevailing winds are from the west so that whatever is thrown into the air may drift over to the lots along the east side of the highway. The objectors south and east of appellee's lot are charged with the knowledge of this condition when they purchased their real estate.
We are not dealing with a situation where an owner seeks a variance in a secluded and quiet section of a town. It is beyond the power of any zoning ordinance to turn this area for some distance east of Madison Avenue into a secluded and desirable residential district; the facts of modern day traffic prevent that. Appellee's lot, in view of the building set back lines and its dimensions, is not a desirable residential lot, even assuming that the traffic on Madison Avenue could be reduced to a mere trickle. An attempt to zone for residential uses only, property fronting on a busy highway, in order to provide a beautiful and dignified village frontage can be unreasonable under restriction of the property to uses to which it is not adapted. Dowsey v. Village of Kensington (1931), 257 N.Y. 221, 177 N.E. 427, 86 A.L.R. 642. "An ordinance which permanently so restricts the use of property that it cannot be used for any reasonable purpose goes, it is plain, beyond regulation, and must be recognized as a taking of the property. The only substantial difference, in such case, between restriction and actual taking, is that the restriction leaves the owner subject to the burden of payment of taxation, while outright confiscation would relieve him of that burden." Arverne Bay Construction Co. v. *69 Thatcher (1938), 278 N.Y. 222, 232, 15 N.E.2d 587, 117 A.L.R. 1110. The ordinance in question precludes appellee's use of his property for any purpose to which it is reasonably adapted. The ordinance is unconstitutional as applied to the appellee and the finding of the trial court was sustained by sufficient evidence and was not contrary to law.
Judgment affirmed.
Bobbitt, Landis, Achor and Arterburn, JJ., concur.
NOTE. Reported in 148 N.E.2d 563.
NOTES
[1] "... But in restricting individual rights by exercise of the police power neither a municipal corporation nor the state legislature itself can deprive an individual of property rights by a plebiscite of neighbors or for their benefit. Such action is arbitrary and unlawful, i.e., contrary to Art. 23 of the Declaration of Rights and beyond the delegated power of the town of Denton to pass reasonable ordinances. Storck v. Baltimore, 101 Md. 476, 61 A. 330; Eubank v. City of Richmond, 226 U.S. 137, 33 S.Ct. 76, 57 L.Ed. 156, 42 L.R.A., N.S., 1123 (cited and quoted in Pocomoke City v. Standard Oil Co., supra, and Goldman v. Crowther, 147 Md. 282, 128 A. 50, 38 A.L.R. 1455)." Benner v. Tribbitt (1947), 190 Md. 6, 20, 57 Atl.2d 346.
[2] "Police power should not be confused with that of eminent domain. Police power controls the use of property by the owner, for the public good, its use otherwise being harmful, while eminent domain and taxation take property for public use. Under eminent domain, compensation is given for property taken, injured or destroyed, while under the police power no payment is made for a diminution in use, even though it amounts to an actual taking or destruction of property." White's Appeal (1926), 287 Pa. 259, 264, 134 Atl. 409.
[3] "The notice shall state that a petition for a writ of certiorari has been filed in the circuit or superior court of the county, as the case may be, asking for a review of the decision of the board of zoning appeals, designating the premises affected and the date of the decision and the time fixed for the return of the writ of certiorari by the board of zoning appeals." Section 53-784, Burns' 1951 Replacement.
[4] "The service of the writ of certiorari by the sheriff on the chairman or secretary of the board of zoning appeals shall constitute notice to the board and to the city or any official or board thereof charged with the enforcement of the zoning ordinance, and no further summons or notice with reference to the filing of such petition shall be necessary." Section 53-784, Burns' 1951 Replacement.
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NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
TODD O’BRYAN,
Plaintiff-Appellant,
v.
UNITED STATES,
Defendant-Appellee.
____________________
2010-5129
______________________
Appeal from the United States Court of Federal
Claims in No. 08-CV-664, Senior Judge John P. Wiese.
______________________
JUDGMENT
______________________
TERRY L. PECHOTA, Pechota Law Office, of Rapid City,
South Dakota, argued for plaintiff-appellant.
JEFFREY D. KLINGMAN, Trial Attorney, Commercial
Litigation Branch, Civil Division, United States
Department of Justice, of Washington, DC, argued for
defendant-appellee. With him on the brief were TONY
WEST, Assistant Attorney General, JEANNE E. DAVIDSON,
Director, and DEBORAH A. BYNUM, Assistant Director.
______________________
THIS CAUSE having been heard and considered, it is
ORDERED and ADJUDGED:
PER CURIAM (LOURIE, PROST, and MOORE, Circuit
Judges).
AFFIRMED. See Fed. Cir. R. 36.
ENTERED BY ORDER OF THE COURT
April 12, 2011 /s/ Jan Horbaly
Date Jan Horbaly
Clerk
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127 F.3d 34
U.S.v.Spratt*
NO. 97-40309
United States Court of Appeals,Fifth Circuit.
Sept 09, 1997
Appeal From: E.D.Tex. ,No.4:96CV216
1
Affirmed.
*
Fed.R.App.P. 34(a); 5th Cir.R. 34-2
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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
_____________________________U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
July 18, 2008
No. 06-13571 THOMAS K. KAHN
_____________________________ CLERK
D. C. Docket No. 01-03084 CV-GET-1
CASCADE CROSSING II, LLC,
Plaintiff-Appellee,
versus
RADIOSHACK CORPORATION,
f.k.a. Tandy Corporation,
Defendant-Appellant.
_________________________________________
Appeal from the United States District Court
for the Northern District of Georgia
_________________________________________
(July 18, 2008)
Before EDMONDSON, Chief Judge, TJOFLAT and GIBSON,* Circuit Judges.
PER CURIAM:
*
Honorable John R. Gibson, United States Circuit Judge for the Eighth Circuit, sitting by
designation.
This case is about the application of a statutory cap on attorneys’ fees under
O.C.G.A. § 13-1-11 to a contract dispute between Cascade Crossing II, LLC
(“Plaintiff”) and Radioshack Corp. (“Defendant”). Pursuant to a written lease
agreement, Defendant leases space at a Georgia shopping mall owned by Plaintiff.
The lease agreement authorizes the prevailing party in any legal action to recover
all reasonable expenses, including attorneys’ fees.
In 2000, Defendant informed Plaintiff that Plaintiff’s lease with another
tenant violated an exclusivity clause in the lease agreement. Plaintiff brought suit
for declaratory judgment, back rent, and attorneys’ fees and costs. The parties
filed cross-motions for summary judgment on all claims, and the district court
concluded that Defendant had waived its rights under the exclusivity clause for
acts before November 2000 but had retained its rights after then. The district court
denied both parties’ requests for attorneys’ fees and costs, concluding that neither
party had “prevailed” in the underlying dispute.
On appeal, we concluded that Defendant had waived all of its rights under
the exclusivity clause and determined that Plaintiff was the only prevailing party
and was entitled to attorneys’ fees and costs. Cascade Crossings II, LLC v.
Radioshack Corp., 131 F. App’x 191, 194 (11th Cir. 2005). On remand,
2
Defendant argued that O.C.G.A. § 13-1-11 capped Plaintiff’s fees. The district
court concluded that O.C.G.A. § 13-1-11 did not apply.
We again vacated the district court’s judgment and remanded because the
district court had not explained the basis for concluding that O.C.G.A. § 13-1-11
did not apply. The district court confirmed its former decision, explaining that
O.C.G.A. § 13-1-11 did not apply because Plaintiff, among other things, sought a
declaration on the enforceability of part of the lease agreement and, therefore, that
this civil action was not one merely to recover past due rent.
On appeal, we faced an issue of state law—whether O.C.G.A. § 13-1-11
applies to cap the award of attorneys’ fees in this case—that we considered
outcome determinative. Setting out the background in some detail, we certified
the state law issue to the Supreme Court of Georgia. Cascade Crossing II, LLC v.
Radioshack Corp., 480 F.3d 1228, 1230–32 (11th Cir. 2007).
The Supreme Court of Georgia clarified the applicable state law for us. See
Radioshack Corp. v. Cascade Crossing II, LLC, 653 S.E.2d 680 (Ga. 2008)
(holding that O.C.G.A. § 13-1-11 does apply to cap the award of attorneys’ fees in
this case.
In the light of the Georgia opinion, we conclude that O.C.G.A. § 13-1-11
applies to and limits the award of attorneys’ fees and costs and, therefore,
3
precludes an award of full attorneys’ fees and costs as provided for in the lease
agreement. Therefore, we vacate the district court’s judgment and remand for
further proceedings.
VACATED and REMANDED.
4
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570 F.2d 213
97 L.R.R.M. (BNA) 2929, 83 Lab.Cas. P 10,380
NATIONAL LABOR RELATIONS BOARD, Petitioner,v.WEST SUBURBAN HOSPITAL, Respondent.
No. 77-1340.
United States Court of Appeals,Seventh Circuit.
Argued Oct. 26, 1977.Decided Feb. 16, 1978.
Elliott Moore, Deputy Associate Gen. Counsel, Carl L. Taylor, Mary Schuette, Attys., N.L.R.B., Washington, D. C., for petitioner.
Richard S. Ratcliff, Robert E. Fitzgerald, Jr., Richard L. Epstein, Chicago, Ill., for respondent.
1
Before SWYGERT and BAUER, Circuit Judges, and CAMPBELL, Senior District Judge.*
2
WILLIAM J. CAMPBELL, Senior District Judge.
3
Respondent West Suburban Hospital (West Suburban) is an Illinois not-for-profit hospital located in Oak Park, Illinois. West Suburban employs about one thousand people, of whom about 380 are non-professional employees. Petitioner National Labor Relations Board (Board) concluded that a group of 21 non-professional employees comprising West Suburban's maintenance department constituted "a distinct and homogeneous unit whose employees share a community of interest," West Suburban Hospital, 224 NLRB 1349, 1351 (1976), and determined that the maintenance department was an appropriate collective bargaining unit.
4
Following an election, the Board certified the International Brotherhood of Firemen and Oilers, Local No. 7 as the exclusive collective bargaining representative of the unit. West Suburban refused to bargain collectively with Local No. 7. The Board then determined that West Suburban's refusal to bargain constituted an unfair labor practice within the meaning of § 8(a)(5) and (1) of the National Labor Relations Act (Act), 29 U.S.C. § 158(a)(5) and (1), and ordered West Suburban to bargain. The Board has applied to this Court for enforcement of its order. Because the Board's decision and order violate the Congressional admonition against the proliferation of bargaining units in the health care field, we deny enforcement of its order.
5
Under § 9(b) of the Act, 29 U.S.C. § 159(b):
6
"The Board shall decide in each case whether, in order to assure the fullest freedom in exercising the rights guaranteed by this Act, the unit appropriate for purposes of collective bargaining shall be the employer unit, craft unit, plant unit, or subdivision thereof . . . ."
7
The determination of an appropriate unit for collective bargaining purposes is committed to the informed discretion of the Board. Packard Motor Car Co. v. N.L.R.B., 330 U.S. 485, 67 S.Ct. 789, 91 L.Ed. 1040 (1947). But the Board's discretionary powers with respect to unit determinations are not without limits, and if the Board's decision "oversteps the law," Id., at 491, 67 S.Ct. 789, enforcement must be denied. Chemical Workers v. Pittsburgh Glass, 404 U.S. 157, 171-172, 92 S.Ct. 383, 30 L.Ed.2d 341 (1971).
8
The Board's determination that West Suburban's maintenance department constitutes an appropriate collective bargaining unit must be viewed against the backdrop of the legislative history of the 1974 amendments of the Act. See: Memorial Hospital of Roxborough v. N.L.R.B., 545 F.2d 351 (3rd Cir. 1976); St. Vincent's Hospital v. N.L.R.B., 567 F.2d 588, No. 77-1027 (3rd Cir. Slip Opinion, December 15, 1977).
9
Not-for-profit hospital employers were included in the coverage of the original Wagner Act (1935). That Act was amended by the Taft-Hartley Act in 1947, which excluded from the term "employer" as used in the Act "any corporation or association operating a hospital, if no part of the net earnings inures to the benefit of any private shareholder or individual." 61 Stat. 137 (1947), 29 U.S.C. § 152(2). In 1974, the exclusion for not-for-profit hospitals was removed by P.L. 93-360, 88 Stat. 395.
10
Congress removed the exemption because it "could find no acceptable reason why . . . employees of . . . non-profit, non-public hospitals . . . should continue to be excluded from the coverage and protection of the Act." S.Conf.Rep.No.998, 93d Cong., 2d Sess., reprinted in (1974) U.S.Code Cong. & Admin.News pp. 3946, 3948. But Congress was also concerned that the welfare of hospital patients might be disrupted by a proliferation of collective bargaining units in health care institutions. In the committee reports of both Houses, Congress expressed its concern over proliferation of units by admonishing the Board as follows:
11
"Due consideration should be given by the Board to preventing proliferation of bargaining units in the health care industry. In this connection, the Committee notes with approval the recent Board decisions in Four Seasons Nursing Center, 208 NLRB No. 50, 85 LRRM 1093 (1974), and Woodland Park Hospital, 205 NLRB No. 144, 84 LRRM 1075 (1973), as well as the trend toward broader units enunciated in Extendicare of West Virginia, 203 NLRB No. 170, 83 LRRM 1242 (1973). 1
12
S.Conf.Rep.No.988, 93d Cong., 2d Sess., reprinted in (1974) U.S.Code Cong. & Admin.News, pp. 3946, 3950; S.Rep.No.766, 93d Cong., 2d Sess. 5 (1974); H.Rep.No.1051, 93d Cong., 2d Sess. 7 (1974). In the instant case, the Board mentioned its awareness of this Congressional directive along with the other traditional factors employed to determine the appropriateness of collective bargaining units.
13
The maintenance unit at West Suburban consists of six maintenance mechanics, five stationary engineers, two electricians, a painter, a wall washer, two handymen, two carpenters, a splint man, and the maintenance department secretary. In contrast to at least eleven other similar bargaining unit cases,1 the Board in the instant case concluded that a unit consisting of only the maintenance department was an appropriate collective bargaining unit. In reaching this conclusion, the Board stressed the importance of the amount of time the maintenance employees spent in the maintenance area of the hospital, and the fact that the maintenance employees were in contact with each other in the performance of their tasks about fifty percent of their time.
14
Common work station and work interrelationships are traditional factors the Board takes into account in making bargaining unit determinations. See Wil-Kil Pest Control Company v. N.L.R.B., 440 F.2d 371, 374-375 (7th Cir. 1971). But such determinations in the health care field are not to be made solely on the basis of traditional factors. See: St. Vincent's Hospital v. N.L.R.B., supra, at 592. Congress has made it clear that the Board must view evidence of traditional factors in the context of the stated Congressional policy of preventing proliferation of bargaining units in the health care field.
15
The Board itself acknowledged that the traditional criteria employed in making bargaining unit determinations must be weighed in the context of Congress' admonition:
16
"We strongly disagree with our dissenting colleagues' assertion that we have ignored the criteria traditionally considered when making unit determinations. Rather, it is they who have ignored the congressional mandate to avoid the proliferation of bargaining units in the health care industry. We are mindful that, under ordinary circumstances, units similar to the one requested here have been found appropriate in other industries, but ordinary circumstances do not exist here. In adopting the hospital amendments, Congress recognized that labor relations in the health care industry require special consideration due to the uniqueness of that industry in terms of the services it provides to the sick, infirm, or aged. It is in the context of the peculiar nature of the industry and the congressional mandate against the proliferation of bargaining units that we have weighed all of the criteria traditionally considered when making a unit determination and have, on balance, concluded that it is proper to place special significance on the high degree of integration of operations performed throughout a health care facility.
17
Were we to adopt the rationale applied by our dissenting colleagues, we could be faced with requests to find appropriate dozens of separate units of employees performing diverse professional, technical, and service and maintenance functions in an industry which, by its very nature, requires great numbers of employees in a myriad of classifications all ultimately involved in providing patient care. We shall not do so, because such an approach can only lead to an undue fragmentation of bargaining units in the health care industry which would totally frustrate congressional intent".
18
Shriner's Hospital, 217 N.L.R.B. 806, 808 (1975).
19
All of the approximately 380 non-professional employees at West Suburban are paid on an hourly basis. All share the same basic fringe benefits regarding insurance, pension, vacation, sick plan, and holidays. All share the same locker room and cafeteria. A formalized grievance procedure has been established which covers all employees. There is no significant difference in the rate of pay between maintenance employees and other non-professional employees. Allocation of employee parking spaces is done on the basis of longevity without regard to a particular employee's department. Employees are encouraged to and do transfer from other departments to the maintenance department. As the Board's dissenting members point out, while contact among maintenance employees occur during fifty per cent of their working time, maintenance employees spend 75 to 80% Of their working time with employees of other departments.
20
In view of these facts, and in view of the Board's mere lip-service mention of the Congressional admonition as a factor to be taken into account, without any indication from the Board as to the manner in which its unit determination in this case implemented or reflected that admonition, we find that the Board's decision violates the Congressional directive that "(d)ue consideration should be given by the Board to preventing proliferation of bargaining units in the health care field."
21
The Board has been asked to make bargaining unit determinations in the health care field on frequent occasions since the enactment of the 1974 amendments.2 The Second Circuit referred to the Board's decisions in this area as in a state of "disarray." Long Island College Hospital v. N.L.R.B., 566 F.2d 833 (2 Cir. 1977). The Third Circuit could not reconcile the Board's previous decisions and rationale with the result reached by the Board in St. Vincent's Hospital v. N.L.R.B., supra, at 591. We add our observation that the Board apparently has embarked upon an erratic course in making bargaining unit determinations. Fixing a course with guidance from the Congressional directive of preventing proliferation of collective bargaining units in the health care field ought to alleviate this deficiency.
22
For the reasons stated herein, we deny enforcement of the Board's order.
23
ENFORCEMENT DENIED.
*
Senior District Judge William J. Campbell of the Northern District of Illinois is sitting by designation
1
By our reference to Extendicare, we do not necessarily approve of all the holdings of that decision."
1
Shriner's Hospital, 217 NLRB 806 (1975); Metropolitan Hospital, 223 NLRB 282 (1976); Jewish Hospital Association of Cincinnati, 223 NLRB 614 (1976); Riverside Methodist Hospital, 223 NLRB 1084 (1976); Baptist Memorial Hospital, 224 NLRB 199 (1976); St. Joseph's Hospital, 224 NLRB 270 (1976); Greater Bakersfield Memorial Hospital, 226 NLRB 971 (1976); Sutter Community Hospitals of Sacamento, Inc., 227 NLRB No. 18 (1976); Anaheim Memorial Hospital Association, 227 NLRB No. 25 (1976); Northeastern Hospital, 230 NLRB No. 162 (1977); Peter Bent Brigham Hospital, 231 NLRB No. 132 (1977). But see: Sinai Hospital of Detroit, 226 NLRB 425 (1976); Eskaton American River Health Care Center, 225 NLRB 755 (1976); St. Francis Hospital Medical Center, 223 NLRB 1451 (1976)
2
See: note 1, supra
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112 U.S. 139 (1884)
MERSMAN
v.
WERGES & Another.
Supreme Court of United States.
Argued October 17, 1884.
Decided November 3, 1884.
APPEAL FROM THE CIRCUIT COURT OF THE UNITED STATES FOR THE DISTRICT OF IOWA.
*140 Mr. C.H. Gatch for appellant.
Mr. Galusha Parsons for appellees.
*141 MR. JUSTICE GRAY delivered the opinion of the court. He stated the facts in the foregoing language and continued:
This court is of opinion that the decree of the Circuit Court cannot be sustained. The difference of opinion is not upon the facts of the case, but upon their legal effect.
A material alteration of a written contract by a party to it discharges a party who does not authorize or consent to the alteration, because it destroys the identity of the contract, and substitutes a different agreement for that into which he entered. In the application of this rule, it is not only well settled that a material alteration of a promissory note by the payee or holder discharges the maker, even as against a subsequent innocent indorsee for value; but it has been adjudged by this court that a material alteration of a note, before its delivery to the payee, by one of two joint makers, without the consent of the other, makes it void as to him; and that any change which alters the defendant's contract, whether increasing or diminishing his liability, is material, and therefore the substitution of a later date, delaying the time of payment, is a material alteration. Wood v. Steele, 6 Wall. 80. See also Angle v. Northwestern Insurance Co. 92 U.S. 330; Greenfield Savings Bank v. Stowell, 123 Mass. 196, and cases there cited.
The present case is not one of a change in the terms of the contract, as to amount or time of payment, but simply of the effect of adding another signature, without otherwise altering or defacing the note. An erasure of the name of one of several obligors is a material alteration of the contract of the others, because it increases the amount which each of them may be held to contribute. Martin v. Thomas, 24 How. 315; Smith v. United States, 2 Wall. 219. And the addition of a new person *142 as a principal maker of a promissory note, rendering all the promisors apparently jointly and equally liable, not only to the holder, but also as between themselves, and so far tending to lessen the ultimate liability of the original maker or makers, has been held in the courts of some of the States to be a material alteration. Shipp v. Suggett, 9 B. Monroe, 5; Henry v. Coats, 17 Indiana, 161; Wallace v. Jewell, 21 Ohio St. 163; Hamilton v. Hooper, 46 Iowa, 515. However that may be, yet where the signature added, although in form that of a joint promisor, is in fact that of a surety or guarantor only, the original maker is, as between himself and the surety, exclusively liable for the whole amount, and his ultimate liability to pay that amount is neither increased nor diminished; and, according to the general current of the American authorities, the addition of the name of a surety, whether before or after the first negotiation of the note, is not such an alteration as discharges the maker. Montgomery Railroad v. Hurst, 9 Alabama, 513, 518; Stone v. White, 8 Gray, 589; McCaughey v. Smith, 27 N.Y. 39; Brownell v. Winnie, 29 N.Y. 400; Wallace v. Jewell, 21 Ohio St. 163, 172; Miller v. Finley, 26 Michigan, 248.
The English cases afford no sufficient ground for a different conclusion. In the latest decision at law, indeed, Lord Campbell and Justices Erle, Wightman and Crompton held that the signing of a note by an additional surety, without the consent of the original makers, prevented the maintenance of an action on the note against them. Gardner v. Walsh, 5 El. & Bl. 83. But in an earlier decision, of perhaps equal weight, Lord Denman and Justices Littledale, Patteson and Coleridge held that in such a case the addition did not avoid the note, or prevent the original surety, on paying the note, from recovering of the principal maker the amount paid. Catton v. Simpson, 8 Ad. & El. 136; S.C. 3 Nev. & Per. 248. See also Gilbert on Evidence, 109. And in a later case, in the Court of Chancery, upon an appeal in bankruptcy, Lords Justices Knight Bruce and Turner held that the addition of a surety was not a material alteration of the original contract. Ex parte Yates, 2 DeG. & Jon. 191; S.C. 27 Law Journal, (N.S.), Bankr. 9.
The case at bar, being on the equity side of the court, is to *143 be dealt with according to the actual relation of the parties to the transaction, which was as follows: The note, though in form made by the husband to his partner, Krueger, and indorsed by Krueger, was without consideration as between them, and was in fact signed by both of them for the benefit of the partnership. The mortgage of the wife's land was executed and delivered by her and her husband to Krueger for the same purpose. The name of the wife was signed to the note by Krueger, or by his procurement, before it was negotiated for value. The plaintiff received the note and mortgage from Krueger, and advanced his money upon the security thereof, in good faith and in ignorance that the note had been altered. If the wife had herself signed the note, she would have been an accommodation maker, and, in equity at least, a surety for the other signers; and neither the liability of the husband as maker of the note, nor the effect of the mortgage executed by the wife, as well as by the husband, to secure the payment of that note, would have been materially altered by the addition of her signature. There appears to us, therefore, to be no reason why the plaintiff, as indorsee of the note, seeking no decree against the wife personally, should not enforce the note against the husband, and the mortgage against the land of the wife.
This suit, being between citizens of different States, and founded on a negotiable promissory note, the indorsement of which to the plaintiff carried with it as an incident, in equity, the mortgage made to secure its payment, was within the jurisdiction of the Circuit Court, under the act of March 3, 1875, ch. 137, although Krueger, the payee and mortgagee, could not have maintained a suit in that court. 18 Stat. 470; Sheldon v. Sill, 8 How. 441, 450; Treadway v. Sanger, 107 U.S. 323.
Decree reversed.
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This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2014).
STATE OF MINNESOTA
IN COURT OF APPEALS
A15-0739
In re the Matter of: Eric Joseph Vacko, petitioner,
Appellant,
vs.
Teri Ann Shults,
Respondent.
Filed May 23, 2016
Affirmed
Reyes, Judge
Anoka County District Court
File No. 02F605009076
Eric Vacko, Forest Lake, Minnesota (pro se appellant)
Terri A. Melcher, Fridley, Minnesota (for respondent)
Considered and decided by Reyes, Presiding Judge; Ross, Judge; and Tracy Smith,
Judge.
UNPUBLISHED OPINION
REYES, Judge
In this parenting dispute, appellant-father argues that the district court abused its
discretion by not holding respondent-mother in contempt of court for interfering with
father’s parenting time and should not have denied his request for compensatory
parenting time. We affirm.
FACTS
Appellant-father Eric Joseph Vacko and respondent-mother Teri Ann Shults are
the parents of B.L.V. who was born in 2001. B.L.V. was born with a disability and is
developmentally delayed. He has an individualized education program at school and
attends special schools. While the parties were never married, they signed a recognition
of parentage form when B.L.V. was born, and father’s name is on the child’s birth
certificate.
In October 2005, mother filed a motion for sole legal and sole physical custody of
B.L.V. The parties attended custody mediation. A stipulation and order filed on May 15,
2006, granted mother sole physical and sole legal custody of B.L.V. Father was granted
parenting time every other weekend from Friday to Sunday, every Wednesday evening,
and alternating holidays.
In November 2013, father filed a motion and sought sole physical custody or in
the alternative to modify the parenting schedule. Mother filed a motion opposing father’s
motion. The district court appointed a guardian ad litem (GAL), and the GAL issued a
report in early 2014. The report recommended that B.L.V.’s sole physical custody
remain with mother and that she comply with all recommendations for B.L.V.’s treatment
and services, especially those provided by his schools. At a hearing held following the
submission of the GAL’s report, father appeared pro se and argued that B.L.V. was
endangered because mother removed him from a special school and medically neglected
him by failing to take him to various medical appointments. The district court concluded
2
that father did not present a prima facie case of endangerment and denied father’s motion
for modification of custody.
In November 2014, B.L.V. began expressing an unwillingness to attend visits with
father. Father filed a motion for contempt alleging that mother was interfering with his
parental visitations. The district court denied father’s motion for contempt and instead
construed his motion as one for parenting-time assistance. On December 23, 2014, the
district court granted father four weekends of compensatory parenting time. But B.L.V.
continued to resist visits with father. On February 9, 2015, father filed another motion
for contempt and parenting-time assistance, alleging the same facts he had alleged
previously. Mother submitted a DVD to the district court as evidence of B.L.V.’s
behavior to refute the allegation that she interfered with father’s visitation rights. On
February 25, 2015, the district court denied father’s motion. Father appeals.
DECISION
I. The district court did not abuse its discretion by denying father’s parenting-
time assistance and contempt motion.
Father argues in his informal brief that the district court abused its discretion by
refusing to hold mother in civil contempt of court. We are not persuaded.
A district court has broad discretion to hold a party in civil contempt. Crockarell
v. Crockarell, 631 N.W.2d 829, 833 (Minn. App. 2001), review denied (Minn. Oct. 16,
2001). We review a district court’s use of contempt powers for an abuse of discretion. In
re Welfare of J.B., 782 N.W.2d 535, 538 (Minn. 2010). “We will reverse the factual
findings of a civil contempt order only if the findings are clearly erroneous.” Id. We
3
review a contempt order to determine whether the order “was arbitrary and unreasonable
or whether” the record supports it. Gustafson v. Gustafson, 414 N.W.2d 235, 237 (Minn.
App. 1987). “[F]acts constituting contempt” must be presented by the party seeking a
contempt order. Minn. Stat. § 588.04(a) (2014); see Clausen v. Clausen, 250 Minn. 293,
296, 298, 84 N.W.2d 675, 678, 679 (1957).
At the hearing on February 20, 2015, father alleged that mother disrupts his
parenting time by recording the parenting-time exchanges, by giving B.L.V. the choice to
visit father, and by not walking B.L.V. to father during the exchange. However, mother
argued that the difficulties arose because father was not present for the parenting
exchanges, B.L.V. does not like to be left alone with father’s wife, and B.L.V. is very
attached to her.
The district court found that mother was acting in good faith, she was making
“every reasonable effort” to encourage parenting time, and that it was unclear why
B.L.V. was responding in this way. The district court’s written order following the
hearing also found that the DVD mother provided “shows [B.L.V.] demonstrating intense
adverse reactions to leaving [m]other’s house for parenting time with [f]ather. [B.L.V.]
does not adequately verbalize his reasons why he does not want to go to [f]ather’s home.”
The district court denied father’s motion because it found father’s affidavit “conclusory
regarding how [m]other’s actions interfere with his parenting time and what she could do
any different than she is already doing to ease the transition.” Additionally, the court
found “no evidence in the record that [m]other interfered with [f]ather’s parenting time.
4
The record supports the district court’s findings and order. Father’s motion for
contempt regarding mother’s alleged interference with parenting time failed to present
facts constituting contempt. The Minnesota rules require that a contempt motion and
affidavit “shall set forth each alleged violation with particularity,” Minn. R. Gen. Pract.
309.01(c), and father’s affidavit fails to indicate how mother’s conduct specifically
interfered with father’s parenting time. Father’s affidavit merely states the missed
visitation dates and how mother’s family members have been uncooperative. The
evidence supports the district court’s decision denying father’s motion. Therefore, we
conclude that the district court did not abuse its discretion by denying father’s contempt
motion.
II. The district court did not abuse its discretion by denying father’s request for
compensatory parenting time.
Father next argues that he has been active consistently in B.L.V.’s life, mother has
wrongfully interfered with his parenting time since November 2014, and the district court
abused its discretion by denying him compensatory parenting time as a remedy. We
disagree.
“Appellate courts recognize that a district court has broad discretion to decide
parenting-time questions, and will not reverse a parenting-time decision unless the district
court abused its discretion by misapplying the law.” Newstrand v. Arend, 869 N.W.2d
681, 691 (Minn. App. 2015) (quotation omitted), review denied (Minn. Dec. 15, 2015).
“A district court’s findings of fact underlying a parenting-time decision will be upheld
unless they are clearly erroneous.” Id. (quotation omitted). “A finding is clearly
5
erroneous if [we are] left with the definite and firm conviction that the [district] court
made a mistake.” SooHoo v. Johnson, 731 N.W.2d 815, 825 (Minn. 2007). “We review
the [district] court’s findings in a light most favorable to those findings.” Id.
“If modification would serve the best interests of the child, the court shall
modify. . . an order granting or denying parenting time . . . . Minn. Stat. § 518.175, subd.
5(a) (2014). Under Minn. Stat. § 518.175, subd. 1(b) (Supp. 2015), following a hearing,
the district court shall “restrict parenting time with that parent as to time, place, duration,
or supervision and may deny parenting time entirely, as the circumstances warrant” if it
finds that “parenting time with a parent is likely to endanger the child’s physical or
emotional health or impair the child’s emotional development.”1
Here, the parties attended a hearing on February 20, 2015, to discuss both father’s
motion for contempt and parenting assistance and mother’s cross motion that father be
present for all parenting time, pay attorney fees, and pay child support. Mother presented
1
The ultimate concern in a dispute over parenting time is the best interests of the child.
Hagen v. Schirmers, 783 N.W.2d 212, 216 (Minn. App. 2010). Minn. Stat. § 518.17,
subd. 1(a) (2014), lists several factors relevant to a best-interests analysis. But when
addressing parenting time, section 518.175 “does not require the court to make findings
regarding the best-interests factors in Minn. Stat. § 518.17, subd. 1(a), which addresses
custody, rather than parenting time.” Newstrand, 869 N.W.2d at 691. A substantive
amendment to Minn. Stat. § 518.17, subd. 1, was made during the 2015 legislative
session. 2015 Minn. Laws ch. 30, art. 1, § 3. Because the relevant amendments do not
specify an effective date, the amendments became effective on August 1, 2015. See
Minn. Stat § 645.02 (2014). We therefore apply the 2015 version of Minn. Stat.
§ 518.175, but the 2014 version of Minn. Stat. § 518.17, which was in effect when the
district court issued its February 25, 2015 order. See Interstate Power Co. v. Nobles Cty.
Bd. of Comm’rs, 617 N.W.2d 566, 575 (Minn. 2000) (stating that, generally, courts apply
the law in effect at the time they make their decision, unless doing so would alter vested
rights or result in manifest injustice).
6
a DVD that demonstrated B.L.V.’s negative reactions to leaving mother’s house for
parenting time with father. Father argued that B.L.V. would be fine if mother walked
him out to his car because this had been successful in the past. Mother asserted that
increasing the number of visits would adversely affect B.L.V.’s life. More specifically,
she argued that B.L.V. distrusts people and is very attached to mother because of his
disability. And, as previously stated, mother argued that the visits are unsuccessful
because father is not always the person transporting B.L.V., B.L.V. acts adversely to
father’s wife, and he does not like being left alone with her.
In the district court’s February 2015 order, it found that B.L.V. continued to have
adverse reactions to leaving his mother’s house to visit father. It also found that the
parties agreed that B.L.V. has refused on many occasions to participate in parenting time
with father. The district court denied father’s motion for additional compensatory
parenting time.
The evidence supports the district court’s order denying father’s motion. After
reviewing the DVD and the parties’ affidavits, the district court declined to modify the
current parenting-time schedule and denied compensatory time finding that it was in
B.L.V.’s best interests and that father’s parenting-time loss was not deliberately due to
mother’s actions. B.L.V. had negative reactions to the parental exchange. He was unable
to verbalize his objection to visiting father’s home. The district court looked for the “best
prospect for success,” and a flexible solution. As such, the district court found that a
7
modification was not in B.L.V.’s best interests.2 See Minn. Stat. § 518.175, subd. 5(a).
Therefore, we conclude that the district court did not abuse its discretion by denying
father’s motion for compensatory parenting time.
Affirmed.
2
The district court previously granted father’s motion for compensatory parenting time
on December 23, 2014. In doing so, the district court stated that there was no “first-hand
information from a . . . professional that B.L.V. is physically or emotionally endangered
in [f]ather’s care.” But we note that after the February 20, 2015, hearing the district court
concluded that the additional compensatory visits were not in B.L.V’s best interests. See
Minn. Stat. § 518.175, subd. 5(a).
8
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FILED
1 ORDERED PUBLISHED DEC 09 2014
2 SUSAN M. SPRAUL, CLERK
U.S. BKCY. APP. PANEL
OF THE NINTH CIRCUIT
3 UNITED STATES BANKRUPTCY APPELLATE PANEL
4 OF THE NINTH CIRCUIT
5
6 In re: ) BAP No. AZ-13-1502-JuKiD
)
7 IAN NEHEMIAH GRAY and CYNTHIA ) Bk. No. 3:13-bk-8071-MCW
JACKSON GRAY, )
8 )
Debtors. )
9 ______________________________)
)
10 IAN NEHEMIAH GRAY; CYNTHIA )
JACKSON GRAY, )
11 )
Appellants, )
12 v. ) O P I N I O N
)
13 LAWRENCE J. WARFIELD, )
Chapter 7 Trustee, )
14 )
Appellee. )
15 ______________________________)
16
Argued and Submitted on November 20, 2014
17 at Phoenix, Arizona
18 Filed - December 9, 2014
19 Appeal from the United States Bankruptcy Court
for the District of Arizona
20
Honorable Randolph J. Haines, Chief Bankruptcy Judge, Presiding
21 ________________________
22 Appearances: Kenneth L. Neeley, Esq. for appellants Ian
Nehemiah Gray and Cynthia Jackson Gray;
23 Terry A. Dake, Esq. for Lawrence J. Warfield,
Chapter 7 Trustee.
24 ________________________
25 Before: JURY, KIRSCHER, and DUNN, Bankruptcy Judges.
26
27
28
1 JURY, Bankruptcy Judge:
2
3 Chapter 7 debtors1 Ian and Cynthia Gray appeal from the
4 bankruptcy court’s order sustaining the chapter 7 trustee’s
5 objection to an amended exemption on the grounds of bad faith.
6 Because the Supreme Court in Law v. Siegel, 134 S. Ct. 1188
7 (2014), determined that bankruptcy courts have no discretion
8 either to disallow amended exemptions or to deny leave to amend
9 exemptions based on equitable grounds not specified in the
10 Bankruptcy Code, we VACATE and REMAND.
11 I. FACTS
12 Ian and Cynthia Gray (Debtors) filed their chapter 7
13 petition and schedules on May 14, 2013. The schedules did not
14 list as an asset or claim as exempt any prepaid rent. At the
15 § 341(a) meeting of creditors on June 24, 2013, the chapter 7
16 trustee (Trustee) questioned Debtors about the payment of
17 $2,707.00 made to their landlord on March 11, 2013. Debtors
18 testified that the payment was a prepayment of rent for April,
19 May, and June of 2013. On July 8, 2013, Trustee demanded
20 turnover of $900.00 for the prepayment of the post-petition rent
21 due for June 2013 (the June Prepaid Rent). Debtors responded by
22 amending schedules B and C to respectively list as an asset and
23 claim an exemption (the Amended Exemption) in the June Prepaid
24 Rent. Because Debtors did not claim a homestead exemption, they
25
26
1
Unless otherwise indicated, all chapter and section
27 references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532,
and “Rule” references are to the Federal Rules of Bankruptcy
28 Procedure.
-2-
1 were permitted to claim as exempt “prepaid rent, including
2 security deposits . . . not exceeding the lesser of one thousand
3 dollars or one and one-half months’ rent.” Ariz. Rev. Stat.
4 Ann. § 33-1126(C).2
5 On July 9, 2013, Trustee filed an objection to the Amended
6 Exemption and argued that Debtors’ initial failure to disclose
7 the asset constituted grounds for the denial of the exemption.
8 Debtors filed their response on July 10, 2013, arguing that
9 under Rule 1009(a) amendments to their schedules should be
10 allowed as a matter of course because Debtors’ failure to
11 disclose did not amount to bad faith and Trustee failed to show
12 prejudice to creditors.
13 After oral arguments from both parties, the bankruptcy
14 court issued its order sustaining the objection on September 16,
15 2013. Without holding an evidentiary hearing, the bankruptcy
16 court disallowed the Amended Exemption because Debtors acted in
17 bad faith and intentionally concealed the June Prepaid Rent.
18 Debtors filed a timely notice of appeal.
19 II. JURISDICTION
20 The bankruptcy court had jurisdiction over this proceeding
21 under 28 U.S.C. §§ 1334 and 157(b)(2)(A) and (B). We have
22 jurisdiction under 28 U.S.C. § 158.
23 III. ISSUE
24 1. Whether the bankruptcy court has discretion either to
25 disallow the Amended Exemption or to deny leave to amend an
26
27 2
This reflects a prior version of Ariz. Rev. Stat. Ann.
§ 33-1126(C), effective from July 20, 2011 to September 12,
28 2013.
-3-
1 exemption based on a finding of bad faith; and
2 2. Whether the bankruptcy court abused its discretion in
3 deciding not to conduct an evidentiary hearing.
4 IV. STANDARD OF REVIEW
5 Questions of law are subject to de novo review. United
6 States v. Lang, 149 F.3d 1044, 1046 (9th Cir. 1998). Questions
7 of fact are reviewed under the clearly erroneous standard.
8 Pullman-Standard v. Swint, 456 U.S. 273, 287 (1982).
9 The bankruptcy court’s decision not to conduct an
10 evidentiary hearing is reviewed for abuse of discretion.
11 Khachikyan v. Hahn (In re Khachikyan), 335 B.R. 121, 128 (9th
12 Cir. BAP 2005).
13 The bankruptcy court abuses its discretion when it applies
14 the incorrect legal rule or when its application of the law to
15 the facts is: (1) illogical; (2) implausible; or (3) without
16 support in inferences that may be drawn from the facts in the
17 record. United States v. Hinkson, 585 F.3d 1247, 1263 (9th Cir.
18 2009) (en banc).
19 V. DISCUSSION
20 A. The Ninth Circuit Standard Before Law v. Siegel.
21 The briefs before the Panel and the pleadings filed with
22 the bankruptcy court identify two issues: whether the Amended
23 Exemption is allowed under § 522 and whether Debtors may amend
24 under Rule 1009(a) to claim the June Prepaid Rent as exempt.
25 Martinson v. Michael (In re Michael), 163 F.3d 526, 529 (9th
26 Cir. 1998) (“Whether the [debtors] could amend their schedules
27 post-petition is separate from the question whether the
28 exemption was allowable.”). Trustee relied on the asserted bad
-4-
1 faith of the Debtors to disallow the Amended Exemption of the
2 June Prepaid Rent under either theory.
3 The distinction is substantively meaningless: denying leave
4 to amend the exemption of property has the identical effect as
5 disallowing an amended exemption. In fact, even before the
6 Supreme Court in Law v. Siegel made the distinction
7 insignificant, Ninth Circuit case law had evolved such that the
8 judge-made exceptions used to bar amendments under Rule 1009(a)
9 were also used as grounds to disallow amended exemptions.
10 A claimed exemption is presumptively valid. Gonzalez v.
11 Davis (In re Davis), 323 B.R. 732, 743 (9th Cir. BAP 2005).
12 Rule 1009(a) gives debtors the right to amend any list,
13 schedule, or statement “as a matter of course at any time before
14 the case is closed” and without court approval. Michael, 163
15 F.3d at 529. The right to amend includes the right to amend the
16 list of exempt property. Goswami v. MTC Distrib. (In re
17 Goswami), 304 B.R. 386, 393 (9th Cir. BAP 2003).
18 Notwithstanding the unqualified and permissive language of
19 Rule 1009(a), courts used judicially created exceptions to limit
20 the right to amend without analyzing whether courts had the
21 statutory authority to do so. The Eleventh Circuit in Doan v.
22 Hudgins (In re Doan), 672 F.2d 831, 833 (11th Cir. 1982), first
23 recognized that bankruptcy courts had discretion to deny leave
24 to amend on a showing of either debtor’s bad faith or prejudice
25 to creditors based on its reading of Rule 1103 (incorporated in
26
27 3
Rule 110 stated that “(a) voluntary petition, schedule or
statement of affairs may be amended as a matter of course at any
28 (continued...)
-5-
1 present Rule 1009(a)). Likewise, the Ninth Circuit adopted the
2 equitable exceptions set forth in Doan without citing a specific
3 statutory provision in the Bankruptcy Code. Michael, 163 F.3d
4 at 529.
5 Bankruptcy courts subsequently used the same equitable
6 considerations as grounds to disallow amended exemptions. In
7 Magallanes v. Williams (In re Magallanes), 96 B.R. 253 (9th Cir.
8 BAP 1988), the bankruptcy court sustained the chapter 7
9 trustee’s objection to amended exemptions claimed in a converted
10 chapter 7 case. In adopting the test articulated in Doan, the
11 Panel found that bankruptcy courts do not have discretion to
12 disallow amended exemptions unless the amendment either was done
13 in bad faith or caused prejudice to third parties. Id. at 256;
14 Arnold v. Gill (In re Arnold), 252 B.R. 778, 784 (9th Cir. BAP
15 2000).
16 Therefore, prior to Law v. Siegel, Ninth Circuit cases had
17 used the bad faith of debtors both to deny leave to amend
18 exemptions and to disallow an amended exemption. The bankruptcy
19 court here relied on this precedent to disallow the Amended
20 Exemption.
21 B. The Supreme Court in Law v. Siegel Discredited the Use of
22 Equitable Principles to Disallow Exemptions Under Federal Law.
23 In Law v. Siegel, 134 S. Ct. 1188 (2014), the Supreme Court
24 held that the bankruptcy court exceeded both its statutory
25 authority and inherent powers when it ordered that the funds
26 protected by the debtor’s homestead exemption be surcharged to
27
3
(...continued)
28 time before the case is closed.”
-6-
1 pay administrative expenses. In the bankruptcy proceeding, the
2 debtor had created and perpetuated a false trust deed against
3 his home to protect any equity from administration by the
4 chapter 7 trustee. Id. at 1193. Eventually the chapter 7
5 trustee invalidated the trust deed, and the bankruptcy court
6 granted the chapter 7 trustee’s motion to surcharge the debtor’s
7 homestead exemption to offset the very high administrative costs
8 incurred in overcoming the debtor’s fraudulent
9 misrepresentations. Id.
10 The Supreme Court ruled that the debtor was entitled to
11 exempt the equity in his home under § 522 and California
12 exemption law, and the exempted funds were deemed “not liable
13 for payment of any administrative expense” under § 522(k). Id.
14 at 1195. Because the attorney’s fees incurred by the chapter 7
15 trustee qualified as an administrative expense, the bankruptcy
16 court’s surcharge violated the express terms of § 522. Id.
17 Albeit in dicta, the Supreme Court found no equitable power
18 in the bankruptcy court to deny an exemption as a remedy to
19 debtor’s bad faith conduct, Id. at 1196-97, and in so
20 doing, implies that the judge-made exceptions of Michael do not
21 survive Law v. Siegel.
22 The Supreme Court discerned no practical difference between
23 disallowing an exemption and denying the debtor the right to
24 amend an exemption: the Bankruptcy Code does not grant
25 bankruptcy courts the “authority to disallow an exemption (or to
26 bar a debtor from amending his schedules to claim an exemption,
27 which is much the same thing)” based on a debtor’s misconduct.
28 Id. at 1196. The Supreme Court explicitly rejected the chapter
-7-
1 7 trustee’s argument that Doan and other like cases reflect a
2 general, equitable power in the bankruptcy courts. Id. Since
3 the Ninth Circuit in Michael adopted the exceptions of bad faith
4 and prejudice articulated in Doan, the effective abrogation of
5 Doan necessarily extends to the use of these equitable grounds
6 in Michael. In re Arellano, 517 B.R. 228, 232 (Bankr. S.D. Cal.
7 2014) (finding that at least as to the bad faith and prejudice
8 exceptions, Michael is effectively abrogated).
9 Supreme Court dicta is not to be taken lightly, and we must
10 consider the rationale behind the holding, if sufficiently
11 persuasive. Cnty. of Allegheny v. Am. Civil Liberties Union
12 Greater Pittsburgh Chapter, 492 U.S. 573, 668 (1989) (Kennedy,
13 J., concurring in judgment in part and dissenting in part) (“As
14 a general rule, the principle of stare decisis directs us to
15 adhere not only to the holdings of our prior cases, but also
16 their explications of the governing rules of law.”). The
17 Supreme Court’s definitive position that the Bankruptcy Code
18 does not grant bankruptcy courts “a general, equitable
19 power . . . to deny exemptions based on a debtor’s bad-faith
20 conduct” is clearly irreconcilable with the use of judicially
21 created remedies either to bar amendments or to disallow amended
22 exemptions. Law, 134 S. Ct. at 1196; Miller v. Gammie, 335 F.3d
23 889, 893 (9th Cir. 2003) (holding prior circuit authority is
24 effectively overruled where its reasoning or theory is clearly
25 irreconcilable with the reasoning or theory of a higher
26 authority).
27 Courts have long recognized that without the judge-made
28 exceptions of Michael, bankruptcy courts have no discretion to
-8-
1 disallow amended exemptions. Magallanes, 96 B.R. at 256;
2 Arnold, 252 B.R. at 784. Had debtor’s entitlement to the
3 exemption been at issue in Law v. Siegel, the Supreme Court
4 dicta leaves no room to doubt how it would have ruled: Ҥ 522
5 does not give courts discretion to grant or withhold exemptions
6 based on whatever considerations they deem appropriate.” Law,
7 134 S. Ct. at 1196. The Supreme Court noted that sole
8 discretion to invoke an exemption vests in the debtor, not the
9 bankruptcy court, and observed that the bankruptcy court “may
10 not refuse to honor the exemption absent a valid statutory basis
11 for doing so.” Id.
12 Here, but for the allegation of bad faith, the Amended
13 Exemption is presumptively valid. Arizona opted out of the
14 federal exemptions provided by the Bankruptcy Code. Ariz. Rev.
15 Stat. Ann. § 33-1133(B). Debtors are entitled to exempt the
16 $900.00 of prepaid rent under Ariz. Rev. Stat. Ann.
17 § 33-1126(C). Moreover, Trustee did not challenge the legal
18 sufficiency of the Amended Exemption.
19 Thus, Law v. Siegel mandates the conclusion that the
20 bankruptcy court is without federal authority to disallow the
21 Amended Exemption or to deny leave to amend exemptions based on
22 Debtors’ bad faith. Law v. Siegel does recognize that when a
23 debtor claims an exemption created under state law, the scope of
24 the exemption is determined under state law which “may provide
25 that certain types of debtor misconduct warrant denial of the
26 exemption.” Law, 134 S.Ct. at 1196-97. It does not appear that
27 Arizona exemption law was considered in determining whether the
28 Amended Exemption could be disallowed based on the Debtors’
-9-
1 conduct. Accordingly, the matter is remanded to give the
2 bankruptcy court the opportunity to determine whether under
3 Arizona law equitable considerations may be used to disallow
4 exemptions.
5 C. The Issue of Whether the Bankruptcy Court Abused Its
6 Discretion by Not Holding an Evidentiary Hearing Is Moot.
7 Because under federal law the bankruptcy court has neither
8 the discretion to disallow amended exemptions nor deny leave to
9 amend based on equitable grounds not specified in the Bankruptcy
10 Code, we need not address this issue.
11 VI. CONCLUSION
12 For the reasons stated above, we VACATE and REMAND for
13 further proceedings consistent with this opinion.
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
-10-
| {
"pile_set_name": "FreeLaw"
} |
374 F.3d 440
UNITED STATES of America, Plaintiff-Appellee,v.Marco GARCIA-ECHAVERRIA, Defendant-Appellant.
No. 03-3655.
United States Court of Appeals, Sixth Circuit.
Argued April 23, 2004.
Decided and Filed July 1, 2004.
COPYRIGHT MATERIAL OMITTED Thomas O. Secor (argued and briefed), Assistant United States Attorney, Toledo, OH, for Appellee.
Jeffrey M. Gamso (argued and briefed), Gamso, Helmick & Hoolahan, Toledo, OH, for Appellant.
Before MERRITT and MOORE, Circuit Judges; DUGGAN, District Judge.*
OPINION
MOORE, Circuit Judge.
1
Defendant-Appellant, Marco Garcia-Echaverria ("Garcia-Echaverria"), appeals his conviction pursuant to a conditional guilty plea for "Unlawful Reentry by an Illegal Alien," in violation of 8 U.S.C. § 1326(b). On appeal, Garcia-Echaverria argues that his conviction for unlawful reentry should be vacated because (1) his initial removal was unlawful, because at the time he was removed, the Kentucky drug conviction for which he was removed was on direct appeal; (2) his initial removal violated due process because at the time he was removed, his petition for review of the Board of Immigration Appeals ("BIA") decision and his motion for a stay of removal were pending before the United States Court of Appeals for the Fifth Circuit, he had filed a petition for a writ of habeas corpus in the United States District Court for the Southern District of New York ("S.D.N.Y."), which the S.D.N.Y. had transferred to the United States District Court for the Western District of Louisiana ("W.D.La."), and the S.D.N.Y. had issued a stay of removal until the W.D.La. took further action; and (3) his indictment should have been dismissed due to violations of § 3161(b) of the Speedy Trial Act and Federal Rule of Criminal Procedure 5(a) because by the time he was indicted, he had been in detention for thirty-three days, and by the time he was first brought before a magistrate, he had been in detention for thirty-five days.
2
For the following reasons, we AFFIRM Garcia-Echaverria's conviction.
I. BACKGROUND
3
In this appeal, Garcia-Echaverria challenges his conviction for unlawful reentry. On October 3, 2001, a grand jury returned a one-count indictment, charging Garcia-Echaverria with being an alien found in the United States on or about August 31, 2001, after having been deported for committing an "aggravated felony" and without obtaining permission to reenter from the Attorney General, in violation of 8 U.S.C. § 1326(b). After his motions to dismiss the indictment were denied, Garcia-Echaverria pleaded guilty to the charge of unlawful reentry, and the district court sentenced him to thirty-seven months of imprisonment.
4
Several of Garcia-Echaverria's arguments on appeal attack the legality of his prior removal. Garcia-Echaverria, a native and citizen of Mexico, entered the United States on or about January 1, 1980, and became a lawful permanent resident on or about January 26, 1990. On January 6, 1997, Garcia-Echaverria was convicted by the State of Kentucky pursuant to a guilty plea, entered on December 16, 1996, to the charge of "Trafficking Marijuana over 8 ounces, less than 5 pounds," in violation of K.R.S. 218A.1421(3). Joint Appendix ("J.A.") at 125-26. On January 10, 1997, the Kentucky Circuit Court sentenced Garcia-Echaverria to five years of imprisonment for his Kentucky drug conviction. Several months later, on May 7, 1997, Garcia-Echaverria filed a motion in the Kentucky Circuit Court, requesting taped copies of the court proceeding leading up to his Kentucky drug conviction, and indicating that the tapes would be used to seek post-judgment relief. Then, on July 16, 1997, Garcia-Echaverria wrote a pro-se letter to the Kentucky Circuit Court, indicating that he wanted to appeal his conviction, or in the alternative, requesting shock probation. The Joint Appendix reflects that on March 29, 2000, the Kentucky Circuit Court entered an order overruling Garcia-Echaverria's "motion for appointment of counsel, motion for hearing and motion to set aside sentence."1 J.A. at 168. Subsequently, Garcia-Echaverria filed a motion to reconsider the March 29, 2000 order, which was captioned as a "`BELATED APPEAL RCr 11.42 MOTION TO VACATE, SE[T] ASIDE, CORRECT SENTENCE OR SET FOR NEW TRIAL AND APPEAL' `APPOINTMENT COUNSEL AND MOTION FOR HEARING.'" J.A. at 153. On April 18, 2000, the Kentucky Circuit Court overruled this motion to reconsider.
5
On May 30, 2000, Garcia-Echaverria filed a Notice of Appeal in the Kentucky Circuit Court, indicating that he sought to appeal the March 29, 2000 and April 18, 2000 orders. The Kentucky Court of Appeals's docket sheet also reflects that the appeal related to the March 29, 2000 and April 18, 2000 orders. The "General Case Information" section of the docket sheet, however, indicates that the document type is a "Matter of Right Appeal," and that the case type is a "Direct appeal-Criminal." J.A. at 114. On February 14, 2001, after Garcia-Echaverria had been removed, the Kentucky Court of Appeals dismissed the appeal upon its own motion. On August 14, 2002, the Clerk of the Court of Appeals for Kentucky wrote a letter to the U.S. Attorney's Office, expressing the opinion that the appeal docketed on May 30, 2000, "is a direct appeal from two judgments denying relief in a collateral attack on a judgment of conviction... not a direct appeal from a judgment of conviction." J.A. at 165.
6
On May 13, 1997, the Immigration and Naturalization Service ("INS") issued Garcia-Echaverria a Notice to Appear, charging that he was deportable due to his Kentucky drug conviction under two sections of the Immigration and Nationality Act ("INA") — § 237(a)(2)(A)(iii) (codified as 8 U.S.C. § 1227(a)(2)(A)(iii)) for being convicted of an "aggravated felony" and § 237(a)(2)(B)(i) (codified as 8 U.S.C. § 1227(a)(2)(B)(i)) for being convicted of controlled substance offense. On September 7, 1999, an Immigration Judge ("IJ") ordered Garcia-Echaverria removed from the United States. On July 20, 2000, the BIA dismissed Garcia-Echaverria's appeal, finding that a waiver of inadmissibility pursuant to § 212(c) of the INA (originally codified as 8 U.S.C. § 1182(c), but repealed by the Illegal Immigration Reform and Immigrant Responsibility Act ("IIRIRA"), 104 Pub. L. No. 104-208, § 304(b), 110 Stat. 3009 (1996)), was not available to him, and that he was statutorily ineligible for cancellation of removal pursuant to § 240A(a) of the INA (codified at 8 U.S.C. § 1229b).
7
Garcia-Echaverria was removed on either August 8 or 9, 2000, after he had made filings in the Fifth Circuit and the S.D.N.Y. On August 7, 2000, Garcia-Echaverria filed in the Fifth Circuit a petition for review of the BIA's decision and a motion for a stay of removal, which were docketed on August 10, 2000. After Garcia-Echaverria was removed, the Fifth Circuit declared moot the motion to stay removal and dismissed for lack of jurisdiction the petition for review. While he was held in Oakdale, Louisiana awaiting removal, Garcia-Echaverria sent a petition for a writ of habeas corpus to the S.D.N.Y.2 On August 8, 2000, the S.D.N.Y. ordered the habeas petition to be filed and docketed, transferred the petition to the W.D. La., and stayed removal pending further action by the W.D. La. However, neither Garcia-Echaverria's habeas petition nor the S.D.N.Y.'s orders transferring the petition and granting the stay were entered on the S.D.N.Y.'s docket sheet until August 9, 2000. The W.D. La. did not receive the transferred habeas petition until August 14, 2000, and dismissed the petition for non-payment of filing fees on November 1, 2000.
8
Garcia-Echaverria was found in the United States on August 31, 2001, when he was stopped for speeding by officers of the Ohio Highway Patrol at Fremont, Ohio. Officers of the Highway Patrol notified the INS, and Garcia-Echaverria was placed in Sandusky County jail pursuant to an INS detainer. On September 4, 2001, INS officer Matthew Hamulak interviewed Garcia-Echaverria after administering Miranda warnings. During this interview, Garcia-Echaverria admitted that he had previously been removed and that he had reentered without obtaining permission from the Attorney General. Garcia-Echaverria also consented to having his fingerprints taken at that time. On September 6, 2001, Hamulak requested from INS headquarters the records pertaining to Garcia-Echaverria's prior removal, which he received on September 22, 2001. On September 14, 2001, INS officer Neal Baker sent Garcia-Echaverria an "INS DETAINEE RESPONSE SHEET," informing Garcia-Echaverria that he would not receive an IJ hearing, that his prior order of deportation had been reinstated, and that he was "awaiting prosecution for Re-Entry after Deportation. No further contact will be made with you by the Detention & Deportation Office until that is resolved." J.A. at 89.
9
The district court had jurisdiction over Garcia-Echaverria's criminal prosecution pursuant to 18 U.S.C. § 3231 because Garcia-Echaverria was indicted for an offense against the laws of the United States. This court has jurisdiction over the appeal pursuant to 28 U.S.C. § 1291 and 18 U.S.C. § 3742.
II. ANALYSIS
A. Standard of Review
10
This court reviews de novo the denial of a motion to dismiss an indictment and a collateral attack upon a prior removal order underlying a conviction for unlawful reentry. United States v. Martinez-Rocha, 337 F.3d 566, 568-69 (6th Cir.2003) (discussing the standard of review for a collateral challenge under 8 U.S.C. § 1326(d)). This court also reviews de novo the district court's application of the Speedy Trial Act and of the Federal Rules of Criminal Procedure. United States v. Burke, 345 F.3d 416, 421 (6th Cir.2003), cert. denied, ___ U.S. ___, 124 S.Ct. 1731, 158 L.Ed.2d 412 (2004); United States v. Salgado, 250 F.3d 438, 453 (6th Cir.), cert. denied, 534 U.S. 916, 122 S.Ct. 263, 151 L.Ed.2d 192 (2001).
B. Finality of Kentucky Drug Conviction
11
First, Garcia-Echaverria argues that his conviction for unlawful reentry should be vacated because he was removed while his Kentucky drug conviction was on direct appeal. Garcia-Echaverria asserts that the Kentucky Court of Appeals's docket sheet reflects that a direct appeal was pending at the time he was removed, and that the district court improperly looked behind these judicial records to determine the finality of his conviction.
12
To support an order of deportation, a conviction must be final. Pino v. Landon, 349 U.S. 901, 75 S.Ct. 576, 99 L.Ed. 1239 (1955). Finality requires the defendant to have exhausted or waived his rights to direct appeal. Aguilera-Enriquez v. INS, 516 F.2d 565, 570-71 (6th Cir.1975), cert. denied, 423 U.S. 1050, 96 S.Ct. 776, 46 L.Ed.2d 638 (1976). The defendant's exercise of post-conviction remedies does not, however, undermine the finality of his conviction. Id. The finality of a defendant's conviction must be determined from court records. Id. at 570.
13
Contrary to Garcia-Echaverria's assertions, Aguilera-Enriquez does not restrict courts to an examination of docket sheets when determining the finality of a conviction. Rather Aguilera-Enriquez provides, "The Immigration authorities must look to judicial records to determine whether a person has been `convicted' of a crime. They may not determine on their own an alien's guilt or innocence." Id. Aguilera-Enriquez prohibits immigration authorities from second guessing, in the context of deportation proceedings, the ascertainment of an alien's guilt, but it does not prohibit the district court from questioning, when determining finality, the designation given to a particular action on a state court's docket sheet.
14
In this case, the district court did not contravene the limitations imposed by Aguilera-Enriquez by examining various records from the Kentucky Circuit Court and the Kentucky Court of Appeals. The district court determined the finality of Garcia-Echaverria's conviction from court records and did not second guess the Kentucky Circuit Court's ascertainment of guilt. According to Kentucky Rule of Criminal Procedure ("RCr") 11.42, a motion to vacate, set aside, or correct sentence is a collateral attack and need normally to be filed within three years of final judgment. At the time Garcia-Echaverria was convicted, a direct appeal from a criminal conviction was required to have been filed within ten days of final judgment. Commonwealth v. Opell, 3 S.W.3d 747, 750 (Ky.Ct.App.1999) (citing old RCr 12.04).3 The Kentucky Circuit Court's March 29, 2000 order indicates that Garcia-Echaverria's initial motion was to set aside his sentence, the Kentucky Circuit Court's April 18, 2000 order disposes of a motion to reconsider that initial motion and cites to RCr 11.42,4 and Garcia-Echaverria's time for filing a direct appeal had expired in 1997. Therefore, the district court did not err by determining that the motions overruled on March 29, 2000 and April 18, 2000 were collateral attacks upon Garcia-Echaverria's conviction. On May 30, 2000, Garcia-Echaverria filed a Notice of Appeal in the Kentucky Circuit Court, specifying that he sought to appeal the March 29, 2000 and April 18, 2000 orders. The Notice of Appeal does not indicate that Garcia-Echaverria sought to appeal his judgment of conviction entered on January 6, 1997 or his sentence imposed on January 10, 1997. Additionally, the Kentucky Court of Appeals's docket sheet indicates that the appeal pertained to the March 29, 2000 and April 18, 2000 orders.
15
Garcia-Echaverria bases his entire argument that his Kentucky drug conviction was not final upon the fact that the "General Case Information" section of the Kentucky Court of Appeals's docket sheet refers to a "Matter of Right Appeal" and a "Direct appeal-Criminal." Aguilera-Enriquez does not support Garcia-Echaverria's argument that a docket sheet notation referring to a direct appeal requires the conclusion that his conviction was not final for removal purposes. The Kentucky court records as a whole indicate that the appeal pending when Garcia-Echaverria was removed pertained to collateral attacks upon his conviction. Therefore, Garcia-Echaverria's conviction was final for removal purposes.
C. Due Process in Prior Removal
16
Next, Garcia-Echaverria argues that his conviction for unlawful reentry must be vacated because he was removed in violation of due process, as court proceedings pertaining to his removal were pending and an order staying his removal had been issued. In response, the government argues that Garcia-Echaverria received due process, in that he received a proper hearing before an IJ and an appeal to the BIA. The government points out that the Antiterrorism and Effective Death Penalty Act of 1996 ("AEDPA") and the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 ("IIRIRA") strip courts of jurisdiction to review orders of deportation/removal5 issued to aliens who have committed certain criminal offenses, and that the IIRIRA stripped courts of jurisdiction over claims arising from decisions by the Attorney General to execute removal orders. The government also recognizes, however, that the AEDPA and the IIRIRA did not strip courts of jurisdiction over habeas corpus petitions filed pursuant to 28 U.S.C. § 2241. The government argues that removing Garcia-Echaverria while his petition for review was pending before the Fifth Circuit did not deny him due process, as the Fifth Circuit would not have had jurisdiction over that petition. The government also contends that removing Garcia-Echaverria after the S.D.N.Y. had transferred Garcia-Echaverria's § 2241 petition to the W.D. La. and issued a stay of removal did not deny him due process, because those orders had not been entered into the court's docket at the time Garcia-Echaverria was removed, and therefore, were not yet effective.
17
1. Petition for Review and Motion for a Stay Pending Before the United States Court of Appeals for the Fifth Circuit
18
The Fifth Circuit's docket sheet indicates that Garcia-Echaverria's petition for review and motion for a stay of deportation were docketed on August 10, 2000. The Fifth Circuit's docket sheet further indicates that on August 11, 2000, the Fifth Circuit declared moot Garcia-Echaverria's motion for a stay (as Garcia-Echaverria had been removed on August 8 or 9, 2000) and on September 12, 2000, the Fifth Circuit granted the Attorney General's motion to dismiss for lack of jurisdiction Garcia-Echaverria's petition for review.
19
Although we do not have the benefit of the Fifth Circuit's analysis,6 we conclude that Garcia-Echaverria's removal after he had filed a petition for review but before the court ruled on that petition did not deprive Garcia-Echaverria of due process. Under the permanent provisions of the IIRIRA, serving a petition for review on an officer or employee of the INS does not give rise to an automatic stay of removal, although the court may issue a stay. 8 U.S.C. § 1252(b)(3)(B); see also Bejjani v. INS, 271 F.3d 670, 688-89 (6th Cir.2001). Moreover, under the permanent provisions of the IIRIRA, an alien's removal while his petition for review is pending neither deprives the court of appeals of jurisdiction over that petition nor does it necessarily render moot the claims in that petition. Bejjani, 271 F.3d at 688-89; see also Amanfi v. Ashcroft, 328 F.3d 719, 725 n. 1 (3d Cir.2003).
20
In this case, Garcia-Echaverria was not removed in violation of an effective stay of removal issued by the Fifth Circuit, as Garcia-Echaverria's petition for review did not give rise to an automatic stay and the Fifth Circuit's docket sheet reflects that Garcia-Echaverria was removed before the court ruled upon his motion for a stay. It is true that Garcia-Echaverria's removal made it more difficult for him to pursue his petition for review before the Fifth Circuit; we have relied upon this fact when issuing stays of deportation/removal for aliens with petitions for review pending before this circuit. Bejjani, 271 F.3d at 688-89. However, Garcia-Echaverria's removal did not make it impossible for him to pursue his petition for review, for his removal did not deprive the Fifth Circuit of jurisdiction over that petition or render moot the claims in that petition. Id.
21
Moreover, when the Fifth Circuit later ruled on Garcia-Echaverria's petition for review, it had no choice but to dismiss that petition for lack of jurisdiction. Section 440(a)7 of the AEDPA stripped courts of jurisdiction to review final orders of deportation against aliens who are subject to deportation for having committed certain criminal offenses, including "aggravated felonies."8 AEDPA, Pub. L. No. 104-132, § 440(a), 110 Stat. 1214 (1996); Figueroa-Rubio v. INS, 108 F.3d 110, 111 (6th Cir.1997). The AEDPA was enacted on April 24, 1996, and the jurisdiction-stripping provisions became effective on that date. Figueroa-Rubio, 108 F.3d at 111-12. The AEDPA did not, however, strip courts of jurisdiction over habeas corpus petitions filed pursuant to 28 U.S.C. § 2241. INS v. St. Cyr, 533 U.S. 289, 314, 121 S.Ct. 2271, 150 L.Ed.2d 347 (2001). Section 306(a)(2) of the IIRIRA9 further stripped courts of jurisdiction to review final orders of removal against aliens who are subject to removal for having committed an even greater number of criminal offenses, still including "aggravated felonies." IIRIRA, Pub.L. No. 104-208, § 306(a)(2), 110 Stat. 3009 (1996). St. Cyr, 533 U.S. at 297, 121 S.Ct. 2271; Calcano-Martinez v. INS, 533 U.S. 348, 351-52, 121 S.Ct. 2268, 150 L.Ed.2d 392 (2001). The IIRIRA was enacted on September 30, 1996, and the pertinent jurisdiction-stripping provision, which was part of the permanent rules, became effective on April 1, 1997. The IIRIRA did not, however, strip courts of jurisdiction over habeas petitions filed pursuant to 28 U.S.C. § 2241. St. Cyr, 533 U.S. at 314, 121 S.Ct. 2271.
22
Garcia-Echaverria's removal proceedings commenced no earlier than May 13, 1997, which was after the enactment of the AEDPA and after the permanent provisions of the IIRIRA had become effective. Therefore, at the time Garcia-Echaverria filed his petition for review in the Fifth Circuit, courts of appeals had been stripped of jurisdiction to review final orders of removal issued against aliens who are removable for having committed an "aggravated felony."10 The Fifth Circuit, however, retained jurisdiction to determine its jurisdiction, including jurisdiction to determine the existence of the jurisdictional fact of whether Garcia-Echaverria had been convicted of a removable offense. Flores-Garza v. INS, 328 F.3d 797, 802-03 (5th Cir.2003).11 The Fifth Circuit had no choice but to conclude that Garcia-Echaverria had been convicted of a removable offense, and thus that it lacked jurisdiction over the petition for review. As discussed in Garcia-Echaverria v. United States, No. 03-3285, the Fifth Circuit would have inevitably found that Garcia-Echaverria had been convicted of an "aggravated felony," depriving it of jurisdiction over Garcia-Echaverria's petition for review.
23
2. Stay Issued by the United States District Court for the Southern District of New York
24
Despite the passage of the AEDPA and the IIRIRA, district courts retain jurisdiction over habeas corpus petitions filed pursuant to 28 U.S.C. § 2241. Absent special circumstances not present here, a petition for a writ of habeas corpus is properly filed only in a court that has personal jurisdiction over the alien's immediate custodian. Roman v. Ashcroft, 340 F.3d 314, 319-21 (6th Cir.2003); Charles v. Chandler, 180 F.3d 753, 756 (6th Cir.1999).12 Garcia-Echaverria was being held in Oakdale, Louisiana; therefore, his habeas petition was not properly filed in the S.D.N.Y. On August 8, 2000, the S.D.N.Y. transferred the petition to the W.D. La. and stayed Garcia-Echaverria's removal pending further action by the W.D. La. However, the S.D.N.Y. did not enter these actions into its docket until August 9, 2000. The government argues that Federal Rule of Civil Procedure 58 provides that a judgment is not effective until it is entered into the court's docket, and therefore, that the INS did not remove Garcia-Echaverria in violation of an effective stay.
25
The S.D.N.Y.'s docket sheet indicates that Garcia-Echaverria's petition for habeas corpus, the S.D.N.Y.'s order transferring that habeas corpus petition to the W.D. La., and the S.D.N.Y.'s order granting a stay of removal were not docketed until August 9, 2000. The fact that the stay had not been entered into the S.D.N.Y.'s docket until after Garcia-Echaverria was removed on August 8 or 9, 2000, alone, is not dispositive in this case. It is the practice in this circuit and at least at one point was the practice in the United States Court of Appeals for the Second Circuit for the clerk's office to provide telephonic notice to the government when a stay has been issued in order to avoid the situation that occurred in this case. See, e.g., Edwards v. INS, 59 F.3d 5, 7 n. 3 (2d Cir.1995). Moreover, the Second Circuit has "rejected the idea that an undocketed order [is] a nullity," citing cases holding that undocketed oral and written orders are binding on the parties so long as the parties have actual notice of the orders. Silivanch v. Celebrity Cruises, Inc., 333 F.3d 355, 365 & n. 1 (2d Cir.2003), cert. denied, 540 U.S. 1105, 124 S.Ct. 1047, 157 L.Ed.2d 890 (2004). In this case, however, there is no evidence that the INS had actual or constructive notice at the time it removed Garcia-Echaverria that the S.D.N.Y. had issued a stay of removal. We conclude that the INS was not bound then by an order of which it had no actual or constructive notice; therefore, Garcia-Echaverria was not removed in violation of an effective stay.
26
3. Petition for Habeas Corpus Pending Before the United States District Court for the Western District of Louisiana
27
Garcia-Echaverria's removal after his petition for habeas corpus was transferred to the W.D. La. but before that court ruled on that petition did not deprive Garcia-Echaverria of due process. Under the permanent provisions of the IIRIRA, an alien's deportation while his petition for habeas corpus pursuant to § 2241 is pending neither deprives the court of jurisdiction over that petition nor does it necessarily render moot the claims in that petition. Zalawadia v. Ashcroft, 371 F.3d 292, 296-98 (5th Cir.2004). It is true that Garcia-Echaverria's removal made it more difficult for him to pursue his petition for habeas corpus before the W.D. La., but it did not make it impossible for him to pursue that petition. We recognize that the result of our due process analysis is harsh, but it comports with the IIRIRA's clear goal of speeding up the removal process. Aliens may be able to mitigate the difficulties posed by removal prior to the conclusion of their court proceedings by securing adequate representation.
28
D. Speedy Trial Act and Federal Rule of Criminal Procedure 5(a)
29
Finally, Garcia-Echaverria argues that his indictment should have been dismissed due to a violation of § 3161(b) of the Speedy Trial Act13 and a violation of Fed.R.Crim.P. 5(a),14 because he was not indicted or initially brought before a magistrate until more than thirty days after his civil detention had ripened into a criminal arrest. To support his contention that he was being held for criminal prosecution, Garcia-Echaverria points out that on September 4, 2001, an INS agent "took [Garcia-Echaverria's] fingerprints, and took a statement from [Garcia-Echaverria] after providing him with Miranda warnings," Appellant's Br. at 16, that on September 14, 2001, an INS agent informed Garcia-Echaverria that he was being held for criminal prosecution, and that the INS did not immediately deport him.
30
Several circuits have held that § 3161(b) does not generally apply to aliens held in civil detention, although many circuits have indicated an exception to this general rule exists when there is evidence of collusion between immigration and criminal prosecution authorities demonstrating that the alien's civil detention is a mere ruse to avoid application of the Speedy Trial Act. See, e.g., United States v. Dyer, 325 F.3d 464, 468-70 (3d Cir.), cert. denied, 540 U.S. 977, 124 S.Ct. 457, 157 L.Ed.2d 330 (2003) (explaining the "ruse" exception, but declining to adopt it because the defendant would not have qualified for the exception); United States v. Drummond, 240 F.3d 1333, 1335-36 (11th Cir.2001); United States v. Garcia-Martinez, 254 F.3d 16, 19-20 (1st Cir.2001); United States v. De La Pena-Juarez, 214 F.3d 594, 597-99 (5th Cir.), cert. denied, 531 U.S. 983, 121 S.Ct. 437, 148 L.Ed.2d 443 (2000); United States v. Grajales-Montoya, 117 F.3d 356, 366-67 (8th Cir.) (explaining the "ruse" exception, but declining to adopt it because the defendant would not have qualified for the exception), cert. denied, 522 U.S. 1007, 118 S.Ct. 586, 139 L.Ed.2d 423 (1997); United States v. Pena-Carrillo, 46 F.3d 879, 883 (9th Cir.), cert. denied, 514 U.S. 1122, 115 S.Ct. 1990, 131 L.Ed.2d 876 (1995). "Under th[is] ruse exception, a civil detention triggers the Speedy Trial Act's time limit when federal criminal officials collude with civil authorities to detain an individual pending criminal charges, such that the primary or exclusive purpose of civil detention is to hold the individual for future prosecution.... [T]he Speedy Trial Act's time limit is not triggered by the fact that the INS is conducting a reasonable investigation in order to decide whether the reentrant should be prosecuted or deported without prosecution." Dyer, 325 F.3d at 468-69.
31
Similarly, several circuits have held that Fed.R.Crim.P. 5(a) does not generally apply to aliens held in civil detention, absent evidence of collusion between immigration and prosecution authorities. Id. at 470; United States v. Encarnacion, 239 F.3d 395, 398-99 (1st Cir.), cert. denied, 532 U.S. 1073, 121 S.Ct. 2233, 150 L.Ed.2d 223 (2001); United States v. Perez-Perez, 337 F.3d 990, 996-97 (8th Cir.), cert. denied, 540 U.S. 927, 124 S.Ct. 336, 157 L.Ed.2d 230 (2003); United States v. Noel, 231 F.3d 833, 837 (11th Cir.2000), cert. denied, 531 U.S. 1200, 121 S.Ct. 1208, 149 L.Ed.2d 121 (2001).
32
On August 31, 2001, Garcia-Echaverria was placed in Sandusky County Jail pursuant to an INS detainer. On September 4, 2001, INS Officer Hamulak interviewed Garcia-Echaverria regarding his prior removal and subsequent reentry. For purposes of this appeal, we will assume that § 3161(b) of the Speedy Trial Act applies to persons held in detention and awaiting removal, when there is evidence of collusion between deportation and prosecution authorities.15 The events that Garcia-Echaverria points to as evidence that he was being held for criminal prosecution — giving him Miranda warnings, taking his fingerprints, and sending him a fax informing him that he was being held for prosecution — all occurred on or after September 4, 2001. Assuming without deciding that these events demonstrate collusion, Garcia-Echaverria was indicted on October 3, 2001, within thirty days of September 4, 2001. Any evidence of collusion does not retroactively convert Garcia-Echaverria's detention prior to September 4, 2001 into a criminal arrest.16 Nor does the fact that the INS failed to remove Garcia-Echaverria on the same day that he was apprehended demonstrate that his detention prior to September 4, 2001 was a criminal arrest. Therefore, § 3161(b) of the Speedy Trial Act was not violated, and the district court properly denied Garcia-Echaverria's motion to dismiss his indictment on that basis.
33
While a finding of collusion between the prosecution and deportation authorities would indicate that Fed.R.Crim.P. 5(a) was violated, Garcia-Echaverria would not be entitled to have his indictment dismissed on that basis.17 Typically, the appropriate remedy for a violation of Fed.R.Crim.P. 5(a) is the suppression of involuntary statements and the fruits of such statements. Mallory v. United States, 354 U.S. 449, 453, 77 S.Ct. 1356, 1 L.Ed.2d 1479 (1957); McNabb v. United States, 318 U.S. 332, 341-47, 63 S.Ct. 608, 87 L.Ed. 819 (1943); Dyer, 325 F.3d at 470 n. 2; United States v. Barlow, 693 F.2d 954, 958 (6th Cir.1982), cert. denied, 461 U.S. 945, 103 S.Ct. 2124, 77 L.Ed.2d 1304 (1983); 1 Charles Alan Wright, Federal Practice and Procedure: Criminal §§ 72-73, 75 (3d ed.1999). Garcia-Echaverria has not indicated what evidence should be suppressed as the result of any violation of Fed.R.Crim.P. 5(a). While suppression of evidence in some cases may ultimately lead to the reversal of a conviction, see, e.g., McNabb, 318 U.S. at 347, 63 S.Ct. 608, Garcia-Echaverria could have been convicted of unlawful reentry absent any statements that he made while he was unlawfully detained. Therefore, even if we were to assume that Fed.R.Crim.P. 5(a) was violated, the district court properly denied Garcia-Echaverria's motion to dismiss his indictment on that basis.
III. CONCLUSION
34
For the foregoing reasons, we AFFIRM Garcia-Echaverria's conviction.
Notes:
*
The Honorable Patrick J. Duggan, United States District Judge for the Eastern District of Michigan, sitting by designation
1
This motion does not appear in the Joint Appendix
2
According to the S.D.N.Y.'s order transferring Garcia-Echaverria's habeas petition and granting a stay of removal, the S.D.N.Y.'s pro-se office received the petition on July 12, 2000
3
"RCr 12.04 was amended effective January 1, 1999, to allow 30 days for taking an appeal."Commonwealth v. Opell, 3 S.W.3d 747, 750 n. 2 (Ky.Ct.App.1999).
4
That Garcia-Echaverria may have requested a belated appeal in these motions does not affect the finality of his conviction
5
The IIRIRA adopted "the term `removal,' which essentially eliminated a distinction that formerly existed between `deportation' proceedings and `exclusion proceedings.' Thus, a determination whether an alien is `inadmissible' (i.e., cannot, or did not, enter the country lawfully), or `deportable' (i.e., entered the country lawfully but is no longer entitled to stay), would be determined through `removal' proceedings."Balogun v. U.S. Att'y Gen., 304 F.3d 1303, 1306-07 (11th Cir.2002) (citations omitted).
6
Nothing in the Joint Appendix indicates the basis for the Fifth Circuit's dismissal for lack of jurisdiction of Garcia-Echaverria's petition for review. We have obtained the relevant order from the Fifth Circuit clerk's office, but the order does not state the court's reasoning
7
Section 440(a) of the AEDPA provided: "Any final order of deportation against an alien who is deportable by reason of having committed a criminal offense covered in section 241(a)(2)(A)(iii), (B), (C), or (D), or any offense covered by section 241(a)(2)(A)(ii) for which both predicate offenses are covered by section 241(a)(2)(A)(i), shall not be subject to review by any court." AEDPA, Pub. L. No. 104-132, § 440(a), 110 Stat. 1214 (1996)
8
Prior to the enactment of the AEDPA and presently, the INA has included within the definition of "aggravated felony," "illicit trafficking in a controlled substance (as defined in section 102 of the Controlled Substances Act [21 USCS § 802]), including a drug trafficking crime (as defined in section 924(c) of title 18, United States Code)." 8 U.S.C. § 1101(a)(43)(1995)
9
Section 306(a)(2) of the IIRIRA provides: "Notwithstanding any other provision of law, no court shall have jurisdiction to review any final order of removal against an alien who is removable by reason of having committed a criminal offense covered in section 212(a)(2) or 237(a)(2)(A)(iii), (B), (C), or (D), or any offense covered by section 237(a)(2)(A)(ii)." IIRIRA, Pub. L. No. 104-208, § 306(a)(2), 110 Stat. 3009 (1996). With some exceptions not relevant here, this jurisdiction-stripping provision became effective on April 1, 1997, and applied to removal proceedings commencing on or after that dateId. at § 309(a). This jurisdiction-stripping provision applied to Garcia-Echaverria's removal proceedings. Unlike some provisions of the IIRIRA, the jurisdiction-stripping provisions did not raise any retroactivity concerns. Figueroa-Rubio v. INS, 108 F.3d 110, 112 (6th Cir.1997) (noting jurisdiction-stripping statutes do not affect substantive rights).
10
The BIA decision indicates that removal proceedings were not "commenced" against Garcia-Echaverria until August 11, 1999, after the permanent provisions of the IIRIRA had become effective on April 1, 1997. It is true that removal proceedings are not "commenced" until a charging document is filed with the Immigration CourtAsad v. Reno, 242 F.3d 702, 705 (6th Cir.2001). There is, however, nothing in the record to support the BIA's finding that charging documents were not filed in the Immigration Court until August 11, 1999. In any event, Garcia-Echaverria was first issued a Notice to Appear on May 13, 1997, and Garcia-Echaverria conceded in his § 2241 petition that his immigration proceedings were not commenced prior to April 1, 1997; therefore, his removal proceedings are covered by the permanent provisions of the IIRIRA.
11
Garcia-Echaverria was charged with being removable on two bases — for being convicted of an "aggravated felony" and for being convicted of a controlled substance offense. Garcia-Echaverria has only contested the BIA's determination that his Kentucky drug conviction constituted an "aggravated felony." Because the BIA also determined that Garcia-Echaverria was removable based upon his conviction of a controlled substance offense, the Fifth Circuit would have held that it lacked jurisdiction and dismissed the appeal, without determining whether Garcia-Echaverria's Kentucky drug conviction constituted an "aggravated felony."Flores-Garza v. INS, 328 F.3d 797, 802-03 (5th Cir.2003).
12
The Second Circuit has not yet expressly decided this issue in a published opinionSee Henderson v. INS, 157 F.3d 106, 122-29 (2d Cir.1998), cert. denied, 526 U.S. 1004, 119 S.Ct. 1141, 143 L.Ed.2d 209 (1999) (holding that a habeas corpus petition is properly filed in a district court that has personal jurisdiction over the petitioner's immediate custodian, but declining to answer the question of whether an alien's habeas corpus petition is also properly filed in a district court that has personal jurisdiction over the Attorney General).
13
18 U.S.C. § 3161(b) requires:
Any information or indictment charging an individual with the commission of an offense shall be filed within thirty days from the date on which such individual was arrested or served with a summons in connection with such charges. If an individual has been charged with a felony in a district in which no grand jury has been in session during such thirty-day period, the period of time for filing of the indictment shall be extended an additional thirty days.
The appropriate remedy for a violation of § 3161(b) is dismissal of the indictment. 18 U.S.C. § 3162.
14
Fed.R.Crim.P. 5(a) provides:
(1) Appearance Upon an Arrest.
(A) A person making an arrest within the United States must take the defendant without unnecessary delay before a magistrate judge, or before a state or local judicial officer as Rule 5(c) provides, unless a statute provides otherwise.
(B) A person making an arrest outside the United States must take the defendant without unnecessary delay before a magistrate judge, unless a statute provides otherwise.
15
Although inUnited States v. Salgado, 250 F.3d 438, 454 (6th Cir.), cert. denied, 534 U.S. 916, 122 S.Ct. 263, 151 L.Ed.2d 192 (2001), we held that the thirty-day rule contained in § 3161(b) does not begin to run until a charging document has been filed, we do not find the absence of a charging document dispositive in this case. We note that it may be appropriate to create an exception to Salgado's holding — that the thirty-day rule does not begin to run until a charging document has been filed — for situations where there is evidence that collusion between deportation and prosecution authorities led to a delay in filing formal charges and a simultaneous period of prolonged detention. See, e.g., United States v. Drummond, 240 F.3d 1333, 1335-36 (11th Cir.2001). We need not announce such an exception in this case, as the delay was less than thirty days.
16
Garcia-Echaverria was initially placed in detention on Friday, August 31, 2001, and was first interviewed by Hamulak on Tuesday, September 4, 2001, which due to the intervening Labor Day weekend was the first workday following Garcia-Echaverria's arrest
17
On appeal, Garcia-Echaverria has not explicitly argued that his detention was unlawful due to the fact that he was arrested without a warrant and not given a probable-cause determination within forty-eight hours as required byCounty of Riverside v. McLaughlin, 500 U.S. 44, 56-57, 111 S.Ct. 1661, 114 L.Ed.2d 49 (1991). It is not entirely clear to what extent the McLaughlin rule and Fed.R.Crim.P. 5(a) overlap. In this case, however, any violation of the McLaughlin rule would not require dismissal of the indictment. United States v. Fullerton, 187 F.3d 587, 590-92 (6th Cir.1999) (suggesting that the proper remedy is either application of the exclusionary rule or a Bivens action), cert. denied, 528 U.S. 1127, 120 S.Ct. 961, 145 L.Ed.2d 834 (2000).
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Matter of Mizell v Dear (2017 NY Slip Op 08271)
Matter of Mizell v Dear
2017 NY Slip Op 08271
Decided on November 22, 2017
Appellate Division, Second Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided on November 22, 2017
SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Second Judicial Department
CHERYL E. CHAMBERS, J.P.
JEFFREY A. COHEN
BETSY BARROS
LINDA CHRISTOPHER, JJ.
2017-07690
[*1]In the Matter of Sheryll Mizell, petitioner,
vNoach Dear, etc., respondent. Sheryll Mizell, Brooklyn, NY, petitioner pro se.
Eric T. Schneiderman, Attorney General, New York, NY (Elizabeth A. Figueira of counsel), for respondent.
DECISION & JUDGMENT
Proceeding pursuant to CPLR article 78 in the nature of prohibition, inter alia, to prohibit the respondent, Noach Dear, a Justice of the Supreme Court, Kings County, from enforcing two orders dated September 21, 2016, and June 5, 2017, respectively, in an action entitled U.S. Bank, N.A. v Mizell , pending in the Supreme Court, Kings County, under Index No. 508980/15.
ADJUDGED that the petition is denied and the proceeding is dismissed on the merits, without costs or disbursements.
"Because of its extraordinary nature, prohibition is available only where there is a clear legal right, and then only when a court—in cases where judicial authority is challenged—acts or threatens to act either without jurisdiction or in excess of its authorized powers" (Matter of Holtzman v Goldman , 71 NY2d 564, 569; see Matter of Rush v Mordue , 68 NY2d 348, 352).
The petitioner has failed to establish a clear legal right to the relief sought.
CHAMBERS, J.P., COHEN, BARROS and CHRISTOPHER, JJ., concur.
ENTER:
Aprilanne Agostino
Clerk of the Court
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993 F.2d 228
25 Fed.R.Serv.3d 1460
NOTICE: Fourth Circuit I.O.P. 36.6 states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit.Glen A. JUNTTI; Barbara J. Juntti, and on behalf of thosesimilarly situated, Plaintiffs-Appellants,and Robert M. MARTIN; Cecelia A. Martin; David F. Apple,M.D.; Professional Corporation Pension Plan, Plaintiffs,v.PRUDENTIAL-BACHE SECURITIES, INC.; John Rissanen; TerrillA. Turner; Robert E. Johnson, Jr.; J & TInvestors, Incorporated; John C. Does,1-100, Defendants-Appellees.
No. 92-2066.
United States Court of Appeals,Fourth Circuit.
Argued: March 4, 1993Decided: May 3, 1993
Appeal from the United States District Court for the Western District of North Carolina, at Charlotte. Graham C. Mullen, District Judge. (CA-90-203-C-C-MU)
ARGUED: Patrick Edward Cafferty, Miller, Faucher, Chertow, Cafferty & Wexler, Chicago, Illinois, for Appellants.
David C. Wright, III, Robinson, Bradshaw & Hinson, P.A., Charlotte, North Carolina, for Appellees.
ON BRIEF: Marvin A. Miller, Miller, Faucher, Chertow, Cafferty & Wexler, Chicago, Illinois; Marvin Schiller, Law Offices of Marvin Schiller, Raleigh, North Carolina, for Appellants.
John R. Wester, D. Blaine Saunders, Robinson, Bradshaw & Hinson, P.A., Charlotte, North Carolina; C. Howard Nye, Nye, Phears & Davis, Durham, North Carolina, for Appellees.
W.D.N.C.
Affirmed.
Before WIDENER and LUTTIG, Circuit Judges, and MACKENZIE, Senior United States District Judge for the Eastern District of Virginia, sitting by designation.
PER CURIAM:
OPINION
1
In connection with an abortive tender offer, a number of investors brought suit alleging fraud under the federal securities law and other derivative causes of action against defendants Johnson and Turner, the putative acquirers of the International Broadcasting Corporation of America ("IBCA"), their investment vehicle J & T Investors, a brokerage company, and several of its employees, including broker Rissanen. In short, the goal of defendants' conduct, according to the plaintiffs, was "to raise the value of IBCA shares and then to sell their shares at an inappropriate profit," J.A. at 120 (Ct. p 20), in violation of Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b) and Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-5.
2
The district court dismissed plaintiffs' first complaint without prejudice, inter alia for failing to plead fraud with particularity pursuant to Fed. R. Civ. P. 9(b). Plaintiffs then filed a second amended complaint, which the district court again dismissed for failing to plead fraud with particularity, concluding that "[a]lthough these allegations may at first blush have the appearance of specificity, in substance they are conclusory and fail to provide an adequate factual basis for an inference of fraud and scienter." J.A. at 111. While plaintiffs allege a price increase and a host of activities by defendant, they offer no basis for believing that those activities constituted the sophisticated fraud they allege.
3
Perhaps best illustrative of the inadequacy of the complaint is the contention at its core:
4
Prudential-Bache and Rissanen were aware of material non-public information ("inside information") concerning the timing of proposed offers by J & T to purchase IBCA stock at certain prices. On or about November 22, 1988, Johnson privately disclosed to Rissanen [in a telephone conversation] J & T's intentions regarding IBCA (i.e., to drive the price of the stock higher), including J & T's planned offers to IBCA and the timetable for the proposed offers.
5
Id. at 128 (Ct. p 45). Plaintiffs offer no facts to establish why they believe the parties to the telephone conversation discussed J & T's intentions. Indeed, plaintiffs offer no facts indicating even why they believed the alleged telephone call ever took place. Their reliance on testimony presented in International Broadcasting Corp. v. Turner, No. 4-89-541 (D. Minn. Feb. 22, 1991), a case that arose out of the same operative facts, is without basis. That testimony suggested only that Rissanen advised two fellow employees of Johnson's interest in IBCA; it does not substantiate plaintiffs' claim as to when or how Rissanen learned of J & T's interest. And it certainly offers no support for the additional, and otherwise unsupported, contention that "Rissanen contacted hundreds of people and advised them to purchase IBCA stock on the basis of inside information of a pending take over [sic]," id. (Ct. p 47).
6
Further indicative of the insufficiently particular character of the complaint is its impermissible aggregation of defendants without specifically alleging which defendant was responsible for which act. See DiVittorio v. Equidyne Extractive Indus., Inc., 822 F.2d 1242, 1247 (2d Cir. 1987) ("Where multiple defendants are asked to respond to allegations of fraud, the complaint should inform each defendant of the nature of his alleged participation in the fraud."). Indeed, in Count I of the complaint (pp 57-70), the count alleging a violation of section 10(b), each paragraph-except for the first two, which respectively incorporate the preceding paragraphs by reference and explain the requirements of section 10(b)-refers only to the actions of the "defendants" generally, not to actions of specific defendants. E.g., J.A. at 131 (Ct. p 59) ("Defendants, together with agents acting on their behalf or at their direction, engaged in a scheme, practice or course of business to manipulate the market for IBCA stock....").
7
Such pleading practice is insufficient either to provide a defendant with fair notice of the claim against him or to protect a defendant from harm to his reputation or goodwill. It is not sufficient to argue that "[e]ach count ... incorporates the factual allegations of the Complaint, which specify each defendant's individual conduct." Reply Br. at 13. The burden rests on plaintiffs to "enable a particular defendant to determine with what it is charged." Hoover v. Langston Equip. Assocs., Inc., 958 F.2d 742, 745 (6th Cir. 1992). While there might be allegations with which only particular defendants could possibly be charged-perhaps, for instance, filing misleading documents with the SEC, see J.A. at 132 (Ct. p 62)-most, if not all, of the allegations in count one could apply to some or all of the defendants. Moreover, it might be that with a given allegation plaintiffs meant to charge only some defendants but that all defendants would have considered themselves so charged. The particularity requirement of Rule 9(b) is designed to avoid just such confusion.
8
We agree with the district court that "[s]imply put, plaintiffs have not shown the factual basis for the alleged pervasive fraud." Id. at 111. Accordingly, we affirm for the reasons stated in the two opinions of the district court. Martin v. Prudential-Bache Sec., Inc., No. CA90-203-C-C-MU (W.D.N.C. May 21, 1991); David F. Apple, M.D. v. Prudential-Bache Sec., Inc., No. CA-90-203-C-C-MU (W.D.N.C. July 17, 1992).
AFFIRMED
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436 F.2d 1068
UNITED STATES of America, Plaintiff-Appellee,v.George CULVERHOUSE, Defendant-Appellant.
No. 29345.
United States Court of Appeals, Fifth Circuit.
Jan. 4, 1971, Rehearing Denied Feb. 4, 1971.
Joseph A. Varon, Hollywood, Fla., for defendant-appellant.
Robert W. Rust, U.S. Atty., Lloyd G. Bates, Asst. U.S. Atty., Miami, Fla., for plaintiff-appellee.
Before BELL, DYER, and RONEY, Circuit Judges.
PER CURIAM:
1
Appellant was convicted after a nonjury trial of perjury, Title 18 U.S.C.A., section 1621. The alleged perjury arose out of his testimony as a witness in the district court in the case of United States v. Baines, Criminal Action No. 67-175, United States District Court for the Southern District of Florida.1
2
There are three assignments of error. The first is that the testimony in question was immaterial in that if was not capable of influencing the tribunal on the issues before it. See Barnes v. United States, 5 Cir., 1967, 378 F.2d 646 at 649, for a statement on the rule on materiality. Secondly it is urged that the evidence was insufficient in any event to warrant the conviction. Lastly, it is said that the court committed error in denying a motion to suppress certain statements made by appellant to an agent of the Internal Revenue Service.
3
We have carefully considered the evidence. We cannot say that the testimony in question was not material on the issue of whether the taxpayer in the Baines case, supra, wilfully failed to pay cabaret taxes due under Title 26 U.S.C.A., section 4231(6), as charged in Count IV of the Baines indictment. The defense theory was that the cabaret was closed for remodeling for a substantial period during the quarter in question; hence only a small amount of tax was due. Appellant's testimony was in support of this theory.
4
As to the sufficiency of the evidence, although there was evidence to the contrary, the evidence was ample to warrant the conviction on the basis that the appellant's testimony as to the remodeling being done at the cabaret was false.
5
The ruling on the motion to suppress was correct. Appellant was not in custody when the statements were made within the concept of Miranda v. Arizona, 1966, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694, as it applies to custodial interrogation. See Posey v. United States, 5 Cir., 1969, 416 F.2d 545, 549-550; Evans v. United States, 5 Cir., 1967, 377 F.2d 535, 536.
6
Affirmed.
1
The conviction of Baines was reversed by this court on grounds unrelated to this appeal. Baines v. United States, 5 Cir., 1970, 426 F.2d 833. Any question as to whether appellant's sentence should be reduced or modified in light of the further proceedings or disposition of the Baines case should be addressed to the discretion of the sentencing court under Rule 35, Federal Rules of Criminal Procedure
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174 So.2d 257 (1965)
STATE of Louisiana, through the DEPARTMENT OF HIGHWAYS, Plaintiff-Appellee,
v.
Gilbert LANCON, Jr., Defendant-Appellant.
No. 1399.
Court of Appeal of Louisiana, Third Circuit.
April 19, 1965.
E. L. Guidry, Jr., St. Martinville, for defendant-appellant.
D. Ross Banister, Glenn S. Darsey, Ben C. Norgress, William W. Irwin, Jr., by William W. Irwin, Jr., Baton Rouge, for plaintiff-appellee.
Before TATE, SAVOY, and HOOD, JJ.
TATE, Judge.
The defendant landowner appeals as inadequate the trial award in this expropriation proceeding.
The plaintiff Department expropriated for highway improvement purposes approximately 1/10th acre from the front of *258 the defendant Lancon's property. Before the taking, the defendant's tract, a rural residential homesite, contained approximate one-half acre in total area, and it fronted on a gravelled highway with a depth of about 120 feet.
The defendant landowner principally complains that the trial court erred (1) in the method used to arrive at the award for the land taken, and also (2) in awarding only $1,800 severance damages by rejecting the defendant's expert's testimony that the remainder of the property had lost approximately two-thirds of its value (instead of about 12%, as found by the trial court) as a rural homesite because of the taking.
The legal principles applicable are not in dispute: The landowner is entitled to the market value of the land actually taken, as well as to any severance damages sustained by the remainder of his property, the latter being the difference between the market value of the remaining property just before and immediately after the taking. State through Department of Highways v. Hayward, 243 La. 1036, 150 So.2d 6; State through Department of Highways v. Davis, La.App. 3 Cir., 149 So.2d 164. Further, the landowner has the burden of proving his claim to a greater award than the amount deposited, LSA-R.S. 48:453, and his claim cannot include damages which are too remote and speculative, State through Department of Highways v. Levy, 242 La. 259, 136 So.2d 35.
1. Value of land taken.
The trial court accepted the testimony of three appraisers for the plaintiff Department. Their valuation was based upon two sales of comparable rural homesites in the immediate vicinity of the subject property. The trial court accepted the conclusion of the plaintiff's experts that the property taken had a value of ten dollars per front foot for rural homesite purposes, or about 6 2/3¢ per square foot. We find no error in the trial award of $278 arrived at on this basis.
The defendant landowner's appraiser testified to a substantially greater value of the 1/10th acre taken. However, the other sales used by him as a basis of his valuation consisted of more valuable tracts in a more settled area, which were not in our opinion as comparable to the present property as were those sales of more similar property relied upon by the plaintiff's appraisers.
Further, the defendant's appraiser used the 4-3-2-1 method[1] of valuing the property taken, by which the front portion of a lot is given a greater value than other portions. Decisions in which this method of valuation or a variation of it has been approved (State through Department of Highways v. Sumrall, La.App. 1 Cir., 167 So.2d 503, certiorari denied, and State through Department of Highways v. Lewis, La.App. 1 Cir., 142 So.2d 652) concerned instances of city commercial lots where the front had a definitely higher value than the rear portions. We find no error in the trial court's conclusion that such a method of appraisal was inappropriate with regard to the present tract, a somewhat shallow rural lot, in which the front portion was not shown to possess a higher market value than the rear.
2. Severance damages.
The plaintiff's three appraisers felt that the remainder after the taking of the defendant's shallow home lot had suffered some diminution of value by its reduction in depth through the expropriation of approximately 25 feet (or about 20% of the depth) across the front. The appraisers variously estimated this loss in market *259 value as from 10-12% of the total value of the premises and improvements, which included a semi-brick two-bedroom home of about 1200 square feet in interior and certain outbuildings. Based upon their testimony, the trial court awarded $1,800 severance damages.
As a result of the taking, the defendant's home is now just 15 feet from the new right-of-way boundary and is now about 27 feet from the edge of the new widened and hard-surfaced highway. (Prior to the taking, the residence was 38-40 feet from the old right-of-way fence, which fence was about 6 feet from the edge of the former gravelled highway.)
The defendant-appellant contends, based upon his expert's estimate, that as severance damages he is entitled to an award of about $9,000, or for the loss of two-thirds of the value of his home premises. This is based upon the testimony of his expert appraiser that there is now practically no market value for the sale of the defendant's property as a residential site, because the home is now so close to the highway right-of-way and now lies on a banked curve, with consequent loss of privacy, disturbance through headlights flashing through the windows at night, and possible danger of cars leaving the highway at the curve and careening into the defendant's shortened front yard or into his home.
The trial court accepted instead the testimony of the plaintiff's appraisers that there was a much less loss in market value. Their estimate of 10-12% loss in market value was based upon their estimate of present market value of the home property after the taking, as well as the difference in the rental value of the property before and after the taking. One of the appraisers testified as to two comparable homes substantially retaining their value although situated on similar curves in nearby areas of the parish, one of which was under construction and on one of which a homestead loan had recently been obtained based upon the substantial value the home possessed despite its location close to the highway right-of-way on a curve in a rural highway similar to that on which the subject property is now situated.
Under similar circumstances, and rejecting contentions similar to those advanced by the present landowner, the courts have accepted expert testimony that only a 10-15% loss in market value of remainder residential property has been sustained by a taking which placed the residence close to the new highway right-of-way. State through Department of Highways v. Leger, La.App. 3 Cir., 170 So.2d 399, State through Department of Highways v. Johnson, La.App. 3 Cir., 168 So.2d 389, State through Department of Highways v. Bourg, La.App. 1 Cir., 135 So.2d 600, certiorari denied. The Leger and Johnson cases also illustrate that the effect on market value by a taking placing the highway close to improvements varies with the particular circumstances and the nature of the improvements, for although the residences therein were held to have been thereby diminished by only 10-15% of their market value, the landowners were awarded a 75% loss of market value in commercial buildings caused by the proximity to them of the highway right-of-way.
In State through Department of Highways v. Huson, La.App. 2 Cir., 166 So.2d 3, certiorari denied, the landowner was awarded a substantial loss in market value where the expropriation for a superhighway had completely destroyed the privacy of a five-acre rural tract and the new highway right-of-way was now located just 29 feet from the landowner's home. However, unlike the present case, such a loss in market value was substantiated by competent evidence accepted by the trier of fact as preponderant. The Huson decision also points out that inconveniences such as a loss of privacy are not compensable in expropriation proceedings unless the market value of the property is thereby diminished. Likewise, although a hazardous condition resulting from an expropriation is *260 compensable if it actually affects market value, see, e. g., Texas Pipeline Co. v. Barbe, 229 La. 191, 85 So.2d 260, the evidence herein of the plaintiff's experts negates any substantial loss in the market value of the defendant's property through any potentially dangerous condition allegedly created by the somewhat gradual curve of the new highway.
Under the present facts and testimony, we find no error in the trial court's acceptance of the Department's expert testimony in arriving at severance damages of only $1,800, and in rejecting the landowner's appraiser's testimony that the value of the residence had been substantially destroyed because the home was now situated so close to the highway right-of-way.
3. Conclusion.
We therefore affirm the trial court's award of $278 as the market value of the land taken and of $1,800 as the severance damages sustained by the remainder. The landowner accepts the award of $448 for improvements (fencing and a concrete driveway) taken as sufficient, but he points out in brief that, additionally, his expert testified to a loss of $100 for a cattle guard on the property taken (Tr. 201), and that the Department's appraiser admitted that he had not taken this loss into consideration (Tr. 148). The award should therefore be increased by an additional amount of $100 to compensate the landowner for the value of this additional improvement taken through the expropriation.
For the foregoing reasons, the judgment of the trial court is amended so as to award the defendant landowner an additional $100 for the cattle guard, together with legal interest thereon from April 30, 1964, the date of the expropriation, until paid; as thus amended, the trial court judgment is affirmed in all other respects. The plaintiff-appellee Department is to pay the costs of this appeal.
Amended and affirmed.
NOTES
[1] By that method, the front ¼ of the property is valued at 40% of the total, the second ¼ is valued at 30% of the total, the third ¼ is valued at 20% of the total, and the rear ¼ is valued at 10% of the total.
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NO. 07-09-0014-CV
NO. 07-09-0015-CV
IN THE COURT OF APPEALS
FOR THE SEVENTH DISTRICT OF TEXAS
AT AMARILLO
PANEL C
MARCH 31, 2009
______________________________
EARL COOPER, APPELLANT
v.
THE STATE OF TEXAS, APPELLEE
_________________________________
FROM THE 108TH DISTRICT COURT OF POTTER COUNTY;
NOS. 57,019-E AND 58,020-E; HON. DOUGLAS WOODBURN, PRESIDING
________________________________
Before QUINN, C.J., and HANCOCK and PIRTLE, JJ.
Memorandum Opinion
On January 8, 2009, Earl Cooper filed a document entitled “‘Notic[e] of Appeal’ for
post conviction psychiatric examination” in the district court. This document was forwarded
to this Court by the trial court’s clerk. In the document, Cooper complains that the trial
court failed to adhere to the deadlines required by Texas Code of Criminal Procedure
article 11.07. As such, we construe this document to be a petition for writ of mandamus
seeking the issuance of a writ ordering the trial court to comply with the procedures
mandated by article 11.07.
Jurisdiction to issue writs of mandamus in criminal law matters pertaining to habeas
corpus proceedings seeking relief from final felony judgments lies exclusively with the
Texas Court of Criminal Appeals. In re McAfee, 53 S.W.3d 715, 717-18 (Tex.
App.–Houston [1st Dist.] 2001, orig. proceeding). Intermediate appellate courts have no
authority to issue writs of mandamus in such matters. See id.; TEX . CRIM . PROC . CODE ANN .
art. 11.07, § 3 (Vernon Supp. 2008). Accordingly, Cooper's petition for writ of mandamus
is dismissed for want of jurisdiction.
Mackey K. Hancock
Justice
2
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Illinois Official Reports
Appellate Court
Berkowitz v. Urso, 2014 IL App (1st ) 121662
Appellate Court GREGORY BERKOWITZ, as Trustee of the W.F.T. Trust,
Caption Plaintiff-Appellant and Cross-Appellee, v. RICHARD J. URSO, JR.,
as Administrator of the Estate of Richard Urso, Deceased,
Defendant-Appellee and Cross-Appellant (Banco Popular North
America and Unknown Owners, Defendants).
District & No. First District, Sixth Division
Docket Nos. 1-12-1662, 1-12-1756 cons.
Filed December 19, 2014
Rehearing denied January 26, 2015
Decision Under Appeal from the Circuit Court of Cook County, No. 04-CH-5166; the
Review Hon. Richard J. Billik, Jr., Judge, presiding.
Judgment Affirmed in part and reversed in part.
Counsel on Collins, Bargione & Vuckovich, of Chicago (George B. Collins,
Appeal Adrian Vuckovich, and Benjamin C. Butler, of counsel), for appellant.
Helm & Wagner, of Naperville (Mary Elizabeth Damitio and Matthew
Levitt, of counsel), for appellee.
Panel JUSTICE LAMPKIN delivered the judgment of the court, with
opinion.
Justices Hall and Rochford concurred in the judgment and opinion.
OPINION
¶1 Following a bench trial, the circuit court found that a joint venture agreement existed for
the ownership and operation of a rental property between plaintiff, Gregory Berkowitz, as
trustee of the W.F.T. Trust (Trust), and Richard Urso (Urso), who had since died. The circuit
court, however, found the Trust was barred or precluded from enforcing any claimed right to
one-half of the property interest because the property was acquired vis-à-vis a fraudulent or
improper purpose and in violation of the Frauds Act (740 ILCS 80/2 (West 1998)).
Notwithstanding, the circuit court concluded that the evidence supported the enforcement of
the Trust and Urso’s agreement for the operation of the rental property. The circuit court,
therefore, ordered plaintiff and defendant, Richard J. Urso, Jr. (Richard Jr.), as administrator of
the estate of Richard Urso, deceased, to wind up the operation of the joint venture arrangement
for the rental of the property and to provide an accounting to each other for the operation of the
business since Urso’s death. The parties have cross-appealed.
¶2 Plaintiff contends the circuit court erred in finding the joint venture agreement for the
ownership of the subject property was unenforceable based on an improper or fraudulent
purpose and is barred by the Frauds Act. In contrast, defendant contends the circuit court erred
in even finding a joint venture agreement existed. In the alternative, defendant contends the
circuit court erred in finding the joint venture agreement as to the operation of the property,
i.e., the renting of the property, was not unenforceable based on a fraudulent or improper
purpose, was not barred by the statute of frauds, was not void based on public policy, or was
not barred by the Probate Act of 1975 (Probate Act) (755 ILCS 5/18-2, 18-3 (West 1998)).
Based on the following, we affirm in part and reverse in part.
¶3 FACTS
¶4 The undisputed facts are these. In 1998, the subject property, 750 S. Clinton Avenue, in
Chicago, Illinois, was purchased. On April 30, 1998, the title to the property was placed in a
land trust with Metropolitan Bank and Trust Company, trust number 2153 (land trust). The
designated beneficiary of the land trust was Urso, having sole power of direction. The land
trust then entered into a mortgage loan agreement with Banco Popular North America (Banco
Popular).1 The property was leased to Scarlett’s G.P., Inc. (Scarlett’s), a gentlemen’s club, for
a nine-year term with a five-year option to renew. The May 12, 1998, lease listed the land trust
as the landlord with the address of “c/o G.B. Management, 1307 S. Wabash, Suite 200,
Chicago, Illinois 60605.” The lease contained an “option to purchase” provision, in which
Scarlett’s had the option to purchase the property until May 31, 1999. In the event Scarlett’s
wished to exercise the purchase option, pursuant to the terms of the lease, an executed contract
1
Banco was dismissed from the underlying lawsuit prior to trial.
-2-
was to be sent to “c/o G.B. Management, 1307 S. Wabash, Suite 200, Chicago, Illinois
60605.”2
¶5 The “buyer’s settlement statement,” dated July 22, 1998, listed the purchase price of the
subject property as $627,500. The settlement statement revealed credits for $25,000 in earnest
money, $25,955.17 in tax credits, and $472,500 in loan proceeds. The settlement statement
also listed “W.F.T. Contribution,[3] $50,000” as a line item reducing the overall balance
required to close the property. The statement listed the “total due from Urso” as $134,769.83.4
The settlement statement contained a signature line with the name Richard Urso printed below
the line and a completed signature on the line. The record contains a copy of a cashier’s check
dated July 27, 1998, for $50,000 made out to “C.T. and T.”5 with “WFT Trust” as the remitter.
¶6 Urso annually reported the income generated from the property on his personal joint tax
returns that he filed with his wife. Urso died on April 15, 2003. As the administrator of Urso’s
estate, Richard Jr. has acted as the beneficiary of the land trust since the time of his father’s
death.
¶7 On March 24, 2004, plaintiff, as trustee of the W.F.T. Trust, filed suit against defendant
alleging that Urso and Louis Wolf, the former trustee of the Trust, entered into an oral joint
venture agreement for the purchase and operation of the subject property. The Trust alleged it
was entitled to partial ownership and a share in the rents received from the subject property.
Plaintiff subsequently filed four amended complaints. In its fourth amended complaint, the
subject of which underlies this appeal, the Trust alleged that, in January or early February of
1998, Wolf, acting for the Trust, and Urso verbally agreed to purchase the subject property
together. The terms of the agreement were such that the Trust would provide $25,000 in
earnest money and an additional $50,000 at the time of closing, while Urso would obtain
financing for the property and provide any funds necessary to close over and above the
available financing. Moreover, the property would be held in a land trust to which Urso would
be the beneficiary. According to the fourth amended complaint, Wolf and Urso agreed that any
profits, i.e., the surplus of rents and receipts over the expenses including interest, would be
divided and any profits derived from the sale of the property, either by Scarlett’s exercising its
option to purchase or the ultimate dissolution of the venture, would be divided equally.
Defendant filed an answer denying the existence of a joint venture agreement and asserted
affirmative defenses based upon illegality/fraudulent purpose, the Frauds Act, the Probate Act,
and the statute of limitations, and as against public policy. The case proceeded to trial.
¶8 Louis Wolf testified at trial that he started the Wolf Family Trust in 1975. The Trust was
involved in all aspects of commercial real estate. Wolf testified that Berkowitz was the trustee
of the Trust and Wolf’s wife and children were the named beneficiaries. Wolf said that he acted
on behalf of the Trust in the acquisition of properties and all negotiations related thereto.
¶9 Wolf testified that he met Urso in 1995. Urso was a neighbor and became a close friend.
According to Wolf, he and Urso had a business relationship for the acquisition of real estate.
2
The purchase option was not exercised by Scarlett’s; the provision is highlighted due to the
address listed in the event the option was exercised.
3
Testimony indicates that W.F.T. Trust stands for Wolf Family Trust.
4
Another figure for $135,700 is hand written on the signed settlement statement directly below this
figure; Wolf testified that Urso contributed $135,700.
5
Chicago Title and Trust Company.
-3-
Specifically, Wolf and Urso purchased three parcels of property together: one on Clark Street,
one on Harlem Avenue, and the subject property. The owners of the Clark Street property were
Wolf, Urso, and Albert Berland, who had since passed away. Wolf testified that he could not
recall who held title to the Clark Street property, but he knew that neither he nor the Trust was
named on the title. Wolf said that they held the Clark Street property for three or four years
before selling it and splitting the proceeds equally amongst the three men. Wolf testified that
there was no written agreement related to the Clark Street property. According to Wolf, he and
Urso purchased the Harlem Avenue property in 2002. Wolf and Urso each contributed half of
the purchase price, but title was held by a corporation to which Urso controlled the ownership
shares. Wolf testified that he and Urso had the Harlem Avenue property for “several years and
then Mr. Urso sold the property.” Wolf and Urso split the proceeds equally. There was no
written agreement attached to the Harlem Avenue property.
¶ 10 Wolf additionally testified that in 1998 he learned of the subject property. Mark Vajdik,
operator of Scarlett’s, suggested Wolf purchase the property because, as the lessor of the
premises, Vajdik was having issues with the owner at the time. After viewing the property,
Wolf told Vajdik that he was interested in purchasing the parcel. As a result, Wolf began
negotiating a lease with Vajdik. While negotiating the lease, Wolf contacted Daniel Kravetz,
whom he had known for 15 years, to inquire if Kravetz was interested in partnering on the deal.
Wolf also retained the services of attorney Charles Goodbar. Wolf provided Goodbar with a
$25,000 check from the Trust for purposes of earnest money. Meanwhile, Kravetz contacted
Larry Slonina, a loan officer at Banco Popular, in an effort to obtain a loan to purchase the
subject property. According to Wolf, he and Kravetz planned to be equal owners of the subject
property, but Kravetz was going to hold title and obtain the loan in Kravetz’s name only.
¶ 11 Wolf testified, however, that Kravetz met him and a group of men for a weekly breakfast
meeting at which time Kravetz told Wolf that he could not proceed with the deal. Kravetz was
in the currency exchange business and his partners in that business had a problem with Kravetz
entering a partnership for the purchase of the subject property. Urso attended the breakfast as
well and expressed interest in taking over Kravetz’s position in the deal. Specifically, Urso
would become an equal partner with Wolf in the transaction and would proceed to get
financing. Wolf testified that Urso ultimately signed the lease agreement as the landlord.
According to Wolf, the Trust contributed $75,000 to the purchase of the subject property and
Urso contributed $135,700. Wolf acknowledged that the settlement statement did not
expressly denote that the Trust contributed $25,000 for earnest money. Rather, there was no
identifiable source for the $25,000 listed on the settlement statement. Moreover, Wolf
acknowledged that the $50,000 line item from the Trust was not designated as a contribution to
the partnership. Wolf testified that Goodbar represented both the Trust and Urso at the closing
for the property.
¶ 12 Wolf acknowledged that Urso was named as the beneficiary of the land trust, which held
title to the subject property. Wolf stated that he was not named on the title of the property
because, at the time, he “had several judgments against [him] that [he] was paying on. And [he]
didn’t want to complicate financing.” According to Wolf, if the Trust was on the title “there
would be a problem.” In particular, Wolf had a judgment against him for $2.2 million related to
an Environmental Protection Agency violation concerning one of his properties and a
judgment against him for $1.8 million related to a property tax violation related to another of
his properties.
-4-
¶ 13 Wolf testified that, after its purchase, he visited the subject property several times. On one
occasion, Wolf introduced Vajdik to Urso and directed him to pay rent to Urso. Wolf added
that he went to the property once or twice because the lessee was not making the proper
payment to cover the tax escrow. Wolf also visited the property to collect rent on one occasion
after Urso’s death. Wolf forwarded the rent check to defendant because Richard Jr. was
managing the property and collecting rent after Urso’s death. Wolf believed that defendant had
taken the place of Urso in managing the subject property on behalf of the partnership. Wolf
admitted that no written partnership agreement existed for the subject property, but maintained
that there was an oral partnership agreement.
¶ 14 Wolf further testified that in August 2000 Berkowitz sent Urso a letter to obtain an
accounting of the rent from the subject property for purposes of income taxes. Wolf added that
he subsequently sent Goodbar a facsimile stating:
“I spoke to Mr. Urso after Greg had a problem with him regarding partnership
returns. He advised me as to the closing statement, just how much I owe to him for my
fifty percent interest. And I will bring you a check for the W.F.T. interest in this
property. I have asked Urso on three occasions to give me that figure with no success.
After his conversation with Greg I want this matter to be disposed of one way or
another.”
According to Wolf, he annually reported an interest in the subject property on his “Schedule E”
tax return. The returns do not appear in the record.
¶ 15 Gregory Berkowitz testified that he was a licensed real estate broker and the trustee for the
W.F.T. Trust, but not the beneficiary of the Trust. Berkowitz was also the president of GB
Property Management, Inc., which managed Wolf’s properties. Berkowitz testified that he
managed the real estate for the Trust and handled the maintenance for the Trust’s buildings.
According to Berkowitz, the Trust had “well over 100 pieces of property.” The Trust
maintained office space, first at 1307 South Wabash Avenue in Chicago, Illinois, and later at
770 North LaSalle Street in Chicago, Illinois. Berkowitz had known Wolf since Berkowitz was
a teenager and began working for him in 1984. Berkowitz said he met Urso when he started
working for Wolf. Berkowitz described Wolf and Urso as old friends and neighbors with a
business relationship. The office had business records for the properties in which Wolf or the
Trust held an interest. According to Berkowitz, the Trust’s accountant advised the Trust not to
file tax returns.
¶ 16 Berkowitz testified that he personally owned eight or nine properties with Wolf. Berkowitz
stated that Wolf or the Trust had a number of properties, other than the subject property, for
which he was not of record but claimed an interest. For example, “dealings with Dan Kravetz
where [Wolf] had an ownership interest in properties that were not–and his interest was not of
record, as well as Richard Urlich. Same scenario. And even an instance where [Wolf] and
[Berkowitz] had a property together where [Wolf’s] interest was not of record.” The property
Berkowitz owned with Wolf was located in Florida. Wolf had an 80% ownership interest, but
he was not the owner of record. Berkowitz testified that there was a loan obtained for the
property through Slonina at Banco Popular.
¶ 17 In relation to the subject property, Berkowitz testified that he did not have a personal
interest. Based on conversations with both Wolf and Urso, Berkowitz understood that Wolf
and Urso were equal partners in the acquisition of the subject property. Berkowitz testified that
Wolf provided $25,000 as earnest money for the subject property. After the property was
-5-
acquired, title was held in a land trust with Urso as the beneficiary pursuant to the agreement
between Urso and Wolf. Urso received the rental payments from the lessee. Berkowitz testified
that the Trust’s office maintained documentation related to the subject property. According to
Berkowitz, the file for the subject property contained a letter addressed to Urso dated August
17, 2000. The letter was prepared by Berkowitz on behalf of the Trust. The letter claimed that
the Trust had 50% ownership of the subject property. Over defense counsel’s objection based
on the Dead-Man’s Act (735 ILCS 5/8-201 (West 1998)), Berkowitz testified that Urso never
responded to the letter. According to Berkowitz, the letter was sent after a conversation with
the Trust’s accountant. Berkowitz was attempting to compile documentation to accurately
show the Trust’s 50% interest in order to document the property on Wolf’s tax return.
Berkowitz testified that Wolf had an “active role in the management” of the subject property.
Berkowitz stated that he arranged to have his “roofing people repair the roof” of the subject
property at the request of Wolf. Berkowitz, however, admitted that in his deposition testimony
he testified that he never got involved in the maintenance of the subject property. Berkowitz
later testified that, during his deposition testimony, he failed to recall the roof repair of the
subject property, but had since been reminded of it.
¶ 18 Berkowitz further testified that Wolf and Urso partnered on a property on Harlem Avenue
in Bedford Park. According to Berkowitz, he learned from Wolf that the Harlem Avenue
property subsequently was sold and Wolf and Urso split the funds equally.
¶ 19 Mark Vajdik testified at trial that he negotiated the terms of his lease of the subject property
with Wolf. Initially, Vajdik sent his rent payments to “GB Management,” which he understood
was “the operating entity for” the Trust. Vajdik testified that Wolf introduced him to Urso in
1998, sometime after the closing on the property. According to Vajdik, Wolf and Urso held
themselves out as partners. After meeting Urso, Vajdik was instructed to direct all
building-related issues, such as repairs, to Wolf and to remit all rent payments to Urso. Vajdik
then sent rent payments to Urso. In addition, Vajdik testified that he called Wolf when the roof
leaked at the property and Wolf provided roofers to repair the damage.
¶ 20 Daniel Kravetz testified that he had a professional and personal relationship with Wolf. In
their first business relationship, Kravetz and Wolf purchased a building together in 1987 or
1988. Kravetz was responsible for the loan. Wolf’s name did not appear on the loan. Kravetz
testified that he and Wolf were equal partners, providing some of their own money as equity
and borrowing the rest in the form of a mortgage that was eventually satisfied. According to
Kravetz, he and Wolf initially did not memorialize their partnership agreement, but did so
sometime after 2000. Kravetz testified that he and Wolf were involved in the ownership of
several properties.
¶ 21 According to Kravetz, Wolf approached him in 1998 with a business opportunity to
purchase the subject property together. The terms of the agreement were that Kravetz and Wolf
would each contribute at least $100,000 to purchase the $800,000 building and act as equal
partners. Kravetz, however, would hold title in his name alone or in the name of one of
Kravetz’s entities, and Kravetz would obtain the loan for the property. After performing his
“due diligence” by inspecting the property, Kravetz informed Wolf that he was interested in
moving forward with its purchase. Kravetz contacted Slonina, with whom he had an
established relationship as a “preferred borrower.” Kravetz testified that he informed Slonina
that Wolf was involved in the purchase of the subject property, but that Kravetz would be
responsible for the loan.
-6-
¶ 22 Kravetz, however, said he ultimately stepped away from the deal because his partners in
another line of business did not want him to become a landlord for a gentlemen’s club. Kravetz
testified that, at that time, he attended weekly lunch gatherings on Sundays at the Atrium
Restaurant located on the corner of Monroe Street and Wacker Drive in Chicago. The
following Sunday, his group, including Wolf, Urso, the owner of the restaurant, and a man that
has since died, gathered and the subject property was discussed. Urso expressed a desire to
purchase the subject property. According to Kravetz, Wolf stated that Urso would step into
Kravetz’s shoes in the deal as an equal partner. Kravetz replied that he had to inform Slonina
that he was no longer interested in proceeding with purchasing the property and instead he
would recommend that the bank extend a loan to Urso. Kravetz completed the phone call to
Slonina, and Slonina advised Kravetz to have Urso call Slonina. Thereafter, Kravetz was no
longer involved in the acquisition of the subject property.
¶ 23 Charles Goodbar testified that in February 1998 he issued a $25,000 check on behalf of
Wolf to the seller’s attorney for earnest money for the subject property. The check, however,
was returned in late February 1998 or early March 1998 because the sale of the property fell
through. According to Goodbar, Wolf then returned to Goodbar’s office sometime in May
1998 with an executed purchase and sales agreement for the subject property, along with a
lease. Wolf set up a meeting between himself, Urso, and Goodbar. During the meeting in May
1998, Wolf introduced Goodbar to Urso. In Goodbar’s presence, Wolf asked Urso whether he
would like to purchase the subject property together and to partner in leasing the property.
Urso replied in the positive. Goodbar testified that he considered himself to represent the
partnership between Wolf and Urso. At the meeting, Wolf and Urso decided the subject
property would be vested in a land trust with Urso as the sole beneficiary “so they could
attempt to get a loan.” They discussed contacting Slonina at Banco Popular to obtain the loan.
Goodbar testified that Wolf did not want to be named in conjunction with the property because
the property had a special use license issued by the city of Chicago.
¶ 24 When asked whether Urso was the “only buyer” of the subject property, Goodbar
responded in the negative. Goodbar elaborated:
“Mr. Wolf was not involved as beneficiary of the land trust. Mr. Wolf was not
involved in the application.
***
Mr. Wolf was involved in the negotiation of the lease. Mr. Wolf was involved in
putting the deal together.
I do not know who made the earnest money deposit. Mr. Wolf attended the closing.
And as we discussed, Mr. Wolf made a deposit at closing towards the downpayment of
the property.”
Goodbar admitted that Urso was his only client in terms of taking title as a beneficiary of the
land trust and applying for the loan to purchase the subject property. According to Goodbar,
Wolf and Urso both attended the closing of the subject property. The Chicago Title and Trust
settlement statement listed three deposited checks: one from the Wolf Family Trust for
$50,000, one from Urso for $25,000, and one from an unnamed source for $25,000. Goodbar
testified that he signed the settlement statement as the buyer with permission from Wolf and
Urso.
-7-
¶ 25 According to Goodbar, neither Wolf nor Urso requested that the terms of their partnership
be reduced to writing. Goodbar understood that Wolf and Urso were equal partners, but he did
not know the details of the partnership. Goodbar testified that he had a series of conversations
with Wolf and Urso at the end of 2002 and in early 2003 “to try to determine the amount of
capital each partner had in their account.” Goodbar prepared a document “at the direction of
Mr. Wolf of putting the numbers together.” According to Goodbar, there was an issue
regarding who provided the $25,000 in earnest money for the property. Both Wolf and Urso
claimed to have provided the $25,000 earnest money, but neither could produce a canceled
check to substantiate his claim. Goodbar testified that Urso borrowed $468,237.50 from Banco
Popular to purchase the property. The loan was guaranteed by Urso only.
¶ 26 Goodbar further testified that Wolf and Urso partnered on another real estate purchase after
the subject property, sometime in 1999, 2000, or 2001. The property was on Harlem Avenue in
Bedford Park, Illinois, and title was purchased by a corporation with Urso as the sole
stockholder. The corporation was the borrower in the acquisition. According to Goodbar, the
Bedford property was sold approximately 15 months after it was purchased and the proceeds
were divided equally by Wolf and Urso. Wolf and Urso did not have a written agreement for
the Bedford property venture.
¶ 27 Larry Slonina testified that, in 1998, he was a senior vice president at Banco Popular. His
duties included those of a commercial loan officer, in that he analyzed loan applications for
creditworthiness. According to Slonina, a creditworthiness assessment included a cash flow
analysis, as well as performing a search for liens, pending lawsuits, or judgments against the
applicant. Slonina testified that he was the loan officer for Urso’s loan application for the
subject property. Slonina testified that Kravetz introduced him to Urso. Kravetz was an
individual with whom Slonina had conducted business previously. Urso’s loan application
provided that the primary source of repayment for the loan was rental payments on the property
and the secondary source was Urso. Wolf’s name did not appear on the application. The loan
application contained a section entitled “monitoring covenants,” which listed three documents
that Urso was obligated to provide on an ongoing basis, namely, annual operating statements
of the building, annual compiled statements of one of Urso’s business entities, and Urso’s
annual personal financial statements and tax returns. No assets or contributions by Wolf or the
W.F.T. Trust were included on the loan application. According to Slonina, the land trust and
Urso were the borrowers on the promissory note provided to Banco Popular. A mortgage
document was executed by Slonina with the land trust and Urso: the mortgagor was the land
trust with Urso as the sole owner of the beneficial interest of the land trust. Slonina did not
attend the closing for the subject property.
¶ 28 Larry Starkman testified that he was a real estate appraiser, broker, manager, and
developer. Starkman was longtime friends with both Wolf and Urso. Starkman testified that he
presented Wolf and Urso with the opportunity to purchase the property located at 6375 Harlem
Avenue in Bedford Park, Illinois. Starkman acted as the real estate broker in the purchase. For
that property, Urso borrowed the money for the deal. When Wolf and Urso sold the property,
Starkman again acted as the real estate broker. According to Starkman, both Wolf and Urso
paid Starkman’s $25,000 commission for the sale. Starkman assumed the remaining gain from
the sale “was divided equally between the two.” Starkman discussed the equal partnership with
both Wolf and Urso in separate conversations.
-8-
¶ 29 Starkman testified that he participated in weekly lunches with Wolf, Urso, Kravetz, and
others. According to Starkman, the lunches occurred on recurring Saturdays and took place in
various restaurants. Starkman recalled Wolf discussing the terms of the deal with the subject
property over the course of a number of lunches. According to Starkman, Kravetz was initially
linked to the deal with Wolf, but it “evolved” into Urso “doing the deal with” Wolf. Starkman
testified that Urso said “it sounded like an excellent deal and he would love to be a partner.”
According to Starkman, it was a “common practice” for Wolf not to be included in the
financing on his property acquisition deals. Starkman understood that Wolf did not want to be
named on the title or financing for the subject property because there were outstanding
judgments against him and because of the notoriety of the property lessee. During the lunches,
Wolf also expressed concern with linking his name to the subject property because the city of
Chicago was involved and concerned with a liquor license for the premises and because the
property had a special entertainment license. After the subject property was purchased,
Starkman said Urso was tasked with the day-to-day management while Wolf maintained an
advisory role. According to Starkman, “Wolf was always advising. Richard Urso had great
respect for Lou’s opinion. *** [Wolf] had nothing to do with bookkeeping, but I think any
decisions that came up *** [Wolf] primed [Urso’s] decisions. [Urso] really relied on [Wolf]
for advice like that. And [Wolf] had excellent judgment when it came to these types of
transactions dealing with the tenants.”
¶ 30 Starkman further testified that he regularly appraised properties for Wolf. Starkman also
appeared as an expert witness on Wolf’s behalf. In a bankruptcy proceeding, Starkman
testified regarding the value of 10 parcels of property to which Wolf did not hold title but
claimed an interest.
¶ 31 Joanne Urso, the decedent’s wife, testified that the subject property was owned by the land
trust. According to Joanne, she filed joint tax returns with her husband and in the years from
1998 until 2001 the returns included the subject property. Joanne had no knowledge that the
Trust had an ownership interest in the subject property.
¶ 32 Richard Jr. testified that, prior to Urso’s death, he picked up rent checks at the subject
property “probably about fifteen or twenty times and paid the real estate taxes on the property.”
Richard Jr. testified that the rent checks were made payable to “750 South Clinton,” the
address of the property. Richard Jr. said he gave the rent checks to Urso, never to Wolf,
Berkowitz, or a representative of W.F.T. Trust. Richard Jr. testified that he was unaware of
anyone claiming a partnership interest in the subject property. After Urso’s death, Richard Jr.
collected the rent checks from the subject property, paid the mortgage and real estate taxes, and
was in charge of building maintenance. Richard Jr. never consulted with Wolf, Berkowitz, or
any representative of the Trust regarding those activities. According to Richard Jr., Banco
Popular decided not to renew the mortgage on the subject property and the mortgage was taken
over by Mutual Bank. Neither Wolf, Berkowitz, nor any representative of the Trust were
consulted regarding the purchase of the mortgage. Richard Jr. testified that the mortgage had
since been paid off.
¶ 33 In its written order, the circuit court concluded, in part:
“Under either a preponderance of the evidence or a clear and convincing standard,
the evidence has shown that Wolf and Urso intended to enter into an arrangement to
acquire and operate the Property. The Trust has demonstrated that Wolf and Urso
reached an understanding regarding the Property, even though the evidence indicates
-9-
that after the acquisition, there were certain unresolved matters that arose, including
whether the Trust paid a total of $50,000 or $75,000 at or prior to the closing on the
Property.
***
Urso, Jr. has not rebutted the showing made by the Trust that an understanding was
reached and it ripened into the Agreement regarding the Property. Notwithstanding,
Urso, Jr. has asserted affirmative defenses and other matters in an attempt to bar the
enforcement of the Agreement.
The Trust is asking this court to order the sale of the assets of the venture, including
the Property, even though neither the Trust nor any entity comprising the venture holds
title to the Property, owns or holds a beneficial interest under the land trust that does
hold title to the Property or has proven a contractual right under any writings signed by
Urso to require Urso, Jr. to sell the Property in order for the Trust to receive an equal
share of the proceeds of the sale. Both Wolf and the Trust, who had access to Attorney
Goodbar, could have arranged for the preparation of the necessary documentation to
create an entity or a venture to take title or hold title to the Property. Wolf and the Trust,
who had access to Attorney Goodbar, could have arranged for either of them to be
placed on title or be designated as beneficiary under the land trust with Urso, but they
chose not to do so. Wolf and the Trust could have had a written agreement prepared
evidencing the oral understanding they assert the parties had with respect to [the]
Trust’s claimed right to an interest in the Property with Urso, but Wolf and the Trust
did not do that either. The only reasonable evidentiary inference is that such action was
not taken by Wolf and the Trust in order to conceal or not disclose the claimed right
they now assert to an interest to the Property or to the proceeds of its sale.
Urso, Jr. has shown that any term or understanding in the Agreement to acquire the
Property in such a manner so as not to disclose the claimed interest that Wolf and his
Trust are now asserting in the Property sought to ‘accomplish an improper or
fraudulent purpose’ and is unenforceable for certain reasons argued by Urso, Jr. ***
***
The evidence and reasonable inferences therefrom demonstrate that the manner in
which the Property was acquired and maintained, titled not in the name of the Trust or
in a venture identifying the Trust or Wolf, and the loan secured, through the name of
Urso only, served an ‘improper’ or ‘fraudulent’ purpose as the record shows that there
was an effort to keep the Property out of reach from the judgment creditors and an
effort to facilitate the issuance of licenses from the City of Chicago for the Property’s
operation. In view of these circumstances that have support in the record, the Trust’s
pursuit of an order under the Agreement to require a sale of the Property to allow for a
distribution of the proceeds to the Trust as if it held a right to an interest in the Property
that the Trust is claiming has not been shown to be justified and the term of the
Agreement that the Trust is relying upon to claim such relief cannot be enforced on
such a deceptive or improper premise. ***
Urso, Jr. seems to advocate the position that under the circumstances presented in
this record that a court of equity ‘should leave the parties where it finds them.’ ***
After considering Urso, Jr.’s position, this court finds that after Urso’s death, Urso, Jr.
is the holder of the beneficial interest of the land trust that holds title to the Property and
- 10 -
that neither the Trust nor any venture is so named in the land trust. This court further
finds that the parties should be left to the arrangement of operating the business as the
Property together under the Agreement. *** The parties’ arrangement under the
Agreement has involved, the leasing of the premises. ***
The contention raised by Urso, Jr. that ‘the purported agreement between Wolf and
Urso is not severable and should not be enforced’ for purposes of fashioning a remedy
has not been shown to be convincing. *** The evidence adduced as trial substantiated
the operation and management of the Property under such an understanding. The
record simply does not support Urso, Jr.’s contention that the parties’ arrangement to
operate the business at the Property together cannot be treated separately from the
Trust’s claim right to share in the proceeds from the sale of the Property because of an
alleged interest in it. ***
***
The evidence has established that Wolf for his benefit and acting on behalf of the
Trust reached an oral understanding with Urso regarding the joint operation of the
business at the Property, that has involved the leasing of the premises to a tenant. With
respect to the operation of the business at the Property, the Trust is entitled to a
dissolution of that arrangement in view of Urso’s death. ***
The Trust and Urso, Jr. shall wind up the operation of the business at the Property
that both the Trust and Urso agreed to operate jointly, unless Urso, Jr. and the Trust
consent in writing and present a proposed agreed order regarding the same to the court
***. In connection with the winding up process, the parties shall take account of each
other for operation of the business at the Property since Urso’s death. However, the
$75,000 in payments the Trust made in 1998 shall be taken into consideration for
purposes of the accounting.”
¶ 34 With regard to Richard Jr.’s affirmative defense of the statute of frauds, the circuit court
found that Wolf’s and Urso’s acquisition of the property was unenforceable as a violation of
the Frauds Act, but that the Frauds Act did not bar the arrangement involving the operation of
the rental property. The circuit court denied Richard Jr.’s remaining affirmative defenses based
on violations of the federal banking law, the Probate Act, and the statute of limitations. The
parties have cross-appealed.
¶ 35 ANALYSIS
¶ 36 We immediately turn to the issues related to the Frauds Act, as they are dispositive to the
case. The Trust contends that the circuit court erred in finding that the acquisition of the subject
property was barred by the Frauds Act. Richard Jr., on the other hand, contends the circuit
court erred in finding the operation of the oral rental agreement for the subject property was not
barred by the Frauds Act.
¶ 37 The Frauds Act provides:
“No action shall be brought to charge any person upon any contract for the sale of
lands, tenements or hereditaments or any interest in or concerning them, for a longer
term than one year, unless such contract or some memorandum or note thereof shall be
in writing, and signed by the party to be charged therewith, or some person thereunto
- 11 -
by him lawfully authorized in writing, signed by such party.” 740 ILCS 80/2 (West
1998).
The supreme court has advised that “Illinois’ statute of frauds seeks to do the same [as the
English statute enacted by Parliament] by barring actions based upon nothing more than loose
verbal statements.” McInerney v. Charter Golf, Inc., 176 Ill. 2d 482, 489 (1997). The supreme
court further advised:
“The period of one year, although arbitrary, recognizes that with the passage of
time evidence becomes stale and memories fade. The statute proceeds from the
legislature’s sound conclusion that while the technical elements of a contract may exist,
certain contracts should not be enforced absent a writing. It functions more as an
evidentiary safeguard than as a substantive rule of contract. As such, the statute exists
to protect not just the parties to a contract, but also–perhaps more importantly–to
protect the fact finder from charlatans, perjurers and the problems of proof
accompanying oral contracts.” Id.
The interpretation of a statute is a question of law that we review de novo. Lucas v. Lakin, 175
Ill. 2d 166, 171 (1997).
¶ 38 The Trust argues that there were two writings signed by Urso that satisfy the Frauds Act. In
particular, the settlement statement, signed by Urso, reflected the Trust’s $50,000
“contribution” to the purchase of the subject property, and the lease, also signed by Urso, listed
the office of the Trust as the location for rental payments and for the exercise of the lease’s
purchase option. According to the Trust, the evidence demonstrated that the subject property
was purchased by the Trust and Urso for profit after they entered into a joint venture
agreement, which does not violate the Frauds Act.
¶ 39 In order for a writing to satisfy the statute of frauds, the writing must demonstrate the
existence of a contract and contain all of its essential terms and conditions. Storm &
Associates, Ltd. v. Cuculich, 298 Ill. App. 3d 1040 (1998). Neither of the writings in this case
satisfies the statute of frauds. The $50,000 “contribution” remitted by “W.F.T. Trust” listed
“C.T. and T.,” i.e., Chicago Title and Trust, as the recipient of the funds. The settlement
statement provided a $50,000 line-item credit recorded as “W.F.T. Contribution.” No other
information regarding the alleged contract was contained within the settlement statement. With
regard to the second writing, the lease listed the land trust as the landlord, but provided the
address of “c/o G.B. Management, 1307 S. Wabash, Suite 200, Chicago, Illinois 60605” for the
remission of rental payments and for the exercise of the purchase option. However, other than
the address, which plaintiff contends was the address for the Trust’s property management
company, there was absolutely no information demonstrating a connection between the
property and the Trust, let alone the existence of the alleged contract or its terms and
conditions. As a result, neither of the writings supports the Trust’s position that the parties’
intent to establish a joint venture to own and operate the property was clearly
demonstrated vis-à-vis the settlement statement and the lease.
¶ 40 The basic facts of this case are similar to those in Morton v. Nelson, 145 Ill. 586 (1893). In
Morton, the two plaintiffs alleged that they and the defendant entered an agreement for the
purchase of a parcel of land and the erection of a building for which the parties were to share
equally in the net profits. Id. at 591. The land was purchased by and deeded solely to the
defendant, as was the case for the subject property. Id. Unlike in our case, though, the evidence
demonstrated that the plaintiffs in Morton did not “advance[ ] a single dollar in payment of the
- 12 -
purchase money, or in payment of the cost of the building” and, therefore, the supreme court
found there was not a partnership between the parties. Id. at 591-92. Notwithstanding, the
plaintiffs alleged the parties had a verbal agreement wherein the defendant was to deed or
execute and deliver a declaration of trust to invest each of the three men in one-third interest in
the property. Turning to the statute of frauds defense advanced by the defendant, the supreme
court concluded the alleged verbal agreement was unenforceable because it related to the sale
of or interest in land, which, under the statute, required a writing signed by the party alleged to
have made the agreement, i.e., the defendant, and no such writing existed. Id. at 593. “[A]
verbal agreement to purchase land for the benefit of another is void under the Statute of Frauds,
and can not be enforced against a purchaser who, in the absence of fraud, has paid for the land
with his own money, and taken a conveyance in his own name.” Id. at 593-94 (citing
Stephenson v. Thompson, 13 Ill. 186, 188 (1851)).
¶ 41 We acknowledge that, in the case at bar, the circuit court found the Trust contributed
$75,000 to the purchase of the property; however, Urso purchased the property by receiving
$472,500 in financing for which he was solely responsible, as well as contributing
approximately $135,000 of his own money. The ownership of the property was placed in the
land trust for which Urso was the sole beneficiary. Therefore, Urso financed the vast majority
of the purchase price in his name alone and owned the property in his name alone. In order to
avoid the statute of frauds, the Trust was required to advance a written document evidencing
the alleged oral contract, which, as stated above, the Trust failed to provide.
¶ 42 More recently, the Second District stated that “Section 2 [of the Frauds Act] does not
govern a joint venture agreement if the partnership engages in the purchase or sale of real
property that is owned by the partnership. However, the statute is applicable to the joint
venture agreement if the partners agree to share the proceeds of a sale of land that is owned by
one partner alone.” B&B Land Acquisition, Inc. v. Mandell, 305 Ill. App. 3d 1068, 1073 (1999)
(citing Goldstein v. Nathan, 158 Ill. 641, 646-47 (1895)). In this case, the alleged partnership
did not purchase the property. Instead, the Trust merely contributed a small percentage of the
purchase price. Moreover, the property was not owned by the alleged partnership. Urso was the
sole beneficiary of the land trust. As a result, the statute of frauds applied.
¶ 43 In the alternative, the Trust contends the Frauds Act does not apply where it fully
performed under the oral contract. According to the Trust, the agreement at issue was for the
purchase and leasing of the subject property. The Trust argues it fully performed because Wolf
found the property, negotiated its purchase and the lease thereof, contributed the “agreed
amount” toward the purchase, and “helped with the collection of rent and repairs.”
¶ 44 We recognize that there is an exception to the statute of frauds’ writing requirement where
one party completely performs under a contract (Anderson v. Kohler, 397 Ill. App. 3d 773, 785
(2009)); however, we find the exception does not apply in this case. Based on the trial
testimony, Wolf chose the subject property and negotiated its purchase and lease prior to
entering into the alleged oral agreement with Urso. As a result, these actions were not
performed in furtherance of completing an agreement that had not yet been made. Moreover,
the Trust’s contribution to the purchase price does not constitute full performance rendering
the Frauds Act inapplicable. See Cain v. Cross, 293 Ill. App. 3d 255, 259 (1997) (partial
payment for the purchase of a property is insufficient to bar application of the Frauds Act).
Finally, the trial testimony demonstrated that Wolf had little involvement in the operation of
the subject property during Urso’s lifetime and had no involvement when Richard Jr. took over
- 13 -
the operation. Overall, we cannot say the Trust fully performed under the alleged oral
agreement.
¶ 45 We further conclude that the circuit court erred in finding the alleged oral agreement to
operate the subject property did not violate the statute of frauds. Without providing any
reasoning, the circuit court held that the Frauds Act did not bar the Trust’s ability to enforce the
alleged oral arrangement involving the operation of the subject property. The circuit court’s
ruling that the Trust was entitled to an interest in the rents received from leasing the property
directly conflicts with its ruling that the Frauds Act barred the Trust from exercising an
ownership interest in the property. The Frauds Act requires a writing for agreements involving
real property and the rights associated therewith. More specifically, the Frauds Act provides
that “[n]o action shall be brought to charge any person upon any contract for the sale of lands,
tenements or hereditaments or any interest in or concerning them” unless there is a writing
signed “by the party to be charged therewith.” 740 ILCS 80/2 (West 1998). The right to collect
rent has long been established as a right of property ownership. The collection of unaccrued
rents is an incorporeal hereditament that passes with the sale or devise of land. Lipschultz v.
Robertson, 407 Ill. 470, 474 (1950); see Black’s Law Dictionary 794 (9th ed. 2009)
(incorporeal hereditament is defined as “[a]n intangible right in land” and rent is listed as a
type in common law). Indeed, it has been determined that hotel receipts constitute rent and,
therefore, are an interest in real property. Travelers Insurance Co. v. First National Bank of
Blue Island, 250 Ill. App. 3d 641, 645 (1993). In sum, the right to receive collected rents is
incident to ownership and, therefore, is governed by the statute of frauds. Because there was no
writing demonstrating any agreement for collecting rents on the property, the alleged oral
agreement is barred by the Frauds Act.
¶ 46 CONCLUSION
¶ 47 We conclude that the alleged oral agreement for the ownership and operation of the subject
property was precluded by the Frauds Act. We, therefore, affirm the circuit court’s judgment
that the Trust was barred from enforcing a one-half property interest in the subject property;
however, we reverse the circuit court’s judgment finding that the Trust was entitled to enforce
an interest related to the leasing of the subject property.
¶ 48 Affirmed in part and reversed in part.
- 14 -
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117 Ga. App. 163 (1968)
159 S.E.2d 300
GLEN FALLS INSURANCE COMPANY et al.
v.
MERCK.
43312.
Court of Appeals of Georgia.
Submitted January 9, 1968.
Decided January 15, 1968.
Rehearing Denied January 31, 1968.
Woodruff, Savell, Lane & Williams, Ronald L. Davis, John M. Williams, for appellants.
Ellard & Frankum, Stephen D. Frankum, for appellee.
PANNELL, Judge.
Where, as in the present case, it appears that the employer, a college, maintained a construction and maintenance crew for work on its property and in order to keep these crews busy and working, permitted and authorized them by direction of their supervisor to do work on the property of members of the college staff, at times, but not always, charging the staff member with the workers' time and materials for which the college was reimbursed by the staff member, that the purpose in doing so was a part of the services that the college rendered its staff and faculty and to keep the employees busy so as to prevent them from leaving the job, the director and the State Board of Workmen's Compensation were authorized to find that an employee, accidentally injured while doing such work, received such injury arising out of and within the scope of his employment. See F. E. Fortenberry & Sons v. Malmberg, 97 Ga. App. 162 (2) (102 SE2d 667); J. W. Starr & Sons Lumber Co. v. York, 89 Ga. App. 22, 28 (78 SE2d 429). In this case, there is direct evidence that the method of operation was for the benefit of the employer in maintaining and keeping a construction and maintenance crew, whereas in American Mutual Liab. Ins. Co. v. Lemming, 187 Ga. 378 (200 SE 141), relied on by appellant, there was no such testimony. An inference arising from the evidence that this may be so is not sufficient. See Corum v. Edwards-Warren Tire Co., 110 Ga. App. 33, 34 (3) (137 SE2d 738). The judge of the superior court did not err in affirming the award of the State Board of Workmen's Compensation.
Judgment affirmed. Jordan, P. J., and Deen, J., concur.
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435 F.Supp. 917 (1977)
Samuel A. LANE, Plaintiff,
v.
M'S PUB, INC., Defendant.
Civ. No. 76-0-459.
United States District Court, D. Nebraska.
August 24, 1977.
*918 John F. Thomas, Omaha, Neb., for plaintiff.
William G. Dittrick, Omaha, Neb., for defendant.
MEMORANDUM AND ORDER
DENNEY, District Judge.
This matter is before the Court upon the defendant's motion for summary judgment [Filing # 17] after a hearing on August 12, 1977. This action arises under the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. for the recovery of unpaid overtime compensation pursuant to 29 U.S.C. § 207 and liquidated damages pursuant to 29 U.S.C. § 216(b). Jurisdiction is based on 28 U.S.C. § 1337.
The defendant is a restaurant and bar in Omaha, Nebraska. The plaintiff worked for the defendant from January 1, 1976 through September 3, 1976 as a "bookkeeper and manager" [Filing # 19]. The plaintiff alleges that during the period of his employment he worked an unspecified number of workweeks in excess of forty-six hours without payment of overtime compensation, in violation of 29 U.S.C. § 207.
The defendant claims to be exempt from the wage and hour provisions of the Act by virtue of 29 U.S.C. § 213(a)(1) and 29 U.S.C. § 213(a)(2). Section 213(a)(1) exempts
any employee employed in a bona fide executive, administrative, or professional capacity . . . (as such terms are defined and delimited from time to time by regulations of the Secretary . . . except that an employee of a retail or service establishment shall not be excluded from the definition of employee employed in a bona fide executive or administrative capacity because of the number of hours in his workweek which he devotes to activities not directly or closely related to the performance of executive or administrative activities, if less than 40 per centum of his hours worked in the workweek are devoted to such activities.)
The Court finds that this exemption does not apply to the plaintiff for the reasons set forth below.
The defendant asserts that the plaintiff was in charge of issuing and verifying payroll checks, ordering and paying for supplies, hiring and firing restaurant employees, and "generally managing the customer service aspect of the defendant's restaurant" [Filing # 19]. The defendant has not specified any hourly, weekly, or other percent of the plaintiff's total time spend in each of these duties. Moreover, there is a suggestion in the record that the plaintiff also served as a waiter and bartender, and the hours spent in those occupations are not indicated [Filing # 10].
*919 29 C.F.R. § 541.1 establishes six criteria, all of which must be met before the plaintiff can be considered an "executive" employee. See generally, Rau v. Darling's Drug Store, Inc., 388 F.Supp. 877, 881-83 (W.D.Pa.1975). Section 541.1(b) requires that the employee "customarily and regularly [direct] the work of two or more other employees." The defendant does not claim that plaintiff fulfilled this requirement.
Section 541.1(d) requires that the employee "customarily and regularly [exercise] discretionary powers." The Court finds that the issuing of payroll checks and ordering and paying for supplies are essentially clerical duties. While hiring and firing personnel would constitute the exercise of discretion, no specific amount of time is assigned to the various activities performed by the plaintiff. Section 541.1(e) limits the "bona fide executive" to one who does not devote more than forty percent of his time to activities which are not directly or closely related to the executive duties defined in Sections 541.1(a)-(d).
Finally, Section 541.1(f) requires that an executive employee be compensated on a "salary basis." 29 C.F.R. § 541.118(a) excludes employees, such as the plaintiff, paid on an hourly basis, i. e., who are not paid "a predetermined amount . . . without regard to the number of days or hours worked."
Because defendant has not established that plaintiff customarily and regularly exercised discretion and independent judgment at least in the performance of a substantial portion of his duties and that he performed administrative or professional activities for not less than sixty percent of his time and because he was not paid on a salary basis as defined by the Secretary of Labor, the plaintiff also does not meet the definitions of bona fide "administrative" or "professional" employees set forth in 29 C.F.R. § 541.2 and § 541.3.
The above regulations promulgated by the Secretary of Labor are presumed valid unless shown to conflict with the Act. Gilstrap v. Synalloy Corp., Indus. Piping Supply Co. Div., 409 F.Supp. 621, 624 (M.D. La.1976). They are constitutional. See Craig v. Far West Engineering Co., 265 F.2d 251, 257-59 (9th Cir. 1959); Hodgson v. Barge, Waggoner & Sumner, 377 F.Supp. 842, 844 (M.D.Tenn.1972); aff'd, 477 F.2d 598 (6th Cir. 1972). See also Wirtz v. Miss. Publishers Corp., 364 F.2d 603, 608 (5th Cir. 1966). The Eighth Circuit has stated that
the burden is upon those who attack an administrative regulation (when power to make regulations is given by Congress) to make its invalidity so manifest that the Court has no choice except to hold the regulation inappropriate to the end specified in the Act of Congress.
Knight v. Mantel, 135 F.2d 514, 517 (8th Cir. 1943). The defendant's attack on the regulations has not met this standard.
Moreover, exemptions under the Fair Labor Standards Act are to be strictly construed. Mitchell v. Ky. Fin. Co., 359 U.S. 290, 295, 79 S.Ct. 756, 3 L.Ed.2d 815 (1959); Phillips Co. v. Walling, 324 U.S. 490, 493, 65 S.Ct. 807, 89 L.Ed.2d 1095 (1945). The employer bears the burden of proving each of the conditions set forth in the regulations which define the claimed exemptions. Craig v. Far West Engineering Co., supra, 265 F.2d at 257. The defendant has not carried this burden.
The defendant next alleges that it meets the three-part test for the exemption established in 29 U.S.C. § 213(a)(2). However, the Court finds that the defendant does not meet the third part of the test for this exemption because it is "an enterprise described in 29 U.S.C. § 203(s)." 29 U.S.C. § 203(s) includes in the definition of an "enterprise engaged in commerce or in the production of goods for commerce" one which has "employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce" and whose annual gross volume of sales exceeds $250,000.00.
The defendant has admitted [Filing # 7] that in 1975 and 1976 it purchased food products and T-shirts from other states for which it paid $3,798.00 and $6,248.00 respectively. Its gross volume of sales in 1975 *920 was $274,228.00 and in 1976 was $309,223.00 [Filing # 10]. The Court finds that the exemption set forth in 29 U.S.C. § 213(a)(2) as further defined by 29 U.S.C. § 203(s) is not available to the defendant. See Wirtz v. Melos Construction Corp., 408 F.2d 626 (2nd Cir. 1969).
The defendant has also moved for summary judgment on the issue of whether liquidated damages would be appropriate in this action if defendant has violated 29 U.S.C. § 207.
29 U.S.C. § 216(b) provides that an employer who violates the wage and hour portions of the Act shall be liable to the affected employee for liquidated damages in the amount of the unpaid overtime compensation. However, the Court in its discretion may decline to award liquidated damages if the failure to pay overtime wages was in good faith and based on a reasonable belief that the Act was not thereby violated. See 29 U.S.C. § 260; Craig v. Far West Engineering Co., supra, 265 F.2d at 261.
The Court finds that this is not an appropriate case for an award of liquidated damages. In two uncontroverted affidavits, the owner, President and Treasurer of the defendant, Mary H. Vogel, stated that she acted in good faith with respect to the plaintiff and did not believe that the overtime portions of the Act applied to her employees. She paid the plaintiff substantially more than the legal minimum wage and never required that he work in excess of forty-six hours per week.[1] If plaintiff worked more than forty-six hours in any particular workweek, it was at his own request. The defendant's owner consulted her accountant who informed her that M'S Pub is solely a local and intrastate business to which the Fair Labor Standards Act does not apply. While the accountant was mistaken, the Court finds that Mary H. Vogel reasonably and in good faith relied on his advice.
Clearly, the defendant's owner sought to ascertain the law so as to comply with it. See Hodgson v. Barge, Waggoner & Sumner, Inc., supra, 377 F.Supp. at 845. The substantial payment to plaintiff in excess of the minimum wage demonstrates the defendant's good will. See Rau v. Darling's Drug Store, supra, 388 F.Supp. at 887. An award of liquidated damages is a severe sanction. Snelling v. O. K. Service Garage, Inc., 311 F.Supp. 842, 846 (E.D.Ky.1970). As in that case, "[t]he facts of this case are not so clear cut that the defendant could not sincerely believe [she] was exempt."
Therefore, in accordance with the above opinion, partial summary judgment with respect to the issue of exemption from the Fair Labor Standards Act pursuant to 29 U.S.C. § 213(a)(1) and (2) is denied as to the defendant and is granted as to the plaintiff. The Court specifically finds that the defendant is not exempt from the wage and hour provisions of 29 U.S.C. § 207.
Partial summary judgment with respect to the issue of liquidated damages is granted to the defendant. The Court finds that the defendant has made a sufficient showing of good faith and reasonable grounds for belief that the Act had not been violated. The Court will not award liquidated damages in exercise of the discretion conferred by 29 U.S.C. § 260.
IT IS THEREFORE ORDERED that partial summary judgment with respect to the issue of exemption from the Fair Labor Standards Act is denied to the defendant and granted to the plaintiff.
IT IS FURTHER ORDERED that partial summary judgment with respect to the issue of liquidated damages is granted to the defendant.
IT IS FURTHER ORDERED that within thirty (30) days hereof, the plaintiff shall notify the Court in writing whether the remaining issues not submitted for summary judgment will be tried, abandoned or settled.
NOTES
[1] As defendant operates a restaurant, employees such as the plaintiff are entitled to overtime wages only for hours worked in excess of forty-six hours in any workweek. See 29 U.S.C. § 213(b)(8)(A).
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12 N.Y.3d 710 (2009)
MATTER OF CHASM HYDRO, INC.
v.
NEW YORK STATE DEPT. OF ENVTL. CONSERVATION.
Court of Appeals of New York.
Decided May 12, 2009.
Motion for leave to appeal granted.
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670 F.Supp. 52 (1987)
Gordon C. WILSON, individually and as Personal Representative of the Estate of Nancy L. Wilson, Plaintiff,
v.
CONNECTICUT GENERAL LIFE INSURANCE COMPANY and L.L. Bean, Inc., Defendants.
Civ. No. 87-0131-P.
United States District Court, D. Maine.
September 15, 1987.
Anthony K. Ferguson, Fales & Fales, Lewiston, Me., for plaintiff.
Jotham D. Pierce, Jr., John J. Aromando, Pierce Atwood Scribner, James M. Bowie, Hunt Thompson & Bowie, Portland, Me., for defendants.
ORDER ON PENDING MOTIONS
GENE CARTER, District Judge.
In this action Plaintiff filed in state court a complaint alleging various state law claims. These regarded Defendants' failure to pay a sum allegedly payable to Plaintiff under a supplemental life insurance policy purchased by Plaintiff's wife as part of a benefit program offered by her employer, Defendant L.L. Bean, Inc. Defendant Connecticut General removed the case to this court on the grounds that the claims were not only preempted by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001, et seq., but that they were also displaced by ERISA's civil enforcement provision, 29 U.S.C. § 1132(a)(1)(B). Pilot Life Insurance Co. v. Dedeaux, ___ U.S. ___, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987); Metropolitan Life Insurance Co. v. Taylor, ___ U.S. ___, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987).
Shortly after their initial scheduling conference in this court, Plaintiff demanded a jury trial, which demand Defendants have moved to strike.[1] By motion of August 13, 1987 Defendant Connecticut General moved to dismiss the action on the grounds that the complaint contains only state law causes of action, preempted by ERISA, and fails to state a cognizable cause of action. *53 Acknowledging the Supreme Court's above-cited recent teachings on the subject, Plaintiff has moved to amend his complaint to include a claim under the civil enforcement provision of ERISA, 29 U.S.C. § 1132(a). Defendant Connecticut General has objected to the Motion to Amend, asserting that even as amended, the complaint fails to state a claim under ERISA. Defendant moves in the alternative for a more definite statement of the claim.
Defendant's petition for removal cites Metropolitan Life Insurance Co. v. Taylor, ___ U.S. ___, 107 S.Ct. 1542, for the proposition that claims like Plaintiff's "are completely displaced by the civil enforcement provision of ERISA, 29 U.S.C. § 1132(a)(1)(B), thus rendering causes of actions like the Plaintiff's, regardlessof how pleaded, exclusively federal questions." Section 1132(a)(1)(B) provides that a participant or beneficiary may bring a civil action "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan or to clarify his rights to future benefits under the terms of the plan." As Defendant states in its petition for removal, the complaint alleges that Plaintiff's deceased wife was an employee of L.L. Bean, which provided as part of its employee benefit plan a group life insurance policy. The Court agrees with Defendant that the complaint, at the least, asserts a claim by Plaintiff, his wife's beneficiary under the policy, "for benefits allegedly wrongfully denied under the Plan." Petition for Removal at 3. Given Defendant's description of the complaint, the Court finds it difficult to understand why Defendant asserts that Plaintiff has not filed a cognizable federal claim under 29 U.S.C. § 1132.
Under Rule 15(a) of the Federal Rules of Civil Procedure, leave to amend a pleading "shall be freely given when justice so requires." The Court will, therefore, grant Plaintiff's Motion to Amend to allege ERISA as the basis for this action. With the amendment, or possibly even without it, see Fed.R.Civ.P. 8(a)(1) and Metropolitan Life Insurance Co. v. Taylor, ___ U.S. ___, 107 S.Ct. 1547, the complaint meets the rather minimal pleading requirements set forth in Rule 8 of the Federal Rules of Civil Procedure, and is not subject to dismissal for failure to state a claim.
Turning to the motion to strike Plaintiff's demand for a jury trial, the Court notes that most courts, including itself, have not permitted jury trials for claims brought under section 1132(a)(1)(B) of ERISA. See, e.g., Strout v. GTE Products Corp., 618 F.Supp. 444 (D.Me.1985); Turner v. CF & I Steel Corp., 770 F.2d 43, 47 (3d Cir.1985); Calamia v. Spivey, 632 F.2d 1235 (5th Cir.1980); Wardle v. Central States, Southeast and Southwest Areas Pension Fund, 627 F.2d 820 (7th Cir.1980), cert. denied, 449 U.S. 1112, 101 S.Ct. 922, 66 L.Ed.2d 841 (1981). As this Court stated in Strout,
a suit for pension benefits under ERISA essentially is based on the law of trusts and the conduct of the trustee, rather than the law of contracts. Thus, a legal rather than an equitable remedy only would arise if one is seeking to enforce a duty to pay benefits due immediately and unconditionally, such as in a standard breach of contract action.
Strout v. GTE Products Corp., 618 F.Supp. at 445.
Most of the above cases subscribing to this view, however, are factually distinct from the case at bar because they deal with attempts to collect pension benefits. In the instant case the claim seeks to collect money allegedly owed under a life insurance policy provided under the benefit plan. The question arises, then, whether such a claim is for "benefits due immediately and unconditionally" and should therefore be considered legal rather than equitable for purposes of determining the propriety of a jury trial. In recent dictum, the Court of Appeals for the Ninth Circuit indicated its belief that claims for benefits denied under a life insurance policy provided by the benefit plan seek a legal remedy because they sound in contract, not in trust. Trans-america Occidental Life Insurance Co. v. Digregorio, 811 F.2d 1249, 1251-52 n. 2 (9th Cir.1987). This Court is satisfied, however, that Plaintiff's claim should not be *54 considered one to enforce benefits due immediately and unconditionally, because eligibility for the life insurance benefit is the salient issue in this case. Traditionally,
[c]hancery was responsible for the supervision of trusts, and as long as there was a question concerning the administration of the trust including the interpretation of its terms the [legal] writs of debt and assumpsit were unavailable. In such cases, beneficiaries could be heard only in equity. Plaintiffs in plan-enforcement actions thus bring an action analogous to one at law only if the defendant trustee admits that plaintiff is entitled to benefits.
Note, 96 Harv.L.Rev. 737, 752 (1983); see also Sichko v. Lewis, 191 F.Supp. 68, 68-69 (W.D.Pa.1960).
Defendants here deny that Plaintiff is entitled to benefits, so no legal remedy is available. Moreover, trial will center on whether the trustee properly exercised discretion in denying Plaintiff's eligibility for the life insurance benefit, and such inquiry does not lend itself to the traditional jury trial. See Strout, 618 F.Supp. at 445; Turner v. CF & I Steel Corp., 770 F.2d at 47.
Accordingly, it is ORDERED that Defendants' Motion to Strike Plaintiff's Request for a Jury Trial be, and it is hereby, GRANTED.
It is FURTHER ORDERED that Plaintiff's Motion to Amend the Complaint be, and it is hereby, GRANTED.
Finally, Defendants' Motion to Dismiss and Motion in the Alternative for a More Definite Statement are hereby DENIED.
NOTES
[1] By letter of September 2, 1987, Defendant L.L. Bean has joined in Connecticut General's Objection to the Motion to Amend and Motion to Strike the Plaintiffs Request for a Jury Trial.
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226 Miss. 716 (1956)
85 So.2d 215
FORD, et al.
v.
JONES, et ux.
No. 39942.
Supreme Court of Mississippi.
February 13, 1956.
*717 Welch & Gibbes, Laurel; Evon A. Ford, Taylorsville; Walker & Cox, Laurel, for appellants.
McFarland & McFarland, Bay Springs, for appellees.
*718 ETHRIDGE, J.
The issue on this appeal is the construction of a deed to an interest in oil, gas and other minerals, which was executed on December 28, 1944, by appellees, J.T. and Geneva Jones, to appellant, Evon A. Ford. The suit was brought in the Chancery Court of Jasper County, Second Judicial District, by appellees, the Joneses, against appellants, Ford, A.F. Chisholm and Central Oil Company, the latter two claiming under subsequent conveyances from Ford. The chancery court agreed with appellees' contentions and held that the instrument hereinafter described conveyed to Ford a one-fourth royalty interest, and not a one-fourth undivided interest in the minerals in place. It also dismissed the cross bill of appellant Chisholm.
The deed is on a "Form R-101" and is entitled "Mineral Right and Royal Transfer (To Undivided Interest)". Ford paid the Joneses $135 an acre, or a total price of $1,350. The deed recites a consideration of $10 and other good and valuable considerations. The granting clause conveys to grantee "an undivided one-fourth (1/4) interest in and to all of the oil, gas and other minerals of every kind and character in, on or under that certain tract or parcel of land" as described. The form used was a printed form, but following the property description there was typed in these two paragraphs:
"It is the intention of grantors, by this instrument, to convey, and the intention of grantee to purchase an undivided ten (10) royalty acres under the above described lands.
"It is understood and agreed that this land is now subject to an outstanding oil, gas, and mineral lease and *719 grantee waives the right to receive any part of the delayed drilling rentals as provided in said lease."
The habendum clause is a usual one in a mineral deed. It recites that the grantee holds "the said undivided interest in all of the said oil, gas and other minerals in, on or under said land, together with all and singular the rights and appurtenances thereto in anywise belonging, with the right of ingress and egress, and possession at all times for the purpose of mining, drilling and operating for said minerals and the maintenance of facilities and means necessary or convenient for producing, treating and transporting such minerals and for housing and boarding employees, unto said grantee, his heirs, successors and assigns, forever; and grantor herein for himself and his heirs, executors and administrators hereby agrees to warrant and forever defend all and singular the said interest in said minerals, unto the said grantee, his heirs, successors and assigns against every person whomsoever lawfully claiming or to claim the same or any part thereof."
The grantee has the right any time to redeem for the grantor any liens on the land, where grantor has defaulted, and to be subrogated thereto; and the conveyance is subject to any valid existing mineral lease, "but, for the same consideration hereinabove mentioned, grantor has sold, transferred, assigned and conveyed and by these presents does sell, transfer, assign and convey unto grantee, his heirs, successors and assigns, the same undivided interest (as the undivided interest hereinabove conveyed in the oil, gas and other minerals in said land) in all the rights, rentals, royalties and other benefits accruing or to accrue under said lease or leases from the above described land; to have and to hold unto grantee, his heirs, successors and assigns." The instrument was filed for record on January 1, 1945, four days after its execution. This suit was brought by appellees on June 18, 1954.
*720 (Hn 1) We have concluded that the instrument conveyed to the grantee an undivided one-fourth interest in the minerals in place. This included a fractional interest in the reversionary fee estate in the minerals in place, the rights to receive rents and royalties under mineral leases, subject to the exception in the deed as to rentals under the then existing lease to Graham, and the rights to participate in execution of new mineral leases and to receive a proportionate part of any bonus consideration therefor. (Hn 2) The intent of the grantor in the deed must where possible be ascertained by construing the instrument as a whole, and from a fair consideration of the entire instrument, if it can be reasonably done. Salmen Brick and Lumber Company, Ltd. v. Williams, 210 Miss. 560, 50 So.2d 130 (1951).
(Hn 3) The rule that the written provisions of a deed control over the printed provisions applies only when the former cannot be reconciled with the latter, and where they are wholly inconsistent. Dale v. Case, 217 Miss. 298, 308-310, 64 So.2d 344 (1953). All of the provisions of this instrument can be reconciled only by construing it as a mineral and not a royalty deed. Its title is "mineral right and royalty transfer (to undivided interest)". The granting clause conveys a one-fourth interest in all of the oils, gas and other minerals in and under the land. The habendum clause refers to the interest conveyed as an "undivided interest" in the minerals, with the right of ingress and egress and possession for the purpose of drilling and producing such minerals. The warranty clause extends to "said interest in said minerals", and the deed recites in its latter part that the grantor conveys unto grantee "the same undivided interest (as the undivided interest hereinabove conveyed in the oil, gas and other minerals in said land) and all the rights, rentals, royalties and other benefits accruing or to accrue" under leases on the land.
The two intention clauses or sentences written into the instrument are entirely consistent with the foregoing *721 provisions. The first recites that it is the intention of grantors and grantee to convey "ten royalty acres." Of course a deed to minerals in place carries along with it the royalty rights in the land, unless expressly excepted. Furthermore, the second intention sentence recites that the land is subject to an existing mineral lease, and that "grantee waives the right to receive any part of the delayed drilling rentals as provided in said lease." This provision would have been useless if the deed conveyed only a royalty interest. The grantee could waive rentals under an existing lease only if the nature of the deed in fact conveyed to him the rentals unless an exception of them was made. Moreover, the latter part of the instrument conveys expressly to the grantee the rentals under future leases.
Appellees contend that the instrument conveyed only a royalty interest, but if this position were accepted, one of the two intention clauses written into the instrument would necessarily constitute the entire instrument, namely, that referring to "ten royalty acres." The entire balance of the deed would have to be disregarded, and our duty is to interpret the intention of the parties from an examination of the entire instrument. The reference to royalty acres therefore and necessarily must be construed as simply a reference to one of the several rights which the instrument was intended to convey.
Appellees rely on Dale v. Case, supra, which involved an admitted mineral deed, but which provided, "This deed shall not participate in present oil and gas lease, but shall participate in any and all such future leases." In the light of the circumstances of that particular case, it was held that this provision excepted from its grant the royalties from one of two tracts covered by the instrument, from which there was production under a lease in existence at the time of its execution. Koenig v. Calcote, 199 Miss. 435, 25 So.2d 763, involved in part the construction of a mineral deed which also stated that *722 it covered one-half of the royalties. It was held that the instrument conveyed a one-half mineral interest.
In Texas Gulf Producing Company v. Griffith, 218 Miss. 109, 141, 65 So.2d 447, 834 (1953), the Court construed a printed instrument entitled "Royalty Deed," and in which the grantors reserved the exclusive right to lease the lands, and the rights to bonus money for future leases and all delay rentals. There was typed in the deed, "It is the intention of the grantors herein to convey by these presents and they do convey by these presents 24 mineral acres." Despite this intention clause, it was held that reading the instrument as an entirety it conveyed only a royalty and not a mineral interest. This decision is particularly pertinent to the present facts. (Hn 4) It is well-settled that grantors and grantees in oil, gas and mineral deeds may separate in their conveyances the several interests constituting a mineral estate. Westbrook v. Ball, 77 So.2d 174 (Miss. 1955); Woods v. Sims, 273 S.W.2d 617 (Sup. Ct. of Texas, 1955).
Reversed and judgment rendered for appellants.
McGehee, C.J., and Hall, Lee and Holmes, JJ., concur.
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IN THE MATTER OF THE REINSTATEMENT OF HOLLAWAY
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IN THE MATTER OF THE REINSTATEMENT OF HOLLAWAY2020 OK 8Case Number: SCBD-6811Decided: 01/28/2020THE SUPREME COURT OF THE STATE OF OKLAHOMA
Cite as: 2020 OK 8, __ P.3d __
IN THE MATTER OF THE REINSTATEMENT OF: BLAIR STEVEN HOLLAWAY TO MEMBERSHIP IN THE OKLAHOMA BAR ASSOCIATION AND TO THE ROLLOF ATTORNEYS
ORIGINAL PROCEEDING FOR RULE 11 BAR REINSTATEMENT
¶0 Petitioner, Blair Steven Hollaway, filed a petition for reinstatement to membership in the Oklahoma Bar Association. By unanimous vote, the Trial Panel recommended that Petitioner should be reinstated. The Oklahoma Bar Association recommends that the findings of the Trial Panel be adopted. Upon de novo review, we determine that reinstatement should be granted and impose costs of $95.11 within thirty (30) days from the date this opinion becomes final.
PETITION FOR REINSTATEMENT GRANTED;
PETITIONER ORDERED TO PAY COSTS OF $95.11.
Blair Steven Hollaway, Moore, Oklahoma, Petitioner/Pro Se,
Katherine M. Ogden, Assistant General Counsel, Oklahoma Bar Association, Oklahoma City, Oklahoma, for Respondent.
OPINION
EDMONDSON, J.:
¶1 Petitioner, Blair Steven Hollaway, filed his Petition for Reinstatement on June 14, 2019 requesting he be readmitted as a member of the Oklahoma Bar Association (OBA) pursuant to Rule 11, Rules Governing Disciplinary Proceedings, 5 O.S. 2011, Ch. 1, App. 1-A (RGDP). Petitioner graduated from the Oklahoma City University School of Law in 2010. He was admitted to the OBA and his name was entered on the roll of attorneys on July 13, 2010. Petitioner resided in Oklahoma until June 2011 but he did not practice law.
¶2 In June, 2011, Petitioner moved to Atlanta, Georgia where he accepted a job as general counsel with a company located in that city. Petitioner's position did not require him to appear in court or to be a member of the Georgia Bar Association. He worked with this company until 2013. Next, he accepted a position with a different company in Georgia as an account executive where he worked from 2013 until January, 2019. Petitioner returned to Oklahoma in February, 2019.
¶3 In 2014, Petitioner's license was suspended for failure to pay his OBA membership dues. In 2015, Petitioner was stricken from the roll of attorneys of the OBA for non-payment of membership dues.
¶4 On September 4 and October 4, 2019, a hearing on the Petition for Reinstatement was held before the Trial Panel of the Professional Responsibility Tribunal (PRT). The OBA did not contest the Petition for Reinstatement but noted that because Petitioner was suspended for five years the PRT was required to make a finding as to whether Petitioner would have to take the bar exam, whether Petitioner engaged in the unauthorized practice of law, and whether Petitioner met the standards for good moral character.
¶5 Petitioner testified at the hearing, and he also presented five different witnesses to testify as to his competency as an attorney, his moral character, and to determine if he had engaged in the unauthorized practice of law. The OBA presented only one witness, the OBA investigator.
¶6 The PRT found by clear and convincing evidence that the Petitioner possesses the competency and learning in the law required for admission to practice law in the State of Oklahoma. Further, that Petitioner has shown that notwithstanding his long absence from the practice of law, he has continued to study the law and he has completed significant hours of continuing legal education. Specifically, the PRT determined that Petitioner was informed as to current developments in the law sufficient to maintain his competency. In addition, the PRT found that Petitioner demonstrated by clear and convincing evidence that he possessed stronger proof of qualifications than an applicant seeking admission to the bar for the first time.
¶7 Petitioner testified under oath that he was not engaged in the practice of law at the time of his suspension and therefore, he had no clients to notify. The PRT found this testimony was sufficient proof for Petitioner to overcome the failure to file an Affidavit pursuant to Rule 9.1 of the Rules Governing Disciplinary Proceedings ("RGDP"). In addition, the PRT found that Petitioner demonstrated by clear and convincing evidence that he possesses good moral character sufficient to entitle him to be admitted to the OBA. Finally, the PRT found that Petitioner has shown by clear and convincing evidence that he has not engaged in the unauthorized practice of law nor has he appeared in court as attorney for any party nor has he participated as counsel of record in any litigation since he was suspended in 2014 and then stricken from the roll of attorneys in 2015. By a unanimous vote, the PRT recommended that Petitioner be reinstated to the Oklahoma Bar Association.
¶8 The PRT's report was filed with this Court on November 20, 2019 and this Court issued a briefing schedule on November 21, 2019. Petitioner filed a Waiver of Right to File Brief in Support on December 10, 2019. The OBA filed a Waiver of Answer Brief on December 17, 2019 stating the OBA agrees with the findings submitted by the PRT and recommended the adoption of all findings by the PRT.
¶9 This Court has the non-delegable, constitutional responsibility to regulate both the practice and the ethics, licensure, and discipline of Oklahoma attorneys. In re Reinstatement of Rickey, 2019 OK 36, ¶ 4, 442 P.3d 571, 574. Our review of the record is made de novo. State ex rel. Oklahoma Bar Ass'n v. Hulett, 2008 OK 38, ¶ 4, 183 P.3d 1014, 1016. In a reinstatement proceeding involving no prior imposition of discipline for attorney misconduct, the focus of our inquiry concerns 1) the present moral fitness of the applicant; 2) conduct subsequent to suspension as it relates to moral fitness and professional competence; 3) whether the attorney has engaged in the unauthorized practice of law; and 4) whether the attorney has complied with the rule-mandated requirements for reinstatement. Rickey, 2019 OK 36, ¶ 4, 442 P.3d at 574.
¶10 The PRT's recommendations, although entitled to great weight, are only advisory as the ultimate decision rests with this Court. In re Reinstatement of Pate, 2008 OK 24, ¶ 3, 184 P.3d 528, 530. Rule 11.4, RGDP, provides an applicant seeking reinstatement will be required to present stronger proof of qualifications than one seeking admission for the first time. In addition, Rule 11.5, RGDP provides the following element:
(c) Whether or not the applicant possesses the competency and learning in the law required for admission to practice law in the State of Oklahoma, except that any applicant whose membership in the Association has been suspended or terminated for a period of five (5) years or longer, or who has been disbarred, shall be required to take and successfully pass the regular examination given by the Board of Bar Examiners of the Oklahoma Bar Association. Provided, however, the before the applicant shall be required to take and pass the bar examination, he shall have a reasonable opportunity to show by clear and convincing evidence that, notwithstanding his long absence from the practice of law, he has continued to study and thus has kept himself informed as to current developments in the law sufficient to maintain his competency. If the Trial Panel finds that such evidence is insufficent to establish the applicant's competency and learning in the law, it must require the applicant to take and pass the regular bar examination before a finding as to his qualifications shall be made in his favor.
We have held this provision creates a rebuttable presumption that one who has been suspended for five years will not possess sufficient competency in the law to be reinstated, absent an extraordinary showing to that effect. In re Reinstatement of Farrant, 2004 OK 77, ¶ 7, 104 P.3d 567, 569. Each application for reinstatement must be considered on its own merits and the evidence presented in each case. In re Reinstatement of Kerr, 2015 OK 9, ¶ 19, 345 P.3d 1118, 1125.
ANALYSIS
I. Moral Fitness
¶11 Petitioner has never been disciplined by the OBA; the only issue that arose was his suspension for failure to pay dues. Petitioner was living out of state, not practicing law, and was facing financial difficulties when he was unable to pay his OBA dues. Five different witnesses testified at the hearing that overwhelmingly supported a finding that Petitioner is possessed of good moral character. The PRT found Petitioner had shown by clear and convincing evidence that he possessed good moral character sufficient to be readmitted to the OBA. Likewise, the OBA agreed with these findings. After an examination of the record, we agree with this finding.
II. Professional Competence Sufficient for Reinstatement
¶12 Rule 11.5, RGDP, requires petitioners for reinstatement to show they possess the competency and learning in the law required for admission. If they have been suspended or terminated for more than five years, there is a rebuttable presumption they will be required to retake the regular bar examination. However, this presumption can be overcome when a petitioner establishes competence and learning in the law. In re Reinstatement of Gill, 2016 OK 61, 376 P.3d 200.1
¶13 Petitioner presented evidence that during the time he was suspended his work experience required understanding of the law. He participated in a hearing in Georgia within the parameters allowed under Georgia law and presented evidence of his competency in serving in this role. Other witnesses testified about different independent research conducted by Petitioner reflecting diligence and competency in several different areas of the law. Evidence was presented reflecting that Petitioner was in compliance with his MCLE requirements at the time of his suspension. Further evidence was provided that he completed 30 hours of MCLE in 2019, including 2 hours of ethics. The PRT made a finding by clear and convincing evidence that Petitioner possessed the competency and learning in the law required for admission to practice law in the State of Oklahoma and further that even with his absence from the practice of law, he has continued to study and he has completed significant hours of continuing legal education and kept himself informed as to current developments. The PRT did not find that Petitioner was required to take the Oklahoma Bar Examination. We agree with the PRT and find the Petitioner has proven by clear and convincing evidence he possesses the level of competency and learning in the law to be reinstated to membership in the OBA without re-examination.
III. Unauthorized practice of Law and Rule 11.1, RGDP
¶14 The OBA investigator testified she had found no evidence in her investigation that Petitioner had engaged in the unauthorized practice of law during the time of his suspension. The investigator checked various databases, reviewed tax information and conducted an independent investigation. There was no evidence presented to indicate that Petitioner engaged in the unauthorized practice of law. Testimony from witnesses indicated that a hypothetical legal research project done by Petitioner was done under the supervision of an attorney and that Petitioner had not engaged in the unauthorized practice of law.
¶15 Rule 11.1, RGDP provides a mechanism for determining whether a petitioner has engaged in the unauthorized practice of law. Pursuant to this rule, the petitioner for reinstatement is required to submit an affidavit from each court clerk of the several counties in which he resided after suspension or termination of the right to practice law, establishing the petitioner has not engaged in the unauthorized practice of law in their respective courts during that period. Petitioner submitted an affidavit from the Oklahoma County Court Clerk attesting that the Petitioner had not appeared before any judge in the county since his suspension. Further, the investigator for the OBA testified that she found no cause for concern during her investigation into whether Petitioner had engaged in the unauthorized practice of law.
¶16 The PRT's report found the Petitioner had proven by clear and convincing evidence that he has not engaged in the unauthorized practice of law nor has he appeared in court as an attorney of record for any party in any litigation. We find no evidence to the contrary.
¶17 An affidavit from the OBA's MCLE Administrator states that Petitioner did not owe any MCLE credits or MCLE fees. If he is reinstated as a member of the OBA, Petitioner will need to obtain 12 hours of CLE, including 1 hour of ethics for the calendar year in which he is reinstated. An Affidavit from the OBA Director of Administration states that Petitioner will owe only his current membership dues of two hundred seventy-five dollars ($275.00) for the year of his reinstatement. The OBA filed an Application to Assess Costs, pursuant to Rule 11.1 (c), RGDP requesting that Petitioner pay costs in the amount of ninety-five dollars and eleven cents ($95.11) for expenses relating to this investigation. This application included an exhibit that reflects Petitioner was directly invoiced and has paid the costs of the transcript of the PRT proceedings. The record reflects there have been no payments expended from the Client's Security Fund on the Petitioner's behalf.
CONCLUSION
¶18 We hold that the Petitioner has demonstrated by clear and convincing evidence his eligibility for reinstatement without examination. Within thirty days of the date of this opinion, Petitioner shall pay the costs incurred in this proceeding in the amount of ninety-five dollars and eleven cents ($95.11) as required by Rule 11.1 (c), RGDP. He will also be required to pay the current year's (2020) OBA membership dues prior to reinstatement and following reinstatement shall complete mandatory continuing legal education sometime this year in the same manner as other members of the bar.
PETITION FOR REINSTATEMENT IS GRANTED;
PETITIONER IS ORDERED TO PAY COSTS
ALL JUSTICES CONCUR.
FOOTNOTES
1 Petitioner, Gill presented evidence of work experience that required an understanding of the law. In addition, her understanding of the law was pertinent to her extensive community service. Gill also completed continuing legal education courses as well as other evidence reflecting her competency. Also see, In re Reinstatement of Jones, 2006 OK 33, 142 P.3d 380, Petitioner demonstrated competency by working supervised as a volunteer law clerk, taking continuing legal education classes and regularly reading the Oklahoma Bar Journal; In re Reinstatement of Essman, 1987 OK 102, 749 P.2d 103, Petitioner was employed as a landman which required through knowledge of matters affecting title to real property and negotiation of purchasing oil and gas leases as well as taking continuing legal education classes.
Citationizer© Summary of Documents Citing This Document
Cite
Name
Level
None Found.
Citationizer: Table of Authority
Cite
Name
Level
Oklahoma Supreme Court Cases
CiteNameLevel
1987 OK 102, 749 P.2d 103, Reinstatement of Essman, Matter ofDiscussed
2004 OK 77, 104 P.3d 567, IN THE MATTER OF THE REINSTATEMENT OF FARRANTDiscussed
2006 OK 33, 142 P.3d 380, IN THE MATTER OF THE REINSTATEMENT OF JONESDiscussed
2008 OK 24, 184 P.3d 528, IN THE MATTER OF THE REINSTATEMENT OF PATEDiscussed
2008 OK 38, 183 P.3d 1014, STATE ex rel. OKLAHOMA BAR ASSOCIATION v. HULETTDiscussed
2015 OK 9, 345 P.3d 1118, IN THE MATTER OF THE REINSTATEMENT OF KERRDiscussed
2016 OK 61, 376 P.3d 200, IN THE MATTER OF THE REINSTATEMENT OF GILLDiscussed
2019 OK 36, 442 P.3d 571, IN THE MATTER OF THE REINSTATEMENT OF RICKEYDiscussed at Length
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Opinions of the United
2007 Decisions States Court of Appeals
for the Third Circuit
3-13-2007
Shah v. Atty Gen USA
Precedential or Non-Precedential: Non-Precedential
Docket No. 06-1478
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Recommended Citation
"Shah v. Atty Gen USA" (2007). 2007 Decisions. Paper 1491.
http://digitalcommons.law.villanova.edu/thirdcircuit_2007/1491
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 06-1478
ALI SHAH,
Petitioner
v.
ATTORNEY GENERAL OF THE UNITED STATES,
Respondent
On Petition for Review of an Order of the
United States Department of Justice
Board of Immigration Appeals
BIA No. A79-732-322
(Honorable Rosalind K. Malloy, Immigration Judge)
Submitted Pursuant to Third Circuit LAR 34.1(a)
March 12, 2007
Before: FUENTES, VAN ANTWERPEN, and SILER*, Circuit Judges.
(Filed: March 13, 2007)
OPINION OF THE COURT
_____________
* The Honorable Eugene E. Siler, Jr., Senior United States Circuit Judge for the Sixth
Circuit, sitting by designation.
VAN ANTWERPEN, Circuit Judge.
Petitioner Ali Shah, a native and citizen of Pakistan, seeks review of the January
12, 2006, Order of the Board of Immigration Appeals (“BIA”) that affirmed without
opinion the Immigration Judge’s (“IJ”) denial of his application for relief. We have
jurisdiction to review the petition pursuant to 8 U.S.C. § 1252(a), and for the reasons set
forth below, we will deny the petition.
I.
Because we write solely for the benefit of the parties, we will set forth only those
facts necessary to our analysis.
Shah entered the United States on or about December 17, 1998. Nearly four years
later, on October 17, 2002, the government commenced removal proceedings against him.
On April 29, 2003, Shah conceded removability and filed applications for asylum,
withholding of removal, and relief under the Convention Against Torture. He filed these
applications because he feared being harmed upon returning to Pakistan for his prior
involvement in Pakistani politics.
On October 20, 2004, the Immigration Court held a hearing at which Shah testified
to the following. Shah, a seaman by trade, joined the democratic Pakistan People’s Party
(“PPP”) in 1969 and became a PPP vice president in 1993. On February 4, 1998, he spoke
at a PPP demonstration about how members of Pakistan’s other political parties had
conspired to constrict the supply of water and electricity to areas primarily inhabited by
PPP party members in an effort to win converts from the PPP. Ultimately, the police
2
disbanded the demonstration, beating and arresting protestors and firing tear gas at them.
Shah escaped unharmed and went into hiding, staying at the houses of friends. One month
after the demonstration, a “report” was issued against him and he was summoned to
appear before a court. Shah remained in hiding, and in May 1998, the Pakistani
government issued a warrant for his arrest. Fearing arrest, Shah traveled to Karachi where
he waited to sail on a ship of the Pakistan National Shipping Corporation on which he
worked as a seaman. On June 20, 1998, he sailed out of Pakistan, and he arrived in New
Orleans on December 17, 1998.
On September 25, 2005, the IJ issued an oral decision in Shah’s case. She denied
Shah’s application for asylum because it was filed more than one year after he entered the
U.S. She also denied his applications for withholding of removal and relief under the
Convention Against Torture. In ruling on these applications, she explained that Shah
lacked credibility, and, even if she were to find him credible, he failed to establish that it
would be more likely than not that he would be tortured if returned to Pakistan. The IJ
granted Shah’s petition for voluntary departure.
The BIA affirmed the IJ’s decision without opinion on January 12, 2006. Shah
filed this appeal on February 3, 2006, contesting the IJ’s findings with respect to his
credibility and the likelihood of his being tortured.
II.
“When the BIA affirms an IJ without opinion, we review the IJ’s opinion...” Butt
3
v. Gonzales, 429 F.3d 430, 433 (3d Cir. 2005) (internal quotation marks and citation
omitted). We review the opinion under the substantial evidence standard. See Zubeda v.
Ashcroft, 333 F.3d 463, 471 (3d Cir. 2003). Under this standard, the decision must be
affirmed if it is “supported by reasonable, substantial, and probative evidence on the
record considered as a whole.” Balasubramanrim v. INS, 143 F.3d 157, 161 (3d Cir.
1998) (quoting INS v. Elias-Zacarias, 502 U.S. 478, 481, 112 S.Ct. 812 (1992)).
Furthermore, the IJ’s findings must be upheld “unless the evidence not only supports a
contrary conclusion, but compels it.” Abdille v. Ashcroft, 242 F.3d 477, 484 (3d Cir.
2001).
III.
A. Credibility Claim
Shah first claims the IJ erred in finding his testimony incredible. Because the IJ’s
finding is supported by substantial evidence, we reject this claim.
An adverse credibility finding must be supported by “specific cogent reasons” that
“bear a legitimate nexus to the finding.” Gao v. Ashcroft, 299 F.3d 266, 276 (3d Cir.
2002). “We look at an adverse credibility determination to ensure that it was
appropriately based on inconsistent statements, contradictory evidences, and inherently
improbable testimony in view of the background evidence on country conditions.” Dia v.
Ashcroft, 353 F.3d 228, 249 (3d Cir. 2003) (internal citation and quotations omitted).
Adverse credibility findings based on “speculation or conjecture, rather than on evidence
in the record, are reversible.” Gao, 299 F.3d at 272. Furthermore, the underlying basis of
4
an adverse credibility determination must go to the heart of the alien’s claims.1 Id.
The IJ based her credibility finding on the following. First, she disbelieved Shah’s
claim that he was a PPP leader. Shah was a seaman, and testified to being away on ships
for up to 12 months at a time. The IJ thought it unlikely that someone who was absent
from his village for long periods could be sufficiently involved in politics to rise to the
level of a party leader. Second, she found it unusual that, as a party member for nearly 30
years and a party leader for over 10 years, he never attended or spoke at a PPP
demonstration until 1998, just before his leaving for the U.S. Third, the IJ doubted that
the Pakistani government ever sought to arrest Shah. Shah admitted to working for nearly
20 years for the Pakistan National Shipping Corporation, a company owned by the
government. In addition, he continued his work as a seaman through December 1998,
well after a warrant was issued for his arrest. Had the police really been interested in
arresting Shah, the IJ reasoned, they could have easily contacted his long-time
government employer and discovered his whereabouts. Finally, the IJ doubted Shah’s
testimony about his being a wanted man. Shah testified that he requested permission from
the government to leave on the June 20, 1998 voyage. Both the filing of this request and
1
The Real ID Act of 2005 changes the standards governing credibility determinations,
such that a determination may be made “without regard to whether an inconsistency,
inaccuracy, or falsehood goes to the heart of the applicant’s claims.” Pub.L. 109-13, div.
B, § 101(a)(3)(B)(iii), 119 Stat. 231, 303 (to be codified at 8 U.S.C. § 1158(b)(1)(B)(iii)).
This provision applies only where an alien has filed for asylum, withholding of removal,
or other relief after the effective date of the Act, May 11, 2005. Because Shah applied for
relief in 2003, this provision does not apply to his claims.
5
the government’s subsequent granting of it occurred after a warrant was allegedly issued
for Shah’s arrest. The IJ found it unbelievable that the government, who Shah now claims
wants to harm him, would have granted him express permission to leave the country if it
truly sought to arrest him.
Because these inconsistencies are supported by the record and could lead a
reasonable adjudicator to doubt the veracity of Shah’s claims, we are not compelled to
overturn the IJ’s determination that Shah lacked credibility.
B. Other Claims
Shah next contends the IJ erred in finding he failed to establish that it was more
likely than not that he would be harmed, tortured, or killed if removed to Pakistan based
on his involvement in the PPP. Consequently, he claims he is entitled to withholding of
removal or relief under the Convention Against Torture. Because the IJ’s finding with
respect to Shah’s persecution and torture claims is supported by substantial evidence, we
reject this contention.
An applicant seeking withholding of removal must establish by a “clear
probability” that his life or freedom would be threatened in his country of origin because
of race, religion, nationality, or membership in a social or political group. Ghebrehiwot v.
Attorney General, 467 F.3d 344, 351 (3d Cir. 2006). To meet this burden, the applicant
must demonstrate that it is more likely than not that he would be persecuted upon his
return. Toure v. Attorney General, 443 F.3d 310, 317 (3d Cir. 2006) (quoting INS v.
Stevic, 467 U.S. 407, 424, 104 S.Ct. 2489 (1984)). An applicant can establish eligibility
6
for withholding of removal either by demonstrating past persecution or by showing a
likelihood of future persecution. See 8 C.F.R. § 1208.16(b).
To establish a claim for protection under the Convention Against Torture, the
applicant must meet a two-part test. First, it must be “more likely than not” that he would
be tortured if removed to the proposed country. 8 C.F.R. § 208.16(c)(2). And second, the
feared torture must be inflicted “by or at the instigation of or with the consent or
acquiescence of a public official or other person acting in an official capacity.” 8 C.F.R.
§ 208.18(a)(1). In assessing the probability of the applicant being tortured, the following
factors are relevant: (1) “evidence of past torture inflicted upon the applicant;” (2)
“evidence that the applicant could relocate to a part of the country of removal where he or
she is not likely to be tortured;” and (3) “evidence of gross, flagrant or mass violations of
human rights within the country of removal, where applicable.” 8 C.F.R. §
208.16(c)(3)(i)-(iii). “The testimony of the applicant, if credible, may be sufficient to
sustain the burden of proof without corroboration.” 8 C.F.R. § 208.16(c)(2).
In this case, the IJ found that, even if she were to credit Shah’s testimony about his
role in the PPP and the circumstances leading to his departure from Pakistan, Shah did not
show that it is “more likely than not” that he would be persecuted or tortured by the
government if returned to his homeland. In support of this finding the IJ cited the
following: First, Shah was never subject to persecution during the almost 30 years that he
was politically active in Pakistan. According to Shah, he joined the PPP in 1969, became
a leader of the party in 1993, and, prior to 1998, never reported having any contact with
7
the Pakistani police or other government officials. In addition, although he indicated that
police arrested three people at the February 4, 1998 demonstration, Shah admitted that he
was neither arrested nor harmed by police on this occasion. Second, since Shah has not
been politically active since leaving Pakistan and the events surrounding his departure
took place so long ago (in mid-1998), the IJ found it unlikely that the government would
still have an interest in him. Finally, with respect to his Convention Against Torture
claim, the IJ found Shah presented no evidence that, even if the government arrested
Shah, it was more likely than not to torture him. (Shah presented no evidence, for
example, that the three people arrested at the demonstration on February 4, 1998 were
tortured.)
We conclude the IJ’s findings are amply supported by the record. Shah admits that
he has never been persecuted or tortured because of his political beliefs in the past. In
addition, he presented little convincing evidence that shows he is likely to be persecuted
or tortured if he returns. Accordingly, we uphold the IJ’s decision with respect to Shah’s
petition for withholding of removal and relief under the Convention Against Torture.
IV.
We have considered all other arguments made by the parties on appeal, and
conclude that no further discussion is necessary. For the foregoing reasons, we conclude
that substantial evidence supports the IJ’s denial of Shah’s application and we will deny
the petition for review.
8
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765 F.2d 149
Pickardv.City of Henderson, Nev.
84-2384
United States Court of Appeals,Ninth Circuit.
6/11/85
1
D.Nev.
AFFIRMED
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837 F.2d 1096
Unpublished DispositionNOTICE: Federal Circuit Local Rule 47.8(b) states that opinions and orders which are designated as not citable as precedent shall not be employed or cited as precedent. This does not preclude assertion of issues of claim preclusion, issue preclusion, judicial estoppel, law of the case or the like based on a decision of the Court rendered in a nonprecedential opinion or order.Herman W. MARSHALL, Petitioner,v.UNITED STATES POSTAL SERVICE, Respondent.
No. 87-3383.
United States Court of Appeals, Federal Circuit.
Dec. 7, 1987.
Before RICH and DAVIS, Circuit Judges, and NICHOLS, Senior Circuit Judge.
RICH, Circuit Judge.
DECISION
1
The decision of the Merit Systems Protection Board in Docket No. SL07528610279, sustaining petitioner Herman Marshall's removal for sexual harassment, is affirmed.
OPINION
2
The Postal Service has defined sexual harassment in its Postal Bulletin No. 21404, dated May 19, 1983, at page 19. The Notice of Proposed Adverse Action to petitioner recited this definition, as did the Letter of Decision informing petitioner of his removal. Thereafter, the Postal Service's definition of sexual harassment disappears. The administrative judge nowhere mentions it. Neither do the parties. Instead, all rely on cases interpreting Title VII of the Civil Rights Act of 1964, 42 USC 2000e-2000e-17 (1982) and the Equal Employment Opportunity Commission's Guidelines on Discrimination Because of Sex, 29 CFR 1604.11 (1986).
3
We accept the premise that the Postal Service meant to prohibit by its Bulletin No. 21404 the same type of harassment which is addressed in the EEOC guidelines cognate to Title VII. We think it is well to remember, however, that the agency may proscribe conduct which does not rise to the level of a Title VII violation. As this court explained in Carosella v. U.S. Postal Service, 816 F.2d 638 (Fed.Cir.1987):
4
The right or opportunity for a victim of sexual harassment to seek redress under Title VII has no bearing on the right of an employer to establish reasonable rules governing the workplace....
5
....
6
... An employer is not required to tolerate the disruption and inefficiencies caused by a hostile workplace environment until the wrongdoer has so clearly violated the law that the victims are sure to prevail in a Title VII action. The agency need show only that "the employee's misconduct is likely to have an adverse effect upon the agency's functioning." Mings v. Department of Justice, 813 F.2d 384, 389 (Fed.Cir.1987).
7
Carosella, 816 F.2d at 642-43 (other citations omitted). Thus, although Title VII cases provide a useful reservoir of experience to guide our decision-making process, they are only persuasive authority. Carosella makes clear that the proper focus is on the efficiency of the service, and not on any putative violation of Title VII.
8
The administrative judge found that petitioner was engaged in "hostile environment" sexual harassment: sexual discrimination which creates an intimidating, hostile, or offensive working environment. See Meritor Savings Bank v. Vinson, --- U.S. ----, ----, 106 S.Ct. 2399, 2405-06, 91 L.Ed.2d 49, 59 (1986). Cases in this area have required that the harassment, to be actionable, must be sufficiently severe and persistent to affect seriously the psychological well-being of the employee. Henson v. City of Dundee, 682 F.2d 897, 904 (11th Cir.1982), cited with approval, Meritor, 106 S.Ct. at 2406; Downes v. Federal Aviation Administration, 775 F.2d 288, 292 (Fed.Cir.1985). Petitioner asserts that the finding of hostile environment harassment cannot stand because the administrative judge overlooked the requirement that the conduct be sufficiently severe and persistent to seriously affect the psychological well-being of complainant Barks.
9
We do not agree that the administrative judge "overlooked" this requirement. He made the following findings on this point:
10
I find that the offensive conduct by the appellant was sufficiently pervasive as to alter the conditions of Barks' employment and to affect her psychologically. The record clearly demonstrates that Barks was repeatedly caught between the pendulum swings of the appellant's promises to her of favors and his threats of disciplinary action. She also testified that the appellant's unwanted attentions embarrassed and humiliated her. Tr. 25. It is also clear that the attention and favoritism shown by the appellant to Barks at least temporarily alienated her fellow employees.
11
It is true that the first sentence of the above quotation omits the word "seriously" after "affect," as it is found in Downes, 775 F.2d at 292, and other authorities. However, the language and structure of this sentence otherwise mirror that found in Downes and we think the administrative judge was in fact averring to the "serious psychological effect" requirement when he made the above findings.
12
The issue thus reduces itself to one of the sufficiency of the evidence. In her written statement to the postal inspectors, Barks recounted that petitioner would gyrate on the one hand between threatening her with charges of insubordination, and promising on the other to leave her alone in the future. On this same point, Barks' clear testimony was that on some days petitioner would be threatening, and that on other days he would ask her what he could do to make her love him. This situation became "worse and worse," Barks testified, to the point where she felt her job was in danger if she didn't "go along." She testified that she felt as if she were "walking a tightrope." Thus, there was sufficient evidence to find that Barks found herself caught between what the administrative judge called "pendulum swings" of promises and threats from petitioner. Also, Barks testified more than once that she was embarrassed and humiliated by petitioner's undesired attentions. And substantial evidence supports the finding that petitioner's overweening interest in Barks led other employees to avoid being seen with her. In view of all this, we cannot say that the administrative judge's finding of the requisite psychological effect was unsupported by substantial evidence.
13
Petitioner mounts a challenge to the finding of nexus, but falls short of the mark. Whether phrasing the idea in terms of a presumption or otherwise, courts have recognized that there are some instances of misconduct where the connection between the misconduct and the efficiency of the service is self-evident. Hayes v. Dept. of the Navy, 727 F.2d 1535, 1539 (Fed.Cir.1984); Snipes v. U.S. Postal Service, 677 F.2d 375, 377-78 (4th Cir.1982). Over an eight month period, petitioner pressed his attentions on Barks through conversation, notes and letters, and physical advances. Petitioner knew that his advances were unwelcome. Instead of accepting this fact, he abused his supervisory position in an attempt to force the issue. We conclude that the nexus between petitioner's sexual harassment of Mrs. Barks and the efficiency of the service is obvious on the face of these facts. Indeed, that Congress in Title VII has gone so far as to make sexual harassment as there defined a crime makes clear that sexual harassment is deemed unacceptable in the workplace. We are unwilling to say that the Postal Service, which has defined sexual harassment in terms similar to those found in the EEOC guidelines on Title VII, lacked a rational basis for finding the required link between petitioner's misconduct and the efficiency of its service.
14
Petitioner was removed for his misconduct. The penalty is a harsh one, given his forty years of otherwise good service. Sexual harassment, however, is a serious form of misconduct. After carefully reviewing the administrative judge's findings in this regard, we hold that the agency did not overstep its discretion when it assessed the penalty of removal against petitioner.
15
We need not stop to consider the alternative finding of quid pro quo sexual harassment, because we affirm on the basis of the finding of hostile environment harassment. We have carefully reviewed petitioner's other contentions and find them to be insubstantial. The agency's action is affirmed as it is not arbitrary, capricious, an abuse of discretion, unsupported by substantial evidence or otherwise not in accordance with law. 5 USC 7703(c).
16
NICHOLS, Senior Circuit Judge, concurring.
17
I concur in the result. It seems obvious to me that petitioner Marshall harassed complainant Barks by offering promotion and other benefits in return for sexual favors, and threatened her with demotion and other detriments such as "counselling" when she persisted in refusal. The findings support this conclusion and the employer Postal Service had its rule of conduct which prohibited what Marshall, in his reckless infatuation, did. This is quid pro quo harassment by any standard. Therefore, I would affirm on the ground of quid pro quo harassment, the first ground on which the administrative judge made his decision.
18
On the other hand, I am totally befogged as to what "hostile environment" harassment means in the instant context. The Supreme Court in Meritor Savings Bank v. Vinson (slip op. June 19, 1986) draws a parallel between "hostile environment" harassment against women and conduct traditionally called discrimination as against blacks, hispanics, and other minorities, where race, not sex, is the basis of the hostile attitude. You might say it is insufficiently amorous conduct where that of Marshall was excessively amorous. It is conduct of persons who do not want the protected race or gender as fellow employees, or as subordinates. If Marshall in any literal sense at all created a hostile environment for complainant Barks, it was by arousing hostility towards her on the part of third-party Postal employees who resented his apparent disposition to grant her preference and favors they did not share. I can't help reading some of our and other lower court opinions as holding that the annoyance and mental distress caused by an over-amorous supervisor may of itself constitute a hostile environment, as much as an under-amorous attitude would do, and one might have to resort to such a theory if, unlike here, the supervisor offered nothing in return, or if he engaged in objectionable behavior such as fanny-pinching, which would anticipate no reciprocity. Here we don't need it.
19
It seems to me our problem is we know what behavior women employees should be protected against in the workplace, but we don't know how to define it, and have failed to do so in our published cases. Perhaps other courts, in cases not brought to our attention, have done better. In the absence of clear definitions, it appears to me we should stick to the short path and affirm the board where it is easy to do so, not on its finding that an ill-defined offense was also somehow committed.
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PRICE DANIEL
Auen~~~.'iIkxas
ATT..Rh-RY
~~iS~z*..x.
August 8, 1952
Hon. Coke R. Stevenson, Jr.
Administrator
Texas Liquor Control Board
Austin, Texas Opinion po. v-1500
Re: Application of Saction 37
of Article 666-17; Ver-
non's Penal Code, to the
sale of confiscated alco-
holic beverages by the
Dear Mr. Stevenson: Texas Liquor Control Board.
Your request for the opinion of this office reads
in part as follows:
"We desire your valued opinion on each of
the following questions relating to the action
of this Department in advertising for, accept-
ing or rejecting sealed bids for the purchase
of confiscated alcoholic beverages from this
Department.
"(1) Whether or not this Department has
the authority to reject a high bid received
from a Package Store Permittee whose name IS
carried on the Board's Delinquent Account List
at the time the bids are opened.
"(2) Whether or not the Board has the au-
thority in advertising for the sale of confis-
cated alcoholic beverages, to also publish
notice that bids will not be accepted from any
permlttee whose name appears on the Board's
Delinquent Account List at the time the sealed
bids are opened."
Article 666-30, Vernon's Penal Code, provides,
In part, a8 follows:
"(a) All alcoholic beverages and the con-
tainers thereof, and any device in which the
alcoholic beverage Is packaged, equipment, and
other property forfeited to the State, unless
Hon. Coke R. Stevenson, Jr., page 2, (V-1500)
otherwise herein provided, and all illicit
beverages and the containers thereof, and
any device in which the alcoholic beverage
Is packaged Is forfeited to the State, shall
be turned over to the Board for public or
private sale In such place and manner as It
may deem best: provided, that the Board
shall exercise diligent effort to obtain the
best available price for anything thus sold:
provided, further, that any bill of sale
executed by the Board or Administrator shall
convev a nood and valid title to the nur-
chaser as-to any such property sold. *The
Board shall sell alcoholic beverages only to
the holders of qualified permits or licenses."
(Emphasis added.)
Sectlon 37 of Article 666-17, Vernon's Penal
Code,provides:
"It shall be unlawful for any Whole-
saler, Class B Wholesaler, Class A Winery
or Wine Bottler to sell any alcoholic bev-
erage, nor shall any Package Store Per-
mittee, Wine Only Package Store Permittee,
or other retailer purchase any alcoholic
beverage, except for cash or on terms re-
quiring payment by the purchaser as follows:
On purchases made from the first to fif-
teenth day inclusive of each calendar month,
payment must be made on or before the twenty-
fifth day of the same calendar month: and,
on purchases made from the sixteenth to the
last day inclusive of each calendar month,
payment must be made on or before the tenth
day of the succeeding calendar month. Every
delivery of alcoholic beverage must be ac-
companied by an invoice of sale giving the
date of purchase of such alcoholic beverage.
In the event any Package Store Permittee,
Wine Only Package Store Permittee, or other
retail dealer becomes delinquent in the pay-
ment of any account due for alcoholic bev-
erages purchased, (that is, if he fails to
make full payment on or before the date here-
inbefore provided) then it shall be the duty
of the Wholesaler, Class B Wholesaler, Class
A Winery or Wine Bottler to report the fact
immediately to the Board or Administrator Ln
Eon. Coke R. Stevenson, Jr., page 3, (V-1500)
writing. Any Packsge Store Permittee, Wine
Only Package Store permittee, or other re-
tail dealer who becomes delinquent shall not
be permitted to purchase alcoholic beverages
from any Wholesaler, Class B Wholesaler,
Class A Winery or Wine Bottler until said de-
linquent account is paid in full, and the
delinquent account shall be cleared from the
records of the Board before any Wholesaler,
Class B Wholesaler, Class A Winery or Wine
Bottler will be permitted to sell alcoholic
beverages to him. Any Wholesaler, Class B
Wholesaler, Class A Winery or Wine Bottler
who accepts postdated checks, notes or memo-
randa or who participates in any scheme,
trick or deViC8 to assist any Package Store
Permittee, Wine Only Package Store Permittee
or other retail dealer In the violation of
this Section shall likewise be guilty of a
violation of this Section. The Board shall
have the power and it shall be its duty to
adopt rules and regulations Riving full
Porte and effect to this section.,”(Emphasis
added. )
In Texas Liquor Control Board v. Floyd, 117 S.W.
2d 53C (Tex. civ. App. 1938)) the court said:
“The Texas Liquor Control Board Is by
virtue of the law an administrative branch
of the State government, to wNch has been
delegated, by law, certain functions, among
which are determining in the first place to
whom and when shall certain privileges be
extended to persons to sell liquors, and
second, whether or not such persons so fa-
vored have breached the conditions under
which the privilege has been granted.
” . . . It has been held that the Act
under consideration must be liberally con-
strued by the courts so as to make it ef-
fective) according to the expressed and im-
plied intention of the Legislature.”
The purpose of Section 37 of Article 666-17 Is
discussed In Attorney General Opinion V-1126 (1950). As
pointed out in that opinion, the provision is one for the
purpose of maintaining the independence of the wholesale
and retail levels of the liquor Industry in Texas.
Hon. Coke R. Stevenson, Jr., page 4, (V-1500)
In order to make the provisions against affilia-
tion between retailer and wholesaler effective, the Legis-
lature has prohibited the extension of credit by the lat-
ter to the former beyond the time stipulated. To make the
prohibition against excessive extension of credit effec-
tive, the Legislature has provided, in effect, that upon
violation of the provisions, the retailer Is prohibited
from purchasing liquor from the wholesalers and the latter
are also prohibited from selling to him. The sanction
against the retailer Is, in practical effect, a suspension
of the privilege of purchasing liquor for resale until the
account Is paid and the payment reported in the due course
of the operation of the reporting machinery set up by the
Board under the act.
Under Article 666-30, in making provision for
disposition,of confiscated liquor the Board Is authorized
to sell such liquor, but only to "qualified" licensees
and permittees. The question here Is whether a retailer
in such delinquency status i8 a "qualified" licensee or
permittee at the time of the sale.
It is our opinion that only a permittee or li-
censee who is "qualified" to purchase liquor for resale
is "qualified" to purchase confiscated liquor from the
Board. There is no specific statutory definition of
"quallfledn permittees or licensees,.and itisnecessazyto
look to the purpose and scheme of the statute in this
respect to determine who the Legislature Intended should
be qualified to purchase confiscated liquor. It is not
reasonable to assume'that one who is disqualified from
purchasing liquor at wholesale generally is to be con-
sidered qualified to purchase confiscated liquor, and
certainly not one whose general~dlsqualiflcatlon arises
from a violation of the statute.
As a matter of fact, Only a r8latiV8ly few
classes of permittees are expressly authorized to pur-
chase liquor for resale to either dealers or consumers,
and fewer still are authorized to purchase the finished
and packaged product. See Article 666-15, Vernon's
Penal Code. Therefore, a "qualified" licensee or per-
mittee must not only hold a license which authorizes
generally the purchase of the type of liquor put up for
sale by the Board, but in our opinion, his privilege of
purchasing liquors under such license or permit must be
currently In effect.
Hon. Coke R. Stevenson, Jr., page 5, (V-1500)
It is our opinion that the Board, in advertls-
lng for the sale of confiscated alcoholic beverages, may
state the conditions on which bids will be accepted.
Since the Board must reject bids received from delinquent
permittees, It may publish a notice that such bids will
not be accepted.
SUMMARY
The Liquor Control Board is not author-
ized to sell confiscated alcoholic beverages
to retailers who are delinquent in their whole-
sale purchase accounts, Under the provisions
of Section 37 of Article 666-17, Vernon’s Penal
Code. The Board must reject bids by such re-
tailers and may state such disqualification in
advertising for bids on such liquor.
Yours very truly,
PRICE DANIEL
APPROVED: Attorney General
Red McDaniel
State Affairs Mvision
Mary E. Wall
Reviewing Assistant
Charles S. Mathews
First Assistant
JD/rt/ec
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IN THE COURT OF CRIMINAL APPEALS
OF TEXAS
NO. WR-79,197-01
IN RE STEVIE ELBERT JONES, Relator
ON APPLICATION FOR A WRIT OF MANDAMUS
CAUSE NOS. W-09-60793-W(A) & W-09-72982-W(A)
IN THE 363RD DISTRICT COURT
FROM DALLAS COUNTY
Per curiam.
O R D E R
Relator has filed a motion for leave to file an application for a writ of mandamus pursuant
to the original jurisdiction of this Court. In it, he contends that he filed applications for writs of
habeas corpus in the 363rd District Court of Dallas County, that more than 35 days have elapsed, and
that the applications have not yet been forwarded to this Court. Relator contends that the district
court entered orders designating issues on September 9, 2011.
Respondent, the Judge of the 363rd District Court of Dallas County, shall file a response with
this Court by having the District Clerk submit the records on such habeas corpus applications. In
the alternative, Respondent may resolve the issues set out in the orders designating issues and then
have the District Clerk submit the records on such applications. In either case, Respondent's answer
shall be submitted within 30 days of the date of this order. This application for leave to file a writ
of mandamus will be held in abeyance until Respondent has submitted his response.
Filed: April 10, 2013
Do not publish
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607 S.W.2d 356 (1980)
Edgar DUPREE, Jr., Appellant,
v.
STATE of Arkansas, Appellee.
No. CR 80-132.
Supreme Court of Arkansas.
November 10, 1980.
*358 Arnold, Hamilton & Streetman, Crossett, for appellant.
Steve Clark, Atty. Gen. by Mary Davies Scott, Asst. Atty. Gen., Little Rock, for appellee.
FOGLEMAN, Chief Justice.
Appellant was found guilty of manslaughter and sentenced to ten years imprisonment on October 12, 1979. He had been tried on a charge of first degree murder of his brother-in-law, George Parker, Jr., arising from an incident on May 7, 1977, but was found guilty of the lesser offense. The charge was filed on May 10, 1977. This appeal is based upon the trial court's denial of several pretrial motions. They were: (1) a motion to dismiss the charge on account of the state's failure to bring him to trial within three terms of court; (2) a motion to prohibit witnesses whose names were belatedly furnished to defense counsel from testifying; (3) a demurrer and motion to dismiss the charge on account of a defect in the name of the person charged in the information; and (4) a motion to quash the information. We find reversible error in regard to the second motion.
On September 11, 1978, appellant moved that the state be required to file a "bill of particulars" including the names of every person known to the state who had any information, the addresses of such persons, the substance of their expected testimony and a statement whether the state intended to use them in the trial of the case. At a pretrial hearing on September 28, 1979, after the case had been set for trial on October 12, 1979, the court ordered the state to furnish counsel for defendant a list of witnesses which it proposed to use along with their addresses and an itemization of any other evidence in the state's possession by October 2, 1979. On October 2, 1979, a deputy prosecuting attorney addressed a letter to appellant's attorney advising him that the state intended to call Wallace Champion, Leroy McCowan, Robert Lee Pen and Evelyn Dupree. In spite of the fact that the charges had been pending for more than two years, the letter included the following: "At the present time, this is a complete list of the witnesses and evidence available to the State. If anything further turns up, you shall be advised promptly." Yet, on October 10, 1979, subpoenas were issued on behalf of the state for Shela [Shiela] Wood, Jacqueline [Jacqulin] Rodgers, Bear Webb and Ernest Thomas [Thompson] and on October 11, 1979, for *359 Myena [Murna] Bryan. On October 12, appellant's attorney requested that the court deny the prosecution the right to call Sheila Wood, Jacqulin Rodgers, Ernest Thompson, Ollie Mae Parker and Murna Bryan as witnesses. Appellant's attorney stated that he was not made aware of the evidence these witnesses would introduce, that the names of Wood, Rodgers, and Thompson had not been furnished him until approximately 2:15 p. m. on October 10, and that on October 11 at 4:00 p. m., he was given the names of Parker and Bryan. The attorney stated that he had not had an opportunity to talk with any of these witnesses and had no idea what their testimony would be or the purpose of their being called. He said that on the preceding day he had called Sheila Wood and Ernest Thompson by telephone and had made appointments for each of them to come to his office, but both failed to appear. He said that he had tried to reach Jacqulin Rodgers by telephone, but had found that she was working and could not be reached. The prosecuting attorney said that he had located these witnesses himself during the preceding two days and that, if a request had been made he would have been glad to have told appellant's attorney the "substance of their involvement in the matter." He said that Murna Bryan was a nurse who had been located in an effort to prove that corpus delicti after it was discovered that the attending physician did not have a good recollection of the cause of the death of George Parker, Jr. After the prosecuting attorney had been sworn and had testified that he had advised the trial judge on September 28 that he had furnished the contents of his investigative file to defense counsel "as of June 15," that he had given Mr. Streetman a list of all witnesses "we had as of October 2," that he had furnished appellant's attorney with a list of all witnesses as "I have received them," and that he made no attempt to withhold anything from appellant's attorney, the trial judge overruled appellant's motion. Appellant's attorney was permitted thereafter to cross-examine the deputy prosecuting attorney, apparently for the record. This witness then admitted that he did not know of any reason why the state had not been aware that Ollie Mae Parker would be called as a witness and why, with reasonable diligence, the prosecuting attorney, who had filed the charge and his deputy, or the present incumbent of these offices, could not have learned the names of all these witnesses and furnished them to appellant's attorney at an earlier date. The trial judge then noted that appellant had objected to each of these persons being permitted to testify, thus obviating the requirement that appellant register an objection when each of them was called.
There was really no prejudice to appellant resulting from the testimony of Murna Bryan, Ernest Thompson or Sheila Wood. The witness Bryan simply testified as to the condition of George Parker, Jr., when he was brought into the emergency room at the hospital in Crossett on May 7, 1977. She described the wounds and the blood she saw on the clothing and the body. Dupree testified and admitted that he had been armed with a knife when he and Parker had an encounter and that he had used the knife in self-defense, or to keep Parker off him. Dupree said that he did not think that Parker had ever seen the knife, but that after Parker was cut, he had bled, looked at himself and at Dupree and had run. There does not seem to have been any serious question about the cause of death, so permitting this witness to testify under the circumstances was not sufficiently prejudicial to justify a reversal for abuse of the trial court's discretion.
Sheila Wood testified only in rebuttal. She controverted the testimony of Dupree that the physical encounter between the two was commenced by Parker's pushing him and that, before Parker was cut, the two had fallen to the ground. Her testimony was cumulative to that of Evelyn Dupree and Jacqulin Rodgers. Thus, it was not sufficiently prejudicial to constitute reversible error. The only testimony by Thompson related to his seeing Parker run away from the scene of the encounter between Dupree and Parker, and to Parker's condition when Thompson went to the place *360 toward which he had seen Parker running and found Parker lying on the ground.
Ollie Mae Parker was the mother of George Parker, Jr., and Evelyn Dupree. She testified that, on the evening of the encounter between her son and son-in-law, Evelyn had come running back to the Parker house and was upset. She said that she went outside and saw that appellant had driven her daughter's car and positioned it so she and her daughter could not use it to go see about George Parker, Jr., that appellant had stated that he had cut that "so-and-so" and that he was going to wind up killing all of the Parkers. She also told of the condition in which she later found her son. Appellant himself testified that, after his encounter with Parker, he had gotten in the car and had driven home, which was next door to the Parker house, where he met Mrs. Ollie Mae Parker and her family, who were on their way to see Parker, but denied having blocked the driveway. Dupree could not well have been surprised to learn that Mrs. Parker would be a witness. Investigation of the case should have revealed the nature of the testimony she might be expected to give. A defendant in a criminal case cannot rely upon discovery as a total substitute for his own investigation.
On the other hand, the record does not disclose any means that appellant had of anticipating that Jacqulin Rodgers would testify or what her testimony might be. The testimony abstracted does not reveal that appellant knew that Jacqulin Rodgers, Sheila Wood, and a man named Arthur had been in an automobile from which George Parker, Jr., had alighted before the encounter between him and appellant on the grounds of a place known as Willie Penn's Bar-b-que only a short distance from the dwelling house of the elder Parkers. Her testimony was as damaging to appellant and his defense as that of any other witness. She testified that she had never been contacted by anyone about the case until she was served with a subpoena the day before the trial.
The state seeks to excuse its failure to comply with the court's order on appellant's motion for discovery by stating that the deputy prosecuting attorney who participated in the trial had only located the witnesses, to which appellant objected, two days before the trial, that he had learned that certain of the witnesses whose names he had furnished were unavailable, and thereafter had sought replacement witnesses. The state called only one witness on its original list. Even though the case had been pending over two years, the state's attorneys, only ten days before trial, stated that certain witnesses would be called and then discovered they were not available. Even though there may have been no lack of good faith, diligence on the part of the prosecuting attorney would have prevented appellant from being misled as to the witnesses with whom he would be confronted. The admission of a lack of prosecutorial diligence in the matter of witnesses was certainly appropriate. Even so, only the mechanics of compliance rest upon the prosecuting attorney. The discovery rules require that he make disclosure upon timely request. His obligations under Rule 17, Arkansas Rules of Criminal Procedure, extend to material and information within the knowledge, possession and control of members of his staff and of any others who have participated in the investigation or evaluation of the case and who regularly report, or with reference to the particular case, have reported, to his office. It would be difficult to believe that there had been no investigation that revealed that Jacqulin Rodgers was a potential witness. In Williamson v. State, 263 Ark. 401, 565 S.W.2d 415, we pointed out that Rule 17.1 imposes a duty upon the state to disclose all material and information to which a party is entitled in sufficient time to permit his counsel to make beneficial use of it.
It is quite possible that the trial court might have rendered the state's failure to earlier furnish the names of the witnesses it used harmless by granting appellant a continuance or by recessing the trial until appellant's attorney could have an adequate interview with the witnesses. See Rule 19.7, *361 Arkansas Rules of Criminal Procedure, Ark.Stat.Ann. v. 4A (Repl.1977); Hughes v. State, 264 Ark. 723, 574 S.W.2d 888. But the court never gave any indication that this relief was available to appellant. The court's overruling of appellant's motion before his attorney could cross-examine the deputy prosecuting attorney was certainly not indicative of the availability of such relief.
Appellant argues that the trial court erred in denying his motion to dismiss for failure to try him within three terms of court as required by Rule 28. His original motion for dismissal for failure to bring him to trial within three terms of court was based solely upon the provisions of Rule 28. Arkansas Rules of Criminal Procedure, supra. The critical dates disclosed by the record and by statute are:
March 21, 1977 Term of court began
May 5, 1977 Appellant arrested
May 10, 1977 Information filed
June 13, 1977 Appellant admitted to bail
October 17, 1977 Term of court began
January 27, 1978 Entry on court's docket: Defendant
ill in Trumann with flu.
Pass for plea. Set for trial on
June 6, 1978
March 20, 1978 Term of court began
June 6, 1978 Date case set for trial
October 1978 Employment of Bruce Switzer
as appellant's attorney terminated
October 16, 1978 Term of court began
March 19, 1979 Term of court began
June 28, 1979 Appellant arraigned
September 19, 1979 Motion to dismiss filed
September 28, 1979 Motion to dismiss denied, without
either party offering evidence
October 12, 1979 Appellant's trial held and motion
to dismiss again denied
October 15, 1979 Term of court began
The term of court during which appellant was arrested and charged is excluded. State v. Messer, 269 Ark. ___ (30 June, 1980), 601 S.W.2d 857. It is clear, however, that three terms of court passed before appellant was brought to trial unless there were excluded periods under Rule 28.3. The period of delay resulting from a continuance granted at the request of the defendant or his counsel is such an excluded period. Rule 28.3(c), Arkansas Rules of Criminal Procedure, supra. The burden was on the state to show that a period should be excluded. The trial judge denied the motion when no evidence was presented on the basis of the docket entry dated January 27, 1978. It was proper for the judge to act upon the basis of the docket entry. The court's docket is an appropriate record of continuances granted. See Ark.Stat.Ann. § 22-117 (Repl. 1962). A court's records have a large degree of sanctity attached to them and are not to be lightly overturned. Williams v. Alexander, 140 Ark. 442, 215 S.W. 721. There was nothing before the court to overturn the record made.
If that record was correct, trial was imminent at the time, or there would have been no occasion for a motion for continuance by the defendant. The definite trial date set when the continuance was granted was well into a new term of court. After the continuance was granted the circuit judge was required to hold terms of court in Bradley County on the first Monday in February, 1978; in Drew County on the third Monday in February, 1978; in Cleveland County on the first Monday in March, 1978; and in Dallas County on the third Monday in June, 1978. The continuance resulted in a setting in the March, 1978, term of the Ashley Circuit Court and before the circuit judge had to commence a term of court in Dallas County.
We have indicated that a delay by reason of a continuance should not exclude a full term of court, if that can be avoided. Matthews v. State, 268 Ark. ___ (1980), 598 S.W.2d 58. It is difficult to see how the exclusion of the October 1977 term might have been avoided. Thus, if the continuance was granted on motion of the defendant, he was brought to trial within three terms.
Appellant renewed his motion to dismiss on October 12, 1979. In this motion he reasserted his contentions with reference to Rule 28 and added that he was materially prejudiced by the delay because several key witnesses for the defense were not available to testify and that their whereabouts were *362 unknown to him. Appellant proffered his testimony as well as that of Bruce D. Switzer, appellant's former counsel, to controvert the docket entry. The trial judge declined to hear the testimony because it was not offered on September 28 and because the new motion had not been filed more than 10 days prior to trial. After the testimony was proffered, the trial judge stated that he denied the motion because of the docket entry, which was in the handwriting of the judge who then presided over the court, because the testimony should have been tendered on the date of the first hearing and because the motion was filed too late.
We are not aware of any requirement that a motion to dismiss for denial of a speedy trial be made more than ten days before the date of trial. A failure to make the motion before trial would have constituted a waiver. See Rule 30.2, Arkansas Rules of Criminal Procedure, supra. The abstract of the record does not disclose that an omnibus hearing had been held in the case. Nevertheless, we cannot say that there was error in the denial of the motion. The state had met its burden by the docket entry. Appellant sought to overcome its effect by his own testimony and that of Switzer. The docket entry was not conclusive, and was subject to rebuttal by parol evidence. The trial judge would not be justified in his reliance upon it if it had been refuted by unequivocal testimony, which was unrebutted. Prout v. State, 256 Ark. 723, 510 S.W.2d 291.
We cannot say that the docket entry should have been overturned upon the proffered testimony. Appellant testified that Switzer had represented him until approximately October, 1978. Appellant testified unequivocally that he did not ask Switzer to postpone a trial date because appellant had been sick, or for any other reason. He said that he did not know where Trumann, Arkansas is and did not think he had ever been there. He said that he was living in Crossett on January 27, 1978. He admitted that he had had the flu but said that he did not report it to Switzer. Switzer testified that he did not recall having asked the court to continue the case in January, 1978, and that his file did not reflect that he had. He said that he did not recall the appellant's having been ill with the flu nor did he recall having any information about the appellant's having had the flu. Since it is clear that appellant had had the flu and the attorney only denied any recollection of having requested a continuance or of any disclosure of such a request in his file, we cannot say that the record made on the docket should have been overturned.
We find no merit in appellant's contention that the court erred in denying his demurrer and motion to quash the information because it named Edgar Dupree and he was actually Edgar Dupree, Jr. That motion was filed at 1:00 p.m. on October 12, 1979, after the jury had been impaneled and sworn to try the case. Appellant testified that he had "turned himself in when it happened." Appellant admitted that he had been known as Edgar Dupree. Appellant's father who was living, was also named Edgar Dupree.
We need not consider the denial of appellant's motion to quash the jury panel. It is highly unlikely that the particular situation of which appellant complained would arise again.
The judgment is reversed and the cause remanded.
HICKMAN and MAYS, JJ., dissent as to the remand.
HICKMAN, Justice.
I agree with the majority decision in all respects but one. I would dismiss the charges because of the lack of a speedy trial.
We have said many times that Rules of Crim.Proc., Rule 28, sets forth the outer limits of delay allowed in bringing a criminal defendant to trial. At the same time we have said we are bound by Barker v. Wingo, 407 U.S. 514, 92 S.Ct. 2182, 33 L.Ed.2d 101 (1972) which defines the law regarding a speedy trial. It depends upon the length of delay, the reason for delay, the claim for a speedy trial, and prejudices *363 that are caused by the absence of a speedy trial. We have never, to my knowledge, dismissed a case short of the term limits set forth in Rule 28 but I submit that this is a case for just that treatment. It fits all the criteria set forth in Barker v. Wingo, id.
There is no doubt that three terms of court had elapsed. The State offered no reason for the delay. A docket entry of dubious value is the basis of the majority's decision. Even if it is given credibility and an extra six months is granted to the State, the trial was not held soon enough.
I do not know why the State delayed this case. It may have had a weak case, docket problems, administrative problems, or whatever, but there was no justification given. That can only mean that the charges ought to be dismissed. In Alexander v. State, 268 Ark. ___, 598 S.W.2d 395 (1980), this court dismissed charges that had been pending less than seven months. The State should not be able to sit idly by expecting that their inaction will be approved.
MAYS, J., joins in this dissent.
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720 F.Supp. 792 (1989)
Eugenio ALFARO-ORELLANA, et al., individually; and on behalf of others similarly situated, Plaintiffs,
v.
David N. ILCHERT, District Director Immigration and Naturalization Service, Defendant.
No. C-88-4729-CAL.
United States District Court, N.D. California.
August 18, 1989.
*793 Jonathan M. Kaufman, San Francisco, Cal., for plaintiffs.
Joseph P. Russoneillo, U.S. Atty., Susan Kamlet, Sp. Asst. U.S. Atty., San Francisco, Cal., for defendant.
OPINION AND ORDER
LEGGE, District Judge.
I.
Plaintiffs are aliens who seek authorization to work in the United States while their applications for asylum are being decided. This action, and these summary judgment motions, require interpretation of the regulations promulgated by the Immigration and Naturalization Service ("INS") which govern the granting of such authorizations to work.
The necessity for interpreting the regulations arises from a recurring problem: Countless aliens are applying for asylum in the United States under section 208(a) of the Refugee Act of 1980; 8 U.S.C. § 1158(a), as amended. The procedures for those applications take considerable time and involve numerous steps before the application is finally approved or denied. The aliens want authority to work in the United States while those procedures are occurring.
The INS regulations on work authorization provide that any alien who files a nonfrivolous application for asylum shall be granted employment authorization during the period of time his application is "pending," including any administrative appeal or judicial review. 8 C.F.R. § 274a.12(c)(8). Plaintiffs interpret the regulation as providing for work authorizations while asylum applications run their full course, from the initial filing until a final decision on appeal. Defendant disagrees, contending that asylum applications, and hence work authorizations, are not "pending" at various stages during the asylum process. The issue to be resolved in this case is therefore when applications for asylum are "pending" under the regulations, so that aliens are entitled to work authorizations.
II.
Plaintiffs filed applications for asylum, and at the same time applications for employment authorization, with the INS office in this district, pursuant to 8 U.S.C. § 1158(a) and 8 C.F.R. § 274a.12(c)(8). Defendant, the District Director of the INS in this district, determined that their applications for asylum were not frivolous, and he then granted employment authorizations as he was required to do by the regulations. After then reviewing the applications for asylum, defendant later notified plaintiffs that their applications for asylum were denied, that being the first decisional step in the processing of asylum applications. At the same time, defendant advised plaintiffs that their employment authorizations were terminated. Plaintiffs then filed this action.
Plaintiffs bring the action pursuant to 8 U.S.C. § 1329 and 5 U.S.C. §§ 701-706. Plaintiffs seek interpretation of the regulations regarding work authorization and seek to compel the granting of work authorizations until their applications for asylum are finally determined.
Plaintiffs' applications for asylum are now proceeding through the various steps for review and final determination. Some, but not all, plaintiffs have had their employment authorizations renewed as the asylum process has proceeded. Defendant continues, however, to assert that the regulations do not require the granting of employment authorization during all stages of the asylum process.
This court granted interim relief to plaintiffs by way of a temporary restraining order and a preliminary injunction. This court denied plaintiffs' request for class certification because the basic issue, the interpretation of the regulations, is a matter of law which will be binding on defendant as to all applicants for asylum, and it is not necessary to invoke class action procedures to give either plaintiffs or defendant the benefits and burdens of the court's rulings.
The parties have now made cross motions for summary judgment. Those motions *794 frame the issue central to the dispute: that is, when during the asylum application process is an application "pending," so that the alien applicant is entitled to work authorization? The court, having reviewed the record in the case, the motion papers, the regulations, the statute under which the regulations were passed, and the applicable authorities, concludes that there are no genuine issues of material fact with respect to the matters set forth below, and that summary judgment must be entered for plaintiffs and against defendant.
III.
Before discussing the issues of interpretation raised by the parties, the court must first address defendant's argument that plaintiffs' claims are moot and that plaintiffs no longer have standing to advance their claims.
The argument for mootness is based on defendant's assertion it is not now defendant's "current normal practice to revoke previously-granted employment authorization upon his denial of an asylum application." However, this statement, made after the litigation started, is somewhat equivocal. In addition, it is inconsistent with defendant's interpretation of "pending" under the regulations, and with his contention in this case that there is no requirement of work authorization during certain periods of the asylum process. Nor does it answer all of the questions regarding work authorization during other steps in the asylum application process.
Second, defendant asserts that by December 19, 1988, deportation proceedings had been instituted against each plaintiff. Defendant argues that upon the initiation of deportation proceedings, any work authorizations previously granted to plaintiffs under 8 C.F.R. § 274a.12(c)(8) automatically terminated by virtue of 8 C.F.R. § 274a.14(1)(ii). Thus, defendant contends that the claims of the plaintiffs placed in deportation are now moot. However, that regulation is itself ambiguous, because it creates an exception for appropriate work authorizations under § 274a.12(c). And again, it does not govern work authorizations during other steps in the asylum process.
Further, a well-settled exception to the mootness doctrine is where a defendant's actions are capable of repetition yet evade review. United States v. W.T. Grant Co., 345 U.S. 629, 632-33, 73 S.Ct. 894, 897-98, 97 L.Ed. 1303 (1953); County of Los Angeles v. Davis, 440 U.S. 625, 631, 99 S.Ct. 1379, 1383, 59 L.Ed.2d 642 (1979). "Grant and Davis stand for the proposition that voluntary cessation of allegedly illegal activity will not moot an action absent a heavily burdensome showing that `there is no reasonable expectation that the wrong will be repeated,' and that `the interim relief or events have completely eradicated the effects of the alleged violation.'" United States v. City and County of San Francisco, 656 F.Supp. 276 (N.D.Cal.1987).
In Los Angeles v. Lyons, 461 U.S. 95, 103 S.Ct. 1660, 75 L.Ed.2d 675 (1983), the Supreme Court stated that "the capable of repetition doctrine applies only in exceptional situations, and generally only where the named plaintiff can make a reasonable showing that he will again be subjected to the alleged illegality." Id. at 109, 103 S.Ct. at 1669. Plaintiffs make such a reasonable showing here. As discussed below, the aliens placed in deportation can renew their asylum applications before an immigration judge, and can then apply for work authorizations. And, under defendant's interpretation of "pending," plaintiffs would again be subjected to defendant's interpretation of the regulations which will deny them work authorizations at several steps in the asylum process.
Defendant further argues that plaintiffs "lack standing" to challenge defendant's interpretation of § 274a.12(c)(8) once deportation proceedings are instituted. Because plaintiffs have not alleged that any of them have been denied employment authorization subsequent to the institution of deportation proceedings and prior to administrative or judicial appeal, defendant urges that they lack standing to complain. More accurately, defendant contends that their claims are not "ripe" for review, and thus no "case or controversy" exists.
*795 A "ripe" controversy exists where a party has threatened to enforce a statute or regulation against a plaintiff, or by a general showing of active enforcement intentions. See Buckley v. Valeo, 424 U.S. 1, 114-117, 96 S.Ct. 612, 680-681, 46 L.Ed.2d 659 (1976) (challenges to the method of appointing members of the Federal Election Commission were ripe, even to the extent that they looked toward "impending future rulings and determinations," where "it was all but certain that the Commission would be exercising its unexercised functions."); Michigan State Chamber of Commerce v. Austin, 788 F.2d 1178, 1179 (6th Cir.1986) (ripe controversy found to exist where defendant state official had admitted in his answer that he intended to enforce the challenged criminal statute regulating election contributions); see also 13A Wright, Miller & Cooper, Federal Practice and Procedure, § 3532.5 at pp. 175-79 and n. 9.
Here, defendant has stated his interpretation of the regulations and his intention to apply that interpretation throughout the process under which aliens apply for asylum. The court concludes that plaintiffs' claims are not moot, are ripe for review, and that plaintiffs have standing to pursue them. The court now turns to the issues of interpretation.
IV.
The right to asylum in the United States was created by Congress. In section 208(a) of the Refugee Act of 1980, 8 U.S.C. § 1158(a), as amended, Congress directed the United States Attorney General to establish a procedure by which aliens may apply for political asylum. The Attorney General complied with that directive by publishing 8 C.F.R. § 208.[1]
Under those regulations, resolution of asylum applications involves a multi-step and time consuming process:
The first step is for the alien to file an application for asylum with the district director. The district director reviews the application and ultimately makes a ruling on it. Secs. 208.1(a), 208.3. There is no time limit for that review, and it may take a substantial amount of time. If the district director denies the asylum application, the alien does not have an immediate right to seek a review of that denial. Sec. 208.8(c). The right to review does not occur until and unless the alien is placed in deportation proceedings by the district director. Secs. 208.8(c), 208.9. The district director is vested with discretion, akin to prosecutorial discretion, as to whether to initiate such deportation proceedings. Sec. 208.8(f)(4).
At such time as deportation proceedings are initiated by the director, the alien can renew his asylum application before an immigration judge. Secs. 208.9, 208.1(b). If the immigration judge denies asylum, the alien may then appeal to the Board of Immigration Appeals. Secs. 3.1(b), 242.21. If the Board of Immigration Appeals denies asylum, the alien has a right of appeal to the United States Court of Appeals. 8 U.S.C. § 1105a. All of those review steps take substantial periods of time.[2]
It is within this multi-step and time consuming asylum process that the issue arises of the alien's right to work pending the completion of the process. Does an alien have a right to work authorization throughout this process, or only during certain stages of the process?
V.
In the Refugee Act, Congress did not address the question of whether applicants for asylum may work in the United States while their applications are in process. Nor did Congress instruct the Attorney General to adopt regulations pertaining to such employment. Nevertheless, pursuant to 8 U.S.C. §§ 1158(a) and 1103, the Attorney General, through the INS, published regulations on the subject. 8 C.F.R. §§ 274a.12274a.14.
*796 We are not here concerned with the validity of those regulations. Rather, we are concerned with the interpretation of the regulations in light of their language, the congressional intent in enacting the statute under which the regulations were promulgated, and the basic objectives of the regulations. In interpreting the regulations, this court acknowledges the deference which it must extend to defendant's interpretation of INS's own regulations. United States v. Larionoff, 431 U.S. 864, 872-73, 97 S.Ct. 2150, 2155-56, 53 L.Ed.2d 48 (1977). However, that deference does not relieve this court of its obligation to interpret the regulations. Construction of regulations is a legal issue and the final determination is a question of law for the courts. Sierra Club v. Watt, 608 F.Supp. 305, 330 (E.D.Cal.1985); See Deukmejian v. United States Postal Service, 734 F.2d 460 (9th Cir.1984).
In interpreting these regulations, the court does not have the guidance of any relevant decisions of the courts of appeal. The court is, however, assisted by the very thoughtful analysis of the United States District Court for the Eastern District of California (Chief Judge Karlton) in Diaz v. Immigration and Naturalization Service, 648 F.Supp. 638 (E.D.Cal.1986), which in part involved the interpretation of similar regulations.[3]
VI.
The regulations provide that at the initial step in the asylum process the alien's filing of an application the director is required to issue a work authorization if he determines that the application for asylum is not frivolous. Sec. 274a.12(c)(8) Even if the asylum application is denied by the director and the alien is placed in deportation proceedings, the alien may renew his request for asylum before an immigration judge. If the alien does so, he may again request employment authorization, and that employment authorization must be granted if the director determines that the application is not frivolous.[4] Sec. 274a.12(c)(8), Sec. 74a12(c)(13).
Sec. 274a.12(c)(8), in pertinent part, provides:
Employment authorization shall be granted in increments not exceeding one year[5] during the period the application [for asylum] is pending (including any period when administrative appeal or judicial review is pending)....
Id. (emphasis added).
Despite that flat language, the regulations appear to provide that work authorizations should terminate (1) upon the occurrence of certain events, § 274a.14(a); (2) when "it appears that any condition upon which it was granted no longer exists, or for good cause shown," § 274a.14(b)(1)(i); or (3) upon the expiration of the term for which the authorization was granted, 274a.14(a)(1)(i).
In essence, plaintiffs contend that an asylum application is "pending," for purposes of § 274a.12(c)(8), during the entire proceedings on the asylum application. Defendant, on the other hand, contends that the asylum application is "pending" only during the following periods of time: (1) from the time it is filed with the defendant until he renders his decision on the application; (2) from the time the application is properly renewed before the immigration judge until the immigration judge renders a decision; (3) from the time of the filing of a notice of appeal challenging the immigration judge's decision until the Board of Immigration Appeals renders its decision; and (4) from the time a petition for review is filed with the Circuit Court until the Circuit Court issues its mandate. Conversely, defendant contends that the asylum application is "not pending:" (1) once defendant has made his determination *797 to deny the application for asylum; (2) if the immigration judge denies asylum; and (3) if the Board of Immigration Appeals denies asylum. Defendant's interpretation of the regulations on work authorization parallels his interpretation of when an asylum application is or is not "pending:"
Under defendant's interpretation of the regulations, work authorization may be revoked or terminated by defendant if he denies the asylum application. The alien is then without work authorization for an indefinite period of time, because the alien can take no steps to proceed with his asylum application and his application for work authorization until defendant decides whether to initiate deportation proceedings against the alien. After deportation proceedings are initiated, the alien can again apply for asylum and work authorization. But defendant takes the position that he then has the power to make a new determination as to whether the asylum application is frivolous, and hence whether the alien has a right to work authorization.[6] And the defendant contends that he has sixty days to make this determination.
Defendant also takes the position that he can revoke a work authorization (1) if the immigration judge denies asylum and before the alien appeals to the Board of Immigration Appeals, and (2) if the Board of Immigration Appeals denies asylum and before a notice of appeal is filed with the U.S. Court of Appeals. The alien has six months to file such a notice of appeal, and would of course be without work authorization during that time. 8 U.S.C. § 1105a(a)(1). In addition, defendant notes that a work authorization may expire by its own time limitation. This may occur at any time during the asylum process, and indeed even before defendant makes his initial decision on the asylum application.
It is apparent from this review of the asylum and work authorization procedures that, under defendant's interpretation of the regulations, there are extensive periods of time when work authorizations would not be in effect, sandwiched between periods of time when they are in effect and are even required to be in effect.
Interpretation and some degree of consistency are obviously needed.
VII.
One of the basic guides to, and objectives of, interpretation is the intent of Congress. Unfortunately there is very little guidance here. Congress did not expressly require the promulgation of regulations regarding authority to work, and there is no legislative history directly on the issue that is before this court. Nevertheless, certain legislative objectives can be identified, and the regulations may also be tested against related statutory enactments.
By creating an asylum process, Congress obviously intended it to be meaningful. And, by creating a process for asylum applications, the regulations were ostensibly pursuing Congress's objective. The meaningful pursuit of an asylum application is frustrated by a checkerboard pattern of grants and denials of work authorization during that process. Aliens who have bona fide claims for asylum could well be discouraged from pursuing them because of the intermittent inability to pursue lawful employment. It is more reasonable to conclude that Congress desired a more consistent process.
Second, in various portions of the Immigration Act, Congress has addressed its concern over illegal employment. See e.g. 8 U.S.C. §§ 1182(a)(14), 1255(c). It is inconsistent with that concern for regulations to be interpreted in such a way that periods of lawful employment could be interspersed with periods of no work authorization when the alien applicants might be forced to seek work illegally.
Congress was also concerned with the role of employers in alien employment. The Immigration Reform and Control Act of 1986 ("IRCA") requires employers to verify the identity and employment authorization *798 of all persons hired. 8 U.S.C. § 1324a(b). The employer also has an obligation to re-verify an alien's employment authorization should the employment authorization expire. § 274a.2(b)(1)(viii). Thus, both employers and aliens might be subjected to economic and legal sanctions because of their inability to verify the periods of unauthorized work and authorized work.
All of this is underscored by extensive legislative and judicial concern over the right to work generally, and the recognition of its impact upon individuals and upon the country. This concern extends to alien workers and has received constitutional protection. See Goldberg v. Kelly, 397 U.S. 254, 261-62, 90 S.Ct. 1011, 1016-17, 25 L.Ed.2d 287 (1970).
The present regulations must be viewed in the light of those congressional concerns, and in light of the overall objective of the regulations themselves.
This court concludes that defendant's interpretation of the regulations is inconsistent with congressional objectives and with the purpose of the regulations themselves. The basic objective of the regulations is to provide a workable and consistent set of procedures for the pursuit of asylum applications, and the related work authorizations during the asylum process.
The court concludes that the regulations must be interpreted as providing for work authorizations during the entire time that asylum applications are being pursued. Specifically, the term "pending" in section 274a.12(c)(8) must be interpreted as meaning: from the time that the asylum application is first filed and the district director makes his initial determination that the application is not frivolous, and extending thereafter until either the application for asylum is abandoned by the alien or there is a final adverse decision on his asylum application.
VIII.
Three specific sections of the regulations must be addressed and reconciled with the above interpretation.
The first is section 274a.14(1)(ii), which ostensively provides that work authorization automatically terminates upon the institution of deportation proceedings against the alien. As stated, this section is ambiguous because of its reference back to § 274a.12(c). Even if it applies, the alien's remedy is then to renew his application for asylum before an immigration judge and to again request employment authorization. §§ 274a.14(a)(2), 274a.12(c)(8). This gap in the authorization process can be a short-lived one, because the alien can file the renewal of his asylum application before an immigration judge and request a work authorization as soon as deportation proceedings are instituted. That regulation should be interpreted, in conjunction with the other regulations, as requiring the prompt issuance of work authorization as soon as the alien renews his application before the immigration judge.
Second, defendant contends that under § 274a.13(d) he again has the right to determine whether the application for asylum is frivolous, and that he has sixty days to do so. This court does not believe that interpretation is correct. At the time of granting the initial work authorization, defendant determined that the application was not frivolous. The fact that defendant later denies the asylum request does not necessarily render it frivolous. This court does not believe that § 274a.13(d) gives the director a second opportunity to make a determination contrary to his first determination, and take sixty days to do so. Accord: Diaz v. INS, 648 F.Supp. at 655. The court interprets § 274a.13(d) as requiring the district director to act in a manner consistent with his first determination, unless changed circumstances clearly require a different result, and to act promptly.
The final question is what occurs if the employment authorization is terminated, under § 274a.14(a)(1)(i), by expiration of time. Again, this subsection is ambiguous, because the regulation also provides that "automatic revocation under this section does not preclude reapplication for employment authorization under § 274.12(c) of this part." Sec. 274a.14(a)(2). Therefore, *799 this regulation should also be interpreted, in conjunction with the other regulations, as requiring work authorization to be issued promptly as soon as the alien files his reapplication.
IX.
Plaintiffs urge this court to order defendant to act on the aliens' reapplications for work authority within twenty-four hours. This court has great difficulty with such a request. There are undoubtedly other matters pending before the INS which, for reasons unknown to this court, may require more rapid handling than the applications for work authorization. This court does not believe that it can or should establish a priority list for the performance of defendant's numerous statutory and regulatory responsibilities, or impose short and arbitrary deadlines for the performance of some.
Nevertheless, the court can and does expect that defendant will be sensitive to the applicants' needs for employment authorization and that defendant's administrative procedures will take those needs into consideration. This court can order that the needs for the work authorizations be given due consideration by defendant in determining the order and speed with which it responds to such applications.
The court is therefore ordering that defendant reply "promptly" to such reapplications. And in complying with that requirement of promptness, defendant must give due consideration to the needs of the applicants for work authorizations. To assist defendant in performing this responsibility, it may be appropriate for applicants to specifically state the need and the reason for prompt action.
X.
IT IS THEREFORE ORDERED that plaintiffs' motion for summary judgment is granted and defendant's motion for summary judgment is denied.
NOTES
[1] All remaining section references are to 8 C.F.R. unless otherwise noted.
[2] At any time the alien may apply for voluntary departure from the United States. §§ 242.5; 244.1.
[3] Diaz was subsequently dismissed as moot.
[4] There is an issue as to whether a determination of frivolousness can be made by the district director if he determined that the application was not frivolous at the time of the original filing. That issue is discussed below.
[5] The record established that defendant does issue some work authorizations for less than one year.
[6] Even though he made a determination at the time of initial filing that the application was not frivolous.
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United States Court of Appeals
For the First Circuit
No. 14-1295
UNITED STATES OF AMERICA,
Appellee,
v.
JOSÉ L. VELÁZQUEZ,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. D. Brock Hornby, U.S. District Judge]
Before
Lynch, Chief Judge,
Souter,* Associate Justice,
and Selya, Circuit Judge.
J. Hilary Billings, Assistant Federal Defender, for appellant.
Margaret D. McGaughey, Assistant United States Attorney, with
whom Thomas E. Delahanty II, United States Attorney, was on brief,
for appellee.
January 26, 2015
*
Hon. David H. Souter, Associate Justice (ret.) of the Supreme
Court of the United States, sitting by designation.
SELYA, Circuit Judge. Employing a categorical approach,
we held in United States v. Eirby, 515 F.3d 31 (1st Cir. 2008),
that the strict liability offense of engagement in a sexual act
with a 14- or 15-year-old minor by a person at least 10 years older
constituted a crime of violence and, thus, qualified as a predicate
offense under the career offender guideline, USSG §4B1.2(a)(2).
See id. at 38. Defendant-appellant José L. Velázquez invites us to
abrogate that holding, asserting that a subsequent Supreme Court
decision has relegated it to the scrap heap. After careful
consideration, we decline the appellant's invitation and affirm his
sentence.
I. BACKGROUND
We rehearse the background of the case to the extent
needed to frame the issue on appeal. Since the appellant's
sentence followed a guilty plea, we glean the facts from the plea
agreement, the change-of-plea colloquy, the unchallenged portions
of the presentence investigation report (PSI Report), and the
transcript of the disposition hearing. See United States v.
Almonte-Nuñez, 771 F.3d 84, 86 (1st Cir. 2014).
In 2008, the appellant was haled into a Maine state court
for, inter alia, two counts of gross sexual assault of a child
under the age of 14. See Me. Rev. Stat. tit. 17-A, § 253(1)(B).
The indictment charged in pertinent part that the appellant had on
two separate occasions "engage[d] in a sexual act with [E.O.], not
-2-
his spouse, who had not in fact attained the age of 14 years." The
appellant was 29 years old at the time of the offense, and the
victim (whose age was known to the appellant) was 12 years old.
The appellant pleaded guilty to these charges and the state court
sentenced him to a substantial prison term.
The convictions resulted in the appellant's
classification as a sex offender with a lifetime registration
requirement under both federal and state law. See 42 U.S.C.
§§ 16911(4), 16915(a)(3); Me. Rev. Stat. tit. 34-A, §§ 11203(7)(A),
11203(8)(A), 11225-A(3). Shortly after his release from custody in
2011, the appellant flouted not only these registration
requirements but also the reporting obligations imposed as a
condition of his state-court probation. As a result, the state
reincarcerated him as a probation violator.
The appellant did not learn his lesson. Upon his
provisional release from custody, he absconded. The Maine
authorities issued a warrant, which led to the appellant's
apprehension in Miami. It later came to light that, during his
time on the run, the appellant allegedly committed a sex crime in
New York involving a four-year-old girl. Those charges were
pending at the time of sentencing in this case.
In May of 2013, a federal grand jury sitting in the
District of Maine charged the appellant with being a sex offender
who had traveled in interstate commerce without registering or
-3-
updating his registration. See 18 U.S.C. § 2250(a). In due
course, the appellant entered into a plea agreement (the Agreement)
with the government. The Agreement contained a stipulated total
offense level of 13. Although the Agreement did not specify the
appellant's criminal history category (CHC), the parties agreed to
limit their sentencing recommendations to the guideline sentencing
range (GSR) eventually determined by the district court.
Arriving at the appropriate CHC proved to be contentious.
The PSI Report treated the appellant's two prior convictions for
gross sexual assault as effectively yielding a single sentence, see
USSG §4A1.2(a)(2), generating three criminal history points, see
id. §4A1.1(a). After accounting for the remainder of the
appellant's criminal record and his commission of the offense of
conviction while on probation, see id. §4A1.1(d), the Report
recommended that the appellant be placed in CHC IV. Paired with
the agreed offense level, this placement resulted in a GSR of 24 to
30 months.
The appellant accepted these calculations, but the
government demurred. It argued that an additional criminal history
point should be assessed because gross sexual assault under section
253(1)(B) is a crime of violence within the meaning of USSG
§4B1.2(a) (part of the so-called career offender guideline). See
id. §§4A1.1(e), 4A1.2(p). This single point had decretory
significance in the sentencing calculus: it catapulted the
-4-
appellant into CHC V, elevating the GSR to 30 to 37 months and
paving the way for a more onerous sentence.
In resolving this contretemps, the district court found
Eirby controlling and assessed the disputed criminal history point.
Consequently, the higher GSR applied, and the court imposed a 37-
month top-of-the-range term of immurement. This timely appeal
followed.
II. ANALYSIS
This is a rifle-shot appeal: the appellant asks us to
disallow the disputed criminal history point and, in the bargain,
to abrogate our decision in Eirby. In support, he submits that a
strict liability sex offense cannot be classified as a crime of
violence in light of the Supreme Court's decision in Begay v.
United States, 553 U.S. 137 (2008).1 Because the classification
vel non of a criminal offense as a crime of violence poses a purely
legal question, our review is de novo. See United States v.
Williams, 529 F.3d 1, 3 (1st Cir. 2008).
We start by noting the circumscribed scope of our
inquiry. It is beyond peradventure that the appellant's two
1
Begay construed the term "violent felony" as used in the
Armed Career Criminal Act (ACCA), 18 U.S.C. § 924(e)(2)(B), which
we have consistently equated with the term "crime of violence" as
used in the career offender guideline. See United States v.
Willings, 588 F.3d 56, 58 n.2 (1st Cir. 2009) (calling the terms
"nearly identical in meaning, so that decisions construing one term
inform the construction of the other"); United States v. Williams,
529 F.3d 1, 6 (1st Cir. 2008) (similar). We proceed, therefore, to
treat the terms interchangeably.
-5-
convictions for gross sexual assault under section 253(1)(B) were
properly counted as yielding a single sentence that merited three
criminal history points. The sole issue on appeal is whether a
violation of section 253(1)(B) constitutes a crime of violence,
thus necessitating an additional criminal history point. See USSG
§4A1.1(e).
The term "crime of violence" is derived from the career
offender guideline, which sets forth a two-part definition:
The term "crime of violence" means any offense
under federal or state law, punishable by
imprisonment for a term exceeding one year,
that —
(1) has as an element the use, attempted use,
or threatened use of physical force against
the person of, or
(2) is burglary of a dwelling, arson, or
extortion, involves use of explosives, or
otherwise involves conduct that presents a
serious potential risk of physical injury to
another.
Id. §4B1.2(a). Here, the predicate offense — a violation of
section 253(1)(B) — is punishable by a term of imprisonment that
exceeds one year. See Me. Rev. Stat. tit. 17-A, § 1252(2)(A).
That offense, however, does not have as an element the use,
attempted use, or threatened use of physical force against the
person of another. By the same token, the offense is not one of
the enumerated crimes delineated in the career offender guideline
— burglary of a dwelling, arson, or extortion. Nor does the
offense involve the use of explosives. The question, then, is
whether the offense comes within the career offender guideline's
-6-
residual clause; that is, whether the offense "otherwise involves
conduct that presents a serious potential risk of physical injury
to another." USSG §4B1.2(a).
In determining whether an offense constitutes a crime of
violence under this definition, we employ the familiar categorical
approach. See Taylor v. United States, 495 U.S. 575, 602 (1990);
Williams, 529 F.3d at 4. Under this approach, we focus on "the
statutory definition of the prior offense, and do not generally
consider the particular facts disclosed by the record of
conviction." James v. United States, 550 U.S. 192, 202 (2007)
(quoting Shepard v. United States, 544 U.S. 13, 17 (2005))
(internal quotation marks omitted). Where, as here, the predicate
offense is a state offense, we glean the elements from the statute
of conviction as interpreted by the state's highest court. See
United States v. Hart, 674 F.3d 33, 41 (1st Cir. 2012).
Against this backdrop, we turn to the statute of
conviction that underlies the challenged criminal history point.
A person is guilty of gross sexual assault under section 253(1)(B)
"if that person engages in a sexual act with another person and
. . . [t]he other person, not the actor's spouse, has not in fact
attained the age of 14 years." "Sexual act" is defined separately
as "[a]ny act between 2 persons involving direct physical contact
between the genitals of one and the mouth or anus of the other, or
direct physical contact between the genitals of one and the
-7-
genitals of the other." Me. Rev. Stat. tit. 17-A, § 251(1)(C)(1).
Maine's highest court has held that gross sexual assault of a minor
is a strict liability offense and that the use of force need not be
proven to secure a conviction. See State v. Keaten, 390 A.2d 1043,
1045 & n.6 (Me. 1978). A violation of this statute is punishable
by up to thirty years' imprisonment. See Me. Rev. Stat. tit. 17-A,
§ 1252(2)(A).
We proceed next to the residual clause of the career
offender guideline.2 Our first inquiry is whether, in the typical
case, the conduct underlying the offense poses a "serious potential
risk" of injury equivalent to that of its closest analog among the
exemplar crimes. James, 550 U.S. at 203. In this context, the
Supreme Court has construed the phrase "potential risk" to require
only a realistic probability (not a certainty) that the offense
conduct will result in injury. See id. at 207-08.
Under the similarity-of-risk test, this court has not
wavered in holding that strict liability sex crimes against minors,
such as statutory rape, are crimes of violence. See, e.g., Eirby,
515 F.3d at 38; United States v. Cadieux, 500 F.3d 37, 45-47 (1st
Cir. 2007); United States v. Richards, 456 F.3d 260, 264-65 (1st
Cir. 2006); United States v. Sacko, 247 F.3d 21, 24-25 (1st Cir.
2
The Supreme Court recently asked for new briefing on whether
the ACCA's parallel residual clause is unconstitutionally vague.
See Johnson v. United States, No. 13-7120, 2015 WL 132524 (U.S.
Jan. 9, 2015). The appellant in this case has not advanced such a
constitutional challenge.
-8-
2001); United States v. Sherwood, 156 F.3d 219, 222 (1st Cir.
1998); United States v. Meader, 118 F.3d 876, 884 (1st Cir. 1997).
We explained in Eirby that "child-molestation crimes 'typically
occur in close quarters, and are generally perpetrated by an adult
upon a victim who is not only smaller, weaker, and less
experienced, but is also generally susceptible to acceding to the
coercive power of adult authority figures.'" 515 F.3d at 38
(quoting Sherwood, 156 F.3d at 221). With an eye to "the statutory
description of the offense conduct, the baseline age of the minor,
and the chronological spread between the age of the minor and the
age of the perpetrator," we concluded that in the typical case of
sexual contact between a 14- or 15-year-old minor and an adult 10
years her senior, there exists a realistic probability that force
will be used. Id. Relatedly, we discussed in Sacko evidence that
young adolescents (even those professing to consent to sexual
activity) face an increased risk of sexually transmitted disease
and traumatic injury from intercourse. See 247 F.3d at 23-25.
The appellant does not seriously dispute that our
precedents dictate the result of the similarity-of-risk analysis.
The statute underlying the predicate offense at issue here
prohibits sexual acts with children from birth to age 13. Such
conduct is attended by a risk of physical injury more serious and
more certain than that posed by the conduct needed to trigger the
-9-
statute discussed in Eirby, which applied only to 14- and 15-year-
old victims.3
While one might conjure up an intimate sexual act between
an adult and a child under the age of 14 that would not pose a
serious potential risk of injury to the child, that surely would
not be the ordinary case.4 Typicality is the watchword; and the
existence of outliers does not suffice to remove an offense,
otherwise eligible, from the sweep of the career offender
guideline. See James, 550 U.S. at 208 (observing that "[o]ne can
always hypothesize unusual cases in which even a prototypically
violent crime might not present a genuine risk of injury").
This brings us to the appellant's core contention: that,
despite the serious potential risk of injury, Begay dictates that
a strict liability sex crime against a minor cannot be a crime of
violence because such a crime encompasses conduct that is not
"purposeful, violent, and aggressive." Although adopting this
doctrinal approach would require us to abrogate Eirby, the
3
This comparative assessment is bolstered by Maine's sex
offender registration provisions, which classify section 253(1)(B)
as a "sexually violent offense," and section 254(1)(A-2) (the crime
at issue in Eirby) as merely a "sex offense." See Me. Rev. Stat.
tit. 34-A, § 11203(6)(B), (7)(A).
4
The lack of an explicit age disparity in section 253(1)(B)
is of little consequence. Though the statute in Eirby specified a
10-year minimum age spread, a de facto age spread of at least five
years is embedded in the statute at issue here. After all, an
offender in Maine would have to be at least 18 years of age in
order to be criminally charged as an adult. See Me. Rev. Stat.
tit. 15, §§ 3003(14), 3101(2)(A), 3103(1)(A).
-10-
appellant insists that we should do so notwithstanding the law of
the circuit doctrine. In his view, such an abrogation is
permissible because supervening Supreme Court authority justifies
this panel in departing from Eirby. See United States v. Chhien,
266 F.3d 1, 11 (1st Cir. 2001) (describing narrow exceptions to law
of the circuit doctrine).
This proposal has a certain superficial allure. The
Begay Court admittedly added a gloss to the similarity-of-risk
inquiry, opining that a predicate offense ordinarily must be both
similar in risk and "roughly similar, in kind" to the enumerated
crimes of burglary, arson, extortion, and use of explosives. 553
U.S. at 143. The Begay majority concluded that the strict
liability offense of driving under the influence of alcohol (DUI)
was unlike the enumerated offenses because it did not "typically
involve purposeful, violent, and aggressive conduct" and,
therefore, was not predictive of future armed career criminal
behavior. Id. at 144-45 (internal quotation marks omitted). Some
other courts of appeals read Begay as categorically removing strict
liability sexual offenses from the sweep of the career offender
guideline's residual clause. See, e.g., United States v. McDonald,
592 F.3d 808, 814 (7th Cir. 2010). After close perscrutation,
however, we conclude that Begay does not demand this result.
In our view, the Begay Court's "purposeful, violent, and
aggressive" language was never meant to establish an inflexible
-11-
standard. See Williams, 529 F.3d at 7 (explaining that
"[a]djectives like 'purposeful' and 'aggressive' denote qualities
that are ineluctably manifested in degree and appear in different
combinations [and] are, therefore, imprecise aids"). One size does
not fit all; and purposefulness, violence, and aggression need not
invariably be attributes of an offense in order to bring that
offense within the compass of the residual clause.
To hold otherwise would drain the crime of violence
taxonomy of any coherent meaning. For example, the requisite mens
rea of an offense informs, but does not control, the purposefulness
analysis. Cf. Begay, 553 U.S. at 152 (Scalia, J., concurring)
(noting that enumerated crimes involving the use of explosives can
be committed recklessly or even negligently). As to violence and
aggression, even burglary of a dwelling — an enumerated offense
under the career offender guideline — cannot be described, "at
least in most instances, as purposely violent or necessarily
aggressive." Williams, 529 F.3d at 7 n.7.
We think it apparent that the driving force behind Begay
was the Court's desire to limit application of the stringent
penalties imposed by the ACCA (and equally by the career offender
guideline) to those predicate felonies involving conduct that is
not only dangerous but also indicative of a willingness to inflict
harm on an identifiable victim. To this end, the Begay Court
sought to restrict armed career criminal treatment to those who
-12-
"might deliberately point the gun and pull the trigger." 553 U.S.
at 146. The predicate offense at issue in Begay — DUI — did not
pass this test. See id. at 148; see also id. at 146 (identifying
reckless tampering with a consumer product under 18 U.S.C.
§ 1365(a) as a poor fit for the residual clause). We have drawn on
this distinction in prior cases. Compare United States v.
Holloway, 630 F.3d 252, 261-62 (1st Cir. 2011) (holding that
reckless battery generally is not a crime of violence), with United
States v. Dancy, 640 F.3d 455, 468-70 (1st Cir. 2011) (holding that
reckless assault and battery of a police officer is a crime of
violence because its additional elements "require the prosecution
to prove the defendant knew that there were one or more victims who
could be injured by the defendant's actions, and yet nonetheless
acted with disregard of probable harmful consequences or in a way
that created a high degree of likelihood [of] substantial harm to
a potential victim" (alteration in original) (internal quotation
marks omitted)).
The short of it is that the presence or absence of
typically purposeful, violent, and aggressive conduct serves as a
general guide in discerning whether an offense is sufficiently
"similar in kind" to the exemplar crimes. But this guidance may be
supplemented by "common sense and real world experience." Sykes v.
United States, 131 S. Ct. 2267, 2280 (2011) (Thomas, J.,
-13-
concurring). Any other approach would elevate formalism over
realism.
Taking this common-sense path, we are confident in
concluding that intimate sexual contact by an adult with a young
child is no less indicative of a willingness to "point the gun and
pull the trigger" than, say, burglary of a dwelling. Typically,
the offense conduct of a child molester demonstrates a willingness
to impose himself on a person who is smaller, weaker, and
inexperienced. See Eirby, 515 F.3d at 38. Such a predator, unlike
a typical DUI offender, places a known and identifiable victim at
serious risk. What is more, by engaging in intimate sexual acts
with a child, the perpetrator inevitably places himself in a
position to inflict harmful, even deadly, physical force on a
vulnerable victim. Seen in this light, sexual offenses against
children are not dissimilar to crimes that are unarguably crimes of
violence, such as kidnapping and forcible rape. Cf. 18 U.S.C. §
2241 (classifying sexual acts with children under 12 alongside
forcible rape as a form of "aggravated sexual abuse"). Given these
characteristics, a conviction for gross sexual assault of a minor
can fairly be said to be "associated with a likelihood of future
violent, aggressive, and purposeful [career offender] behavior."
Begay, 553 U.S. at 148.
We think it is worth noting that sexual offenses against
young children are often punished far more severely than offenses
-14-
like burglary. For example, federal law imposes a 30-year
mandatory minimum sentence — and a lifetime minimum for repeat
offenders — for engaging in a sexual act with a child under 12.
See 18 U.S.C. § 2241(c). Mistake of age is no defense. See id.
§ 2241(d). Maine also punishes sex crimes against young children
severely. See Me. Rev. Stat. tit. 17-A, §§ 253(1)(B), 1252(2)(A)
(authorizing sentence of up to 30 years for sexual acts with a
child under 14). By contrast, Maine allows sentences up to 10
years for simple burglary of a dwelling.5 See id. §§ 401(1)(B)(4),
1252(2)(B). This hierarchy of penalties is a rough proxy for the
seriousness of the crimes and for the potential risk of harm.
To say more would be to paint the lily. We conclude that
Begay's "purposeful, violent, and aggressive" formulation is a
guide, not a straitjacket. Common sense and real-world experience
remain important factors in applying the career offender
guideline's residual clause. Here, those considerations help to
make pellucid that gross sexual assault of a child under the age of
14 is a crime of violence. This aligns with our prior precedents,
and we so hold.
We add a coda. Even if Begay creates a series of
immutable boxes that must be checked before a predicate crime can
5
While federal law does not specifically criminalize burglary
of a dwelling, we note that an analogous federal crime — burglary
of a bank — carries a maximum penalty of 20 years and no minimum
penalty unless aggravating factors are present. See 18 U.S.C.
§ 2113(a), (e).
-15-
fit within the confines of the career offender guideline — and we
do not think that it does — gross sexual assault of a child younger
than 14 checks those boxes.
It cannot be gainsaid that purposeful conduct is the norm
among violations of section 253(1)(B). The sexual act underlying
the offense — "direct physical contact between the genitals of one
and the mouth[,] anus[,] [or] genitals of the other," Me. Rev.
Stat. tit. 17-A, § 251(1)(C)(1) — typically involves affirmative
and deliberate conduct by the perpetrator. See United States v.
Daye, 571 F.3d 225, 234 (2d Cir. 2009). This is especially so
since a violation of section 253(1)(B), which refers only to
younger children, will usually be characterized by awareness of the
victim's underage status. See Office of Juvenile Justice &
Delinquency Prevention, U.S. Dep't of Justice, NCJ 208803,
Statutory Rape Known to Law Enforcement 2 (2005) (noting that no
more than 5% of offenders were strangers to the juvenile victim).
We think, too, that in the mine-run of cases the
commission of a sexual offense such as is proscribed by section
253(1)(B) will create a serious risk of violent and aggressive
behavior. The disparity in age between the adult perpetrator and
the young victim, coupled with the deliberate nature of the
forbidden conduct and the physical contact with the intimate parts
of the victim, "creates a risk, not generally present during the
commission of a drunk driving offense, that the perpetrator will
-16-
intentionally use force." Daye, 571 F.3d at 233. We recognize
that, as with burglary of a dwelling, physical force is neither an
element nor an inevitable concomitant of the offense; but it blinks
reality to say that the risk that force will be used to carry out
the crime is less than significant. See Cadieux, 500 F.3d at 46.
When a sexual offense involves a particularly young victim — and
under section 253(1)(B), the victim may be, say, a three-year-old
toddler — it is much more likely that violent force and aggressive
behavior will actually be used than in the commission of a burglary
of a dwelling. See United States v. Howard, 754 F.3d 608, 609-10
(8th Cir. 2014) (holding that offense involving sexual intercourse
with victim under 14 years of age is crime of violence); Daye, 571
F.3d at 231, 234 (holding that offense involving sexual acts with
victims aged 15 or younger is crime of violence).
In an effort to blunt the force of this reasoning, the
appellant relies on a number of circuit court decisions. We find
these precedents unpersuasive for two reasons. First, the majority
of cases hawked by the appellant deal with offenses encompassing
sexual contact with children older than those protected by section
253(1)(B). See, e.g., United States v. Van Mead, ___ F.3d ___, ___
[2014 WL 6863679, at *5] (2d Cir. 2014); United States v. Harris,
608 F.3d 1222, 1225 (11th Cir. 2010); United States v. Christensen,
559 F.3d 1092, 1093 (9th Cir. 2009); United States v. Dennis, 551
F.3d 986, 990 (10th Cir. 2008).
-17-
Second, some of them interpret Begay to mean that strict
liability offenses are categorically beyond the purview of the
residual clause. See, e.g., United States v. Owens, 672 F.3d 966,
972 (11th Cir. 2012); McDonald, 592 F.3d at 814. As we already
have explained, we do not believe that Begay goes so far.
To be sure, two of the appellant's cases conclude that a
particular offense targeting younger minors is not a crime of
violence. These cases, however, are easily distinguishable.
In United States v. Goodpasture, 595 F.3d 670 (7th Cir.
2010), the statute sub judice targeted victims under 14 years of
age, but prohibited even "kissing and fondling." Id. at 670-72.
Thus, it was much less plausible that the offense conduct was
typically violent or aggressive. So, too, the statute at issue in
United States v. Thornton, 554 F.3d 443 (4th Cir. 2009), targeted
13- and 14-year-old victims. See id. at 445 n.2. But unlike
section 253(1)(B), that statute has as an element a lack of force.
See id.
III. CONCLUSION
We need go no further. For the reasons elucidated above,
we hold that gross sexual assault of a minor under section
253(1)(B) is categorically a crime of violence within the purview
of the career offender guideline. See Williams, 529 F.3d at 7
(deciding, post-Begay, that trafficking of a minor for prostitution
-18-
is a crime of violence).6 The district court's criminal history
calculation was, therefore, unimpugnable.
Affirmed.
6
In this regard, Williams is particularly instructive because
the predicate offense at issue there — trafficking of a minor for
prostitution, 18 U.S.C. § 2423(a) — is a strict liability offense
with respect to the victim's underage status. See United States v.
Tavares, 705 F.3d 4, 20 (1st Cir. 2013).
-19-
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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
ST. JOSEPH LEASE CAPITAL
CORPORATION,
Petitioner-Appellant,
v. No. 99-2473
COMMISSIONER OF INTERNAL REVENUE,
Respondent-Appellee.
Appeal from the United States Tax Court.
(Tax Ct. No. 95-249)
Argued: September 28, 2000
Decided: December 20, 2000
Before NIEMEYER and MICHAEL, Circuit Judges, and
Frederick P. STAMP, Jr., Chief United States District Judge
for the Northern District of West Virginia, sitting by designation.
Affirmed by published opinion. Judge Niemeyer wrote the opinion,
in which Judge Michael and Chief Judge Stamp joined.
COUNSEL
COUNSEL: Henry G. Zapruder, BAKER & HOSTETLER, L.L.P.,
Washington, D.C., for Appellant. Gilbert Steven Rothenberg, Tax
Division, UNITED STATES DEPARTMENT OF JUSTICE, Wash-
ington, D.C., for Appellee. ON BRIEF: Paula M. Junghans, Acting
Assistant Attorney General, Ellen Page DelSole, Tax Division,
UNITED STATES DEPARTMENT OF JUSTICE, Washington,
D.C., for Appellee.
2 ST. JOSEPH LEASE CAPITAL v. CIR
OPINION
NIEMEYER, Circuit Judge:
We are presented with the question under the Tax Code of whether
the mailing by the Internal Revenue Service ("IRS") of a misad-
dressed notice of income tax deficiency suspended — under 26
U.S.C. § 6503(a) — the running of the three-year limitations period
within which the IRS must assess taxes due. For the reasons that fol-
low, we affirm the United States Tax Court’s decision that this period
of limitations was suspended by the mailing, when the taxpayer
received actual notice of the deficiency and still had sufficient time
within which to file a petition under 26 U.S.C. § 6213(a) for a Tax
Court redetermination of the deficiency.
I
St. Joseph Lease Capital Corporation ("the taxpayer") filed federal
income tax returns on October 15, 1991, for the tax years 1985-1990.
The period of limitations within which the IRS could assess a defi-
ciency for those returns was three years, and would thus expire on
October 15, 1994, absent tolling. See 26 U.S.C. § 6501(a).
Following an audit of these returns, the IRS mailed a deficiency
notice to the taxpayer on October 6, 1994, shortly before the expira-
tion of the three-year limitations period. Two copies of the notice of
deficiency were mailed to the taxpayer, addressed as follows:
St. Joseph Lease Capital Corporation
Post Office Box 19307
Alexandria, Virginia 22320
and
St. Joseph Lease Capital Corporation
6019 Tower Court
Alexandria, Virginia 22320
In addition, the IRS mailed a copy of the notice of deficiency to the
taxpayer’s attorney, Roger A. Pies, at his address in Washington, D.C.
ST. JOSEPH LEASE CAPITAL v. CIR 3
The taxpayer had earlier appointed Pies its attorney-in-fact for pur-
poses of income tax matters for the 1985-1990 tax years. The
addresses that the IRS used were those maintained in its computer and
were concededly accurate up until August 1994, although they
became inaccurate by the time of the October 6 mailing.
In late August 1994, the taxpayer hired a new attorney, Robert M.
Levin, to represent it in connection with tax matters, and on Septem-
ber 1, 1994, the taxpayer submitted to the IRS a new Form 2848,
which appointed Levin, in place of Pies, as taxpayer’s attorney-in-
fact. Around the same time, the taxpayer’s parent corporation sent the
IRS a Form 851 (affiliation schedule) that listed a new street address
for the taxpayer at 218 North Lee Street, Alexandria, Virginia 22314.
A few weeks later, on September 21, 1994, the taxpayer itself sent the
IRS a Form 8822 (change of address) by overnight courier, also list-
ing this address as the taxpayer’s new address.
Because the taxpayer’s change of attorney and new addresses had
not, as of October 6, 1994, been incorporated in the IRS’s computer
information base, all three copies of the notice of deficiency mailed
on October 6, 1994, were misaddressed, and all three were returned.
The first returned notice was stamped "Box Closed, No Forwarding
Order." The second was stamped "Return to Sender, Unclaimed." And
the third was returned unopened with a cover letter from Pies stating
that he no longer represented the taxpayer.
The IRS did nothing with the returned notices until specifically
requested to do so several weeks later. When the taxpayer’s new
attorney, Levin, discovered on November 2, 1994, that a deficiency
notice had been mailed to the taxpayer in early October, he requested
a copy of the notice. The IRS faxed him a copy on November 10,
1994. It was thus received by the taxpayer more than three years after
the taxpayer initially filed its returns.
On January 3, 1995, the taxpayer filed a petition with the United
States Tax Court for a redetermination of its tax deficiency. In that
proceeding, the parties filed cross-motions for summary judgment on
whether the IRS was barred from assessing a deficiency because it
misaddressed the notices of deficiency and the taxpayer received
actual notice more than three years after filing its returns. The Tax
4 ST. JOSEPH LEASE CAPITAL v. CIR
Court concluded that even assuming that the IRS did not mail the
notice of deficiency to the taxpayer at its last-known address* — a
condition that would have conclusively imputed notice to the taxpayer
under 26 U.S.C. § 6212(b) — its mailing of the October 6 notice
effectively tolled the statute of limitations because the taxpayer actu-
ally received a copy of the notice by fax on November 10, 1994, and
the taxpayer had ample time to file a timely petition with the Tax
Court.
Following the Tax Court’s ruling, the parties entered into a settle-
ment that resolved their dispute regarding the amount of taxes due,
but they expressly preserved the taxpayer’s right to appeal the Tax
Court’s determination of the statute of limitations issue. This appeal
was taken to review the single issue of whether any of the misad-
dressed October 6 notices suspended the running of the three-year
limitations period pursuant to 26 U.S.C. § 6503(a)(1), a question of
law that we review de novo. See Balkissoon v. Commissioner of Inter-
nal Revenue, 995 F.2d 525, 527 (4th Cir. 1992).
II
The Tax Code provides that the IRS must assess any deficiency in
the payment of income taxes within three years after a return is filed,
see 26 U.S.C. § 6501(a), and generally no assessment can be made
until a notice of deficiency has been mailed to the taxpayer, see id.
§ 6213(a). When a notice of deficiency is mailed to the taxpayer, the
three-year period is extended 90 days from the mailing to permit the
taxpayer an opportunity to petition the Tax Court for a redetermina-
tion of the deficiency. See id. §§ 6213(a), 6503(a). If the taxpayer
files a petition for a redetermination of the deficiency, the three-year
period is extended yet further until 60 days following the date when
*The issue of whether, in fact, the IRS’s mailing to addresses that were
correct as of late August 1994 constituted a mailing to the "last-known
address" has not been decided. The IRS contends that the old addresses
remained the "last known address" until the end of the 45-day processing
period established by its internal procedures. See Rev. Proc. 90-18, 1990-
13 I.R.B. 19. For purposes of this appeal, however, the parties have
assumed that the IRS’s mailing was not to the taxpayer’s last-known
address.
ST. JOSEPH LEASE CAPITAL v. CIR 5
the decision of the Tax Court on the taxpayer’s petition becomes
final. See id. § 6503(a). Until the Tax Court’s decision becomes final,
the IRS may not take any steps to assess and collect the taxes claimed.
See id. § 6213(a). If the taxpayer fails to take advantage of the 90-day
window within which to petition the Tax Court for a redetermination,
the IRS may assess the deficiency and begin collecting the tax imme-
diately after the 90 days have run. The taxpayer, however, does not
lose the opportunity to challenge the assessment of deficiency merely
because it fails to petition the Tax Court. It may pay the taxes and
then sue the United States for a refund in federal district court. See
id. §§ 6212(a), 6213(a), 6511, 6532(a), 7422.
Thus, the IRS’s mailing of a notice of deficiency simultaneously
serves two functions. First, it tolls the three-year statute of limitations,
and second, it commences a process that enables the taxpayer to chal-
lenge the deficiency.
In this case, the parties agree that the IRS mailed a notice of defi-
ciency by certified mail within three years after the taxpayer filed its
returns. The taxpayer contends, however, that because the IRS misad-
dressed the notice, the mailing was "a nullity" and ineffective for all
purposes. Without a mailing, the statute of limitations under 26
U.S.C. § 6503(a) was never tolled, and therefore the IRS could not
assess any deficiency after October 15, 1994, as it purported to do.
The IRS contends to the contrary that its October 6 notice of defi-
ciency was valid and, having been mailed to taxpayer before the expi-
ration of three years from the taxpayer’s filing of its returns, tolled the
statute of limitations. It argues that the defect in mailing was of no
consequence "because taxpayer actually received [the notice] without
prejudicial delay and filed a timely petition."
To resolve this dispute, we begin with the statutory language, as we
must. Section 6503(a)(1) provides that the three-year period of limita-
tions for making an assessment is suspended "after the mailing of a
notice under § 6212(a)." Section 6212(a) requires that the notice of
deficiency to the taxpayer include notice "of the taxpayer’s right to
contact a local office of the taxpayer advocate and the location and
phone number of the appropriate office" and authorizes that the notice
be sent to the taxpayer by certified mail or registered mail. This sec-
tion imposes no other requirements for the mailing. Significantly, the
6 ST. JOSEPH LEASE CAPITAL v. CIR
mailing that suspends the running of the limitations period under
§ 6503(a)(1) is explicitly a § 6212(a) mailing; there is no requirement
that the deficiency notice be mailed as required by § 6212(b), which
conclusively imputes notice to the taxpayer if the notice is mailed to
the taxpayer’s "last-known address." Accordingly, we conclude that
§ 6503(a) means what it says — in order to suspend the running of
the limitations period under § 6503(a), a mailing must comport with
the requirements of § 6212(a), but need not comport in any way with
§ 6212(b).
The taxpayer contends that in reading § 6503(a), we should infer
that a mailing must be received by the taxpayer in order for it to sus-
pend the running of the three-year limitations period. To support this
argument, the taxpayer relies upon Mulvania v. Commissioner of
Internal Revenue, 769 F.2d 1376 (9th Cir. 1985), which held that a
misaddressed notice of deficiency was invalid because the taxpayer
never actually received a copy of the notice, and Reddock v. Commis-
sioner of Internal Revenue, 72 T.C. 21 (1979), which held that when
the IRS re-mailed an earlier misaddressed notice to the correct
address, it abandoned the first mailing which could not then be used
to toll the statute of limitations.
The taxpayer’s argument, however, finds support in neither the lan-
guage of the statute nor the commonly understood meaning of "mail-
ing." Section 6503(a) does not on its face require that a mailing
actually be received by the taxpayer. And in the absence of an explicit
requirement of receipt, we are left with a question of statutory inter-
pretation turning on the meaning of "mailing." As commonly under-
stood, "mailing" means the placement of a letter — "properly
addressed and stamped with the proper postage" — in the custody of
the Postal Service. Black’s Law Dictionary 952 (6th ed. 1990); cf. 26
U.S.C. § 7502(a). There is no dispute that the notices in this case con-
tained addresses proper for mailing (i.e., consistent with postal regula-
tions), were stamped, and were placed in the custody of the Postal
Service. A mailed letter does not later become "unmailed" if it is
never delivered or if it is returned. On the contrary, a letter that is
returned has both the attributes of having been "mailed" and of having
been "returned."
Our conclusion that the running of the limitations period under
§ 6503(a) is suspended simply by a mailing to the taxpayer and not
ST. JOSEPH LEASE CAPITAL v. CIR 7
by receipt is corroborated by the cases applying § 6503(a) to circum-
stances in which a notice is mailed before the expiration of three years
but is received after the expiration. These cases have held uniformly
that such a notice tolls the statute of limitations. See, e.g., Scheidt v.
Commissioner of Internal Revenue, 967 F.2d 1448, 1450-51 (10th
Cir. 1992); Borgman v. Commissioner of Internal Revenue, 888 F.2d
916, 917-18 (1st Cir. 1989); Pugsley v. Commissioner of Internal
Revenue, 749 F.2d 691, 692-93 (11th Cir. 1985); Clodfelter v. Com-
missioner of Internal Revenue, 527 F.2d 754, 757 (9th Cir. 1975);
Frieling v. Commissioner of Internal Revenue, 81 T.C. 42, 53-60
(1983). In none of these cases did the court find that the statute
includes an implied receipt requirement. In each, the court concluded
that the statute of limitations had been effectively tolled even though
the notice was received after the three years expired.
The taxpayer seeks to distinguish these precedents on the basis that
the mailing in each case was the mechanism that ultimately gave the
taxpayer notice, whereas in this case, the taxpayer received the notice
by fax, and not from the mailing. This argument, however, necessarily
returns to the argument that "mailing," as used in the statute, implies
a requirement of "receipt" — an argument that the holdings in these
cases implicitly rejected.
We find ourselves in agreement with the Tenth Circuit’s observa-
tion that "mailing" should not be interpreted in a manner that adds
more to the term’s meaning than it ordinarily encompasses: "Absent
any evidence of Congressional intent, we decline to graft an addi-
tional prerequisite to the tolling of the limitations period based on
whether a taxpayer receives the notice of deficiency in the due course
of the mails." Scheidt, 967 F.2d at 1451; see also Lifter v. Commis-
sioner of Internal Revenue, 59 T.C. 818, 823-24 (1973) (finding that
the limitations period was tolled when taxpayers actually received a
copy of a notice mailed to their attorney, although not the original
notice mailed to them, which had been returned to the IRS); cf.
Mulvania, 769 F.2d at 1380-81 (concluding that mailing did not toll
the statute of limitations when the taxpayer neither received notice
nor filed a petition with the Tax Court).
The taxpayer in this case relies most heavily on the Tax Court’s
decision in Reddock, which held a returned mailing abandoned when
8 ST. JOSEPH LEASE CAPITAL v. CIR
the IRS remailed the notice. The facts there are indeed analogous to
those before us. The only potentially relevant difference is that, in
Reddock, the IRS remailed the return notice after the three-year
period expired, thus abandoning the original mailing, see 72 T.C. at
25-27, whereas, in this case, the IRS faxed a copy of the original
notice after the three years expired. The IRS contends that this differ-
ence in the method of providing actual notice sufficiently distin-
guishes this case from Reddock. It asks us to agree with the Tax
Court’s finding in this case that the IRS did not abandon the original
mailing, but instead continued to hold the original "returned" mailing
and notified the taxpayer independently by fax.
We find this distinction unpersuasive. The subsequent service on
the taxpayer of a returned notice originally sent by certified or regis-
tered mail is the equivalent of the second mailing at issue in Reddock.
See Tenzer v. Commissioner of Internal Revenue, 285 F.2d 956, 958
(9th Cir. 1960). In addition, we have previously made clear that the
method by which the IRS provides notice is irrelevant — any
"method of delivery" is a valid mailing as long as the taxpayer
receives the notice of deficiency. Balkissoon, 995 F.2d at 528.
Accordingly, we conclude that faxing the notice of deficiency is the
functional equivalent of mailing it. If, therefore, the reasoning
employed by the Tax Court in Reddock were to control the outcome
here, the taxpayer would prevail.
We disagree, however, with the Reddock court’s conclusion that by
remailing the notice, the IRS abandons the original misaddressed
mailing, rendering it ineffective for purposes of tolling the statute of
limitations under § 6503(a). The statutory language itself plainly pro-
vides that a mailing suspends the running of the period of limitations
and that suspension occurs when the mailing is complete, i.e., upon
deposit of the letter with the Postal Service. It does not provide that
the "mailing" is effective only if there is no remailing. We reject this
argument for the same reason that we concluded that mailing does not
imply receipt. We find more persuasive the Tenzer court’s statement
that even though a second mailing may provide actual notice, the first
notice is not "wholly void" but is "good enough to arrest the statute
of limitations." 285 F.2d at 958.
As noted above, a "mailing" under § 6503(a) simultaneously serves
two purposes. The first is to suspend the running of the three-year
ST. JOSEPH LEASE CAPITAL v. CIR 9
limitations period, and the second is to commence a process by which
the taxpayer can challenge a deficiency. If the taxpayer does not
receive notice from the mailing, the consequence must relate to the
purpose of the mailing. By not including a receipt requirement in
§ 6503(a), Congress meant to provide an objective act within the con-
trol of the IRS by which the IRS could suspend the running of limita-
tions. This is accomplished by the simple act of mailing, as that term
is generally understood. Congress also meant to begin a process for
the assessment of a deficiency, expecting, but not requiring, that in
most cases the simple mailing would provide the taxpayer with the
notice of deficiency. If the taxpayer does not receive notice of the
process’ commencement through a mailing under § 6503(a), then the
consequence as relevant to this second purpose would be to give the
taxpayer the process lost through an ineffective mailing. If we were,
instead, to conclude that the consequence of an ineffective mailing
under § 6503(a) would be a waiver of tax liability, we would be con-
verting a mechanism designed only to give the taxpayer an opportu-
nity to challenge a proposed deficiency into a mechanism for avoiding
tax liability altogether.
The statutory scheme anticipates that the "vast majority of taxpay-
ers will be informed that a tax deficiency has been determined against
them." Balkissoon, 995 F.2d at 528 (quoting Jones v. United States,
889 F.2d 1448, 1450 (5th Cir. 1989)). But even when they are not so
informed, this scheme giving the taxpayer the opportunity to seek a
Tax Court redetermination of a deficiency should not be read to
undermine the Tax Code’s overarching purpose of collecting the
taxes.
Even if the taxpayer had never received a deficiency notice, it
would not have lost the opportunity to challenge the amount of tax
owed; it would have lost only the opportunity to challenge the amount
owed prior to paying the tax and suing for a refund. And in this case,
the taxpayer did not even lose that. It lost a few weeks to prepare its
Tax Court petition — a period that it does not assert prejudiced it.
Indeed, the time that the taxpayer lost in this case is no greater than
the time delays in other cases in which the statute of limitations was
found to have been tolled. See, e.g., Scheidt, 967 F.2d at 1449 (one-
month delay from mailing to receipt); Tenzer, 285 F.2d at 956 nn. 2,
10 ST. JOSEPH LEASE CAPITAL v. CIR
4 (same); Dolezilek v. Commissioner of Internal Revenue, 212 F.2d
458, 459 (D.C. Cir. 1954) (45-day delay from mailing to receipt).
But, to conclude that the taxpayer’s failure to receive notice from
the mailing under 26 U.S.C. § 6503(a) should deprive the IRS of all
opportunity to assess the taxpayer’s taxes, even though the taxpayer
received actual notice of the mailing within sufficient time to file a
petition with the Tax Court, would bring about a strangely unbalanced
result that would mindlessly focus on the success of a "mailing" and
not on the substance of the statutory provision involved, i.e., to sus-
pend the running of the limitations period and to commence a process.
Although it is true that the IRS’s conformity with 26 U.S.C. § 6212(b)
(mailing to the taxpayer’s last-known address) would provide it with
a safe harbor and relieve it of all risk of non-receipt, a mailing not
conforming with § 6212(b) is still presumptively valid. But the ques-
tion then becomes simply what the effect of a misaddressed mailing
should be. In the context of tolling the statute of limitations, a misad-
dressed mailing is of no consequence. The statute requires mailing
and that was accomplished. In the context of the taxpayer’s challenge
to the deficiency, we must ask if the taxpayer was prejudiced. We
note that when a mailing provides the taxpayer actual notice so that
the taxpayer has sufficient time to petition the Tax Court, the courts
have uniformly held that any technical flaw in the mailing is harm-
less. See, e.g., Balkissoon, 995 F.2d at 528-29 (citing cases). Simi-
larly, when a mailing itself does not provide the taxpayer with a copy
of the deficiency notice, but the taxpayer otherwise receives such
notice, we can only conclude that the same technical flaw in the mail-
ing is just as harmless.
In sum, while the Tax Code does not explicitly address the effect
of the IRS’s failure to comport with the method of mailing that would
provide it safe-harbor protection under § 6212(b), it does address
what suspends the running of the three-year limitations period for
making a tax assessment. It provides that such a suspension is
effected by a "mailing of a notice [of deficiency] under § 6212(a),"
without more. 26 U.S.C. § 6503(a). And if the mailing is technically
deficient but the taxpayer receives actual notice of the deficiency and
an opportunity to petition the Tax Court for a redetermination of the
deficiency, then the technical deficiency is harmless for all purposes
and should not undermine the strict language of § 6503(a). Under this
ST. JOSEPH LEASE CAPITAL v. CIR 11
interpretation, the precision of the Tax Code is preserved, its intent is
fulfilled, and justice is served by not allowing the taxpayer to receive
a windfall exemption from paying taxes because of a mailing defect
whose importance relates only to a challenge process in which the
taxpayer was not prejudiced.
For the foregoing reasons, the decision of the Tax Court is
AFFIRMED.
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684 N.E.2d 414 (1997)
291 Ill. App.3d 541
225 Ill.Dec. 729
The PEOPLE of the State of Illinois, Plaintiff-Appellee,
v.
Thomas NOEL, Defendant-Appellant.
No. 3-95-0754.
Appellate Court of Illinois, Third District.
August 15, 1997.
*415 Janet Gandy Fowler, Office of the State Appellate Defender, Mt. Vernon, for Thomas Noel.
John X. Breslin, Deputy Director, State's Attorneys Appellate Prosecutor, Ottawa, Kevin W. Lyons, State's Attorney, Peoria, Nancy Rink Carter, State's Attorneys Appellate Prosecutor, Ottawa, for the People.
Justice SLATER delivered the opinion of the court:
Defendant Thomas Noel was convicted of robbery and was sentenced to a term of eight years imprisonment. Defendant's conviction and sentence were subsequently affirmed by this court. People v. Noel, No. 3930794 (1995) (unpublished order under Supreme Court Rule 23). On February 10, 1995, defendant filed a pro se petition for post-conviction relief. On August 8,1995, the trial court appointed counsel to represent the defendant and scheduled a hearing for those matters raised in paragraph 4(a) of defendant's petition. With respect to paragraph 4(b) of the petition, the court ruled that defendant was merely arguing factual matters that had been previously determined by the jury and therefore no hearing would be conducted concerning those allegations. Following a hearing on October 12, 1995, the trial court denied defendant's petition for post-conviction relief.
On appeal, defendant contends that the trial court erred in summarily dismissing paragraph 4(b) of his petition. Defendant maintains that such a dismissal is only proper within 90 days of the date the petition was filed. We agree.
The Post-Conviction Hearing Act (725 ILCS 5/1221 et seq. (West 1994)) (the Act) establishes a three-step process for adjudicating petitions for post-conviction relief:
"First, the circuit court must consider the petition without input by the State or further pleadings by the defendant, in order to ascertain whether it is `frivolous or patently without merit.' If the court concludes that it is, the petition is to be dismissed. Such an order of dismissal is appealable.
If the petition is not dismissed as `frivolous or patently without merit,' the court must appoint counsel to represent the defendant (if he or she is indigent), and the petition moves to the second stage of the post-conviction petition adjudication process. At this juncture, counsel must first be afforded an opportunity to amend the petition. Thereafter, the petition may be dismissed or denied without a hearing on the basis of either a motion to dismiss or answer filed by the State. An order dismissing or denying the petition at this stage of the proceedings also constitutes an appealable order.
If the petition is not dismissed or denied at the second stage of the adjudicatory process, it progresses to the third and final stage, at which an evidentiary hearing is held. Following this hearing, the circuit court will either grant or deny the relief requested in the petition." People v. Dredge, 148 Ill.App.3d 911, 912-13, 102 Ill.Dec. 552, 553, 500 N.E.2d 445, 446 (1986).
In this case, it appears that the trial court dismissed paragraph 4(b) of defendant's petition as frivolous or patently without merit. Such a dismissal is void, however, if it occurs more than 90 days after the petition was filed. People v. Porter, 122 Ill.2d 64, 118 Ill.Dec. 465, 521 N.E.2d 1158 (1988); 725 ILCS 5/1222.1(a) (West 1994). In Porter, the supreme court held that the language of section 1222.1 was mandatory and required the trial court to either dismiss the petition within 30 days or docket it for further consideration in accordance with sections 1224 through 1226 of the Act. The 30 day period has since been expanded to 90 days. See 725 ILCS 5/1222.1(a) (West 1994).
*416 The State argues that the trial court did not dismiss paragraph 4(b) of defendant's petition under section 1222.1(a). The State maintains that the court was proceeding in accordance with section 1222.1(b), and pursuant to that section "the trial judge found no need for an evidentiary hearing on the allegations in paragraph 4(b)."
The problem with the State's position is that section 1222.1(b) does not provide for dismissal of a post-conviction petition. That section merely states:
"(b) If the petition is not dismissed pursuant to this Section, the court shall order the petition to be docketed for further consideration in accordance with Sections 1224 through 1226." 725 ILCS 5/1222.1(b) (West 1994).
In other words, if the post-conviction petition is not dismissed under section 122 2.1(a), the next step is the appointment of counsel, who "is expected to consult with the petitioner, review the trial record, and make any necessary amendments to the petition" (People v. Wallace, 201 Ill.App.3d 943, 948-49, 147 Ill.Dec. 366, 369, 559 N.E.2d 539, 542 (1990); 725 ILCS 5/1224 (West 1994); see also People v. Wilk, 124 Ill.2d 93,124 Ill.Dec. 398, 529 N.E.2d 218 (1988) (once petition is deemed non-frivolous, counsel will be appointed)). In this case, while counsel was appointed to assist the defendant, it is clear from the court's order that it did not consider paragraph 4(b) worthy of further consideration. Thus the effect of the order was to summarily dismiss paragraph 4(b) as patently without merit. Such a dismissal, coming more than 90 days after the filing of the petition, was prohibited by Porter. We therefore reverse the dismissal of paragraph 4(b) of defendant's petition and remand for further consideration in accordance with sections 1224 through 1226 of the Act.
Defendant has also requested that we reverse the circuit court's order denying the remainder of his post-conviction petition. The trial court held an evidentiary hearing regarding defendant's claim of ineffective assistance of counsel and ruled that defendant had failed to show that his attorney's alleged errors would have affected the results of his trial. Defendant does not argue the merits of his ineffective assistance claim, but instead contends that the improper dismissal of paragraph 4(b) of his petition rendered any subsequent proceedings void. The defendant has failed to cite any relevant case law in support of his position, and we do not believe it is grounded in law or logic. Our review of the record supports the trial court's decision and we therefore affirm the denial of paragraph 4(a) of defendant's post-conviction petition.
Finally, we note that even if the trial court had acted within 90 days, the procedure employed here was improper. The Post-Conviction Hearing Act does not authorize partial dismissals of post-conviction petitions as frivolous or patently without merit. If some part of the petition is not frivolous, the trial court should appoint counsel, who can appropriately amend the petition. Allowing partial dismissal raises serious questions about the judicial review process, since first stage dismissals are final and appealable judgments. In the interest of judicial economy, and to avoid piecemeal litigation, trial judges should refrain from entering partial summary dismissals.
For the reasons stated above, the judgment of the circuit court is affirmed in part and reversed in part and remanded.
Affirmed in part and reversed in part; cause remanded.
HOLDRIDGE and HOMER, JJ., concur.
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 18-2396
THEON SMITH,
Plaintiff - Appellant,
v.
DOMESTIC RELATIONS OF CHARLESTON COUNTY; JUDGE DANA A.
MORRIS,
Defendants - Appellees.
Appeal from the United States District Court for the District of South Carolina, at
Charleston. David C. Norton, District Judge. (2:18-cv-02297-DCN)
Submitted: January 22, 2019 Decided: January 24, 2019
Before MOTZ, KEENAN, and FLOYD, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Theon Smith, Appellant Pro Se.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Theon Smith appeals the district court’s order dismissing without prejudice his
civil complaint challenging a state court child support order. * The district court referred
this case to a magistrate judge pursuant to 28 U.S.C. § 636(b)(1)(B) (2012). The
magistrate judge recommended dismissing the action and advised Smith that failure to
file timely, specific objections to this recommendation could waive appellate review of a
district court order based upon the recommendation.
The timely filing of specific objections to a magistrate judge’s recommendation is
necessary to preserve appellate review of the substance of that recommendation when the
parties have been warned of the consequences of noncompliance. Wright v. Collins, 766
F.2d 841, 845-46 (4th Cir. 1985); see also Thomas v. Arn, 474 U.S. 140 (1985). By
failing to file specific objections after receiving proper notice, Smith has waived
appellate review of the district court’s order.
Accordingly, we affirm the judgment of the district court. We deny Smith’s
motion to transfer this appeal to the Federal Circuit. We dispense with oral argument
because the facts and legal contentions are adequately presented in the materials before
this court and argument would not aid the decisional process.
AFFIRMED
*
We have jurisdiction over this appeal because the district court dismissed the
action for defects that could not be cured by amendment to the complaint. See Goode v.
Cent. Va. Legal Aid Soc’y, Inc., 807 F.3d 619, 624 (4th Cir. 2015).
2
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447 F.2d 1297
UNITED STATES of America ex rel. John SCHAEDEL, Petitioner-Appellant,v.Harold W. FOLLETTE, Warden, Green Haven Prison, Stormville, New York, Respondent-Appellee.
No. 829.
No. 830.
Docket 31189.
Docket 32289.
United States Court of Appeals, Second Circuit.
Argued May 24, 1971.
Decided August 13, 1971.
Robert Hermann, The Legal Aid Society, New York City (Milton Adler, The Legal Aid Society, New York City, on the brief), for appellant.
Brenda Soloff, Office of Atty. Gen. (Louis J. Lefkowitz, Atty. Gen. of N. Y., and Samuel A. Hirshowitz, First Asst. Atty. Gen., and Lillian Z. Cohen, Asst. Atty. Gen., on the brief), for appellee.
Before KAUFMAN, ANDERSON and MANSFIELD, Circuit Judges.
ANDERSON, Circuit Judge:
1
These are consolidated appeals from orders of the United States District Court for the Southern District of New York denying appellant's applications for writs of habeas corpus under 28 U. S.C. § 2254. Both applications challenged the lawfulness of appellant's custody under a 1964 conviction in the County Court, Suffolk County for grand larceny.
2
At the time of his arrest on January 3, 1963, appellant was vice president of Northeast Insulation Company which was wholly owned by Jacques Segal, its president. One of appellant's duties consisted of computing the hours worked by mechanics employed by the corporation and passing this information to the accounting department which issued a blanket check to appellant for payment of the mechanics. Evidence introduced at the trial showed that appellant added additional hours to the time cards he submitted to accounting, cashed the blanket check, paid the mechanics what they properly were due and appropriated the balance. Following judgments of conviction on jury verdicts of guilty on five counts of grand larceny in the first degree, appellant was sentenced on June 23, 1964 to concurrent terms of five to ten years on each count; he is presently serving those sentences. The convictions were affirmed by the Appellate Division, People v. Schaedel, 23 A.D.2d 967, 260 N.Y.S.2d 601 (2d Dept.1965), and leave to appeal to the New York Court of Appeals was denied.
3
Docket No. 32289 is an appeal from Judge Palmieri's order denying, without a hearing, appellant's application for a writ of habeas corpus, 275 F.Supp. 548, seeking release from custody on the ground that an involuntary confession was utilized at trial or, alternatively, seeking a federal evidentiary hearing on the issue of voluntariness under Jackson v. Denno, 378 U.S. 368, 84 S.Ct. 1774, 12 L.Ed.2d 908 (1964). Joined with this appeal is an appeal (Docket No. 31189) from an earlier denial by Judge Frankel of an application for a writ of habeas corpus which sought release from custody on the ground that a ten-month period of delay between the time of arrest and trial, during which time a prospective witness died, denied appellant his Sixth Amendment right to a speedy trial. For the reasons hereinafter stated, we affirm both orders of the district court.
Docket No. 32289
4
Detective Investigator George Holmes of the Suffolk County District Attorney's office testified that on the evening of January 8, 1963 he was investigating the payroll problem at the company's offices and spoke with the appellant. Holmes testified that the appellant admitted to falsifying time cards and to appropriating the difference between what the employees were properly owed and the amount called for by the altered time cards. Defense counsel offered no objection to the testimony1 and cross-examined Holmes in an attempt to challenge his ability to recollect the events of the evening of January 8. The cross-examination did not attempt to challenge the voluntariness of the admissions and the court did not instruct the jury to determine whether the admissions were voluntarily given.
5
On June 22, 1964, one day before appellant was sentenced, the Supreme Court decided Jackson v. Denno, supra, which overruled Stein v. New York, 346 U.S. 156, 73 S.Ct. 1077, 97 L.Ed. 1522 (1953), and held that due process required a separate hearing on the issue of voluntariness and a resolution by the trial judge of all factual issues bearing on the voluntary nature of the confession. On his direct appeal, appellant was represented by the same retained counsel who had represented him at the trial and he raised no claim that the admissions testified to by Detective Holmes were involuntarily given.
6
Shortly after the completion of his direct appeal, appellant moved for a writ of error coram nobis, claiming that the admissions introduced against him at trial were the result of coercion and were, therefore, involuntary. The motion was denied without a hearing under People v. Huntley, 15 N.Y.2d 72, 255 N. Y.S.2d 838, 204 N.E.2d 179 (1965), on the ground that Huntley had been decided while appellant's case was on direct appeal,2 and the claim should have been raised at that time, and on the ground that no objection had been lodged at the trial to Detective Holmes' testimony. The denial was affirmed without opinion and leave to appeal was denied.
7
On this record, we agree with the district court's conclusion that the application for habeas corpus must be denied because of the failure of appellant to object to the use of his allegedly involuntary oral admissions at the trial or to raise the issue on direct appeal. Where the federal habeas applicant "has deliberately by-passed the orderly procedure of the state courts and in so doing has forfeited his state court remedies" the federal habeas judge may, in his discretion, deny relief. Fay v. Noia, 372 U.S. 391, 83 S.Ct. 822, 9 L.Ed.2d 837 (1963). Under New York law a contemporaneous objection is required to preserve the issue on appeal, but no objection is required to preserve for appellate review a deprivation of a fundamental constitutional right, and the failure to object does not waive the defendant's state remedies for the preservation of those rights. People v. McLucas, 15 N. Y.2d 167, 256 N.Y.S.2d 799, 204 N.E.2d 846 (1965); People v. DeRenzzio, 19 N. Y.2d 45, 277 N.Y.S.2d 668, 224 N.E.2d 97 (1966); People v. Arthur, 22 N.Y.2d 325, 292 N.Y.S.2d 663, 239 N.E.2d 537 (1968). Federal habeas relief, therefore, is not foreclosed where the failure to object did not waive state remedies. United States ex rel. Vanderhorst v. LaVallee, 417 F.2d 411 (2 Cir. 1969), cert. denied, McMann v. Vanderhorst, 397 U.S. 925, 90 S.Ct. 930, 25 L.Ed.2d 105 (1970). Here, however, the appellant not only failed to object to Detective Holmes' testimony but also failed to raise the issue on appeal. On Appellant's state coram nobis application the state court held this constituted a waiver of state remedies.
8
Although state proceedures requiring a contemporaneous objection and a raising of the issue on appeal clearly serve legitimate state interests and are not void under either the due process or supremacy clause, Henry v. Mississippi, 379 U. S. 443, 85 S.Ct. 564, 13 L.Ed.2d 408 (1965); Fay v. Noia, supra, appellant argues that his failure to comply with these rules cannot be held to constitute a deliberate bypass of state procedures because (1) nothing in the record indicates that appellant participated or acquiesced in counsel's decision not to object to the admissions, and (2) the decision not to object was compelled by procedures for determining voluntariness which were held unconstitutional in Jackson v. Denno, supra. Neither argument possesses merit under these circumstances.
9
A strategic decision by appellant's counsel not to object to a confession, with or without prior consultation with the client, is binding on the client in the absence of exceptional circumstances. Henry v. Mississippi, supra; United States ex rel. Agron v. Herold, 426 F.2d 125 (2 Cir. 1970). Counsel's position as manager of the lawsuit requires such a standard, and a contrary rule would unnecessarily disrupt the trial process. See J. Gibbons, Waiver: The Quest for Functional Limitations on Habeas Corpus Jurisdiction, 2 Seton Hall L.Rev. 291, 304-305 (1971); Developments — Federal Habeas Corpus, 83 Harv.L.Rev. 1038, 1109-1112 (1970). No claim has been made that counsel's failure to object was inadvertent, compare Henry v. Mississippi, supra; United States ex rel. Vanderhorst v. LaVallee, supra, and the record demonstrates, from appellant's own papers, that counsel knew of the possibility of objecting to the voluntariness of the confession both under § 395 of the New York Code of Criminal Procedure and under the Fifth and Sixth Amendments. Moreover, even if consultation with the client were required, the record indicates that appellant had discussed the issue with his attorney and knew that no objection would be lodged. Absent a claim of incompetence of counsel, therefore, counsel's deliberate decision not to object or raise the issue on appeal forecloses federal habeas relief. Cf. McMann v. Richardson, 397 U.S. 759, 90 S. Ct. 1441, 25 L.Ed.2d 763 (1970); J. Gibbons, supra, at 305.
10
Appellant argues, however, that because counsel's decision not to object was compelled by the unconstitutional pre-Jackson New York procedures for determining voluntariness, the decision cannot be classified a deliberate bypass of state procedures. Even if the argument were accepted,3 however, it would not benefit appellant, because Jackson v. Denno, supra, was decided before appellant began his state appellate processes, and Huntley was decided while he was still involved in those processes. Because appellant failed to raise the issue of a Jackson v. Denno hearing on appeal in the state courts, as he was entitled to do under People v. McLucas, supra, he deliberately bypassed state procedures which provided a remedy. See United States ex rel. Molinas v. Mancusi, 370 F.2d 601 (2 Cir.), cert. denied, Molinas v. Mancusi, 386 U.S. 984, 87 S.Ct. 1285, 18 L.Ed.2d 232 (1967); United States ex rel. Agron v. Herold, supra. Absent a claim of inadvertent error or incompetence of counsel, therefore, federal habeas relief is not available. Cf. McMann v. Richardson, supra.
Docket No. 31189
11
Appellant was arrested on January 8, 1963 and the trial was held some fifteen months later on April 23, 1964. During the entire period appellant was free on bail. Ten months after the arrest, Jacques Segal, president of Northeast Insulation Company and a prospective prosecution witness, was killed in an airplane crash on November 16, 1963. Appellant claims that Segal's testimony would have exonerated him of any criminal liability and, therefore, that the ten-month delay between his arrest and Segal's death denied him a speedy trial. As the delay was due mainly to appellant's own motion to inspect the grand jury minutes and the normal summer recess where preferences were given to the cases of jailed defendants, the relatively short period of the state's inaction is not of Sixth Amendment proportions under United States ex rel. Von Cseh v. Fay, 313 F.2d 620 (2 Cir. 1963), and we appreciate the candor with which counsel for appellant acknowledged this point at oral argument.
12
The orders of the district court are, therefore, affirmed.
Notes:
1
At the close of the prosecution's case, defense counsel moved to dismiss for failure to make out a prima facie case. When reminded of the defendant's admissions, counsel attempted to object to their use, but the court pointed out that no objection had been lodged when they were introduced, and it refused to hear further argument. Although a tardy objection may serve the purpose of a contemporaneous objection for purposes of avoiding the deliberate bypass rule, Henry v. Mississippi,infra, 379 U.S. at 448, 85 S.Ct. 564, the transcript clearly indicates that counsel was objecting only to the use of the confession, standing alone, to make out a prima facie case, which is proscribed under § 395, New York Code of Criminal Procedure.
2
InHuntley the New York Court of Appeals held that the hearing mandated by Jackson v. Denno, supra which has retroactive application, see McMann v. Richardson, infra, 397 U.S. at 783, 90 S.Ct. 1441; Johnson v. New Jersey, 384 U.S. 719, 727-728, 86 S.Ct. 1772, 16 L.Ed.2d 882 (1966); Tehan v. U. S. ex rel. Shott, 382 U.S. 406, 416, 86 S.Ct. 459, 15 L.Ed. 2d 453 (1966); Linkletter v. Walker, 381 U.S. 618, 639 and n. 20, 85 S.Ct. 1731, 14 L.Ed.2d 601 (1965), was not required in cases where the confession was admitted without objection or there was no assertion by the defendant or his witnesses that the confession was involuntary, unless the trial court charged the jury on voluntariness under Stein v. New York, supra.
3
Appellant cites numerous decisions from other circuits for this proposition, but these decisions are distinguishable from the present appeal. Unlike the present record, in United States ex rel. Snyder v. Mazurkiewicz, 413 F.2d 500 (3 Cir. 1969) and United States ex rel. Montgomery v. Brierley, 414 F.2d 552 (3 Cir. 1969), cert. denied, 399 U.S. 912, 90 S.Ct. 2206, 26 L.Ed.2d 566 (1970), the records were silent both on the question of counsel's inadvertent error and on defendant's knowledge that no objection would be lodged. In Moreno v. Beto, 415 F.2d 154 (5 Cir. 1969) the defendant was faced with completely waiving his Fifth Amendment privilege had he taken the stand to contest the voluntariness of his confession. In Hizel v. Sigler, 430 F.2d 1398 (8 Cir. 1970) it was held error for the trial court to have failed to raise the issue of voluntariness on its own motion because of the defendant's diminished mental capacity. Schildan v. Gladden, 426 F.2d 1158 (9 Cir. 1970) is better understood as a case where the federal court was not bound to find a deliberate bypass because the state court, in hearing the merits of the claim in a collateral proceeding, had ignored its own waiver rules. Finally, in United States ex rel. O'Connor v. New Jersey, 405 F.2d 632 (3 Cir.), cert. denied, Yeager v. O'Connor, 395 U.S. 923, 89 S.Ct. 1770, 23 L.Ed.2d 240 (1969), at the time of trial the admissibility of the confession was clear. Subsequent to the trial and direct appeal a change in thesubstantive law defining involuntariness provided the defendant with his claim. Compare United States ex rel. Meadows v. New York, 426 F.2d 1176 (2 Cir. 1970).
Moreover, these cases were decided prior to McMann v. Richardson, supra, in which the Supreme Court dismissed, without a hearing, an attempt collaterally to attack a guilty plea on the ground that it was motivated by a coerced confession whose voluntariness could not be challenged by procedures that passed constitutional muster. The Court held that in the absence of a claim of incompetent counsel, habeas corpus would not lie.
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Cite as 2017 Ark. App. 390
ARKANSAS COURT OF APPEALS
DIVISION I
No. CV-16-946
Opinion Delivered June 21, 2017
SHERRY ANN MIESNER APPEAL FROM THE CLEVELAND
APPELLANT COUNTY CIRCUIT COURT
[NO. 13PR-15-16]
V.
HONORABLE HAMILTON H.
ESTATE OF JOYCE EDNA PRIEST SINGLETON, JUDGE
ALLRED, DECEASED, RELYANCE
BANK, BELINDA DIANE ALLRED,
AND JANET HERRING
APPELLEES AFFIRMED
BRANDON J. HARRISON, Judge
Sherry Miesner appeals from a Cleveland County Circuit Court order that approved
a family-settlement agreement, distributed assets, and awarded various costs and fees to
Relyance Bank, as administrator of the Estate of Joyce Edna Priest Allred, deceased. On
appeal, Miesner argues (1) that the petition for appointment of a personal representative was
filed by a nonlawyer, so all the subsequent orders are null and void, and (2) the family-
settlement agreement is unenforceable. We affirm the circuit court’s decision.
I.
A detailed history of the case leading to this appeal is needed to understand it. Joyce
Allred was married to Lewis Franklin Allred, Sr., and they had three children together—
Sherry Miesner (appellant), Janet Herring, and Lewis Franklin Allred, Jr. Lewis Franklin
Allred, Sr., passed away sometime before 2001. Joyce apparently executed a will in 2001.
1
Cite as 2017 Ark. App. 390
In it, she named Janet to serve as personal representative, made some specific bequests to
certain grandchildren and great-grandchildren, and left the residue of her estate to her three
children equally. The record also contains a Joyce Allred Trust Agreement dated 13 July
2010. That trust is revocable, and Joyce is named as grantor and initial trustee. Her
daughters are named as successor trustees. Schedules A, B, and C attached to the trust
document describe real property in Arkansas. The document directs that certain
distributions be made to the trust’s beneficiaries on Joyce’s death. Joyce’s signature is
notarized, acknowledged, and dated 13 July 2010. A quitclaim deed dated 13 July 2010
(but not filed until 14 August 2015) reflects that some real property was deeded to the
revocable trust. Joyce also executed a durable power of attorney (effective 13 July 2010)
appointing Janet Herring as her attorney in fact.
Moving forward chronologically, the record also contains a document titled “Allred
Family Settlement Agreement” (Agreement) dated 29 March 2012. It is an agreement
between Joyce, Sherry, Janet, and Lewis, Jr. The Agreement states, “[T]o avoid controversy
between her children, [Joyce] believes that an independent limited guardian of her estate
should be appointed to manage her financial affairs during her remaining lifetime.” The
Agreement referenced a civil-interpleader lawsuit filed in the Cleveland County Circuit
Court regarding Joyce’s accounts at Edward Jones Company and Simmons First National
Bank.
The Agreement states, in part:
In consideration of the cessation of the Interpleader Action and to
avoid any further controversy regarding the management of the financial
affairs of Joyce E. Allred during her remaining lifetime and after her death the
parties agree as follows:
2
Cite as 2017 Ark. App. 390
(i) Upon execution of this Agreement by all parties and as expeditiously
as possible, Joyce E. Allred will Petition the Cleveland County Circuit Court
for the appointment of Pine Bluff National Bank, or other appropriate
financial institution, as Limited Guardian for the purpose of managing her
financial affairs and payment of all properly presented bills related to her care.
Pine Bluff National Bank will take control and manage the financial affairs of
Joyce E. Allred pursuant to this Limited Guardianship of her Estate. The
Limited Guardian will have authority to review all transactions from June 1,
2010 forward and take any actions it deems appropriate with respect to any
transactions, other than the advances addressed below in this Agreement.
(ii) At the death of Joyce E. Allred, and irrgardless [sic] of any Will,
pay on death designations, joint ownership designations or beneficiary
designations to the contrary, the remaining assets of Joyce E. Allred (other
than the jewelry described in item (iii)), from all sources, including life
insurance, annuities, bank accounts, brokerage accounts, et. cet . . . . , after
payment of all valid claims and expenses of administration will be distributed
as follows:
(A) The first $ 170,000.00 1 in cash or other assets will be distributed,
divided equally to Lewis Franklin Allred, Jr., and Sherry Miesner to equalize
advances already made to Janet Herring.
(B) The remaining assets (other than the jewelry described in item (iii))
will be distributed, divided equally, between Lewis Franklin Allred, Jr., Sherry
Miesner and Janet Herring.
(iii) At the death of Joyce E. Allred, or if she elects, during her life,
Joyce E. Allred’s jewelry will be divided equally between Sherry Miesner and
Janet Herring
. . . .
All parties agree that, after the settlement is executed, this Agreement
is a complete settlement between the parties regarding the financial affairs of
Joyce E. Allred during her remaining life and after her death and that no legal
proceedings of any kind may be instituted by any one or more of them against
the other for actions related, in any way, to the administration of the financial
affairs of Joyce E. Allred during her life and after her death or any transfers of
property between the parties as contemplated in this Agreement.
1
The typewritten number is $56,666.66, but it is crossed out and the handwritten
number $170,000, with four sets of initials next to it, appears too.
3
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. . . .
(b) The terms of this Agreement will bind and benefit the parties and
their successors in interest.
The Agreement is signed by Joyce E. Allred, Belinda D. Allred as “Attorney-In-Fact For
Lewis Franklin Allred, Jr.,” Sherry Miesner, and Janet Herring.
In June 2012—about two months after the Agreement had been executed—Lewis,
Jr., died. More than two years later, in December 2014, his mother Joyce died.
II.
On 10 July 2015, Relyance Bank filed a petition for appointment of a personal
representative in the probate division of the Cleveland County Circuit Court. The petition
states that Joyce died intestate around 21 December 2014 and that the bank’s “interest in
the estate is that of Guardian of the Estate of Joyce Edna Priest Allred, now deceased.” The
petition names Miesner and Janet as Joyce’s surviving heirs at law and lists their addresses as
“unknown.” It also states that Joyce’s estate contains no real property and more than
$25,000 of personal property. Relyance asked the court to waive any bond requirement
and to appoint it to administer the estate. The petition is signed by Richard Metcalf, EVP,
for Relyance Bank. His signature is notarized. No attorney signature appears on the
document.
On 23 July 2015, the circuit court appointed Relyance as administrator of Joyce’s
estate, finding that she had died intestate and that the petition was unopposed. In August
2015, the Cleveland County Herald published an advertisement notifying the public that any
claims against Joyce’s estate must be made within six months and sent to Relyance Bank
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c/o Owens Law Firm. In January 2016, Belinda Allred (Lewis, Jr.’s widow) filed a claim
for $85,000 and for one-third of the estate’s assets. She attached the Agreement to her
claim. Relyance objected to Belinda’s claim. The objection is signed by C. Thompson
Owens as attorney for Relyance Bank.
In February 2016, Relyance filed a petition to approve the Agreement and asked the
court to ratify it. It asked for an administrative fee of $15,000 and an attorney’s fee of
$8,788.76 to be paid before any other claims or distributions. The circuit court was asked
to distribute the remaining assets of the estate “pursuant to the Agreement.”
Next, Relyance asked the court to deny Belinda’s claim against the estate. This new
petition was signed by Richard Metcalf, as senior vice president and trust officer of Relyance
Bank. Metcalf also signed a verification, and his signature was notarized. A certificate of
service signed by attorney Tom Owens was attached to the February 2016 petition.
In March 2016, Miesner filed a pro se affidavit objecting to Belinda’s receiving any
money from the estate because she was “not privy” to the Agreement. She alleged that the
“successors in interest” phrase in the Agreement was ambiguous and the Agreement was
silent on what was to be done if “one kinship should predecease the testator or another
kinsman.” Attached to Miesner’s objection was Joyce’s 2001 will. Also attached were two
attorney-correspondence letters from April and July 2015 proposing, and rejecting, a
settlement offer from Miesner and Janet to Belinda. Miesner also objected to the
administrative fee Relyance requested and asked the court to “remedy the situation at hand”
regarding a $66,854.87 annuity from Protective Life Insurance Co. that had been deposited
in her personal account because she was the named beneficiary of the policy. Miesner also
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claimed that there was another annuity with Protective Life Insurance Co. to which she was
not a named beneficiary and that Relyance had not deposited that annuity into the estate’s
account. Miesner attached documentation of the annuity and a letter from Protective Life
Insurance Co. indicating that Miesner and Lewis, Jr., were the named beneficiaries.
In April 2016, Relyance asked the court to order Miesner to turn over to the estate
any life-insurance proceeds she had received although Miesner was the designated
beneficiary on the life-insurance contract. This petition was signed by Chris Cummings,
vice president and trust officer for Relyance Bank. Tom Owens signed the certificate of
service attached to the petition.
Days later, Relyance filed another response and asked the circuit court to dismiss
Miesner’s affidavits and claims against the estate and to award sanctions against her for
“willful violation of the Allred Family Settlement Agreement.” On 26 April 2016, Belinda
moved to dismiss Miesner’s claims and requested attorney’s fees.
Miesner promptly responded that Lewis, Jr., had predeceased their mother and that
any gift Joyce made had lapsed. She maintained that a will “transfers property at testator’s
death, not when executed.” According to Miesner, her mother meant to leave property
only to blood relatives, which did not include Belinda.
Various motions were filed about attorney’s fees. The court held a hearing in June
2016 and entered a written order in July 2016 ratifying and approving the 2012 Agreement.
It found that “all heirs” of Joyce Allred were parties to the Agreement and that the
Agreement “survives the death of Joyce Edna Priest Allred and should be enforced.” The
court ordered Miesner to turn over the life-insurance proceeds she received to the estate
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and that the estate should reimburse her for the taxes she paid as a result of cashing in the
policy. The court also ordered that the “individual claim of Belinda Diane Allred and the
claim of the Estate of Lewis Franklin Allred, deceased are denied at this time without
prejudice based upon the ruling of the court that the Allred Family Settlement Agreement
controls all of the assets of the estate.” The court directed that the estate’s assets be
distributed exactly how Relyance had requested:
• $85,000 to Lewis Franklin Allred, Jr., Estate c/o Belinda Diane Allred,
Administratrix
• $85,000 to Sherry Miesner
• 1/2 jewelry to Sherry Miesner
• 1/2 jewelry to Janet Herring
• 1/3 of remaining estate assets to Lewis Franklin Allred, Jr., Estate c/o Belinda
Diane Allred, Administratrix
• 1/3 of remaining estate assets to Sherry Miesner
• 1/3 of remaining estate assets to Janet Herring
The court also found that Miesner had breached the terms and conditions of the
Agreement by “filing frivolous pleadings in this matter” and ordered her to pay $1,500 from
her “sole and separate share of the estate.” It awarded Relyance $15,000 in administrative
expenses and Tom Owens $8,788.76 in attorney’s fees.
Miesner appeals the July 2016 written order. While the appeal was pending, she
asked that the case be transferred to the Arkansas Supreme Court because Relyance Bank
had engaged in the unauthorized practice of law when the original petition was filed by a
nonlawyer, making it a nullity. The supreme court denied the motion in April 2017.
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III.
Miesner argues that the initial petition appointing the bank as personal representative
is void because it was not filed by an attorney. She also contends that all of the subsequent
orders in this case are void as a matter of law. Miesner believes the bank lacks standing to
serve as personal representative of Joyce’s estate under the circumstances. In our view, she
has raised an unauthorized-practice-of-law issue, not one of standing. Relyance Bank
responds that it was not until this appeal began that Miesner raised the issue that the bank
acted without an attorney. We must now decide whether an interested person in a probate
proceeding may challenge—for the first time on appeal—the authority of a corporate officer
to file a petition to have a personal representative appointed when the corporate officer has
not been licensed or admitted to practice law. We hold that an interested party must first
raise an unauthorized-practice-of-law challenge in the circuit court and obtain a ruling on
it before we may review it.
By statute, “[u]nless otherwise provided, every application to the [probate] court,
shall be by petition signed and verified by or on behalf of the petitioner.” Ark. Code Ann.
§ 28-1-109(a) (Repl. 2012). A corporation, however, also must be represented by a licensed
attorney to invoke the processes of the court or to appear before the court, because a
corporation cannot practice law. See All City Glass & Mirror, Inc. v. McGraw Hill Info. Sys.
Co., Div. of McGraw Hill, 295 Ark. 520, 750 S.W.2d 395 (1988); see also Ark. Bar Ass’n v.
Union Nat’l Bank of Little Rock, 224 Ark. 48, 273 S.W.2d 408 (1954) (a corporate personal
representative cannot act for itself even through an employee who is an attorney).
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Our state constitution provides that the Arkansas Supreme Court has the authority
to regulate the practice of law. Ark. Const. amend. XXVIII (“The Supreme Court shall
make rules regulating the practice of law and the professional conduct of attorneys at law.”).
See also Rule of Court Creating a Comm’n on the Unauthorized Practice of Law, 246 Ark. App’x
960 (1978) (per curiam). Our supreme court has said that the judiciary holds the exclusive
authority to regulate the unauthorized practice of law, but the General Assembly is not
precluded from creating a cause of action to stop the unauthorized practice of law by a
nonlawyer. Campbell v. Asbury Auto., Inc., 2011 Ark. 157, 381 S.W.3d 21; see also Ark.
Code Ann. § 16-22-211 (Supp. 2015).
An example of how our supreme court has handled an issue involving the
unauthorized practice of law is Davenport v. Lee, 348 Ark. 148, 72 S.W.3d 85 (2002). There,
two nonlawyer administrators of an estate filed a pro se complaint on behalf of an estate in
a wrongful-death action. Id. The complaint was challenged, and the circuit court dismissed
it with prejudice after determining that the nonlawyer administrators could not have filed a
valid complaint. Id. The administrators appealed to this court; we ruled that the
administrators were not authorized to file the complaint, but the “irregularity amounted to
an amendable defect, not a nullity.” Id. at 155, 72 S.W.3d at 88. The supreme court
decided otherwise. So it vacated this court’s decision and affirmed the circuit court, holding
that the administrators’ pro se complaint was the fruit of the unauthorized practice of law
and thus a legal nullity. Id. at 160, 72 S.W.3d at 93.
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Davenport informs the question here, though it does not squarely answer whether
Miesner may raise her nullity argument for the first time on appeal. The appellees naturally
contend that she cannot.
McKenzie v. Burris, 255 Ark. 330, 500 S.W.2d 357 (1973), another supreme court
case, also generally guides us. There the court wrote:
[P]roceedings in a suit instituted or conducted by one not entitled to practice
are a nullity, and if appropriate steps are timely taken the suit may be dismissed, a
judgment in the cause reversed, or the steps of the unauthorized practitioner
disregarded.
Id. at 333, 500 S.W.2d at 360 (emphasis added) (internal citations omitted).
For this case’s purposes, we believe the unauthorized-practice-of-law issue had to be
raised and ruled on by the circuit court, like nearly every other issue, including constitutional
ones, to preserve it for appeal. See, e.g., Mason v. State, 2014 Ark. App. 285, at 5, 435
S.W.3d 510, 513 (“Even when the issue is constitutional in nature, an argument is not
preserved on appeal unless the appellant raised and made the argument at trial and obtained
a ruling on it; nor will a particular theory be addressed on appeal if it was not presented
below.”). We grant that, in Diamond Enterprises, Inc. v. Arvest Bank, 2012 Ark. App. 710
(per curiam), this court dismissed an appeal because the notice of appeal filed in circuit court
by a pro se corporation was a nullity and thus did not invoke this court’s appellate
jurisdiction. Id. at 2. But unlike a notice of appeal, which is still an appellate-jurisdictional
filing for the most part, see Wandrey v. Etchison, 363 Ark. 36, 39–42, 210 S.W.3d 892, 895–
96 (2005), the probate documents filed by or on behalf of Relyance Bank in this case are
not appellate-jurisdictional filings. So Diamond does not require, as a matter of stare decisis,
that we address the unauthorized-practice issue for the first time on appeal.
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IV.
We now turn to the heart of the parties’ dispute: the Agreement. Here we also have
preservation problems.
On appeal, “[p]robate cases are reviewed de novo . . . [and] we will not reverse the
probate judge’s findings of fact unless they are clearly erroneous. . . . A finding is clearly
erroneous when, although there is evidence to support it, we are left on the entire evidence
with the firm conviction that a mistake has been committed.” Snowden v. Riggins, 70 Ark.
App. 1, 7–8, 13 S.W.3d 598, 602 (2000) (citations omitted).
A.
Some testimony from the June 2016 hearing on the bank’s petition is important to
know. At the start of the hearing, before the court received any testimony, Miesner (acting
pro se) argued that her mother was under duress and was ill with chemotherapy and cancer
when the Agreement was signed. During Relyance Bank’s direct examination of trust
officer Richard Metcalf, the following colloquy occurred:
ATTORNEY OWENS: The bank had previous to the estate had acted as
guardian?
METCALF: Limited guardian.
ATTORNEY OWENS: As limited guardian for the . . . that was actually
the bank was Pine Bluff National Bank at that
time?
METCALF: That’s correct.
ATTORNEY OWENS: Did you operated [sic] under the family
settlement agreement that was drafted, or
executed, in 2012 while you were acting as
limited guardian?
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METCALF: Yes, we always felt like that was what everything
was happening on.
ATTORNEY OWENS: So when dealing with Ms. Allred during her
lifetime did she ever state to you that she did not
want you to honor the family settlement
agreement?
METCALF: No, she never did.
ATTORNEY OWENS: Did she ever state that these were not her wishes,
true and direct wishes, that she wanted you to
administer her estate?
METCALF: No, she never told me anything.
Metcalf also agreed that Joyce Allred, Sherry Miesner, Janet Herring, and Lewis
Franklin Allred, Jr., were “all the necessary parties to the Allred family.” He explained that
Belinda Allred signed for Lewis as his attorney-in-fact.
Belinda testified that she executed the Agreement on behalf of her husband Lewis
Franklin Allred, Jr., and that he approved her actions. She said that she is Lewis’s only
surviving heir and is his estate’s administrator.
Sherry Miesner testified that her mother signed the Agreement “under pressure”
because her sister (Janet Herring) had been misappropriating funds under the power of
attorney Joyce had executed, in Herring’s favor, in 2010. According to Miesner, the
Agreement was written by an attorney who had never spoken to her mother; and neither
she nor her mother knew what the term “successors in interest” meant. In her view, Joyce
had used the term “successors in interest” to refer “to her bloodline, her children.” Miesner
said that her mother had written “lie” on the Agreement before signing it. On cross-
examination, Miesner acknowledged that her mother had an attorney, Wilson Bynum,
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when the Agreement was signed but maintained that she was not counseled on the
document.
When asked by the court, Miesner said that paragraph 6(b) in the Agreement meant
that “anybody that was deceased couldn’t inherit, yet a third of everything mother and
daddy worked for is going into my dead brother’s estate.” She also said that “we were
under the impression only the signees of the agreement were privy to it. It was me and my
brother and my sister and my mother which signed.”
Miesner’s husband, Phillip Miesner, testified that Joyce had cancer when the
Agreement was signed, that she was bedridden, that her attorney never talked to her about
it, and that Joyce “didn’t think straight.” He also said Joyce had told him on at least three
occasions that “after L.F. had passed away that she hoped Diane didn’t take her money.”
Miesner’s daughter Krystal also said that Joyce (her grandmother) told her, “I want to make
sure that Diane doesn’t get anything after I pass away because that’s not how I wanted it.”
In this case, the circuit court orally ruled:
I don’t think there is any question but the Allred Family Settlement
Agreement was an agreement that was reached by all the parties in settlement
of litigation that was going on at the time, that even incorporated what had
transpired in arriving at this settlement agreement. So, the Allred Family
Settlement Agreement survives. It should survive and should be enforced.
After the hearing, but before the court entered a written order, Miesner hired an attorney.
In a 8 July 2016 letter (filed July 13) the circuit court declined counsel’s offer to “brief the
issues.” It wrote:
Thank you for your letter of July 5, 2016, and your offer to brief the
issues. I respectfully decline.
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A full hearing on the merits was held June 13, 2016. Following the
presentation of evidence, the Court approved the settlement agreement and
fees to Relyance Bank.
On June 21, 2016, Mr. Tom Owens submitted an Order to the Court
for approval and entry. I thought I had executed the order and returned it to
Mr. Owens. I discovered today that the Order had not been entered.
Enclosed for your information is a copy of the Order entered today, on the
June 13, 2016 hearing.
The only issue remaining is whether your client might be held
responsible for attorney’s fees. A hearing will be scheduled for that sole issue.
The written order in this case, which was entered the same day as the court’s letter, states
that the court “ratifies and approves” the Agreement. The court also wrote in part:
[T]he Court ratifies and approves the Allred Family Settlement
Agreement executed on March 29, 2012. The agreement was reached in
settlement of ongoing litigation at the time of the Agreement. The
Agreement survives the death of Joyce Edna Priest Allred and should be
enforced. All heirs of Joyce Edna Priest Allred, deceased, were parties to the
Agreement and Sherry Miesner, Janet Herring, and Joyce Edna Priest Allred
had legal counsel [at] the time of the execution of the Agreement.
B.
Miesner argues that the Agreement was not an enforceable contract for four reasons.
First, that “[Joyce] Allred was incompetent to sign the agreement, because of illness and lack
of capacity, and secondly she had a guardianship and the guardian did not sign.” Relyance
responds that Miesner has raised the guardian-did-not-sign-the-agreement issue for the first
time on appeal and that we should not consider it. It further argues (1) that the record
contains no testimony or medical records supporting a finding of incompetency or
incapacity, (2) Joyce was represented by an attorney when the document was signed, and
(3) the Agreement was signed by all interested parties—so it is enforceable.
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Because we cannot find anywhere in the record where the circuit court expressly
ruled on Miesner’s arguments about her mother’s ability to contract, we will not address
them. See Woods v. Woods, 2013 Ark. App. 448, at 4 (declining to decide an issue a party
pleaded and argued because the court did not mention the issue in “its comments from the
bench, its letter opinion, or the divorce decree”). We do not presume a ruling from a
circuit court’s silence. The appealing party must obtain a ruling from the circuit court to
preserve an issue for appeal. Id.; see also Neal v. Sparks Reg’l Med. Ctr., 2012 Ark. 328, 422
S.W.3d 116.
Second, Miesner argues that “Lewis Allred did not sign the document, and there was
no showing that he authorized Belinda to sign for him.” Relyance says that this argument
has also been raised for the first time on appeal and that, in any event, the circuit court could
have relied on Belinda’s testimony, meaning the statement that she (Belinda) signed the
Agreement on Lewis’s behalf. On this point, Miesner’s argument here is different than the
one she argued to the circuit court. A party cannot change horses midstream. See Jarrett v.
Brand, 2017 Ark. App. 276, at 3–4; Williams v. Liberty Bank, 2011 Ark. App. 220, 382
S.W.3d 726. In Miesner’s “affidavit to object to claim against estate” filed in circuit court
in March 2016, she stated that Belinda Diane Allred was “not privy” to the Agreement.
Then, in her April 2016 “opposition and reply to motion of dismissal,” Miesner said any
gift made to Lewis had lapsed under the uniform probate code. During the June 2016
hearing, Miesner argued, “I do not think that a third of the money should go into my
brother’s estate for Diane Allred. He predeceased my mother by two and one-half years.”
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Now she argues that Belinda lacked authority to bind Lewis to the Agreement. We decline
to address the vacillating arguments.
Miesner also argues that there was no assent to the Agreement’s terms because the
parties thought the document allowed only blood relatives to receive a benefit under the
Agreement and “[m]utual assent to an agreement and its terms is a foundational requirement,
which must be satisfied, for an enforceable agreement.” Relyance says the Agreement’s
merger clause defeats Miesner’s argument and that she, her sister, and her mother were all
represented by attorneys when the document was signed.
“[T]o make a contract there must be a meeting of the minds as to all terms, using
objective indicators.” Alltel Corp. v. Sumner, 360 Ark. 573, 576, 203 S.W.3d 77, 80 (2005).
Parties must manifest assent to the particular terms of the contract. Id. “For a party to assent
to a contract, the terms of the contract must be effectively communicated.” Id. at 577, 203
S.W.3d at 80 (citing Crain Indus., Inc. v. Cass, 305 Ark. 566, 810 S.W.2d 910 (1991)). In
this case, the contracting parties agreed that “[t]he terms of this Agreement will bind and
benefit the parties and their successors in interest” “[i]n consideration of the cessation of the
[2011] Interpleader Action and to avoid any further controversy regarding the management
of the financial affairs of Joyce E. Allred during her remaining lifetime and after her death[.]”
The parties indicated their mutual assent by signing the document. Apparently there was a
subsequent dispute about what “successors in interest” meant (the phrase is undefined in the
contract), but Miesner offered no evidence or explanation why the parties’ understanding
of that phrase destroyed the ability to contract at all.
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Fourth, Miesner argues that there was a mutual mistake because “the parties thought
the purported family settlement document pertained to blood relatives, not Belinda
personally.” She reasons that the court found the contract’s terms ambiguous because it
allowed parol evidence on her own (and others’) understanding that the document applied
only to “blood relatives.” Relyance counters that the Agreement is unambiguous, that there
was ongoing litigation, and that the merger clause means that Miesner’s mutual-mistake
argument must fail.
Mutual mistake is a mistake common to both parties. Mitchell v. First Nat’l Bank in
Stuttgart, 293 Ark. 558, 739 S.W.2d 682 (1987). Before a mutual mistake can affect the
contract, the mistake must be of an existing or past material fact that is at the heart of the
contract. Id. A contract may be rescinded for a mutual mistake of a material fact. Id. A
court may also grant other equitable relief. See, e.g., Mikus v. Mikus, 64 Ark. App. 231, 981
S.W.2d 535 (1998) (reformation). This is because the writing fails to reflect the parties’ true
understanding. Kohn v. Pearson, 282 Ark. 418, 670 S.W.2d 795 (1984).
Here, “mutual mistake” was never pleaded as a contract defense, nor did the circuit
court rule on the question of mistake one way or the other. Likewise, the court did not
expressly rule on Miesner’s arguments about the parties’ understanding of the contract terms
related to successors in interest or “blood relatives.” So we will not address them. See
Woods, supra.
Affirmed.
VAUGHT and BROWN, JJ., agree.
Robert S. Tschiemer, for appellant.
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C. Thompson “Tom” Owens, for appellee.
18
| {
"pile_set_name": "FreeLaw"
} |
In The
Court of Appeals
Ninth District of Texas at Beaumont
____________________
NO. 09-00-495 CR
____________________
DELVIN WAYNE JACKSON, Appellant
V.
THE STATE OF TEXAS, Appellee
On Appeal from the 252nd District Court
Jefferson County, Texas
Trial Court No. 81284
O P I N I O N
Delvin Wayne Jackson was convicted of third degree felony possession of a
controlled substance. Tex. Health & Safety Code Ann. § 481.115(c) (Vernon Supp.
2002). His sentence, enhanced by a prior felony conviction, was twenty years. On appeal
he raises two points of error: the admissibility of expert testimony and the legal
sufficiency of the evidence to support the conviction.
We will address first his challenge to the legal sufficiency of the evidence. In
evaluating the legal sufficiency of evidence, we view the evidence in the light most
favorable to the verdict and determine whether any rational trier of fact could have found
the essential elements of the offense beyond a reasonable doubt. Jackson v. Virginia, 443
U.S. 307, 319, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979). We consider all evidence
presented at trial, although we may not re-weigh the evidence and substitute our judgment
for that of the jury. King v. State, 29 S.W.3d 556, 562 (Tex. Crim. App. 2000).
In order to sustain a conviction for possession of a controlled substance, the State
must prove that appellant exercised actual care, control, or management over the
contraband and that appellant knew that the substance in his possession was contraband.
Tex. Health & Safety Code Ann. § 481.002(38) (Vernon Supp. 2002); see also King
v. State, 895 S.W.2d 701, 703 (Tex. Crim. App. 1995). Jackson contends that the State
completely failed to meet this burden.
Jackson was a passenger in a car stopped by police. The arresting officer testified
that when the driver stepped out of the car, he dropped a chunk of "off- white colored
rock," suspected of being crack cocaine. When the officer examined the front seat of the
car, there were "shavings" and a small "rock," also suspected to be crack, on the front
bench seat, between where Jackson and the driver had been sitting. A forensic analyst
confirmed that the substance seized by the officer was cocaine, "indicative of the base
form" with a weight of 2.37 grams. It appears from the arresting officer's testimony that
the amount of cocaine for which Jackson was indicted -- more than one but less than four
grams -- includes both the cocaine found on the car seat and the larger chunk dropped by
the driver. Underneath the passenger seat where Jackson had been seated, the officer also
found three boxes of cigars, one of which was opened. The opened box contained a plastic
bag containing 14.93 grams of marijuana. A razor blade was also found in the open cigar
box. On his person, Jackson had $1,180.00 in cash, including eight separate $140 "sets,"
each consisting of one $100 dollar bill and two $20 bills.
The jury also heard testimony from Jim Huebel, an investigator with the Jefferson
County District Attorney's Office. Huebel, testifying as an expert witness, was asked
whether he had ever encountered "two individuals possessing or working together to
possess crack cocaine[.]" He replied "Yes." He further testified:
In that scenario, which is very common, you'll have one person who is
maybe -- you call him the leader of the two . . . . Usually that person will
maintain the money -- the profits made off of the sales, but he'll have a
lower level dealer who he's working in concert with actually handle the
drugs . . . at the direction of the other person who is carrying the money.
Huebel also testified as follows, based on his professional experience:
[I]t's very common to find people that have cash along with drugs have their
money bundled -- usually divided up into say, as an example, if it's $1,000,
usually $100 increments. They'll have say five twenties with a rubber band
around it and then another, another and another total of one thousand. And
I think this is done so that person has quick access to see how much money
he's got whereas maybe you and I would have to look in our wallets and dig
around to see how much money we've got.
Huebel was then asked a hypothetical question that mirrored the arresting officer's
testimony about the drugs and money found in the car during Jackson's arrest. He replied
that:
[G]iven that you've got drugs and you've got a large amount of money on
the other person, I would feel that they're related.
Q. Okay. Particularly if that money is packaged in the way that you
described.
A. Especially if the money is that way.
Huebel also testified that crack cocaine was usually cut up with razor blades. The jury had
heard testimony that the opened cigar box underneath Jackson's seat contained a razor
blade.
Possession of narcotics need not be exclusive possession; evidence that the accused
possessed the drugs jointly with another is sufficient to support conviction. See Watson
v. State, 861 S.W.2d 410, 412 (Tex. App.--Beaumont 1993, pet. ref'd). However, when
the accused is not in exclusive possession of the premises, for example, where contraband
is found, additional facts and circumstances must affirmatively link the accused to the
contraband. See Herndon v. State, 787 S.W.2d 408, 409-410 (Tex. Crim. App. 1990).
This court relies on a list of factors to evaluate whether evidence in drug possession
cases in which the defendant is not in exclusive possession of the premises meets the Jackson
v. Virginia standard. We consider whether (1) the contraband was in plain view; (2) the
accused was the owner of the car in which the contraband was found; (3) the accused was
the driver of the automobile in which the contraband was found; (4) the contraband was
conveniently accessible to the accused; (5) the contraband was found on the same side of the
car seat as the accused was sitting; (6) the strong odor of the drug was present; (7)
paraphernalia to use the contraband was in view of or found on the accused; (8) the physical
condition of the accused indicated recent consumption of the contraband found in the car; (9)
conduct by the accused indicated a consciousness of guilt; (10) the accused had a special
connection to the contraband; (11) the place where the contraband was found was enclosed;
(12) occupants of the automobile gave conflicting statements about relevant matters; (13)
affirmative statements connect the accused to the contraband. See Dixon v. State, 918
S.W.2d 678, 681 (Tex. App.-- Beaumont 1996, no pet.).
The number of factors present is less important than the logical force the factors, alone
or in combination, have in establishing the elements of the offense. Howell v. State, 906
S.W.2d 248, 253 (Tex. App.--Fort Worth 1995, pet. ref'd.). In addition, this list is not
exclusive; "proof of intentional or knowing possession is an inference drawn by the trier of
fact from all of the circumstances." See Eaglin v. State, 872 S.W.2d 332, 337 (Tex. App.--
Beaumont 1994, no pet.), overruled on other grounds, Brown v. State, 911 S.W.2d 744, 748
(Tex. Crim. App. 1995). In Eaglin, for example, we held that $1,000 in cash found on
Eaglin's person could be taken by the jury as evidence that Eaglin was "trafficking in, and
therefore in control of, the contraband . . . ." Eaglin, 872 S.W.2d at 337. Other courts of
appeals have agreed that possession of unusually large sums of cash can be considered an
affirmative link with contraband. Dade v. State, 956 S.W.2d 75, 78-79 (Tex. App.--Tyler
1997, pet. ref'd); Ettipio v. State, 794 S.W.2d 871, 874 (Tex. App.--Houston [14th Dist.]
1990, pet. dism'd). Jackson was not in exclusive possession of the car. However,
additional facts and circumstances affirmatively link him to the cocaine: the fact that the
small rock and scrapings were in plain view; the fact that they were "conveniently
accessible" to Jackson; and the fact that the front seat of the car was, obviously, an
"enclosed area." See Dixon, 918 S.W.2d at 681. The jury heard Huebel's testimony that,
when two people possess crack cocaine jointly, one will often hold the drug while the other
holds the money and that the way Jackson's cash was sorted into "sets" was common
among those found in possession of drugs. The jury also heard that crack cocaine was
usually cut up with a razor blade, and that the cigar box under Jackson's seat contained a
razor blade. This evidence, taken in the light most favorable to the verdict, affirmatively
linked appellant to the knowing possession of the cocaine. Jackson's second point of error
is overruled.
Jackson's remaining point of error challenges the admissibility of Huebel's
testimony. Before Huebel testified, Jackson objected to his proffered testimony as
unreliable, citing Daubert v. Merrell-Dow Pharms., Inc., 509 U.S. 579, 113 S.Ct. 2786,
125 L.Ed.2d 469 (1993), E. I. du Pont de Nemours & Co. v. Robinson, 923 S.W.2d 549
(Tex. 1995), and Gammill v. Jack Williams Chevrolet, Inc., 972 S.W.2d 713 (Tex. 1998).
Jackson stated that he was challenging the relevance and reliability of Huebel's proffered
testimony seeking to connect the money in Jackson's possession with the drugs. Outside
the presence of the jury, Huebel was questioned extensively by both Jackson and the State.
At the conclusion of this exchange, Jackson again objected to Huebel's proposed testimony
on the grounds that the State had not established the reliability of Huebel's observations
about drug possessors operating in pairs and sorting money by "sets." The trial court
overruled the objection, but held that Huebel's testimony would be admissible only as it
pertained to issues regarding drug possession, rather than delivery. Jackson later cross-examined Huebel as to whether his observations had "been published in books" or
"treated with any scientific acceptability[.]"
A trial court's decision to admit expert testimony will not be disturbed on appeal
absent an abuse of discretion. Alvarado v. State, 912 S.W.2d 199, 216 (Tex. Crim. App.
1995). Police officers with pertinent training or experience may qualify to give testimony
both under Rule 701 (opinion testimony by lay witnesses) and Rule 702 (expert testimony)
of the Texas Rules of Evidence. See Thomas v. State, 916 S.W.2d 578, 580-581 (Tex.
App.--San Antonio 1996, no pet.); see also Austin v. State, 794 S.W.2d 408, 410-411
(Tex. App.--Austin 1990, pet. ref'd). A witness may be qualified to testify both under
Rule 702 because of his superior experiential capacity and under Rule 701 if his testimony
and opinion are based on first hand knowledge. Yohey v. State, 801 S.W.2d 232, 243
(Tex. App.--San Antonio 1990, pet. ref'd).
A police officer's hands-on experience can constitute the "special knowledge"
required of an expert witness by Rule 702. Ventroy v. State, 917 S.W.2d 419, 422 (Tex.
App.--San Antonio 1996, pet. ref'd). Thomas, Austin, Yohey, and Ventroy all affirmed the
threshold relevance and reliability of expert testimony proffered by police officers who,
like Huebel, based their testimony on street-level observations of criminal behavior. A
trial court does not err in admitting testimony from police officers which is based on "their
own personal observations and experiences as [police] officers." Southwick v. State, 701
S.W.2d 927, 930 (Tex. App.--Houston [1st Dist.] 1985, no pet.). Huebel's testimony was
relevant because, as noted earlier, possession of unusual amounts of money can be
considered an affirmative link with knowing possession of contraband. Dade, 956 S.W.2d
at 78-79. Jackson's objection to the testimony -- for example, Jackson's observation that
members of the general population also travel in pairs and organize money in their wallets
-- goes to the weight, rather than the admissibility, of Huebel's testimony. Yohey, 801
S.W.2d at 243. Point of error one is overruled.
The judgment of the trial court is affirmed.
AFFIRMED.
PER CURIAM
Submitted on January 4, 2002
Delivered on March 13, 2002
Do Not Publish
Before Walker, C.J., Burgess, and Gaultney, JJ.
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COURT OF APPEALS OF VIRGINIA
Present: Judges Elder, Bray and Senior Judge Baker
Argued at Richmond, Virginia
COMPREHENSIVE SERVICES ACT OFFICE
OF THE CITY OF RICHMOND
MEMORANDUM OPINION * BY
v. Record No. 1620-98-2 JUDGE RICHARD S. BRAY
AUGUST 3, 1999
J. M. 1
FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND
Melvin R. Hughes, Jr., Judge
Alexandra Silva, Assistant City Attorney
(Keith A. May, Assistant City Attorney, on
brief), for appellant.
Linda Mallory Berry; Adrienne E. Volenik,
Guardian ad litem (Elizabeth L. Fowler,
Certified Third-Year Student; Office of the
Public Defender; Mental Disabilities Law
Clinic, T.C. Williams School of Law, on
brief), for appellee.
The Comprehensive Services Act Office (CSA) appeals the
decision of the trial court ordering it to “immediately pursue
and locate residential placement for [J.M.] . . . funded by the
[CSA] pursuant to [Code §] 2.1-757(E).” CSA contends that (1)
the trial court erroneously denied a hearing de novo on appeal
from the juvenile and domestic relations district court (J&DR),
(2) the J&DR acted without jurisdiction and all attendant orders
*
Pursuant to Code § 17.1-413, recodifying Code
§ 17-116.010, this opinion is not designated for publication.
1
The appellee in this case shall be referred to as “J.M.”
are “void and without effect,” (3) the order improperly required
CSA funding for services to J.M. contrary to the applicable
Individualized Educational Program (IEP), and (4) the court
unreasonably infringed on the legislative branch in violation of
the separation of powers. 2 We find that the CSA was entitled to
an evidentiary hearing and, therefore, reverse the disputed
order, and remand the proceedings to the circuit court for
further reconsideration in accordance with this opinion. 3
On May 13, 1997, the guardian ad litem (GAL) for J.M.
lodged a petition with the J&DR alleging that J.M., then age 17,
was “a child in need of supervision, subject to compulsory
attendance in that he is habitually truant from school without
justification despite reasonable efforts to effect his regular
attendance.” On May 15, 1997, the J&DR found J.M. “in need of
supervision,” and referred the matter to a family assessment and
planning team (FAPT) to evaluate the child’s service needs
pursuant to Code § 16.1-278.5. 4 The J&DR thereafter conducted
several hearings in a continuing review and consideration of the
2
At oral argument, the CSA abandoned its contention on
brief that J.M., age 18 on June 4, 1997, was no longer a “child”
eligible for services in the instant cause.
3
Because we are unwilling to anticipate the result of a
proper hearing of the instant cause before the trial court, we
decline to address the remaining arguments of the CSA on appeal.
4
The CSA Office is the Richmond government agency that
oversees family assessment and planning teams to evaluate
children in need of supervision.
- 2 -
petition and, on February 3, 1998, ordered residential placement
for J.M., funded by the CSA pursuant to Code § 2.1-757(E). 5 See
Fauquier County Dep’t of Soc. Servs. v. Robinson, 20 Va. App.
142, 146-47, 455 S.E.2d 734, 736 (1995). The CSA Office
appealed the order to the trial court in accordance with Code
§ 16.1-278(A). In a subsequent pretrial motion, J.M. and the
GAL urged the trial court to limit the appeal to consideration
of the J&DR’s authority to order “the CSA to pursue, locate, and
fund a residential placement for [J.M.] . . ., in that he is
currently 18 years of age and his Individual Education Plan
(IEP) does not specify residential services.” The court granted
the motion and refused to allow the CSA to introduce evidence,
thereby denying the CSA a de novo evidentiary hearing on any
issue then on appeal.
Following argument on the restricted legal issue, the court
concluded that the CSA “was not a party to the . . . juvenile
5
Code § 2.1-757(E) directs that,
[i]n any matter properly before a court
wherein the family assessment and planning
team has recommended a level of treatment
and services needed by the child and family,
the court shall consider the recommendations
of the family assessment and planning team.
However, the court may make such other
disposition as is authorized or required by
law, and services ordered pursuant to such
disposition shall qualify for funding under
this section.
- 3 -
court proceedings,” had a limited right of appeal pursuant to
Code § 16.1-278(A), and ordered it to immediately pursue, locate
and fund a residential placement for J.M., consistent with the
original J&DR order. The CSA Office appeals to this Court,
complaining first that the court erroneously refused to
entertain a de novo appeal. In response, J.M. argues, inter
alia, that the CSA’s appeal was limited by Code § 16.1-278 to
“what the court specifically ordered with respect to that
agency.”
Pursuant to Code § 16.1-278(A), a “judge may order, after
notice and opportunity to be heard, . . . any governmental
agency . . . to render only such information, assistance,
services and cooperation as may be provided for by state or
federal law or an ordinance of any city, county or town.” The
agency “may appeal such order to the circuit court in accordance
with Code § 16.1-296.” Code § 16.1-278(A) (emphasis added). In
considering the issues properly before the court on appeal, the
“proceedings . . . shall conform to the equity practice where
evidence is heard ore tenus.” Code § 16.1-296(F).
Additionally, “[t]he circuit court may affirm or reverse the
order of the juvenile court. Upon reversal, the circuit court
may remand the case to the [J&DR] for an alternative
disposition.” Code § 16.1-278(A).
Code § 16.1-278 afforded the CSA an appeal to the circuit
court for review of the disposition component of the J&DR order,
- 4 -
which required the CSA to provide residential placement for J.M.
The statute confers the circuit court with authority to either
affirm or reverse such order on appeal, after hearing evidence
ore tenus in accordance with Code § 16.1-296(F). Thus, in
adjudicating the instant appeal, the CSA was entitled to an
evidentiary hearing on the J&DR’s order to the CSA affecting the
residential placement. When the trial court refused to hear and
consider evidence pertinent to the disposition component of the
J&DR order, the CSA was denied its statutory remedy.
The CSA also contends that the J&DR was without
jurisdiction over the matter because the GAL failed to comply
with the intake procedure prescribed by Code § 16.1-260.
However, when acting upon a petition, a “[f]ailure to comply
with the procedures set forth in this section shall not divest
the juvenile court of jurisdiction granted it in § 16.1-241.” 6
Code § 16.1-260(I); cf. Rader v. Montgomery County Dep’t of Soc.
Servs., 5 Va. App. 523, 527, 365 S.E.2d 234, 236 (1988) (Code
§ 16.1-260(I), formerly Code § 16.1-260(F), does not waive
requirement of the filing of the petition). Here, the J&DR
acted on a petition of the GAL filed with the court and,
therefore, exercised jurisdiction over the proceedings,
notwithstanding any latent procedural defect.
6
Code § 16.1-241 confers jurisdiction to the J&DR over all
proceedings involving the disposition of a child who is alleged
to be in need of supervision.
- 5 -
Accordingly, we reverse the disputed order and remand the
cause to the trial court for a limited hearing and adjudication,
consistent with Code § 16.1-278 and this opinion, if the CSA be
so advised.
Reversed and remanded.
- 6 -
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 07-7448
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
ISAAC PERRY, aka Ike,
Defendant - Appellant.
Appeal from the United States District Court for the Eastern
District of North Carolina, at Raleigh. James C. Fox, Senior
District Judge. (5:93-cr-42-F-3)
Submitted: December 13, 2007 Decided: December 21, 2007
Before NIEMEYER, MOTZ, and SHEDD, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Isaac Perry, Appellant Pro Se.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Isaac Perry appeals the district court’s order denying
his “Motion for Disclosure of Signed Grand Jury Concurrence Form”
and his alternative request to be released from federal custody.
We have reviewed the record and find no reversible error.
Accordingly, we affirm the denial of relief. United States v.
Perry, No. 5:93-cr-42-F-3 (E.D.N.C. Sept. 18, 2007). We dispense
with oral argument because the facts and legal contentions are
adequately presented in the materials before the court and argument
would not aid the decisional process.
AFFIRMED
- 2 -
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766 N.W.2d 851 (2009)
DEPARTMENT OF ENVIRONMENTAL QUALITY, Plaintiff-Appellee,
v.
WATEROUS COMPANY, Defendant-Appellant.
Docket No. 136520. COA No. 272968.
Supreme Court of Michigan.
June 23, 2009.
Order
On order of the Court, the motion for reconsideration of this Court's February 6, 2009 order is considered, and it is DENIED, because it does not appear that the order was entered erroneously.
CORRIGAN, J., would grant the motion for reconsideration.
MARKMAN, J., would grant the motion for reconsideration and, on reconsideration, would grant leave to appeal for the reasons set forth in his dissenting statement in this case, 483 Mich. 890, 759 N.W.2d 888 (2009).
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 18-1061
DANIEL SULLIVAN, Frederick Police Officer,
Plaintiff - Appellant,
v.
CITY OF FREDERICK, MARYLAND; EDWARD HARGIS, Frederick Police
Department Chief of Police, in his personal and professional capacity; PATRICK
GROSSMAN, Captain, in his personal and professional capacity; THOMAS
TOKARZ, Lieutenant, in his personal and professional capacity; JOHN DOE
FREDERICK POLICE DEPARTMENT, in their personal and professional
capacities; JANE DOE FREDERICK POLICE DEPARTMENT, in their personal
and professional capacities,
Defendants - Appellees.
Appeal from the United States District Court for the District of Maryland, at Baltimore.
James K. Bredar, Chief District Judge. (1:17-cv-01881-JKB)
Submitted: August 31, 2018 Decided: September 19, 2018
Before GREGORY, Chief Judge, AGEE, Circuit Judge, and TRAXLER, Senior Circuit
Judge.
Affirmed by unpublished per curiam opinion.
Daniel L. Cox, THE COX LAW CENTER, LLC, Emmitsburg, Maryland; John Garza,
GARZA LAW FIRM, P.A., Rockville, Maryland, for Appellant. Clifford B. Geiger,
Darrell R. VanDeusen, J. Garrett Wozniak, KOLLMAN & SAUCIER, P.A., Timonium,
Maryland, for Appellees.
Unpublished opinions are not binding precedent in this circuit.
2
PER CURIAM:
Daniel Sullivan appeals from the district court’s order granting Defendants’
Fed. R. Civ. P. 12(b)(6) motion to dismiss his initial eight-count complaint and motion to
strike his amended eight-count complaint. * The district court determined the counts
alleged in the initial complaint failed to state a claim on which relief could be granted and
that the amendments in the amended complaint were futile. We affirm.
We review a district court’s dismissal under Rule 12(b)(6) de novo, accepting as
true all the factual allegations contained in the complaint and drawing all reasonable
inferences from those facts in favor of the plaintiff. Hall v. DIRECTV, LLC, 846 F.3d
757, 765 (4th Cir. 2017), cert. denied, 138 S. Ct. 635 (2018). “To survive a Rule
12(b)(6) motion, a complaint must allege facts sufficient to raise a right to relief above
the speculative level, thereby nudging the claims across the line from conceivable to
plausible.” Burnette v. Fahey, 687 F.3d 171, 180 (4th Cir. 2012) (internal quotation
marks and alterations omitted). “[A]lthough we must accept the truthfulness of all factual
allegations” in a complaint, id., statements of bare legal conclusions “are not entitled to
the assumption of truth.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). We will accept
the conclusions the plaintiff draws from the facts “only to the extent they are plausible
based on the factual allegations.” Burnette, 687 F.3d at 180. Additionally, under Rule
12(b)(6), documents explicitly incorporated into the complaint by reference, documents
*
Although the district court’s order dismissed count VIII in both complaints
without prejudice, we have determined that the order is appealable. See Goode v. Cent.
Va. Legal Aid Soc’y, Inc., 807 F.3d 619, 623-24 (4th Cir. 2015).
3
attached as exhibits, and documents submitted by a movant that were not attached to or
expressly incorporated into a complaint that are integral to the complaint and authentic
are considered. Goines v. Valley Cmty. Servs. Bd., 822 F.3d 159, 164-66 (4th Cir. 2016).
“[T]he grant or denial of an opportunity to amend is within the discretion of the
district court.” Drager v. PLIVA USA, Inc., 741 F.3d 470, 474 (4th Cir. 2014) (internal
quotation marks omitted). We thus review the district court’s denial of leave to amend
for abuse of discretion. Id. “A district court’s denial of leave to amend is appropriate
when (1) the amendment would be prejudicial to the opposing party; (2) there has been
bad faith on the part of the moving party; or (3) the amendment would have been futile.”
Id. (internal quotation marks omitted). Amendments are futile when “the proposed
amendments could not withstand a motion to dismiss.” Perkins v. United States, 55 F.3d
910, 914 (4th Cir. 1995).
We further may affirm the district court’s rulings on any ground supported by the
record, regardless of the ground on which the district court relied. Drager, 741 F.3d at
474.
With these standards in mind, we have reviewed the record and the parties’ briefs
and find no reversible error in the district court’s judgment. Counts I and III of the initial
and amended complaints and count VI of the initial complaint failed to state plausible
claims for relief for the reasons stated by the district court. Sullivan v. City of Frederick,
Md., No. 1:17-cv-01881-JKB. (D. Md. Jan. 9, 2018). Count II in both complaints fails to
state a plausible claim for relief based on Sullivan’s failure to allege he was intentionally
treated differently from others similarly situated. See Engquist v. Or. Dep’t of Agric.,
4
553 U.S. 591, 603-04 (2008); Vill. of Willowbrook v. Olech, 528 U.S. 562, 563-64 (2000)
(per curiam); Morrison v. Garraghty, 239 F.3d 648, 654 (4th Cir. 2001). Count IV in
both complaints fails to state a plausible claim for relief based on Sullivan’s failure to
allege discrimination on the basis of membership in any particular class and his bare
assertions of a conspiracy. See Iqbal, 556 U.S. at 678; A Soc’y Without A Name v.
Virginia, 655 F.3d 342, 346-47 (4th Cir. 2011); Simmons v. Poe, 47 F.3d 1370, 1377
(4th Cir. 1995). Count V in both complaints and count VI in the amended complaint fail
to state plausible claims for relief because those counts offered only “labels and
conclusions” and “naked assertions devoid of further factual enhancement.” Iqbal,
556 U.S. at 678 (internal quotation marks and alteration omitted). Count VII in both
complaints fails to state a plausible claim for relief because the statements at issue were
not defamatory for the reasons noted by the district court. Sullivan, No. 1:17-cv-01881-
JKB (D. Md. Jan. 9, 2018). We also discern no reversible error in the district court’s
dismissal of count VIII in both complaints without prejudice to allow Sullivan to refile
his claim in state court. See Md. Code Ann., General Provisions § 4-362(a).
Sullivan’s arguments on appeal do not establish to the contrary, and we reject
them as without merit. Accordingly, we affirm the district court’s order. We dispense
with oral argument because the facts and legal contentions are adequately presented in
the materials before this court and argument would not aid the decisional process.
AFFIRMED
5
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470 F.Supp. 795 (1979)
Grace BRANDT, Plaintiff,
v.
Joseph CALIFANO, Secretary of Health, Education and Welfare, Defendant.
Civ. A. No. 78-C-85.
United States District Court, E. D. Wisconsin.
June 7, 1979.
*796 John P. Hayes, Milwaukee, Wis., for plaintiff.
Joan F. Kessler, U. S. Atty. by James M. Fergal, Asst. U. S. Atty., Milwaukee, Wis., for defendant.
DECISION AND ORDER
REYNOLDS, Chief Judge.
This is an action brought pursuant to 42 U.S.C. § 405(g) to review a final decision of the defendant Secretary of the Department of Health, Education and Welfare denying plaintiff's application for disability benefits under 42 U.S.C. §§ 416(i) and 423 and for supplemental security income under 42 U.S.C. § 1381 et seq. The plaintiff filed her application for benefits on September 24, 1976, and it was denied in November 1976. Upon her application for reconsideration, the decision was affirmed in February 1977; on August 3, 1977, following a hearing before an administrative law judge, which hearing plaintiff did not attend, her application was again denied; and on December 15, 1977, the Appeals Council affirmed the decision of the administrative law judge. The plaintiff did not retain counsel until after the decision of the administrative law judge was issued on August 3, 1977.
Plaintiff contends that she suffers from mental, nervous, emotional, and physical exhaustion; from root irritations secondary to scarring from surgery and spinal stenosis; from arthritis with degenerative disc changes; and from constant and severe pain. Plaintiff further contends that she presented substantial evidence to the defendant of her inability to engage in substantial gainful employment, and that her application for benefits was denied despite *797 the absence in the record of any contradictory evidence.
The defendant contends that his findings of fact are supported by substantial evidence and therefore are conclusive. He also contends that plaintiff has had two previous applications for disability benefits which were denied and which she failed to appeal, and that those denials are res judicata as to her present claim for the period prior to September 24, 1974.
Following its review of the administrative record and of the materials submitted by the parties on appeal, the Court is persuaded that the two previous denials of plaintiff's application for disability benefits are not res judicata as to plaintiff's present claim,[*] and that the action should be remanded to the defendant for the taking of additional testimony.
The doctrine of res judicata may be applied to deny an application for benefits where a prior denial of an application raising the same issues has become final due to the failure of the applicant to make a timely request for a hearing on the denial. Hunt v. Weinberger, 527 F.2d 544 (6th Cir. 1975); Sangster v. Gardner, 374 F.2d 498 (6th Cir. 1968); Myers v. Gardner, 361 F.2d 343 (9th Cir. 1966); 20 C.F.R. § 404.937. Where the previous denial raised the same claims, however, and the defense of res judicata was not raised before the hearing examiner or used by him as a basis for denying the present application, the defense of res judicata is waived. Staskel v. Gardner, 274 F.Supp. 861 (E.D.Pa.1967). Furthermore, 20 C.F.R. § 404.957 allows for reopening upon a showing of "good cause" of a decision which is otherwise final within four years after the date of notice of the initial determination. Section 404.958 of Title 20 C.F.R. provides that "good cause" shall be deemed to exist where "(a) [n]ew and material evidence is furnished after notice to the party to the initial determination." Plaintiff's second application was denied initially on September 24, 1974, and her third application was filed on September 24, 1976.
The denial of plaintiff's present application was based upon a review of thirty-three exhibits, including at least some of those exhibits which had been presented for plaintiff's prior applications. The administrative law judge found, based upon those exhibits, that:
"The evidence establishes that the claimant's back discomfort is associated with relevant abnormal findings. However, there is no evidence of severe loss of function or manipulative ability which would seriously interfere with her ability to stand, walk and sit for moderate periods and to use her hands and arms.
* * * * * *
"The administrative law judge recognizes that the claimant's back pain and headaches may be an important factor in causing functional loss. However, for pain to form the basis of a determination of `disability,' it must be a persistent severe pain which limits the claimant's activities to those of an incapacitated individual. The claimant's treating physician stated that she is accepting her problem and living with it (ex. 30). The record does not show that she requires substantial amounts of medication to relieve her pain. Nor are there any indications i. e. disuse atrophy, that the claimant's pain had been so persistently severe as to interfere with her regular daily activities." (Tr. at pages 13-14.)
Thus, there is evidence in the record to show at the least that there is some medically determinable foundation for the plaintiff's claim of disability.
In addition, the plaintiff has submitted to this court her own affidavit setting forth her present condition, detailing the pain which she suffers as a result of her physical condition, and describing her present range of activities, and two affidavits stating that plaintiff is considered by the Division of Vocational Rehabilitation, Department of *798 Health and Social Services of the State of Wisconsin, to be incapacitated and unable to engage in substantial gainful activity. None of the information contained in those affidavits was a part of the plaintiff's administrative record before the Department of Health, Education and Welfare.
Section 405(g) of Title 42 U.S.C. provides that for good cause shown, the Court may remand an action to the Secretary for the taking of additional evidence. The Court may consider evidence not presented during the administrative hearing in order to determine if good cause exists provided such evidence appears rationally to be related to the plaintiff's condition at the time of the administrative hearing. Kemp v. Weinberger, 522 F.2d 967 (9th Cir. 1975).
Based on the affidavits submitted by the plaintiff, the Court finds that good cause exists to remand this action to the Department of Health, Education and Welfare for the taking of additional testimony relative to plaintiff's condition since July 16, 1973, which is the date of commencement of her disability as set forth in her current application. (Tr. at page 33.) Aside from that evidence, the Court is also persuaded that plaintiff's lack of counsel, her limited education, and her failure to appear at the hearing before the administrative law judge prejudiced her claim and constitute good cause for a remand. In Staskel v. Gardner, 274 F.Supp. 861, 865 (E.D.Pa.1967), the Court declined to allow the use of a res judicata defense:
"* * * to bar a semiliterate, uncounseled claimant from benefits to which she may well be entitled, particularly where the prior proceedings relied upon as a bar were perfunctory administrative proceedings of a nonadversary nature and where the very notice of denial could well suggest to a person such as the claimant that the denial was not final. Such a defense is peculiarly inappropriate where the Secretary's duty in administering the statute is to see that those who are entitled to benefits under the statute receive them."
Plaintiff is not "semiliterate"; however, there is good reason to believe that her waiver of the right to appear at the administrative hearing was made in ignorance of the probable consequences of that decision (Tr. at pages 7-8; Brandt's affidavit filed February 1, 1979, paragraph 12), and also that she was prejudiced in fact by her lack of counsel. The affidavits submitted to this court demonstrate that had she previously been represented, she could have made a far more effective presentation of her case during the administrative hearing, would have been less likely to have omitted relevant probative evidence, and might have prevailed on her claim. The prejudice arising out of lack of counsel is in itself sufficient in this case to justify a remand for the taking of additional evidence. Webb v. Finch, 431 F.2d 1179 (6th Cir. 1970); Arms v. Gardner, 353 F.2d 197 (6th Cir. 1965); Erwin v. Secretary of Health, Education and Welfare, 312 F.Supp. 179 (D.N.J.1970).
IT IS THEREFORE ORDERED that the decision of the defendant Secretary of the Department of Health, Education and Welfare appealed from is vacated, and this action is remanded to the Secretary for further proceedings consistent with this decision.
NOTES
[*] Plaintiff's present application claims a commencement of disability as of July 16, 1973. Her first application was filed April 8, 1968, and denied on June 28, 1968. The second application, however, was filed August 5, 1974, and denied September 24, 1974, and thus it overlaps in time with plaintiff's present claim. (Tr. at pages 18-31.)
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143 Cal.App.2d 352 (1956)
WALT A. STEIGER, Appellant,
v.
THE BOARD OF SUPERVISORS OF THE COUNTY OF LOS ANGELES et al., Respondents.
Civ. No. 21546.
California Court of Appeals. Second Dist., Div. Three.
July 23, 1956.
C. Paul Du Bois, Arkin & Weissman and Stuart N. Arkin for Appellant.
Harold W. Kennedy, County Counsel, Edward H. Gaylord, Deputy County Counsel, and Donald H. Blanchard for Respondents.
VALLEE, J.
The Board of Supervisors of the County of Los Angeles granted defendant Baldwin Hills Hospital Corporation an exception from the provisions of the county zoning ordinance, the effect of which is to permit it to build a hospital on property which it owns. The appeal is from a judgment denying a writ of mandamus to compel the board to annul its order and dismissing the proceeding.
The complaint is in three counts: the first count is denominated for a writ of review; the second, for a writ of mandate; the third, for declaratory relief. Plaintiff alleges he is the owner of property in the county of Los Angeles, *354 its location, and that he brings the proceeding for himself and 250 other persons who own property within half a mile of the property in question. Defendants filed a return consisting of a demurrer, an answer, and a stipulation of facts. The matter was thereupon submitted to the court for decision. The court denied a writ of mandamus and dismissed the proceeding after reviewing the record before the board. No question is raised with respect to the denial of a writ of review or of declaratory relief. The only attack is on the denial of a writ of mandamus.
The property involved consists of about 6 1/2 acres in unincorporated territory. In 1946 a group of physicians and surgeons purchased the property. They organized defendant Baldwin Hills Hospital Corporation, called the Hospital, and conveyed the property to it. At that time the property was zoned M-3, which permitted it to be used for a hospital. In March 1954 part of the property was zoned R-1, single family residence, and part R-3, limited multiple residence.
In the summer of 1954 the Hospital applied for a zone exception to permit it to construct, operate, and maintain a general hospital on the property. The county regional planning commission denied the application. No appeal was taken to the board of supervisors. In February 1955 the Hospital again applied for a zone exception for the same purpose. The planning commission denied the application. The Hospital appealed to the board of supervisors. The board granted the exception. This proceeding followed.
The following are pertinent provisions of the zoning ordinance of the county of Los Angeles:
"Section 521. Grounds in General. An exception may be granted excepting property from some particular restriction or restrictions applicable to the zone in which such property is located if:"
"(a) The exception is necessary for the preservation of a substantial property right of the owner."
"(b) Such exception will not be materially detrimental to the public welfare nor to the property of other persons located in the vicinity thereof. ..."
Section 522. An exception may also be granted where there are practical difficulties or unnecessary hardships in the way of carrying out the strict letter of the ordinance, and in the granting of such exception the spirit of the ordinance will be observed, public safety secured, and substantial justice done." *355"
"Section 529. Necessary Uses. An exception may also be granted for any use necessary to the maintenance of the public health, convenience or general welfare, including churches, temples or other places used exclusively for religious worship, public utilities, public schools, private schools which offer instructions in the several branches of learning and study required to be taught in the public schools by the Education Code of the State of California and not furnishing room or board and other governmental purposes if such use is necessary to and not detrimental to, the community, and in granting of such exception the spirit of the ordinance will be observed, public safety secured and substantial justice done. ..."
"Section 659. Notice of Appeal. Within fifteen days after the receipt by the applicant for an exception, permit or other approval, or receipt by the person the revocation of whose permit, exception, or other approval is under consideration, of notice of the action of the Commission, any person dissatisfied with the action of the Commission may file with the Clerk of the Board of Supervisors an appeal from such action. ..."
"Section 662. Action by Board of Supervisors. Upon receiving a notice of appeal the Board of Supervisors may:"
"(a) Affirm the action of the Commission, or"
"(b) Require a transcript, or recording of the testimony and all other evidence upon which the Commission made its decision. Upon receiving such evidence the Board of Supervisors shall take such action as, in its opinion, is indicated by such evidence; ..."
"Section 664. Limitation on Receipt of Evidence. In deciding an appeal the Board of Supervisors shall not hear or consider any evidence of any kind other than the evidence received from the Commission, or any argument on the merits of the case other than that contained in the Notice of Appeal, unless it sets the matter for hearing before itself, as provided in this Article, and gives the same notice of hearing as is required for hearings before the Zoning Board by Article 2 of this chapter."
"Section 665. Finality. The decision of the Board of Supervisors upon an appeal is final and conclusive as to all things involved in the matter." In the case at bar the board followed the procedure prescribed in section 662(b).
[1] A zoning ordinance authorizing a planning commission to grant or deny an exception and providing for an *356 appeal to the legislative body which created the commission is valid. (Stats. 1937, ch. 665, 14, p. 1824; Stats. 1947, ch. 807, 71, p. 1919, now Gov. Code, 65540; 2 Deering's Gen. Laws, Act 5211b, 6.3; Wheeler v. Gregg, 90 Cal.App.2d 348, 361-363 [203 P.2d 37]; Mitchell v. Morris, 94 Cal.App.2d 446, 448-451 [210 P.2d 857]; see Johnston v. Board of Supervisors, 31 Cal.2d 66, 71-78 [187 P.2d 686]; Cantrell v. Board of Supervisors, 87 Cal.App.2d 471, 475 [197 P.2d 218].) [2] A granting of a variance rests largely in the discretion of the body designated by the zoning ordinance for that purpose. (County of San Diego v. McClurken, 37 Cal.2d 683, 691 [234 P.2d 972].) [3] The grant of an exception raises the presumption that the existence of the necessary facts had been ascertained and found. (Wheeler v. Gregg, 90 Cal.App.2d 348, 360 [203 P.2d 37].) [4] Whether the granting of an exception was wise as a matter of policy is not for the courts. "The rule is indelibly written into our law that all questions of policy and wisdom concerning matters of municipal affairs are for the determination of the legislative governing body of the municipality and not for the courts. In the exercise of the policy power a large discretion is vested in the legislative branch of the government. The function of the courts is to determine whether or not the municipal bodies acted within the limits of their power and discretion. Courts are not authorized to entertain a hearing de novo and then make such order as in their opinion the municipal authorities should have made. Were the rule otherwise, courts would be usurping the functions of the municipal governing body (Lockard v. City of Los Angeles, 33 Cal.2d 453, 461 [202 P.2d 38, 7 A.L.R. 990]). The determination of what harmonizes with the elements and objectives of the master zoning plan having been committed to the discretion of the local governing bodies, the burden of proving that the city council acted without substantial evidence and in excess of jurisdiction, rested upon appellants. And this requirement is not satisfied by a mere showing that there was a conflict in the evidence, or that the city council on the basis of the record before it, might have been justified in deciding differently, or that the record before the council might have supported a conclusion contrary to that which was arrived at (Hogan v. Retirement Board, 13 Cal.App.2d 676, 677 [57 P.2d 520])." (Wheeler v. Gregg, 90 Cal.App.2d 348, 361 [203 P.2d 37]; Bradbeer v. England, 104 Cal.App.2d 704, 707 [232 P.2d 208].) *357
"The ordinance gives the board, on appeal, the power to proceed as it did here, to require a transcript of the testimony and all other evidence upon which the planning commission made its decision and, upon receipt thereof, take such action as, in its opinion, may be indicated by the evidence." (Meyers v. Board of Supervisors, 110 Cal.App.2d 623, 628 [243 P.2d 38].) [5] A provision of a zoning ordinance that the decision of the board on an appeal for an exception shall be final is a perfectly proper one and must be upheld. (Rubin v. Board of Directors, 16 Cal.2d 119, 125-126 [104 P.2d 1041].)
There was evidence before the board of these facts: The property in question fronts on the north side of Slauson Avenue, a major highway in Los Angeles. The surrounding property is undeveloped. Houses closest to the property "are a considerable distance away." The property to the south of Slauson is subdivided with streets in, but no construction. There is a golf course adjacent to the property on the west which is zoned C-R, commercial- recreational. The area in which the property is included was zoned R-1 and R-3 on March 30, 1954. Two-story apartments may be built south of Slauson under present zoning. The property is "ideally situated" for a hospital with "a golf course on the west and open territory around it." The delay in construction since 1946 was because there were no water or sewage facilities, which were installed in 1952 or 1953. Within a 5-mile radius of the property there are about 530,000 residents and 12 hospitals comparable to the one proposed by defendant Hospital with 558 beds, or about one bed for 1,000 of population. There should be 4 or 5 beds for each 1,000 of population. In San Francisco and Alameda Counties there are 6.2 beds per 1,000. Open areas within the 5-mile radius will be developed within the next few years. The Los Angeles area is badly in need of hospital facilities. Since the prior application there has been a great influx of people into the Los Angeles area; there have been many homes built within the 5-mile radius. Various maps, photographs, and other data were before the board. It is manifest there was substantial evidence before the board to warrant granting the exception under any one of the provisions of the ordinance empowering the board to grant exceptions. There was other evidence, but it merely created a conflict.
The grant of the exception did not give the Hospital any right which was not therefore vested in it. It merely *358 removed the impediment imposed by the ordinance zoning the area R-1 and R-3. The exception does not restrict plaintiff or those he purports to represent in the use of their property. And they have no vested right in the maintenance of restrictions on the Hospital property. [6] Zoning regulations are not contracts of the county and they may be modified.
Plaintiff contends that the prior denial of an exception is res judicata and precludes granting an exception on a second application. The contention is untenable. [7] The doctrine of res judicata has no application to an administrative agency such as the board of supervisors. [8] "For the defense of res judicata to operate as an estoppel there must be a judgment rendered by a court of competent jurisdiction." (Empire Star Mines Co. v. California Emp. Com., 28 Cal.2d 33, 48 [168 P.2d 686]; Altadena Community Church v. State Board of Equalization, 109 Cal.App.2d 99, 105 [240 P.2d 322]; Ogier v. Pacific Oil & Gas Dev. Corp., 135 Cal.App.2d 776, 781 [288 P.2d 101]; State v. Zoning Board of Appeals, 254 Wis. 42 [35 N.W.2d 312, 313].) Furthermore there was evidence of changed conditions and circumstances. [9] The fact that a prior application for an exception has been denied does not prevent the granting thereof on a new application under changed conditions and circumstances. (See authorities collected 168 A.L.R. 127.)
[10] The zoning ordinance provides that not less than 10 days prior to the date of any hearing, the director shall "[c]ause a copy of a notice of the time and place of such a hearing to be published once in a newspaper of general circulation in the County of Los Angeles." Notice of the hearing was published in the Culver City Evening Star-News more than 10 days prior to the hearing. Plaintiff claims, as we understand him, that the "Star-News" is not published in the county of Los Angeles and therefore there was a want of jurisdiction and a denial of due process. The argument seems to be that because the "Star-News" was published in Culver City it was not published in the county of Los Angeles. The court found "[t]he Evening Star-News on February 3, 1955 was, at all times since has been, and now is a newspaper of general circulation published in the County of Los Angeles." The evidence supports the finding. Culver City is in the county of Los Angeles. A newspaper published in Culver City is necessarily published in the county of Los *359 Angeles. (See In re Christensen, 104 Cal.App.2d 375 [231 P.2d 152].)
Without stating a point as required by the rules, plaintiff argues that the board of supervisors did not seriously consider the matter. In their answer to the petition for a writ of mandamus defendants allege, "Each member of the Board of Supervisors read the transcript of zone exception case No. 1918 [this case] and based his vote thereon," and "that the testimony and objection of all witnesses were carefully considered and weighed by every member of the Board of Supervisors." [11] In mandamus proceedings the answer of the defendant is accepted as true unless controverted by the plaintiff. (Hunt v. Mayor & Council of Riverside, 31 Cal.2d 619, 623 [191 P.2d 426].) The quoted averments were not controverted by plaintiff and must be accepted as true. [12] In the absence of a showing that any member of an administrative board did not read, or was not familiar with, the evidence adduced at a hearing, the law presumes that the decision of the board was made after consideration of the evidence. (Cooper v. State Board of Public Health, 102 Cal.App.2d 926, 931 [229 P.2d 27].)
The board of supervisors proceeded strictly in accord with the zoning ordinance and substantial evidence supports its conclusion.
Plaintiff also appealed from an order overruling the demurrer and ordering judgment for defendants. This order is nonappealable and the appeal therefrom must be dismissed.
The appeal from the order is dismissed. The judgment is affirmed.
Shinn, P. J., concurred.
WOOD (Parker), J.
I concur in the judgment. Although the board of supervisors followed the strict "letter of the law," as proclaimed in its ordinance allegedly providing for notice to property owners, the ordinance is one which, for all practical purposes of giving notice and according "due process of law" to property owners, is a total failure. The fact is that, regardless of the legal formalism of complying with an inadequate ordinance, there was no notice to the property owners as a result of the newspaper notice. There was evidence that the Culver City newspaper did not have any circulation in the area involved here. The policy of fair dealing *360 requires that a notice, which is calculated to give notice, should be given to property owners whose rights will be affected by spot zoning. If local political subdivisions cannot enact ordinances providing for adequate notice in such cases, it would seem that the matter should have the attention of the Legislature.
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163 Ariz. 213 (1989)
786 P.2d 1064
STATE FARM FIRE & CASUALTY COMPANY, Plaintiff/Appellee,
v.
Briana Cory POWERS, a minor, By and Through her Guardian ad Litem, next best friend and Conservator, Robert B. FLEMING Esq. or By and Through her natural parents, James P. Powers and Christine S. Powers, Defendant/Appellant.
No. 2 CA-CV 89-0094.
Court of Appeals of Arizona, Division 2, Department A.
December 5, 1989.
Reconsideration Denied January 24, 1990.
*214 Bury, Moeller, Humphrey & O'Meara by David C. Bury, Tucson, for plaintiff/appellee.
Rabinovitz & Associates by Bernard I. Rabinovitz, Tucson, for defendant/appellant.
OPINION
HOWARD, Judge.
FACTS AND PROCEDURE
This is an appeal from a judgment in an action for declaratory judgment filed by State Farm Fire & Casualty Co. The record shows that three-year-old Briana Powers, the daughter of James and Christine Powers, was seriously injured in a spa located at the home of a friend. The minor daughter sued the landowner and her parents for negligence.
At the time of the accident the Powers had a homeowner's policy issued by State Farm. The word "insured" was defined under the policy as follows: "`insured' means you and if residents of your household: a. your relatives; b. any other person under the age of 21 who is in the care of a person described above." Section II of the policy contained the liability coverages and provided in part:
*215 COVERAGE L-PERSONAL LIABILITY
If a claim is made or a suit is brought against an insured for damages because of bodily injury or property damage to which this coverage applies, we will:
1. pay up to our limit of liability for the damages for which the insured is legally liable; and
2. provide a defense at our expense by counsel of our choice. We may make any investigation and settle any claim or suit that we decide is appropriate. Our obligation to defend any claim or suit ends when the amount we pay for damages resulting from the occurrence equals our limit of liability.
COVERAGE M-MEDICAL PAYMENTS TO OTHERS
We will pay the necessary medical expenses incurred or medically ascertained within three years from the date of an accident causing bodily injury. Medical expenses means reasonable charges for medical, surgical, x-ray, dental, ambulance, hospital, professional nursing, prosthetic devices and funeral services. This coverage applies only:
1. to a person on the insured location with the permission of an insured;
2. to a person off the insured location, if the bodily injury:
a. arises out of a condition in the insured location or the ways immediately adjoining;
b. is caused by the activities of an insured;
c. is caused by a residence employee in the course of the residence employee's employment by an insured; or
d. is caused by an animal owned by or in the care of an insured; or
3. to a residence employee if the occurrence causing bodily injury occurs off the insured location and arises out of or in the course of the residence employee's employment by an insured.
SECTION II-EXCLUSIONS
1. Coverage L and Coverage M do not apply to:
* * * * * *
h. bodily injury to you or any insured within the meaning of part a. or
b. of the definition of insured.
(Emphasis in original.)
A court trial was held at which Christine Powers testified that she never discussed the contents of the policy, but she did read it when she received it and thought she and her family members were covered if an accident happened. Appellant contended before the trial court that the policy was ambiguous, that recovery was mandated under the doctrine of reasonable expectation, that the exclusion was against public policy, and that the exclusion denied her constitutional right to equal protection under article 2, § 13 of the Arizona Constitution and the Fifth and Fourteenth amendments to the United States Constitution. The trial court ruled in State Farm's favor, and in this appeal appellant makes the same arguments advanced in the trial court. We find no merit to these contentions and affirm.
DISCUSSION
I. The Alleged Ambiguity
Appellant contends the policy is ambiguous because the policy owner has to refer back to the definitions in order to ascertain the meaning of the word "insured" in Exclusion 1(h). She further argues that because the phrase "To Others" appears in the heading of Coverage M but not in the heading of Coverage L, this makes the uninitiated insured feel comfortable that the insured and family members will be covered. We do not agree.
"The provisions of an insurance policy are not read in isolation, but rather, must be read as a whole. Ambiguity is not established from the fact that definitions appear in different locations." Outdoor World v. Continental Cas. Co., 122 Ariz. 292, 294, 594 P.2d 546, 548 (1979). The language of the exclusion is clear and unambiguous in its reference to the appropriate sections, and when the policy is read as a whole, its language is equally unambiguous.
*216 II. Public Policy
Appellant contends the policy exclusion violates the public policy of the state to protect and prevent injuries to children. Assuming, arguendo, that this particular action for negligence filed against the parents is maintainable against them in the State of Arizona, appellant has not cited to us nor are we aware of any statute or case law which requires the citizens of this state to carry insurance covering persons injured in a non-automobile negligence case. The parties were free here to make their own contractual arrangements. See Arceneaux v. State Farm Mut. Auto. Ins. Co., 113 Ariz. 216, 550 P.2d 87 (1976).
III. Reasonable Expectation
The doctrine of reasonable expectation set forth in Darner Motor Sales, Inc. v. Universal Underwriters Ins. Co., 140 Ariz. 383, 682 P.2d 388 (1984), is not raised by simply putting the insured on the witness stand and asking him or her: "Did you reasonably expect that you would be covered?" Applicability of the doctrine requires more than the fervent hope that is usually engendered by loss, and the expectations to be realized must be those that have been induced by the making of a promise. Darner Motor Sales, Inc. v. Universal Underwriters Ins. Co., supra; Van Sickle v. Farmer's Ins. Co. of Arizona, 153 Ariz. 533, 738 P.2d 1140 (App. 1987). There was no evidence that the insurance company had reason to believe that the Powers would not have accepted the insurance policy if they had known of the exclusion. See Restatement (Second) of Contracts § 211 (1979).[1] The doctrine of reasonable expectation is not applicable here.
IV. Denial of Equal Protection
Appellant argues that the exclusion denies equal protection and is discriminatory because if she were not a resident of the same household she would have been able to recover under the policy. This argument is totally devoid of any merit. First of all, this was a contractual agreement by the parties and they are free to contract to whatever terms they wish as long as it does not violate any public policy. Second, the fifth amendment to the United States Constitution deals with due process and not with equal protection. The equal protection clause of the fourteenth amendment of the United States Constitution relates to state action and does not apply to private conduct. Niedner v. Salt River Project Agr. Improvement and Power Dist., 121 Ariz. 331, 590 P.2d 447 (1979). Third, the equal protection granted by article 2, § 13 of the Arizona Constitution by its very terms also applies only to state action and not to private conduct.[2] See Aspell v. American Contract Bridge League of Memphis, Tennessee, 122 Ariz. 399, 595 P.2d 191 (App. 1979).
Affirmed.
ROLL, P.J., and HATHAWAY, J., concur.
NOTES
[1] In fact, after the Powers were aware of State Farm's contention regarding the policy exclusion they nevertheless continued their policy and paid premiums on it.
[2] Article 2, § 13 provides: "No law shall be enacted granting to any citizen, class of citizens, or corporation other than municipal, privileges or immunities which, upon the same terms, shall not equally belong to all citizens or corporations." (Emphasis added.)
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NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
GREEN MOUNTAIN GLASS, LLC, CULCHROME,
LLC,
Plaintiffs-Cross-Appellants
v.
SAINT-GOBAIN CONTAINERS, INC., DBA
VERALLIA NORTH AMERICA,
Defendant-Appellant
______________________
2018-1725, 2018-1784
______________________
Appeals from the United States District Court for the
District of Delaware in No. 1:14-cv-00392-GMS, Judge
Gregory M. Sleet.
______________________
JUDGMENT
______________________
JEFFREY A. LAMKEN, MoloLamken LLP, Washington,
DC, argued for plaintiffs-cross-appellants. Also repre-
sented by BENJAMIN THOMAS SIROLLY; JUSTIN ADATTO
NELSON, Susman Godfrey LLP, Houston, TX; MATTHEW
ROBERT BERRY, JOHN EDWARD SCHILTZ, Seattle, WA.
STANLEY JOSEPH PANIKOWSKI, III, DLA Piper LLP
(US), San Diego, CA, argued for defendant-appellant. Also
represented by MATTHEW D. SATCHWELL, Chicago, IL;
KATHRYN RILEY GRASSO, Washington, DC; BRIAN BIGGS,
Wilmington, DE.
______________________
THIS CAUSE having been heard and considered, it is
ORDERED and ADJUDGED:
PER CURIAM (LOURIE, O’MALLEY, and WALLACH, Cir-
cuit Judges).
AFFIRMED. See Fed. Cir. R. 36.
ENTERED BY ORDER OF THE COURT
July 12, 2019 /s/ Peter R. Marksteiner
Date Peter R. Marksteiner
Clerk of Court
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NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING
MOTION AND, IF FILED, DETERMINED
IN THE DISTRICT COURT OF APPEAL
OF FLORIDA
SECOND DISTRICT
WALTER DUNN, III, )
)
Appellant, )
)
v. ) Case No. 2D18-537
)
STATE OF FLORIDA, )
)
Appellee. )
)
Opinion filed March 29, 2019.
Appeal from the Circuit Court for
Hillsborough County; Laura E. Ward, Judge.
Walter Dunn, III, pro se.
Ashley Moody, Attorney General,
Tallahassee, and Tonja Vickers Rook,
Assistant Attorney General, Tampa, for
Appellee.
PER CURIAM.
Affirmed.
SILBERMAN, KELLY, and VILLANTI, JJ., Concur.
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IN THE COURT OF CRIMINAL APPEALS OF TENNESSEE
AT JACKSON
Assigned on Briefs July 10, 2007
STATE OF TENNESSEE v. MICHAEL RAY BATES
Direct Appeal from the Circuit Court for Madison County
No. 05-206 Donald H. Allen, Judge
No. W2006-02492-CCA-R3-CD - Filed August 17, 2007
The appellant, Michael Ray Bates, was convicted in the Madison County Circuit Court of four
counts of selling one-half gram or more of cocaine and received an effective ten-year sentence to be
served in a community corrections program. Subsequently, the trial court revoked the appellant’s
community corrections sentence and ordered him to serve his ten-year sentence in confinement. On
appeal, the appellant challenges the revocation of his community corrections sentence and the
imposition of confinement. Upon review of the record and the parties’ briefs, we affirm the
judgment of the trial court.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court is Affirmed.
NORMA MCGEE OGLE, J., delivered the opinion of the court, in which DAVID G. HAYES and THOMAS
T. WOODALL, JJ., joined.
Gregory D. Gookin, Jackson, Tennessee, for the appellant, Michael Ray Bates.
Robert E. Cooper, Jr., Attorney General and Reporter; Cameron L. Hyder, Assistant Attorney
General; James G. Woodall, District Attorney General; and Alfred L. Earls, Assistant District
Attorney General, for the appellee, State of Tennessee.
OPINION
I. Factual Background
The record reflects that the Madison County Grand Jury indicted the appellant for eight
counts of selling one-half gram or more of cocaine, a Class B felony. On December 5, 2005, the
appellant pled guilty to all eight counts, and the trial court merged four of the counts into the
remaining four. The trial court sentenced the appellant to concurrent sentences of ten years for each
conviction and ordered that he serve the sentences on community corrections. According to one of
the judgment forms, the trial court also ordered that the appellant complete a minimum of eight hours
of community service work each month, obtain an alcohol and drug assessment, pay two hundred
twenty dollars to the Jackson-Madison County Narcotics Unit within ninety days of the pleas, submit
to random monthly drug screens, maintain full-time employment, not be on probation or parole, and
pay one hundred dollars per month toward court costs and fines. In October 2006, the appellant’s
program supervisor alleged that the appellant had violated the conditions of his community
corrections sentence by (1) failing to obtain an alcohol and drug assessment, (2) completing only
nineteen hours of community service work; (3) failing to obtain full-time employment; (4) failing
to pay monthly court costs and fines; and (5) being arrested on October 11, 2006, and charged with
attempted murder. The trial court issued a violation warrant on October 12, 2006.
At the appellant’s revocation hearing, Cindy Cooper from Madison County Community
Corrections testified that the appellant was placed in the community corrections program on
December 5, 2005, and that she became his second supervisor in April 2006. She said that the rules
for community corrections were explained to the appellant and that he signed a document stating he
understood the rules. Cooper stated that the trial court had ordered the appellant to obtain an alcohol
and drug assessment but that he never did. The appellant told Cooper that he had spoken with a
woman about obtaining an assessment but that the woman was “booked up and kind of busy.” The
appellant also had completed only nineteen hours of community service work since December 2005
and had failed to provide Cooper with verification of employment since February 2, 2006. Cooper
stated that the appellant used to be employed by Lane College but that she did not know if he was
currently employed. Finally, Cooper stated that the appellant had made payments toward his court
costs in an old case but that he “still owes the full balance on this one.” She said the appellant made
one-hundred-dollar payments towards his court costs in February 2006, March 2006, and September
2006 but had paid nothing else.
On cross-examination, Cooper testified that although the appellant had made some payments
toward his court costs, the court clerk applied those payments toward one of his old cases. She stated
that she advised the appellant to complete eight hours of community service work each month and
that she gave him a schedule of available work on August 17, 2006. She acknowledged that the
appellant was serving a ten-year sentence and that he could resume working on completing his
community service hours. She stated that the appellant had not discussed his employment with her
since February 10, 2006, and that he never told her he was doing mechanic work. She said that the
appellant told her he was going to apply for disability payments due to his having a pacemaker and
that she asked him for verification of his application. However, he never gave it to her. Regarding
the appellant’s alcohol and drug assessment, Cooper said that she gave him the telephone numbers
for Maggie Bible at Pathways and for Jamie Hurst in Henderson and that the appellant said he tried
to call them. She stated that the appellant had always reported to her twice per month, that he had
passed two drug screens, and that he had paid fifteen dollars each month toward his supervision fees.
Cooper learned about the appellant’s arrest for attempted murder from his mother and said the charge
against him was later dismissed.
The appellant testified that he was released from jail on December 6, 2005, and began
working for Lane College about one week later. In February 2006, Lane College ran a criminal
background check on the appellant, discovered that he had prior felony convictions, and fired him.
-2-
The appellant tried to obtain employment at Sonic and Fence Master but could not get a job. The
appellant then began working for a friend by “doing a little work around his mechanical shop.” He
stated that the friend paid him in cash, that he earned about two hundred dollars per week, and that
he worked there for one or two months. The appellant told his first community corrections
supervisor about his job at the shop but did not tell Cindy Cooper.
The twenty-two-year-old appellant testified that he received a pacemaker in 2001 and was
trying to collect disability payments. He stated that Cooper gave him only Maggie Bible’s telephone
number, that he tried to contact Bible and left four or five messages for her, but that he was never
able to speak with her. He stated that he was not guilty of the recent attempted murder charge and
that he could catch up on his court cost payments. He said that he had always reported to Cooper
as scheduled, that he had never failed a drug test, and that he had completed nineteen hours of
community service. Cooper gave the appellant a list of community service work, but he showed up
late and was not allowed to work. He said he had not done any community service work in the last
few months because “[t]hey got this little board at the front where they have . . . work on it and they
ain’t had no work up there.” He stated that he had two young children with his girlfriend and that
he wanted to remain in the community corrections program.
On cross-examination, the appellant testified that he and his girlfriend lived in a rented house
and that she paid all the bills because he was unemployed. When the appellant lost his job, he
stopped making his court cost payments and failed to pay anything toward his court costs from April
to August 2006. In September 2006, the appellant’s father gave him one hundred dollars for his
court costs and fines. The appellant acknowledged that because he was unemployed, he had no
excuse for not doing his community service work. He stated that he had not yet applied for disability
payments because he had no health insurance and no doctor would examine him. He said that he
swept floors and straightened up tools in his friend’s shop and that he could not do “hard” work.
While he worked for Lane College, the appellant did yard work and picked up paper.
Michael Bates, Sr., the appellant’s father, testified that the appellant worked with him at Lane
College part-time. Bates spoke with barber shop owner Willie Flakes, and Flakes said he would hire
the appellant part time to clean around the barber shop. The defense introduced into evidence a letter
from Flakes offering the appellant employment. On cross-examination, Bates testified that the
appellant had not worked full time since December 2005. He stated that he took the appellant to
several places to get a job but that no one would hire him.
Shatara Williams, the appellant’s girlfriend, testified that she and the appellant had two
children together. She said that she was present when the appellant telephoned Maggie Bible and
that she heard the appellant leave messages for her. On cross-examination, Williams acknowledged
that the appellant worked in the mechanic’s shop for several months.
The trial court ruled that the appellant had violated the terms of his community corrections
sentence. Specifically, the trial court found that the appellant had violated the sentence “in a
substantial way” by (1) failing to obtain an alcohol and drug assessment; (2) failing to complete eight
-3-
hours of community service each month; (3) failing to secure full-time employment; and (4) wilfully
failing to pay monthly court costs and fines. The trial court noted that the appellant also had failed
to remain arrest-free but concluded that violation was not substantial because the charge against him
was dismissed. The trial court stated that the appellant had not taken community corrections very
seriously and that he had “basically just showed up twice a month and that’s about it.” The trial
court ordered that the appellant serve his ten-year sentences in confinement with credit for time
served in the program and in jail.
II. Analysis
The appellant contends that the trial court erred by revoking his community corrections
sentence and ordering him to serve his sentences in confinement because he never missed a meeting
with his community corrections supervisor, never tested positive for drugs, completed almost twenty
percent of his community service work, and had the attempted murder charge dismissed. The State
contends that the appellant clearly violated the terms of his community corrections sentence and,
therefore, that the trial court properly ordered him to serve his sentences in confinement. We agree
with the State.
Generally, community corrections sentences are governed by the Tennessee Community
Corrections Act of 1985. See Tenn. Code Ann. § 40-36-101. The Act provides as follows:
The court shall . . . possess the power to revoke the sentence
imposed at any time due to the conduct of the defendant or the
termination or modification of the program to which the defendant
has been sentenced, and the court may resentence the defendant to
any appropriate sentencing alternative, including incarceration, for
any period of time up to the maximum sentence provided for the
offense committed, less any time actually served in any
community-based alternative to incarceration.
Tenn. Code Ann. § 40-36-106(e)(4). A trial court may revoke a community corrections sentence
upon finding by a preponderance of the evidence that an offender violated the conditions of his
suspended sentence. See State v. Harkins, 811 S.W.2d 79, 82 (Tenn. 1991). The trial court’s
revocation of a community corrections sentence will be upheld absent an abuse of discretion. Id.
An abuse of discretion occurs if the record contains no substantial evidence to support the conclusion
of the trial court that a violation of community corrections has occurred. See State v. Gregory, 946
S.W.2d 829, 832 (Tenn. Crim. App. 1997).
As the trial court noted, the appellant violated the conditions of his community corrections
sentence by failing to obtain an alcohol and drug assessment, failing to maintain full-time
employment, failing to complete eight hours of community service each month, and failing to pay
toward his court costs and fines each month. The appellant does not contest these violations but
instead argues that he should remain in the community corrections program because he met with his
-4-
supervisor as scheduled, did not test positive for drugs, and completed a portion of his community
service work. However, in light of the violations, it was within the trial court’s discretion to revoke
his community corrections sentence and order that he serve his effective sentence in confinement.
III. Conclusion
Based upon the record and the parties’ briefs, we affirm the judgment of the trial court.
___________________________________
NORMA McGEE OGLE, JUDGE
-5-
| {
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} |
2018 IL App (1st) 170380
No. 1-17-0380
Opinion filed May 2, 2018
Third Division
IN THE
APPELLATE COURT OF ILLINOIS
FIRST DISTRICT
KARLA GRESS, Individually, and DEAN GRESS, Individually, ) Appeal from the
) Circuit Court of
Plaintiffs-Appellants, ) Cook County.
)
v. )
)
LAKHANI HOSPITALITY, INC., an Illinois Corporation, )
d/b/a Holiday Inn Chicago-Skokie; LAKHANI )
HOSPITALITY, INC., an Illinois Corporation, d/b/a Bar Louie )
Skokie; MANSOOR LAKHANI, Individually; SHEILA ) No. 2015 L 1314
GILANI, Individually; HOSTMARK HOSPITALITY GROUP, )
INC., an Illinois Corporation; INTERCONTINENTAL HOTELS )
GROUP OPERATING CORPORATION, a Foreign Corporation; )
INTERCONTINENTAL HOTELS GROUP RESOURCES, )
INC., a Foreign Corporation; and ALHAGIE SINGHATEH, )
Individually, )
)
Defendants ) The Honorable
) Kathy M. Flanagan,
(Lakhani Hospitality, Inc., d/b/a Holiday Inn Chicago-Skokie; ) Judge Presiding.
Lakhani Hospitality, Inc., d/b/a Bar Louie Skokie; Mansoor )
Lakhani; Sheila Gilani; Hostmark Hospitality Group, Inc.; )
Intercontinental Hotels Group Operating Corporation; and )
Intercontinental Hotels Group Resources, Inc., Defendants- )
Appellees). )
)
No. 1-17-0380
JUSTICE LAVIN delivered the judgment of the court, with opinion.
Presiding Justice Cobbs and Justice Fitzgerald Smith concurred in the judgment and
opinion.
OPINION
¶1 On the evening of October 2, 2013, Karla Gress was a guest at the Holiday Inn Chicago-
Skokie (Skokie Holiday Inn), which was owned and/or managed by defendants Lakhani
Hospitality, Inc. (LHI), and Mansoor Lakhani (Lakhani). After eating dinner and consuming an
alcoholic beverage in the hotel restaurant, Karla went to her room where she was subsequently
raped while unconscious, allegedly by the hotel security guard who also did some maintenance
work at the hotel.
¶2 Karla and her husband, Dean Gress (via a loss of consortium claim) (plaintiffs), brought a
premises liability action against LHI; Lakhani; hotel Director of Operations Sheila Gilani; and
the LHI franchisors, Intercontinental Hotels Group Operating Corporation and Intercontinental
Hotels Group Resources, Inc. (collectively Intercontinental). As to the alleged offender, Alhagie
Singhateh, plaintiffs claimed that he committed assault and battery, as well as intentional
infliction of emotional distress and gender violence. Plaintiffs also sued Intercontinental and
Hostmark Hospitality Group, Inc. (Hostmark) for negligently hiring and retaining Singhateh,
alleging that Hostmark processed Singhateh’s initial job application but failed to discover his
arrest for soliciting a prostitute. Finally, plaintiffs sued Intercontinental for negligent training and
supervision of LHI employees. The trial court dismissed, with prejudice, the premises liability
counts and also the counts related to negligent hiring and retention and negligent training and
supervision under section 2-615 of the Code of Civil Procedure (Code) (735 ILCS 5/2-615
(2012)), leaving the unrepresented alleged perpetrator as the lone defendant. Plaintiffs filed the
2
No. 1-17-0380
present interlocutory appeal after the trial court held that there was no just reason to delay an
appeal of its order under Illinois Supreme Court Rule 304(a) (eff. Mar. 8, 2016).
¶3 For the reasons to follow, we reverse and remand the dismissal of the premises liability
counts in plaintiffs’ fourth-amended complaint that were directed at LHI, Lakhani, and Gilani.
We agree with plaintiffs, finding that they adequately pleaded the existence of a special
relationship duty of care between LHI and its employees as the innkeeper and Karla as the guest,
and contrary to the trial court’s finding, we find that plaintiffs adequately alleged that
Singhateh’s sexual assault was reasonably foreseeable under both the duty and causation
elements of negligence. We affirm the trial court’s dismissal of the counts directed at
Intercontinental and Hostmark, as none of those defendants were alleged to be a possessor of the
premises, and they had no ability or authority to control any activities of LHI’s employees. Thus,
they owed no duty of care to plaintiffs under these circumstances.
¶4 BACKGROUND
¶5 Singhateh was hired as a security guard at an O’Hare Holiday Inn in 2004. The following
year, LHI purchased both the O’Hare Holiday Inn and the Skokie Holiday Inn, with
Intercontinental serving as the franchisor. Singhateh became an LHI employee as a result of the
sale and worked at both hotels.
¶6 Plaintiffs’ first four complaints at law were dismissed with leave to amend. The trial
court’s dismissal of plaintiffs’ fourth-amended complaint is the subject of this appeal. The
following operative facts are taken directly from plaintiffs’ complaint. Karla alleged that she was
a guest at the Skokie Holiday Inn and that she had a drink at the hotel’s Bar Louie
restaurant/lounge. During that time, she alleged that, unbeknownst to her, Singhateh placed a
narcotic substance in her drink. Singhateh, as a hotel security guard, had a key to Karla’s room.
3
No. 1-17-0380
On the evening in question, Singhateh was directed by another LHI employee to enter Karla’s
room alone, allegedly in order to repair a faulty air conditioner unit, even though LHI had been
advised that Karla was intoxicated. The limited key card records show that “a duplicate key” was
used to access Karla’s room at 9:40 p.m. Once there, Singhateh raped Karla while she was
unconscious. When Karla awoke, she realized that she had been sexually assaulted. A rape kit
was taken the next morning at a nearby hospital, and police matched fluid to Singhateh’s DNA at
a subsequent date. Meanwhile, for reasons that are not disclosed in plaintiffs’ complaint or the
parties’ briefs, Singhateh continued to work for LHI for several years after this occurrence.
¶7 Plaintiffs’ complaint made numerous allegations about unseemly conduct by Singhateh
and others at the Skokie Holiday Inn. Plaintiffs alleged that Singhateh had previously been
arrested for solicitation of prostitution after offering an undercover police officer $10 for sexual
relations. There was no indication that LHI was aware of that arrest, although the hotel was
allegedly aware of another named employee’s embezzlement of LHI funds, which was reported
to police. In spite of this, LHI also continued to employ this employee. According to plaintiffs,
prior to the incident in this case, several named LHI guests filed police reports of stolen property
from their rooms, with the key card history of one guest showing that only LHI employees had
accessed his room. Plaintiffs also alleged that employees often brought women into the hotel and
gave them alcoholic beverages and fraternized with them in a hotel room. Prostitutes were
alleged to have frequented the hotel and were served alcohol at the bar. These hotel employees
also disabled surveillance cameras, presumably for improper purposes. In April 2011, an
unnamed guest called the police department reporting a sexual assault (this allegation lacked
further details). In December 2013, just two months after Karla’s rape, another unnamed LHI
guest allegedly had several drinks at the bar, then was approached by two males, only to later
4
No. 1-17-0380
awake in her hotel room naked, and although she did not remember certain portions of the
evening, she recalled one male on top of her having intercourse. She reported this rape to the
Skokie police.
¶8 Additionally, Singhateh was allegedly known by management to have harassed managers
and was seen searching their bags without consent. Some six years before this occurrence,
plaintiffs alleged that Singhateh was working at the O’Hare Holiday Inn during which time a
female guest complained about creepy behavior by the security guard, which included him
contacting her at her hotel room via the hotel telephone, even though she had not given this
security guard her name or room number. She also said that the same person offered to bring a
Caesar salad to her room, even though she had not ordered any food. Finally, she became
concerned when she saw a shadow outside her room, leading her to latch and barricade the door.
She complained to management that she was concerned for her physical safety and that of other
hotel guests based on the interaction. Although Singhateh was not identified by name, the
resulting report was placed in his LHI file, implying that management knew that the guest was
talking about Singhateh.
¶9 In response to these allegations, the trial court ruled that the hotel and its management
employees could not have reasonably foreseen that their security guard (who doubled as a
handyman) might sexually assault an intoxicated female guest if granted access to her room.
Finding that plaintiffs’ allegations “continue to lack relevant facts to support the foreseeability of
[the] attack,” primarily because none of the “additional incidents” alleged by plaintiffs included
“a sexual assault by Singhateh or another employee of a hotel guest in her room,” the court
thereby relieved defendants of any duty to protect Karla from the security guard’s criminal
activities. The court likewise found that neither Karla’s intoxication nor Singhateh’s arrest
5
No. 1-17-0380
provided a basis for foreseeability. Thus, in dismissing the premises liability counts, the trial
court accepted defendants’ argument that they had no duty to foresee that Singhateh might rape
Karla since they had not known him to have done that previously and that plaintiffs failed to
sufficiently plead causation. As stated, the court determined that the counts related to negligent
hiring and retention, and also to negligent supervision and training against Intercontinental and
Hostmark, should be dismissed because there was no nexus between Singhateh’s alleged
unfitness due to his arrest and the sexual assault of Karla. Plaintiffs appealed.
¶ 10 ANALYSIS
¶ 11 Plaintiffs now challenge the trial court’s judgment. The question presented by a motion to
dismiss a complaint under section 2-615 of the Code is whether the complaint alleges sufficient
facts that, if proved, would entitle the plaintiff to relief. Bogenberger v. Pi Kappa Alpha Corp.,
2018 IL 120951, ¶ 23. Such a motion challenges only the legal sufficiency of the complaint. Id.
We accept all well pleaded facts and reasonable inferences from the facts in a light most
favorable to the plaintiff, with the critical inquiry being whether the allegations are sufficient to
state a cause of action on which relief can be granted. Id.; Marshall v. Burger King Corp., 222
Ill. 2d 422, 429 (2006). A court should only dismiss a complaint under section 2-615 where no
set of facts can be proved, which would entitle the plaintiff to recovery. Marshall, 222 Ill. 2d at
429. In other words, if the pleadings put at issue one or more facts material to recovery under a
claim, evidence must be taken to resolve such issues, and judgment dismissing that claim on the
pleadings is inappropriate. Platson v. NSM, America, Inc., 322 Ill. App. 3d 138, 143 (2001). A
claim need only show a possibility of recovery, not an absolute right to recovery, to survive a
section 2-615 motion. Id. Our review is de novo. Id. at 144.
¶ 12 Premises Liability Against LHI, Lakhani, and Gilani
6
No. 1-17-0380
¶ 13 Plaintiffs first contend that they alleged sufficient facts to establish premises liability
negligence in that the defendants LHI, Lakhani, and Gilani 1 (1) failed to ensure the safety of
their guests generally and also via policy and procedure, (2) improperly gave Singhateh a key to
Karla’s room and instructed him to fix the air conditioner despite being informed that she was
demonstrably intoxicated, (3) failed to perform background checks on their employees, (4) failed
to provide adequate security personnel and security cameras, and (5) failed to keep track of the
rooms’ key cards. Plaintiffs also challenge the dismissal of the associated loss of consortium
claims.
¶ 14 In an action like the present, where the plaintiff seeks recovery based on the defendant’s
alleged negligence, the plaintiff must plead and prove the existence of a duty owed by the
defendant, a breach of that duty, and injury proximately resulting from that breach. Bogenberger,
2018 IL 120951, ¶ 21. We begin our analysis with a discussion of duty. The touchstone of the
duty analysis is to ask whether the plaintiff and the defendant stood in such a relationship to one
another that the law imposes on the defendant an obligation of reasonable conduct for the benefit
of the plaintiff. Krywin v. Chicago Transit Authority, 238 Ill. 2d 215, 226 (2010). Whether a duty
exists is a question of law for the court to decide subject to our de novo review, and thus to
determine whether dismissal was proper, we must examine whether the plaintiff alleged
sufficient facts, which if proven, establish a duty of care owed to them by defendants. Id.; Doe-3
v. McLean County Unit District No. 5 Board of Directors, 2012 IL 112479, ¶ 20. On the other
hand, questions of a breach of the duty and proximate cause of the injury are factual matters for
1
Plaintiffs specifically note in their brief that they are appealing the dismissal of counts I, III, IV,
and XX. Counts I, III, and XX allege, respectively, premises liability negligence against LHI, Lakhani,
and Intercontinental. Count IV is a loss of consortium claim against Lakhani for premises liability. We
presume that plaintiffs meant to specifically challenge count V, premises liability against Gilani, rather
than count IV. We presume this because plaintiffs appear to generally challenge all counts relating to
premises liability, as well as the derivative claims of loss of consortium.
7
No. 1-17-0380
the jury to decide, provided there is a genuine issue of material fact regarding those issues.
Krywin, 238 Ill. 2d at 226; Marshall, 222 Ill. 2d at 430.
¶ 15 Plaintiffs contend that they adequately pleaded the existence of a special relationship
between the hotel and Karla, such that the hotel had a duty to protect her against the criminal
actions of a third party, including the hotel’s own employee. While generally speaking, the
owner or possessor of property does not owe a duty to protect invitees from the criminal acts of
third parties, however, a notable exception to this is if a special relationship exists between the
parties, such as, in this case, an innkeeper and its guests, a common carrier and its passengers, a
voluntary custodian and ward, or a business invitor and invitee. Iseberg v. Gross, 227 Ill. 2d 78,
88 (2007); see also Restatement (Second) of Torts § 314A (1965). As section 314A of the
Restatement (Second) of Torts puts it,
“A[n] [innkeeper] is under a duty to its [guests] to take reasonable action
(a) to protect them against unreasonable risk of phsyical harm, and
(b) to give them first aid after it knows or has reason to know that they are
ill or injured, and to care for them until they can be cared for by others.”
Restatement (Second) of Torts § 314A, at 118 (1965).
The duty to protect against unreasonable risk of harm extends to risks arising from acts of third
persons, whether innocent, negligent, intentional, or even criminal. Restatement (Second) of
Torts § 314A cmt. d, at 119 (1965). Likewise, before duty can attach, a defendant must know or
should know of the unreasonable risk of injury. Restatement (Second) of Torts § 314A cmt. f, at
120 (1965). This is another way of saying that the defendant must know of the chance of injury
or the possibility of harm. See Black’s Law Dictionary (10th ed. 2014) (defining “risk”).
8
No. 1-17-0380
Pertinent to this case, the Restatement (Second) of Torts § 319 (1965) 2 also states that when one
actor (like the hotel) takes charge of a third person (like a hotel employee) “whom he knows or
should know” would likely cause bodily harm to another (like Karla) if not controlled, that actor
“is under a duty to exercise reasonable care to control the third person [like the employee] to
prevent him from doing such harm.” 3
¶ 16 Courts have historically held that a hotel or common carrier, for example, must exercise
the “highest degree of care,” which we interpret simply as another way of expressing the
existence of a special relationship. 4 See Krywin, 238 Ill. 2d at 226; Danile v. Oak Park Arms
2
Although the parties do not explicitly identify this Restatement (Second) of Torts provision or
make specific arguments about LHI and Singhateh’s employer-employee special relationship, it adds
support to our analysis and conclusion below. See Simpkins v. CSX Transportation, Inc., 2012 IL 110662,
¶ 20 (noting, the supreme court has also recognized a special relationship between a master-servant and
also employer-employee).
3
The Restatement (Third) of Torts: Liability for Physical and Emotional Harm § 41 (2012) has
not been explicitly adopted by our supreme court. It merits mention, however, that section 41 provides
that an actor in a special relationship with another “owes a duty of reasonable care to third parties with
regard to risks posed by the other that arise within the scope of the relationship,” and among the special
relationships giving rise to that duty is “an employer with employees when the employment facilitates the
employee’s causing harm to third parties.” Restatement (Third) of Torts § 41 (2012).
4
Defendants rely on Schmid v. Fairmont Hotel Company-Chicago, 345 Ill. App. 3d 475 (2003), in
essentially arguing against the existence of a special relationship or “heightened duty” in this case.
Schmid, however, involved a defective condition at the hotel, where the plaintiff-guest received an
electric shock when he flipped on a light switch in his room’s bathroom. The Schmid court declined to
analyze the case under the “heightened duty” of a special relationship, likely because other courts have
historically declined to impose a special relationship on the hotel and guest where the matter involved a
defective condition at the hotel. See Danile v. Oak Park Arms Hotel, Inc., 55 Ill. App. 2d 2 (1964). But
see Restatement (Second) of Torts § 314A cmt. d, at 119 (1965). (duty to protect extends to risks arising
from the condition of the land or from pure accident). For example, in Danile, involving a third-party
attack on a guest, the hotel argued that the trial court improperly gave a jury instruction that stated the
hotel owed “a high degree of care” to protect the plaintiff-guest from harm. In approving the instruction,
the court distinguished its case, where a guest is injured “from the positive action of one person against
another,” from earlier Illinois decisions, where a guest was injured because of defective or dangerous
conditions at the hotel. Danile, 55 Ill. App. 2d at 8. The latter allowed for an ordinary duty of care,
whereas “if the guest is assaulted by an employee of the hotel or by a third person, the hotel may be held
to a high degree of care.” Id. at 3, 8 (citing Fortney, 5 Ill. App. 2d 327); see also Neering v. Illinois
Central R.R. Co., 383 Ill. 366, 374 (1943) (“The rule requiring the highest degree of care on the part of
railroad companies for the protection of passengers applies only to the operation of trains and immediate
incidents of transportation ***.”). The court therefore held “that in these circumstances, a reasonable
degree of care is a high degree of care.” Danile, 55 Ill. App. 2d at 8-9. Other similar cases have since
9
No. 1-17-0380
Hotel, Inc., 55 Ill. App. 2d 2, 3, 9 (1964) (“a reasonable degree of care is a high degree of care”);
Fortney v. Hotel Rancroft, Inc., 5 Ill. App. 2d 327, 335 (1955). These special relationships give
rise to an affirmative duty to aid or protect another against an “unreasonable risk of physical
harm.” Simpkins, 2012 IL 110662, ¶ 20. Such duties are premised on a relationship between the
parties that is independent of the specific situation which gave rise to the harm. Restatement
(Second) of Torts § 314A cmt. b, at 119 (1965) (the “special relations between the parties ***
create a special responsibility, and take the case out of the general rule”); see also Bogenberger,
2018 IL 120951, ¶ 33. The key to imposing a duty based on a special relationship is that the
defendant’s relationship with either the tortfeasor or the plaintiff “ ‘places the defendant in the
best position to protect against the risk of harm.’ ” Bogenberger, 2018 IL 120951, ¶ 39 (quoting
Grand Aerie Fraternal Order of Eagles v. Carneyhan, 169 S.W.3d 840, 850 (Ky. 2005)). With
respect to the innkeeper-guest relationship, it has been said that “since the ability of one of the
parties to provide for his own protection has been limited in some way by his submission to the
control of the other, a duty should be imposed upon the one possessing control (and thus the
power to act) to take reasonable precautions to protect the other one from assaults by third parties
which, at least, could reasonably have been anticipated.” (Internal quotation marks omitted.)
Hills v. Bridgeview Little League Ass’n, 195 Ill. 2d 210, 244 (2000).
¶ 17 Whether the rape in this case could have been reasonably anticipated by LHI and its
employees, and was thus foreseeable, forms the crux of the parties’ contentions on appeal. See
Bruns v. City of Centralia, 2014 IL 116998, ¶ 33 (“something is foreseeable only if it is
objectively reasonable to expect” (internal quotation marks omitted)). Plaintiffs assert that
defendants created a “dangerous condition” by allowing Singhateh unfettered access to Karla’s
followed suit. See Yamada v. Hilton Hotel Corp., 60 Ill. App. 3d 101, 112 (1977); Mrzlak v. Ettinger, 25
Ill. App. 3d 706, 712 (1975).
10
No. 1-17-0380
room while she was intoxicated and, in fact, directing him to the room, especially given
Singhateh’s background and the hotel’s licentious atmosphere. They thus argue that a subsequent
crime was generally foreseeable. The defendants argue contrarily that prior instances of criminal
conduct must be similar in nature for foreseeability purposes. They specifically argue that there
were no reported sexual assaults by Singhateh or other LHI employees, thus militating against a
finding of foreseeability under the duty element.
¶ 18 To understand foreseeability as it relates to a special relationship duty of care at the
pleading stage, we turn to Illinois Supreme Court law. In the seminal special duty case of
Marshall, a Burger King customer was eating in the restaurant when Pamela Fritz lost control of
her car in the parking lot, rendering it airborne, before it crashed into the building and killed the
customer. The trial court dismissed the case on a section 2-615 motion after finding no duty
because the type of accident was unlikely and the burden to protect against the accident was
onerous. The supreme court disagreed and affirmed the appellate court’s reversal and remand of
the case.
¶ 19 The supreme court held that due to the business invitor-invitee special relationship, the
defendants, as owners and operators of the restaurant, owed an affirmative duty to the deceased
customer to protect against the third-party negligent driving of Fritz. They specifically reasoned
that the duty to protect arose out of the special relationship of the parties, noting that this special
relationship and duty of care encompassed “the type of risk—i.e., the negligent act of a third
person—” that led to the customer’s injury. Marshall, 222 Ill. 2d at 440. While noting that the
existence of duty turns in large part on public policy considerations, the court reasoned that “the
policy justifying the business invitor’s duty of reasonable care is related to the affirmative action
11
No. 1-17-0380
the invitor takes in opening his business to the public and to the potential for harm that a business
open to the general public poses.” Id. at 441.
¶ 20 Marshall then analyzed whether the defendants had shown that they were entitled to an
exemption from the duty of protection. In doing so, the court examined the traditional four policy
factors associated with “duty,” including the reasonable foreseeability of the injury, the injury’s
likelihood, the burden of guarding against the injury, and the consequences of placing the burden
on the defendant, before concluding that the defendants had not rebutted the existence of a duty
to protect. 5 The court declined to fully address whether the business invitor’s lack of knowledge
of prior, similar incidents of negligent conduct, should limit his duty of care, finding the
defendants’ argument in that regard underdeveloped. Most pertinent to our analysis here is that
the court also specifically found it unpersuasive that a defendant must have some notice of a
prior incident or prior conduct before the law imposes a duty to protect a plaintiff from the
conduct of a third party, or that the prior incident must be sufficiently similar to put a defendant
on notice that there is a reasonable probability that the acts of the third party are likely to cause
physical harm to others. Id. at 444-45 (citing Restatement (Second) of Torts § 344 cmt. f (1965)).
Marshall thus held that a special relationship, standing alone, was sufficient to establish an
affirmative duty to protect against third-party negligence.
5
In Simpkins, 2012 IL 110662, ¶ 21, the supreme court identified a similar manner of proceeding
with the duty analysis. The court wrote that the first question to be analyzed in a negligence case is
whether the defendant, by his act or omission, contributed to the risk of harm to the particular plaintiff. If
the answer is “yes,” the Simpkins court stated one must weigh the traditional four factors to determine
duty. Id. If the answer is “no,” then one should address whether there were any recognized special
relationships “that establish a duty running from the defendant to the plaintiff.” Id. This suggests that
“duty” along with foreseeability factors and “duty” along with a special relationship are distinct ways
courts and practitioners may analyze duty in negligence cases at least at the pleading stage. As our
analysis in this case reveals, we arguably have both a risk of harm created by the defendant, plus the
satisfied four factors, and also a special relationship.
12
No. 1-17-0380
¶ 21 Other supreme court cases (both before and after Marshall), appear to require
foreseeability 6 as an inherent requirement in proving a special relationship duty to protect. In
Iseberg, 227 Ill. 2d 78, a section 2-615 case decided in 2007, a year after Marshall and where no
special relationship was found, the court stated that when one of the four special relationships
“exists between the parties and an unreasonable risk of physical harm arises within the scope of
that relationship, an obligation may be imposed on the one to exercise reasonable care to protect
the other from such risk, if the risk is reasonably foreseeable, or to render first aid when it is
known that such aid is needed.” (Emphasis added.) Id. at 88. This echoed an earlier statement in
Hills (decided in 2000) that, “[t]he existence of a special relationship does not, by itself, impose
a duty upon the possessor of land to protect lawful entrants from the criminal acts of third
parties. Before a duty to protect will be imposed it must also be shown that the criminal attack
was reasonably foreseeable.” Hills, 195 Ill. 2d at 243. Likewise, the supreme court had long held
in the common carrier-passenger case of Letsos v. Chicago Transit Authority, 47 Ill. 2d 437, 441
(1970), that the carrier’s high degree of care it owed to passengers included, “the responsibility
to prevent injuries which could have been reasonably foreseen and avoided by the carrier.” We
find Marshall particularly apt in this case, since as in Marshall, this case involves a special
relationship complaint dismissed at the section 2-615 stage. We thus proceed in our analysis
pursuant to Marshall. It merits mention, however, that whether foreseeability is a rebuttable
contention on defendants’ part or a requirement under a special relationship duty element,
plaintiffs have adequately set forth a cause of action, which requires reversal of the trial court’s
judgment.
6
Plaintiffs on appeal take the position that foreseeability is an inherent requirement of duty,
failing to specifically acknowledge the holding in Marshall.
13
No. 1-17-0380
¶ 22 Here, as in Marshall, due to the hotel-guest special relationship pleaded in this case,
defendants owed an affirmative duty to Karla to protect against third-party criminal attacks.
Restatement (Second) of Torts § 314A cmt. d, at 119 (1965). This type of relationship
encompassed the type of risk, a sexual assault by a hotel employee. Plaintiffs’ complaint
specifically alleged that while Karla was a paying guest at a hotel owned, operated, and managed
by defendants, she was rendered intoxicated by defendants’ employee and then sexually
assaulted by him in her room. LHI’s hotel management essentially facilitated the assault by
sending this male security guard/repairman into that room, knowing that he had a key, despite
being forewarned that the female guest was intoxicated. We observe that to “safely” commit his
crime, Singhateh needed to be in Karla’s room, alone with her, behind the locked door. Rather
than affirmatively protecting her privacy and safety in her locked room, the hotel management
vitiated it. See Restatement (Second) of Torts § 314A cmt. d, at 119 (1965). (“[t]he duty to
protect the other against unreasonable risk of harm extends to risks arising out of the actor’s own
conduct”). In other words, the allegations establish that LHI and its management should have
known that Singhateh could have entered Karla’s room without her consent and then taken
advantage of her.
“A guest, who is either asleep in [her] room or about to enter [her] room, should not be
subjected to the risk of an assault ***. A guest has a right to rely upon the innkeeper
doing all within his power to avoid or prevent such an assault, and to that end should be
required to exercise a high degree of care.” Fortney, 5 Ill. App. 2d at 335.
¶ 23 In this case, at this early stage in the pleadings, foreseeability, or defendants’ quality of
being able to reasonably anticipate the risk of physical harm, was satisfied by conferring on the
parties their special relationship of hotel-guest. With that special relationship, according to
14
No. 1-17-0380
Marshall, it was incumbent on defendants to show the existence of an exemption under the
traditional four duty factors identified above. Given the pervasiveness of sexual assaults and
generalized crimes in hotels, it is reasonably foreseeable that hotel guests will from time to time
be at such risk in hotels. See Marshall, 222 Ill. 2d at 442; see also Fortney, 5 Ill. App. 2d 327
(battery in hotel room); Danile, 55 Ill. App. 2d 2 (rape in hotel room); Mrzlak, 25 Ill. App. 3d
706 (rape in hotel room); Yamada, 60 Ill. App. 3d 101 (murder and sexual assault/battery in hotel
room); see also Kukla v. Syfus Leasing Corp., 928 F. Supp. 1328 (S.D.N.Y. 1996); Allen v.
Ramada Inn, Inc., 778 P.2d 291 (Colo. App. 1989); Nebel v. Avichal Enterprises, Inc., 704 F.
Supp. 570 (D.N.J. 1989); Millman v. Howard Johnson’s Co., 533 So. 2d 901 (Fla. Dist. Ct. App.
1988); Margreiter v. New Hotel Monteleone, Inc., 640 F.2d 508 (5th Cir. 1981); Rosier v.
Gainesville Inns Associates, Ltd., 347 So. 2d 1100 (Fla. Dist. Ct. App. 1977) (all involving rape,
battery, or other crimes in a hotel room); cf. Bogenberger, 2018 IL 120951, ¶ 46 (noting, “an
injury is not reasonably foreseeable where it results from freakish, bizarre, or fantastic
circumstances” (internal quotation marks omitted)). As Marshall stated, “what is required to be
foreseeable is the general character of the event or harm *** not its precise nature or manner of
occurrence.” (Internal quotation marks omitted.) Marshall, 222 Ill. 2d at 442. Likewise, the
likelihood of injury resulting from criminal acts is quite high, as set forth above. Finally, the
burden of guarding against such harm is minimal, as hotels could simply impose procedures for
when guests appear incapacitated, safely manage questionable employees, or practice sending
several employees of varying genders at a time to guests’ rooms. In other words, a number of
simple, thoughtful protections may be instituted to guard against attacks on guests. Plaintiffs,
thus, adequately alleged a special relationship in this case sufficient to establish duty.
15
No. 1-17-0380
¶ 24 In reaching our conclusion, we thus reject defendants’ claim that because no previous
crime of this exact nature in the hotel had been pled in detail (although another LHI guest rape
was pled to have occurred a mere two months after Karla’s alleged rape), they should be relieved
of their duty to protect Karla. Relying on Salazar v. Crown Enterprises, Inc., 328 Ill. App. 3d
735 (2002), defendants argue that Singhateh’s actions were unforeseeable and that defendants
could not have been on notice of his specific crime. Salazar involved a homeless man, who as a
trespasser, entered a vacant building that had been the site of disrepair and lawlessness, and he
was subsequently murdered. Id. at 737. The Salazar court concluded that there was no special
relationship to impose a duty on the defendant building owners to protect trespassers from third-
party attacks and added that while the plaintiff had alleged that numerous crimes occurred on the
property, none involved murder. Id. at 744-45. We find defendants’ reliance on Salazar
singularly misplaced since there was no special relationship at issue there and since we have
analyzed foreseeability as a matter of law under Marshall.
¶ 25 We find Danile and plaintiffs’ reliance on Mrzlak, both special relationship hotel cases,
more appropriate. See Rowe v. State Bank of Lombard, 125 Ill. 2d 203, 215-216 (1988) (in the
course of recognizing the special relationship between innkeeper and guest, Rowe specifically
relied on Danile and Mrzlak). In Danile, 55 Ill. App. 2d 2, the plaintiff was sleeping in her hotel
room after socializing with her fiancé and his mother when she was raped at 5 a.m. by a bellboy,
an employee of the defendant hotel who had become intoxicated after drinking in another guest’s
room. He took the victim’s “pass key from a ring on a hook” behind the lobby desk, where a
switchboard operator and a night desk man were on duty. Id. at 4-5. After the plaintiff received a
$25,000 judgment, the hotel appealed, arguing that it had “no previous knowledge of
misconduct” by its employee and that nobody knew that he was drinking. Id. at 5. The hotel
16
No. 1-17-0380
complained that its drunken employee was “on a lark of his own.” Id. at 7. In upholding the
verdict in favor of the plaintiff, the court stated the jury could reasonably find that the hotel staff
“could have and should have known of [the bellboy’s] absence from his post when he was
upstairs drinking and they should have found out where he was,” and that they should have
guarded the key more carefully. Id. at 6. The court thus held that it was not necessary that the
hotel have notice of prior instances of similar conduct by the errant bellboy and, in essence,
concluded that foreseeability was subsumed by the hotel-guest relationship.
¶ 26 In Mrzlak, 25 Ill. App. 3d 706, the plaintiff was asleep in her room at the Dearborn Club
Residence for Girls (Dearborn Club) when she was assaulted and robbed by an unknown male
who entered her second-floor room through the bathroom window. The defendants appealed,
arguing, inter alia, that they owed no duty to the plaintiff because the assault by the third party
was not reasonably foreseeable. Id. at 709. As to the issue of duty, the defendants argued against
foreseeability because there were no previous incidents, a claim which the court summarily
rebuffed, citing evidence of nearby taverns and a rooming house, along with proof of several
attempted break-ins at the defendants’ club residence of which the co-owners were aware. Id. at
709-10. Thus, the Mrzlak court held the Dearborn Club liable in light of the club’s notice of
other crimes in the area, even though the crimes did not involve assault. Id. at 710. The court
likewise held that, in light of the evidence, “foreseeability was properly a question for the jury”
and declined to overturn the jury’s decision on appeal. Id.
¶ 27 We also find Virginia D. v. Madesco Investment Corp., 648 S.W.2d 881 (Mo. 1983)
(en banc), persuasive. There, the trial court entered a judgment notwithstanding the verdict for
the defendant after the plaintiff prevailed in her claim against a hotel. The plaintiff claimed that
she was meeting friends for drinks, only to be raped in the hotel bathroom by an intruder. The
17
No. 1-17-0380
trial court’s decision was based on its belief that the hotel could not have reasonably foreseen
this assault. The Missouri Supreme Court reversed, finding that the “question [of] whether the
defendant exercised the proper degree of care under the circumstances, and the question of
causation, were issues to be decided by the jury and should not have been preempted by the
court.” Id. at 889. Evidence at trial indicated that the hotel (not unlike the Skokie Holiday Inn)
was a den of iniquity, plagued with criminal elements, such as prostitutes, thieves, and vagrants,
but that there was no proof of a prior sexual assault. The defendant argued that the lack of a prior
sexual assault alone precluded liability, both as to the lack of a duty and the lack of
foreseeability. The Missouri Supreme Court was blunt in its disagreement, stating, “[t]here is no
requirement that there be at least one mugging or rape before the innkeeper is obliged to consider
the possibility.” Id. at 887.
¶ 28 We likewise decline to impose the equivalent of a “one free rape rule” 7 since there is
simply no requirement under Illinois law that an innkeeper be on notice of a prior sexual assault
before any duty to protect would arise for a third-party attack of that nature. See Isaacs v.
Huntington Memorial Hospital, 695 P.2d 653, 658 (Cal. 1985) (noting, “Surely, a landowner
should not get one free assault before he can be held liable for criminal acts which occur on his
property.”); see also William L. Prosser, Handbook of the Law of Torts § 70, at 465 (4th ed.
1971) (vicarious liability is imposed even for such entirely personal torts as rape and applied to
innkeepers). If we were to impose such a “notice” rule, it would produce the inimical result of
the first sexual assault victim lacking a civil claim, while allowing the next victim (like the one
7
This would be the equivalent of the long gone common law “one bite rule,” where an injured
plaintiff had to plead and prove a dog owner either knew or was negligent not to know that his dog had a
propensity to bite people. See Harris v. Walker, 119 Ill. 2d 542, 546-47 (1988). The Animal Control Act
(510 ILCS 5/16 (West 2012)) now holds the owner of a dog who, unprovoked, attacks or attempts to
attack another person strictly liable for any resulting proximate injury.
18
No. 1-17-0380
allegedly so assaulted two months later in defendants’ hotel while Singhateh was still employed)
to receive justice because defendants had notice of the prior rape. 8 See Isaacs, 695 P.2d at 658.
Any such holding would lead to arbitrary results and would surely be against public policy. See
Marshall, 222 Ill. 2d at 441 (noting, duty is not “sacrosanct in itself, but is only an expression of
the sum total of those considerations of policy which lead the law to say that the plaintiff is
entitled to protection” (internal quotation marks omitted)). The “notice” analysis in Marshall,
discussed supra, also suggests this much. We further observe that a strict notice requirement
improperly conflates foreseeability of a particular act with previous occurrences of similar acts,
which Marshall has already rejected in the context of special relationship cases, requiring that
only the general character of the event or harm be foreseeable. See id. at 442.
¶ 29 While we decline to impose a strict notice requirement for the duty element in this special
relationship case at the pleading stage, we observe that plaintiffs, nonetheless, did adequately
plead constructive notice. Cf. Comastro v. Village of Rosemont, 122 Ill. App. 3d 405, 409 (a
summary judgment case requiring notice). This supports the foreseeability of the risk of harm to
Karla both as a matter of law and fact and, moreover, that the allegations were sufficient to state
a cause of action. In plaintiffs’ complaint, for example, they identified several incidents where
items were stolen from other LHI guests’ rooms while those guests were elsewhere, and in
addition, the pertinent records involving the use of key cards to enter at least one of these guests’
rooms showed that only hotel personnel had access to the rooms. Singhateh himself had a prior
8
Plaintiffs in fact alleged a number of additional incidents involving Singhateh, which happened
after the sexual assault in this case and, if considered, would satisfy notice. Plaintiffs alleged that in mid-
October 2013, a stolen computer was found in Singhateh’s possession; in January 2015, he allegedly
attempted to run a plow truck over two guests and then proceeded “aggressively intimidate them and
remove his clothing to physically assault” them; and, in January 2015, Singhateh was allegedly following
female guests to their rooms and making them uncomfortable. This alleged evidence also highlights the
anomalous result of imposing a strict notice requirement on plaintiffs at the pleading stage.
19
No. 1-17-0380
arrest, damaging reports in his personnel file with respect to another female hotel guest, and had
previously harassed managers, searching their bags absent consent. The hotel, additionally,
condoned a licentious atmosphere which included drugs, prostitution, and disabling of security
cameras. As in Danile, Mrzlak, and Virginia D., the crime that Singhateh is alleged to have
committed was thus foreseeable, notwithstanding the absence of specific facts showing that
either Singhateh or another LHI employee had previously committed a sexual assault against
another guest. Likewise, as in Mrzlak, we believe that the evidence showing the hotel’s extent of
knowledge about the character of its particular hotel, including its location and employees, and
previous crimes committed in the hotel, as well as any precautionary measures taken, all
involved a question of foreseeability for the jury’s consideration under both a fleshed-out
negligence duty element and causation element analysis. See also id. (noting “[w]hat precautions
are reasonable is a question for the trier of fact”).
¶ 30 The following cases buttress our conclusion that the hotel was under a duty to protect a
vulnerable, drugged guest from injury. In Kigin v. Woodmen of the World Insurance Co., 185 Ill.
App. 3d 400, 401-02 (1989), the mother of a 15-year-old camper sued Woodmen of the World
Insurance Company, who operated a camp at which a 41-year-old counselor gave the minor
alcohol, groped her, and attempted to have sexual intercourse with her. After the trial court
dismissed the plaintiff’s complaint, our Fifth District appellate court reversed. Id. at 404. The
Kigin court focused on the factual allegations in the complaint that the camp counselor was in
managerial authority, as he gave the young girl alcohol while becoming intoxicated himself. Id.
at 402. Despite this knowledge, the supervisor allowed the camp counselor to go off with the
minor to a remote location, an action which the court called, “a formula for disaster.” Id. at 403.
20
No. 1-17-0380
¶ 31 Similarly, in Platson, 322 Ill. App. 3d 138, 140-41, our Second District appellate court
reversed the trial court’s dismissal of a lawsuit alleging that an employer was liable for the
inappropriate sexual behavior of its employee by virtue of his repeatedly massaging the
shoulders of a 16-year-old employee in full view of supervisors and other employees. Ultimately,
the supervisor scheduled the plaintiff to work alone with him one evening when he forced
himself on her. Id. at 141-42. Relevant to this appeal, part of the Platson court’s analysis focused
on the “special relationship” doctrine stemming from section 314 of the Restatement (Second) of
Torts, ultimately holding that the dismissal of the complaint was improper because the plaintiff
adequately pled a special relationship by virtue of it having a “custodial relationship” with the
plaintiff. Id. at 149.
¶ 32 In Anicich v. Home Depot U.S.A., Inc., 852 F.3d 643 (7th Cir. 2017), a 22-year-old
woman had worked part-time in the flower department at a Home Depot store for a number of
years. Throughout her tenure, she was consistently sexually harassed and demeaned by her
supervisor who was known to harass other female employees. Id. at 646. He was sent to anger
management treatment, which he failed to complete. Id. at 647. He required the young woman to
accompany him on business trips and once insisted that they share a room. Id. Then, he insisted
that she accompany him to a family wedding in Wisconsin. Id. at 648. He threatened to cut her
hours if she declined and offered to pay her overtime if she went. After the wedding, in their
room (where he allegedly insisted that she stay with him), he attempted to have sexual relations
with her. She was six months pregnant. After she rebuffed his advances, he strangled her to death
and raped her pregnant corpse. Id. The trial court dismissed the plaintiff’s complaint, finding that
Home Depot and its subcontractor owed no duty to the decedent. Id.
21
No. 1-17-0380
¶ 33 The Seventh Circuit Court of Appeals reversed, holding that under the factual
circumstances, the defendants owed the decedent a duty of care to protect her from her
supervisor, who was known to be abusive. After discussing the federal statutes that could impose
liability for failing to discipline those harassing employees, the court examined Illinois law
regarding liability for negligent hiring, supervision, or retention and held that, pursuant to the
Restatement (Second) of Torts § 317(a) (1965), it believed that the Illinois Supreme Court would
find that a tortfeasor’s use of supervisory authority would provide a basis for employer liability,
even though the crime occurred off-premises. Most pertinent to our resolution of this case, the
Anicich court examined the question of whether an employee’s “ ‘particular unfitness…rendered
the plaintiff’s injury foreseeable to a person of ordinary prudence in the employer’s position.’ ”
Anicich, 852 F.3d at 654 (quoting Van Horne v. Muller, 185 Ill. 2d 299, 313 (1998)). Home
Depot and its subcontractor argued that Cooper’s attacks represented a “radical break” from his
earlier, observed behavior so that while the employer might have been able to foresee violence,
“they could not have foreseen murder.” Id. The court was unmoved, holding that “these sort of
arguments present factual issues” that should not be decided on a motion to dismiss.
¶ 34 All of the preceding cases of rape, battery, assault, and murder clearly have many factual
variables, but the facts of this case tell an all-too-familiar tale where a vulnerable woman is raped
and the assault is enabled by the failure of a responsible party to protect the victim. Plaintiffs
deserve the opportunity to expand on their story beyond the pleading stage, and the trial court
erred in dismissing the counts of plaintiffs’ complaint against the owner, operator, and manager
of the hotel and its involved employees.
¶ 35 Proximate Causation and Foreseeability of Injury
22
No. 1-17-0380
¶ 36 Having found duty, we also reject the trial court’s conclusion that plaintiffs failed to
plead proximate cause. As stated, whether there was a breach of the duty and whether the breach
was the proximate cause of the injury are both matters for the jury. Thompson v. Gordon, 241 Ill.
2d 428, 438-39 (2011). “What constitutes proximate cause has been defined in numerous
decisions, and there is practically no difference of opinion as to what the rule is. The injury must
be the natural and probable result of the negligent act or omission and be of such a character as
an ordinarily prudent person ought to have foreseen as likely to occur as a result of the
negligence, although it is not essential that the person charged with negligence should have
foreseen the precise injury which resulted from his act.” (Emphasis added.) Neering, 383 Ill. at
380. The preceding language from Neering was later cited in the seminal case of Ney v. Yellow
Cab Co., 2 Ill. 2d 74, 79 (1954), which involved an automobile crash in which a thief stole a cab
that was left with the key in the ignition and the engine running and later struck another car,
causing property damage.
¶ 37 For the reasons elucidated at some length above, plaintiffs have adequately pleaded that
defendants ought to have foreseen that their security guard/handyman might commit an offense
against this incapacitated woman once he gained private and protected access to her hotel room.
See also Fenton v. City of Chicago, 2013 IL App (1st) 111596, ¶ 31 (“the possibility that this
drunken, angry young man whose conduct had twice required police intervention might return to
the residence and act in a violent manner strikes us as probable and very likely”); Rivera v.
Garcia, 401 Ill. App. 3d 602, 615 (2010) (holding there was overwhelming evidence that
provided a clear nexus between the wilful and wanton conduct of the police officers in initiating
the pursuit to the shooting injury to one occupant and the death of the other). There is simply no
legal requirement that they would necessarily have to foresee the specific way in which he would
23
No. 1-17-0380
offend their hotel guest, so their conduct presents a factual issue related to proximate cause for
the jury to decide, not by a judge in a motion to dismiss.
¶ 38 Premises Liability Against Intercontinental
¶ 39 As for Intercontinental, we agree with the trial court’s ruling that the allegations do not
support premises liability. In asserting liability, plaintiffs rely on the principle that an innkeeper
has a duty to protect against the injurious acts of third persons. Yet, plaintiffs on appeal have not
developed any argument, with citation to legal authority, showing that Intercontinental, a
franchisor, constitutes an innkeeper or that LHI’s status as an innkeeper could be imputed to
Intercontinental. See Ill. S. Ct. R. 341(h)(7) (eff. July 1, 2017) (an appellant must set forth
contentions on appeal and the reasons therefore, with citation to the authorities and the pages of
the record relied on).
¶ 40 Regardless, consistent with Intercontinental’s argument, we note that it is well-
established in Illinois that no special relationship exists between a franchisor and a franchisee’s
invitee. C.H. v. Pla-Fit Franchise, LLC, 2017 IL App (3d) 160378, ¶ 29; see also Kennedy v.
Western Sizzlin Corp., 857 So. 2d 71, 77 (Ala. 2003) (noting “[a] franchise agreement, without
more, does not make the franchisee an agent of the franchisor”). Intercontinental was not alleged
to be a possessor of the hotel, as required, where a land possessor is “a person who is in
occupation of the land with intent to control it.” (Internal quotation marks omitted.) See C.H.,
2017 IL App (3d) (3d) 160378, ¶ 29; Restatement (Second) of Torts § 328E (1965); Parmenter
v. J&B Enterprises, Inc., 99 So. 3d 207, 214 (Miss. Ct. App. 2012) (finding that McDonald’s
Corporation was not the employer of a franchise, where McDonald’s Corporation did not own
the subject location and did not dictate day-to-day franchise operations or have firing and hiring
authority); cf. Marshall, 222 Ill. 2d at 426 (there was no similar franchisor-franchisee issue,
24
No. 1-17-0380
where the plaintiff alleged that Burger King owned, operated, controlled, and maintained the
restaurant by and through its agents, servants, employees, and franchisees). According to
plaintiffs’ complaint, it was not Intercontinental in control of the hotel but rather LHI, since it
owned and operated the hotel. See Madden v. F.H. Paschen/S.N. Nielson, Inc., 395 Ill. App. 3d
362, 375 (2009) (noting for a premises liability claim, it is a prerequisite that the defendant be a
possessor of land with intent to control it, as he is in the best position to discover and control its
dangers). As there was no special relationship and Intercontinental lacked possessory control
over the hotel at issue in this case, Intercontinental cannot be held liable for the criminal acts of
LHI’s employee, Singhateh. We thus reject plaintiffs’ argument in their reply brief that
Intercontinental should be barred from asserting the lack of a special relationship here because
they raised it for the first time on appeal and that plaintiffs should be given leave to amend this
particular premises liability count (count XX). Plaintiffs did not argue to amend their complaint
in their initial brief, thus waiving the matter. See Ill. S. Ct. R. 341(h)(7) (eff. July 1, 2017 )
(“Points not argued are waived and shall not be raised in the reply brief ***.”). Likewise, the
burden to prove all elements of a negligence action remains on the plaintiff throughout the
proceedings (Krywin, 238 Ill. 2d at 233), and plaintiffs have had ample opportunity to plead this
cause of action. Accordingly, we affirm the dismissal of this claim.
¶ 41 Negligent Hiring and Retention by Intercontinental and Hostmark
¶ 42 Plaintiff also asserts that Hostmark and Intercontinental negligently hired and retained
Singhateh. Such an action requires the plaintiff to plead and prove (1) that the employer knew or
should have known that the employee had a particular unfitness for the position so as to create a
danger of harm to third persons, (2) that such particular unfitness was known or should have
been known at the time of the employee’s hiring or retention, and (3) that this particular
25
No. 1-17-0380
unfitness proximately caused the plaintiff’s injury. Van Horne v. Muller, 185 Ill. 2d 299, 311
(1998).
¶ 43 Here, the complaint alleges that Hostmark negligently hired Singhateh in 2004 because
his prior arrest for solicitation of prostitution made him an unfit employee who presented a
danger of harm to third persons. We agree with the trial court that there was an insufficient
“nexus” between Hostmark’s failure to discover Singhateh’s earlier mere solicitation arrest and a
rape that took place many years later. See Giraldi v. Community Consolidated School District
No. 62, 279 Ill. App. 3d 679, 692 (1996) (no proximate cause injury for negligent hiring against
bus company, where company only knew driver was perpetually late in his job prior to driver’s
sexual assault of child); cf. Malorney v. B&L Motor Freight, Inc., 146 Ill. App. 3d 265, 268-69
(1986) (holding a factual question for the jury existed about whether company negligently hired
truck driver with criminal history of violent sex-related crimes who later raped and beat the
plaintiff hitchhiker). At the time of Singhateh’s hiring, there is no allegation that Hostmark knew
of Singhateh’s history of threatening anyone’s safety or engaging in untoward behavior.
Moreover, plaintiffs’ complaint alleged that a year later in 2005, LHI became Singhateh’s
employer. Plaintiffs’ complaint did not allege that Hostmark continued to have authority over
Singhateh’s employment thereafter, and plaintiffs do not otherwise explain on appeal how
Hostmark could be held responsible for LHI retaining Singhateh in his position. Accordingly, the
court properly dismissed that claim.
¶ 44 Similarly, plaintiffs’ complaint failed to state a cause of action for negligent hiring and
retention against Intercontinental. We reiterate that plaintiffs’ complaint alleged that Hostmark,
as opposed to Intercontinental, actually hired Singhateh in 2004 and that LHI subsequently
became Singhateh’s employer. Plaintiffs’ complaint does not, however, specify when
26
No. 1-17-0380
Intercontinental became Singhateh’s employer, although it does allege that both LHI and
Intercontinental “re-hired” Singhateh in 2012 and 2014. It also does not allege any direct
communication between LHI and Intercontinental with respect to management of the hotel or its
employees. Instead, plaintiffs’ complaint appears to assume that the employer status of a
franchisee, such as LHI, may be imputed to a franchisor, such as Intercontinental. Yet, plaintiffs
have cited no legal authority in support of that proposition. See Ill. S. Ct. R. 341(h)(7) (eff. July
1, 2017). Accordingly, we affirm the trial court’s dismissal of plaintiffs’ negligent hiring and
retention complaint against Intercontinental.
¶ 45 Negligent Training and Supervising by Intercontinental
¶ 46 Finally, plaintiffs have not developed any argument that the court improperly dismissed
their claim that Intercontinental was negligent in training and supervising the employees of LHI.
See Ill. S. Ct. R. 341(h)(7) (eff. July 1, 2017); Marzouki v. Nagar-Marzouki, 2014 IL App (1st)
132841, ¶ 12 (issues must be clearly defined and supported by pertinent authority and failure to
develop an argument results in waiver). Accordingly, that contention is forfeited. See Marzouki,
2014 IL App (1st) 132841, ¶ 12.
¶ 47 CONCLUSION
¶ 48 We therefore reverse the trial court’s dismissal of the counts of plaintiffs’ fourth-
amended complaint directed against LHI, Lakhani, and Gilani, including the loss of consortium
claims of Dean Gress (counts I to VI) but affirm the dismissal of all counts against
Intercontinental and Hostmark (counts XIV to XXI) .
¶ 49 Affirmed in part and reversed in part; cause remanded.
27
| {
"pile_set_name": "FreeLaw"
} |
933 F.2d 827
The STATE CORPORATION COMMISSION OF the STATE OF KANSAS,Keith R. Henley, Chairman, Rich Kowalewski,Commissioner, and Margalee Wright,Commissioner, as constituentmembers, Petitioner,v.INTERSTATE COMMERCE COMMISSION and the United States ofAmerica, Respondents, Greyhound Lines, Inc., Intervenor.
No. 90-9502.
United States Court of Appeals,Tenth Circuit.
Submitted on the Briefs.*Decided May 13, 1991.
Frank A. Caro, Jr., Gen. Counsel, and Charles V. Garcia, Asst. Gen. Counsel, Topeka, Kan., for petitioner.
James F. Rill, Asst. Atty. Gen., Robert B. Nicholson and John P. Fonte, Dept. of Justice, Robert S. Burk, Gen. Counsel, Ellen D. Hanson, Associate Gen. Counsel, Michael Martin, I.C.C., Washington, D.C., for respondents.
Before BALDOCK, BARRETT and EBEL, Circuit Judges.
BARRETT, Senior Circuit Judge.
1
The State Corporation Commission for the State of Kansas ("KCC") seeks review of an order issued by the Interstate Commerce Commission ("ICC") granting Greyhound Lines, Inc. ("Greyhound") permission to discontinue bus service over three routes in Kansas. We have jurisdiction pursuant to 28 U.S.C. Secs. 2321(a) and 2342(5).
I.
2
Prior to 1982, a bus carrier had to file discontinuance requests with both the ICC and the appropriate state regulatory commission when the carrier wanted to discontinue a route over which it had both interstate and intrastate authority. The state and federal agencies' separate review of the request resulted at times with the federal agency allowing discontinuance and the state agency refusing it. See H.R.Rep. No. 334, 97th Cong., 1st Sess. at 42 (1981). With the passage of Section 16 of the Bus Regulatory Reform Act of 1982 ("the Bus Act"), codified at 49 U.S.C. Sec. 10935, Congress eliminated this dual regulatory system by giving the ICC the power to override a state's refusal to allow carriers to discontinue such routes.
3
Under the Bus Act, a carrier such as Greyhound must first submit a discontinuance application to the state regulatory commission. See 49 U.S.C. Sec. 10935(a). If the state commission denies the application, the carrier may then petition the ICC for permission to discontinue the service. Id. Any person, including the state, may object to the carrier's ICC petition. 49 U.S.C. Sec. 10935(c). If such an objection is registered, the ICC will still grant the request for discontinuance:
4
unless the Commission finds, on the basis of evidence presented by the person objecting to the granting of such permission, that such discontinuance ... is not consistent with the public interest or that continuing the transportation, without the proposed discontinuance ... will not constitute an unreasonable burden on interstate commerce.
5
49 U.S.C. Sec. 10935(e)(1)(A) (emphasis added).1 In deciding whether discontinuance is either not consistent with the public interest or not an unreasonable burden on interstate commerce, the ICC must "accord great weight to the extent to which interstate and intrastate revenues received for providing the transportation proposed to be discontinued ... are less than the variable costs of providing such transportation," 49 U.S.C. Sec. 10935(g)(1), and the burden of proving the amount of revenues and costs is on the petitioner. Id. The ICC also must consider, "to the extent applicable," at least: (1) the National Transportation Policy; (2) whether the carrier has received an offer of financial assistance to provide the transportation to be discontinued; and (3) if it is the last service to the points involved, whether a reasonable alternative to the service is available. 49 U.S.C. Sec. 10935(g)(2). The National Transportation Policy, codified at 49 U.S.C. Sec. 10101, requires the ICC to promote competitive and efficient transportation services in order to: meet the needs of passengers and shippers; provide and maintain service to small communities, small shippers, and intrastate bus services; improve and maintain a sound, safe and competitive privately owned motor carrier system; allow the most productive use of equipment and energy resources; and enable efficient and well-managed carriers to earn adequate profits, attract capital, and maintain fair wages and working conditions.
II.
6
On November 1, 1988, Greyhound applied with the KCC to abandon the Kansas routes of Manhattan-Marysville,2 Salina-Belleville,3 and Arkansas City-Galena4. The KCC denied the application on March 1, 1989, after a full investigation that included four public hearings. The KCC determined that abandonment of bus service on these routes would be inconsistent with the public interest and that any financial benefit Greyhound may achieve by abandoning the routes was outweighed by the financial impairment which the communities along the routes would suffer.
7
On April 17, 1989, Greyhound petitioned the ICC under the Bus Act to review the KCC's denial of Greyhound's request to abandon the three routes. Within its petition, Greyhound stated that: ridership on the three routes was extremely low, with an average of 0.8 passengers per trip on the Manhattan-Marysville route, 1.8 per trip on the Salina-Belleville route, and 3.6 per trip on the Arkansas City-Galena route; variable costs exceeded revenues for each route, with deficits of $28,434, $17,325, and $31,875 respectively; and neither the state nor any other entity had offered Greyhound a subsidy for any of the routes.
8
In arriving at the above route deficits, Greyhound conducted several studies over a twelve-month period. The first study (covering each route) involved ticket sales for passengers in the form of trip envelopes. Through this study, Greyhound was able to determine the revenues for each trip, the length of the trip for each ticket, the origin and destination of each ticket, the average load for the trip, and the passengers' travel patterns. Greyhound then prepared Average Load Reports to determine the level of passenger ridership and the estimated revenue on a particular trip. In addition, Greyhound conducted studies to show the miles operated, revenue per passenger mile, average load, and revenue cents per mile. Greyhound also included all of the revenue from inbound or outbound package express shipments at each point to be discontinued.
9
Greyhound then compiled its variable costs of providing the round-trip service for each of the three routes. Except for agents' commissions (for which the actual expense was used), Greyhound determined its variable costs on these routes by multiplying its systemwide per mile variable cost by the number of miles traveled annually over these routes. These systemwide variable costs included depreciation for revenue equipment and labor and fuel costs.
10
The KCC filed a timely objection to Greyhound's ICC petition. In its objection, the KCC proposed, inter alia, that the ICC adjust Greyhound's financial data to include "off-route revenues"--that is, revenue earned by Greyhound on other routes but generated by passengers originating or terminating on the routes proposed to be discontinued. The KCC also presented evidence that: termination of bus service on these three routes would leave 12 communities without any bus service; the only alternative transportation available to the communities was to make use of family or friends or some other form of public transportation, such as a taxi, to drive patrons to the nearest town maintaining bus service; the cost to all community members of using this alternative ranged from $49,976 to $198,176; communities along the routes would suffer the economic loss resulting from the loss of sales commissions for ticket agents; and there were additional, nonfinancial costs of abandonment, such as the time cost for family and friends to drive patrons to other towns for bus service. As part of its evidence, the KCC submitted portions of the public testimony received at its public hearings, at which 26 people testified against the discontinuance and about 10 of those 26 testified specifically about the inconvenience or prohibitive cost of using alternative transportation.
11
On June 30, 1989, the ICC granted Greyhound's request to discontinue the three routes because it determined that the KCC did not bear its burden of showing that discontinuance of the three routes was inconsistent with the public interest or was not an unreasonable burden on interstate commerce. Specifically, the ICC found that: the ridership on the routes was light; the routes were not self-sustaining and, unless discontinued, would have to be cross-subsidized by passengers on other, more successful routes; there was no offer of a subsidy; and, while a strong showing of public need for continued service coupled with evidence of an offer of a subsidy "might have served to mitigate the public interest impact of the unprofitability of the involved route," such mitigating factors did not appear here. Greyhound Lines, Inc., Exit Petition--Kansas, Interstate Commerce Commission Decision No. MC-1515 (Sub-No. 400) at 9 (June 30, 1989) ("ICC Decision"). The ICC noted the various goals of the National Transportation Policy at 49 U.S.C. Sec. 10101, and concluded that the sum of those goals called for discontinuance of the service in question.
12
In making its decision, the ICC rejected KCC's proposal that it include off-route revenues in Greyhound's financial data. The ICC stated that it "has consistently accepted Greyhound's approach on this issue," (ICC Decision at 7), and noted that, under 49 CFR 1169.5(c), a petitioner such as Greyhound is required to exclude revenues which they expect to receive in connection with other services which they will still operate. The ICC then determined that:
13
[W]e have discounted objectors' arguments that passenger revenue should include the entire amount earned from ticket sales on a subject route, and arguments that if a service point is eliminated, so is all revenue attributable to passengers boarding or alighting at that point. The apportioning of revenue to miles traveled on the subject route is proper.
Id.5
14
On July 12, 1989, the KCC filed a petition to stay the ICC June 30 order, which the ICC denied. In that denial, the ICC stated that "general, imprecise testimony of need [given at the KCC public hearings] was undercut by the minimal testimony from actual users of the service and the undeniably low patronage along the route," and was insufficient to require a stay. Greyhound Lines, Inc., Exit Petition--Kansas, Interstate Commerce Commission Decision No. MC-1515 (Sub-No. 400) at 2 (July 13, 1989) ("ICC Decision Denying Request for Stay").
15
The KCC then filed a petition for reconsideration, in which the KCC reiterated both that the ICC should include Greyhound's off-route revenues in calculating Greyhound's financial data and that, in any case, discontinuance of the routes was not in the public interest because of the lack of reasonable alternative transportation. In its denial of this latter petition on November 8, 1989, the ICC found that: the Commission has never accepted the approach of including off-route revenues associated with involved services and will not do so now; the Commission did not give great weight to the KCC's hypothetical data concerning the costs of available alternative transportation; 49 U.S.C. Sec. 10935 does not require the ICC to consider the costs of available transportation, merely its availability; in any event, the KCC's data was flawed because it did not take into consideration the costs that bus passengers would incur in travelling to the bus station even if service were continued; considering the substantial mileage between the discontinued stops, it is likely that many passengers would still have incurred such costs; and because of the extremely low ridership levels on the involved routes, the assertedly high cost of alternative transportation will affect relatively few individuals.
16
The KCC then filed the instant petition for judicial review.6 In this petition, the KCC claims that: 1) the ICC's determination that continued bus service would constitute an unreasonable burden on interstate commerce was arbitrary, capricious, an abuse of discretion and unsupported by substantial evidence; and 2) the ICC misapplied the statutory standard of the Bus Act when it found that discontinuance of the three routes in question was not inconsistent with the public interest.
III.
17
"It is well known that the ICC's authority in these matters is broad, and our scope of review narrow." C.O.D.E., Inc. v. ICC, 768 F.2d 1210, 1212 (10th Cir.1985). We may not set aside an action by the ICC unless it is arbitrary, capricious, and an abuse of discretion, or unless it is unsupported by substantial evidence on the record as a whole or not in accordance with the law. American Trucking Assocs., Inc. v. ICC, 703 F.2d 459, 462 (10th Cir.1983).
A.
18
The KCC claims that the ICC's determination that continued bus service would constitute an unreasonable burden on interstate commerce was arbitrary, capricious, an abuse of discretion and unsupported by substantial evidence. In support of its claim, the KCC argues that the ICC erred when it allowed Greyhound to exclude all off-route revenues. The KCC argues that: under the Bus Act, it is the petitioner's burden to prove revenues and costs; in this case, the petitioner (Greyhound) developed no data to determine how much off-route revenue it would retain if the three routes in question were discontinued; instead, Greyhound made the "assumption that it would maintain 100 percent of the overhead revenues from the routes" (Brief of Petitioner at 20); such an assumption is "wholly and completely unsupported by any evidence whatsoever" (Id. at 21); indeed, the KCC presented evidence to the contrary in the form of public hearing testimony; thus, the ICC's decision to accept this assumption is arbitrary, capricious and unsupported by evidence in the record.
19
In response, the ICC asserts that 49 CFR 1169.5(c) requires Greyhound to exclude revenues that it expects to receive and that off-route revenues are typically excluded in bus discontinuance cases under this regulation.
20
"The ICC's interpretations of its regulations and the facts supporting a grant or denial of a certificate require recognition of its expertise and our deference thereto." Midwestern Transp., Inc. v. ICC, 635 F.2d 771, 774 (10th Cir.1980) (citations omitted). We note, as did the court in Pennsylvania Public Utility Comm'n v. United States, 749 F.2d 841, 848 (D.C.Cir.1984), "[t]he Commission ... did not accept the challenged data uncritically or without an appreciation of the carrier's underlying methodology." Here, as in that case, Greyhound "had exhaustively explained its methodology and ... the ICC had considered in detail and approved this methodology in prior discontinuance decisions." Id. Given these circumstances, we must hold that the ICC's decision to allow Greyhound to exclude off-route revenues in its calculations was not arbitrary, capricious, an abuse of discretion or unsupported by the evidence as a whole.
21
Also in support of its claim, the KCC argues that the ICC erroneously accepted Greyhound's systemwide variable cost data rather than requiring Greyhound to develop route-specific costs, and that the ICC erroneously failed to require Greyhound to supply the underlying data supporting its conclusions regarding systemwide variable costs. Apparently the KCC makes these claims for the first time on appeal, and we ordinarily do not entertain such claims. Anschutz Land & Livestock Co. v. Union Pac. R.R. Co., 820 F.2d 338, 344 n. 5 (10th Cir.), cert. denied, 484 U.S. 954, 108 S.Ct. 347, 98 L.Ed.2d 373 (1987).
22
Even if the KCC had properly preserved these claims, we would hold them to be meritless. We note that the ICC is familiar with Greyhound's data compiling methodologies due to prior Greyhound discontinuance proceedings. ICC Decision at 6. We also note that the KCC does not dispute that its staff visited Greyhound's accounting office in Des Moines, Iowa, audited Greyhound's supporting record, and did not object to this portion of the record as inaccurate. As such, we hold that the ICC's findings on these issues are not arbitrary, capricious, or unsubstantiated by the record.
B.
23
The KCC claims that the ICC misapplied the statutory standard of the Bus Act when it found that discontinuance of the three routes in question was not inconsistent with the public interest. Specifically, the KCC argues that: the legislative intent of the Bus Act clearly requires the ICC to make a full consideration of the impact abandonment of bus service will have on the public interest; while Congress did not define the phrase "public interest," it is clear that Congress rejected the notion that the "public interest" be limited to the profitability of the motor carriers; 49 U.S.C. Sec. 10935(g)(2) requires that the ICC consider whether a "reasonable alternative" to the bus service is available; "reasonable alternative" must mean alternatives that are economically feasible; the KCC presented unrefuted evidence that other carriers would not offer a viable alternative; thus, the ICC erroneously found that services by Greyhound "and other carriers" will continue to offer useable alternative service (ICC Decision at 9); the public interest standard cannot be met by the ICC's speculative belief that other services on nearby routes should be useable alternatives; and the ICC erred when it stated that the Bus Act does not require it to consider the "costs of alternative transportation, merely its availability" (Greyhound Lines, Inc., Exit Petition--Kansas, Interstate Commerce Commission No. MC-1515 (Sub-No. 400) at 3 (Nov. 8, 1989) ("ICC Rehearing Decision") (emphasis in original)).7
24
Generally when, as here, variable costs exceed revenues, there is "a virtual presumption in favor of discontinuance." Pennsylvania Public Utility Comm'n, supra, 749 F.2d at 847. We agree that the ICC should consider cost when determining whether "reasonable alternative" transportation is available. However, the ICC did make such considerations here when it determined that, even if it were to consider costs, the KCC had not met its burden of showing that discontinuance was not in the public interest. ICC Rehearing Decision at 3.
25
We hold that the ICC's findings in this regard are not arbitrary, capricious or an abuse of discretion. In so holding, we note the ICC's observation that, under the Bus Act, "the question is not simply whether losses of services will result, for then the provisions of the Bus Act would be a nullity.... [W]e must consider not only the local interest in support of continuing the involved service but also the policy of the Bus Act that favors exit from unprofitable routes." ICC Decision at 9.
26
The petition for review is denied.
*
The parties to this appeal have indicated that oral argument is not desired. After examining the briefs and the appellate record, this three-judge panel has determined that oral argument would not materially assist the determination of this appeal. See Fed.R.App.P. 34(a); 10th Cir. R. 34.1.9. The cause is therefore ordered submitted without oral argument
1
This standard applies to intrastate service for which, as in this case, the carrier received licensing authority on or before August 1, 1982. 49 U.S.C. 10935(e)(1)(B)
2
This route is between Manhattan and the Kansas-Nebraska state line
3
This route is between the junction of U.S. Highways 24 and 81, north of Salina, and the Kansas-Nebraska state line, over U.S. Highway 81
4
This route is between Arkansas City and the Kansas-Missouri state line
5
The ICC did accept other financial adjustments proposed by the KCC. However, the ICC determined that, even with these adjustments, Greyhound was still functioning at approximately the same deficits that Greyhound had originally calculated
6
In No. 89-9543, The State Corp. Comm. of Kansas v. Interstate Commerce Comm., the KCC filed a petition for review of the ICC's June, 1989 decision in this case. That petition was voluntarily dismissed, and the instant petition was filed after the ICC issued its November 1989 decision
7
The KCC also objects to the ICC's statement that the KCC's data is flawed because it "apparently [did] not take into consideration the costs that bus passengers would incur even if service were not discontinued." ICC Rehearing Decision at 3 (emphasis in original). The KCC interprets this statement to mean that the ICC anticipates the customers to incur no cost once bus service is abandoned. We, on the other hand, interpret this statement to mean only that at least some passengers were already paying some cost to get to the bus service because the points to be discontinued were very far apart. Given the facts of this case, we hold that this finding is not arbitrary, capricious or unsupported by the evidence
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United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT October 21, 2003
Charles R. Fulbruge III
Clerk
No. 02-41550
Conference Calendar
WARREN G. SMITH, JR.,
Plaintiff-Appellant,
versus
BOWIE COUNTY, TX, Sheriff Department’s Head Authorities
Officials; DEWAYNE CANNON, Warden; BI-STATE BUILDING J
CENTER, Sheriff Department’s Officials; MICHAEL P. CLAGHORN,
Correctional Official; ROBERT YATES, Correctional Official,
Defendants-Appellees.
--------------------
Appeal from the United States District Court
for the Eastern District of Texas
USDC No. 5:01-CV-289
--------------------
Before KING, Chief Judge, and JOLLY and STEWART, Circuit Judges.
PER CURIAM:*
Proceeding pro se and in forma pauperis, Warren G. Smith,
Jr., Texas prisoner # 490679, filed an interlocutory appeal from
the denial of his motion for injunctive relief in his 42 U.S.C.
§ 1983 suit. Smith has failed to brief any relevant issue and
therefore his appeal is DISMISSED AS FRIVOLOUS. See Howard v.
King, 707 F.2d 215, 219-20 (5th Cir. 1983); 5TH CIR. R. 42.2.
*
Pursuant to 5TH CIR. R. 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
No. 02-41550
-2-
The dismissal of this appeal counts as a strike under 28
U.S.C. § 1915(g). Cf. In Re: Jacobs, 213 F.3d 289, 291 (5th Cir.
2000). Smith is warned that, if he accumulates two more strikes
pursuant to 28 U.S.C. § 1915(g), he may not proceed in forma
pauperis in any civil action or appeal filed while he is
incarcerated or detained in any facility unless he is under
imminent danger of serious physical injury. See 28 U.S.C.
§ 1915(g).
APPEAL DISMISSED AS FRIVOLOUS; SANCTION WARNING ISSUED.
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31 Cal.3d 220 (1982)
643 P.2d 954
182 Cal. Rptr. 337
JOY TURPIN, a Minor, etc., Plaintiff and Appellant,
v.
ADAM J. SORTINI et al., Defendants and Respondents.
Docket No. S.F. 24319.
Supreme Court of California.
May 3, 1982.
*222 COUNSEL
Joseph P. Stretch for Plaintiff and Appellant.
Stammer, McKnight, Barnum & Bailey and Daniel O. Jamison for Defendants and Respondents.
Musick, Peeler & Garrett, James E. Ludlam, Horvitz & Greines, Ellis J. Horvitz and Kent L. Richland as Amici Curiae on behalf of Defendants and Respondents.
*223 OPINION
KAUS, J.
This case presents the question of whether a child born with an hereditary affliction may maintain a tort action against a medical care provider who before the child's conception negligently failed to advise the child's parents of the possibility of the hereditary condition, depriving them of the opportunity to choose not to conceive the child. Although the overwhelming majority of decisions in other jurisdictions recognize the right of the parents to maintain an action under these circumstances, the out-of-state cases have uniformly denied the child's right to bring what has been commonly termed a "wrongful life" action. In Curlender v. Bio-Science Laboratories (1980) 106 Cal. App.3d 811 [165 Cal. Rptr. 477], however, the Court of Appeal concluded that under California common law tort principles, an afflicted child could maintain such an action and could "recover damages for the pain and suffering to be endured during the limited life span available to such a child and any special pecuniary loss resulting from the impaired condition" (id., at p. 831), including the costs of medical care to the extent such costs were not recovered by the child's parents. In the case at bar, a different panel of the Court of Appeal disagreed with the conclusion in Curlender and affirmed a trial court judgment dismissing the child's cause of action on demurrer. We granted a hearing to resolve the conflict.
I
The allegations of the complaint disclose the following facts. On September 24, 1976, James and Donna Turpin, acting on the advice of their pediatrician, brought their first and at that time their only daughter, Hope, to the Leon S. Peters Rehabilitation Center at the Fresno Community Hospital for evaluation of a possible hearing defect.[1] Hope was examined and tested by Adam J. Sortini, a licensed professional specializing in the diagnosis and treatment of speech and hearing defects.
The complaint alleges that Sortini and other persons at the hospital negligently examined, tested and evaluated Hope and incorrectly advised her pediatrician that her hearing was within normal limits when, in reality, she was "stone deaf" as a result of an hereditary ailment. *224 Hope's parents did not learn of her condition until October 15, 1977, when it was diagnosed by other specialists. According to the complaint, the nature of the condition is such that there is a "reasonable degree of medical probability" that the hearing defect would be inherited by any offspring of James and Donna.
The complaint further alleges that in December 1976, before learning of Hope's true condition and relying on defendants' diagnosis, James and Donna conceived a second child, Joy. The complaint avers that had the Turpins known of Hope's hereditary deafness they would not have conceived Joy. Joy was born August 23, 1977, and suffers from the same total deafness as Hope.
On the basis of these facts, James, Donna, Hope and Joy filed a complaint setting forth four causes of action against defendants Sortini, the hospital, the rehabilitation center and various Does. The first cause of action, brought on behalf of Hope, seeks damages for the harm Hope has allegedly suffered as a result of the delay in the diagnosis of her condition. The second cause of action the only cause before us on this appeal was brought on behalf of Joy and seeks (1) general damages for being "deprived of the fundamental right of a child to be born as a whole, functional human being without total deafness" and (2) special damages for the "extraordinary expenses for specialized teaching, training and hearing equipment" which she will incur during her lifetime as a result of her hearing impairment. The third and fourth causes of action, brought on behalf of James and Donna, seek, respectively, special damages relating to the support and medical care of Joy to the age of majority, and general damages for emotional distress sustained by James and Donna "attendant to the raising and caring of a totally deaf child."
Defendants demurred to the second and fourth causes of action, and after briefing and argument, the trial court sustained the demurrer without leave to amend. (1a) (See fn. 2.) Thereafter, the court entered a judgment dismissing the action as to Joy.[2] (2a) (See fn. 3.) As noted, Joy's action is the only matter before us on this appeal.[3]
*225 II
Although this is the first case in which we have faced the question of potential tort liability in a "wrongful life" or "wrongful birth" context,[4] there is no dearth of authority in this area.[5] In recent years, many courts in other jurisdictions have confronted similar claims brought by both parents and children against medical professionals whose negligence had allegedly proximately caused the birth of hereditarily afflicted children. The overwhelming majority of the recent cases have permitted parents to recover at least some elements of damage in such actions. (See, e.g., Robak v. United States (7th Cir.1981) 658 F.2d 471; Schroeder v. Perkel (1981) 87 N.J. 53 [432 A.2d 834]; Berman v. Allan (1979) 80 N.J. 421 [404 A.2d 8, 13-15]; Becker v. Schwartz (1978) 46 N.Y.2d 401 [413 N.Y.S.2d 895, 386 N.E.2d 807, 813-814]; Speck v. Finegold (1981) 497 Pa. 77 [439 A.2d 110, 111-112]; Jacobs v. Theimer (Tex. 1975) 519 S.W.2d 846; Dumer v. St. Michael's Hospital (1975) 69 Wis.2d 766 [233 N.W.2d 372, 376-377, 83 A.L.R.3d 1].) At the same time, the out-of-state authorities have uniformly rejected the children's own claims for general damages. (See, e.g., Berman v. Allan, supra, 404 A.2d at pp. 11-13; Becker v. Schwartz, supra, 386 N.E.2d at pp. 811-812; Speck v. Finegold, supra, 439 A.2d at p. 112, affirming by an equally divided ct. (1979) 268 Pa. Super. 342 [408 A.2d 496, 508]; Dumer v. St. Michael's Hospital, supra, 233 N.W.2d at pp. 374-376; Elliot v. Brown (Ala. 1978) 361 So.2d 546.)
The explanation for the divergent results is that while courts have been willing to permit parents to recover for medical costs or in some *226 cases other harms which the parents would not have incurred "but for" the defendants' negligence, they have been reluctant to permit the child to complain when, but for the defendant's negligence, he or she would not have been born at all. In this context the recent decisions have either concluded that the child has sustained no "legally cognizable injury" or that appropriate damages are impossible to ascertain.
While our court has not yet spoken on the question, three California Court of Appeal decisions have addressed somewhat related claims. Custodio v. Bauer (1967) 251 Cal. App.2d 303 [59 Cal. Rptr. 463, 27 A.L.R.3d 884], the earliest California case in this area, involved an action brought solely by parents against a physician whose negligence in performing a sterilization operation failed to prevent the plaintiff wife's pregnancy and the birth of a healthy child the family's 10th. The Custodio court, applying generally applicable tort principles, upheld the parents' right to bring the action. Although the court did not define the full scope of recoverable damages in such an action (id., at p. 326), it did indicate that numerous items of damage normally recoverable in a tort action could properly be awarded. (Id., at pp. 318-326.)
In the second case, Stills v. Gratton (1976) 55 Cal. App.3d 698 [127 Cal. Rptr. 652], both an unmarried mother and her healthy son brought consolidated actions against several doctors who had negligently performed a therapeutic abortion, leading to the unexpected and unwanted birth of the child. With respect to the mother's claim, the Stills court followed Custodio and permitted the action, concluding that she could recover "all the damages to which she is entitled under ordinary tort principles [subject to] ... any offsets for benefits conferred and amounts chargeable to a plaintiff under her duty to mitigate damages." (Id., at p. 709.)
With respect to the son's claim, however, the court determined that no cause of action would lie. Although the child had alleged that "he was born out of wedlock and that `various reasons' affect him to his detriment" (id., at p. 705), the Stills court noted that the testimony at trial disclosed that the boy "was and is a healthy, happy youngster who is a joy to his mother" (ibid.) and thus that "[h]is only damages, if any, caused by the respondents' conduct is in being born." (Ibid.) Relying on earlier Illinois and New York decisions which had rejected similar wrongful life claims by healthy children of unmarried parents (Zepeda v. Zepeda (1963) 41 Ill. App.2d 240 [190 N.E.2d 849]; Williams v. State (1966) 25 App.Div.2d 906 [269 N.Y.S.2d 786]), the Stills court *227 denied the son's action, suggesting that "[t]he issue involved is more theological or philosophical than legal." (55 Cal. App.3d at p. 705.)
The third and most recent Court of Appeal decision in this area is Curlender v. Bio-Science Laboratories, supra, 106 Cal. App.3d 811, an action brought solely on behalf of a child, not her parents. Unlike Custodio and Stills, in which the defendants' negligence had led to the births of healthy, albeit unplanned, children, in Curlender the child-plaintiff was afflicted with Tay-Sachs disease, a fatal illness "`characterized by partial or complete loss of vision, mental underdevelopment, softness of the muscles, convulsions, etc.'" in which the child has a very reduced life span. (Id., at p. 815, fn. 4, quoting Schmidt's Attorneys' Dict. of Medicine (1980).) The principal defendant in Curlender was a medical laboratory which allegedly had been negligent in performing blood tests which the child's parents had undergone for the specific purpose of determining if their offspring were likely to suffer from Tay-Sachs disease.
In Curlender, the court reviewed the out-of-state and California precedents in this area at some length. The court distinguished Stills as a case in which the unwanted but healthy child had suffered no "injury," and concluded that the severely afflicted child in the case before it had suffered an injury which could properly be the basis of an action in tort. (Id., at p. 825.) Disagreeing with the out-of-state decisions which had found that a child who has been born with serious hereditary defects as opposed to not being born at all has suffered no legally cognizable injury, the Curlender court stated: "The reality of the `wrongful life' concept is that such a plaintiff exists and suffers, due to the negligence of others. It is neither necessary nor just to retreat into meditation on the mysteries of life. We need not be concerned with the fact that had defendants not been negligent, the plaintiff might not have come into existence at all. The certainty of genetic impairment is no longer a mystery. In addition, a reverent appreciation of life compels recognition that plaintiff, however impaired she may be, has come into existence as a living person with certain rights." (Original italics.) (Id., at p. 829.)
Taking up the issue of damages, the Curlender court rejected the plaintiff's request for damages "based upon an actuarial life expectancy ... of more than 70 years the life expectancy if plaintiff had been born without Tay-Sachs disease" (id., at p. 830) but, at the same time, also rejected "the notion that a `wrongful life' cause of action involves *228 any attempted evaluation of a claimed right not to be born." (Original italics.) (Id., at pp. 830-831.) Instead, the court held that in such an action a child may "recover damages for the pain and suffering to be endured during the limited life span available to such a child and any special pecuniary loss resulting from the impaired condition." (Id., at p. 831.) The court also made it clear that, to the extent that the costs of care were not recovered by the child's parents in a separate or consolidated action, the child should be permitted to recover such costs in her own suit. (Ibid.)
Plaintiff, of course, relies heavily indeed exclusively on the Curlender decision in support of her action in this case. Before analyzing Curlender and the out-of-state wrongful life decisions, however, we briefly consider the effect of a new statute enacted in the wake of Curlender.
III
As noted, the defendant in Curlender was a medical laboratory which allegedly had been negligent in conducting blood tests. In the course of its opinion, however, the Curlender court indicated in dictum that in an appropriate case parents of a seriously impaired infant, who, with full knowledge of the child's likely condition, "made a conscious choice to proceed with a pregnancy" (id., at p. 829) could be held liable "for the pain, suffering and misery which they have wrought upon their offspring." (Ibid.)
In evident response to this suggestion of possible parental liability for deciding to conceive or failing to abort a potentially defective child, the Legislature enacted section 43.6 of the Civil Code, effective January 1, 1982. Section 43.6 relieves the parents of any liability in this situation and also provides that the parents' decision shall neither be "a defense in any action against a third party" nor "be considered in awarding damages in any such action." (Stats. 1981, ch. 331, § 1.)[6]
*229 (3a) We conclude that section 43.6 has no significant effect on the issue before us. In this case, of course, the child is suing allegedly negligent providers of medical services, not her parents, and thus the statute clearly poses no explicit bar to the action. Although subdivision (b) of the provision implicitly recognizes that, under Curlender, a wrongful life action may lie against a "third party," we do not think that the statute can properly be viewed as a legislative codification of the Curlender holding, transforming the common law tort perceived in Curlender into a statutory cause of action. Both the Legislative Counsel's Digest accompanying the bill, and the adjacent sections in the Civil Code (see, e.g., Civ. Code, §§ 43.4, 43.5, 43.5, subd. (a), 43.7, 43.8, 43.9), suggest that the purpose of the legislation was simply to eliminate any liability or other similar economic pressure which might induce potential parents to abort or decline to conceive a potentially defective child. Nothing in the statutory language or legislative history suggests that the new provision was intended to impose liability on any party. Under these circumstances, the section cannot properly be read as creating a statutory wrongful life cause of action against third parties. In sum, the new statute does not change the fact that the issue before our court is whether, and to what extent, such a cause of action should be recognized as a matter of California common law.
IV
(4a) In analyzing Curlender, Stills and the numerous out-of-state cases, it may be helpful to recognize that although the cause of action at issue has attracted a special name "wrongful life" plaintiff's basic contention is that her action is simply one form of the familiar medical or professional malpractice action. The gist of plaintiff's claim is that she has suffered harm or damage as a result of defendants' negligent performance of their professional tasks, and that, as a consequence, she is entitled to recover under generally applicable common law tort principles.
In Budd v. Nixen (1971) 6 Cal.3d 195, 200 [98 Cal. Rptr. 849, 491 P.2d 433], our court summarized the basic elements of a professional malpractice action: "The elements of a cause of action in tort for professional negligence are: (1) the duty of the professional to use such skill, prudence, and diligence as other members of his profession commonly possess and exercise; (2) a breach of that duty; (3) a proximate causal connection between the negligent conduct and the resulting injury; and (4) actual loss or damage resulting from the professional's *230 negligence." (See generally, 4 Witkin, Summary of Cal. Law (8th ed. 1974) Torts, § 488 et seq., p. 2749.)
In this case, although the Turpins' older daughter Hope, and not Joy, was defendants' immediate patient, it was reasonably foreseeable that Hope's parents and their potential offspring would be directly affected by defendants' negligent failure to discover that Hope suffered from an hereditary ailment and defendants do not contend that they owed no duty of care either to James and Donna or to Joy. (Cf. Schroeder v. Peckel, supra, 87 N.J. 53 [432 A.2d 834, 838-840].)[7] Nor do defendants assert that the complaint fails to allege adequately either a breach of their duty of care or that Joy's birth was a proximate result of the breach. (See, e.g., Custodio v. Bauer, supra, 251 Cal. App.2d at pp. 311-313, 316-317.)
Instead, defendants' basic position supported by the numerous out-of-state authorities is that Joy has suffered no legally cognizable injury or rationally ascertainable damages as a result of their alleged negligence. Although the issues of "legally cognizable injury" and "damages" are intimately related and in some sense inseparable, past cases have generally treated the two as distinct matters and, for purposes of analysis, it seems useful to follow that approach.
With respect to the issue of legally cognizable injury, the parties agree that the difficult question here does not stem from the fact that defendants' allegedly negligent act and plaintiff's asserted injury occurred before plaintiff's birth. Although at one time the common law denied recovery for injuries inflicted before birth, California in tune with other American jurisdictions has long abandoned that arbitrary limitation. (See Civ. Code, § 29; Scott v. McPheeters (1939) 33 Cal. App.2d 629 [92 P.2d 678]. See generally Robertson, Toward Rational Boundaries of Tort Liability for Injury to the Unborn: Prenatal Injuries, Preconception Injuries and Wrongful Life (1978) 1978 Duke L.J. 1401, 1402-1413.) Thus, if Joy's deafness was caused by negligent treatment of her mother during pregnancy, or if it resulted from a tort committed upon her mother before conception (see, e.g., Renslow v. Mennonite Hospital (1977) 67 Ill.2d 348 [367 N.E.2d 1250]; Bergstreser *231 v. Mitchell (8th Cir.1978) 577 F.2d 22; Annot. (1979) 91 A.L.R. 3d 316), it is clear that she would be entitled to recover against the negligent party.
Joy's complaint attempts, in effect, to bring her action within the scope of the foregoing line of cases, asserting that as a result of defendants' negligence she was "deprived of the fundamental right of a child to be born as a whole, functional human being without total deafness...." While the Curlender decision did not embrace this approach to "injury" completely refusing to permit the plaintiff to recover for a reduced lifespan it too maintained that the proper point of reference for measuring defendant's liability was simply plaintiff's condition after birth, insisting that "[w]e need not be concerned with the fact that had defendants not been negligent, the plaintiff might not have come into existence at all" (106 Cal. App.3d at p. 829), and rejecting "the notion that a `wrongful life' cause of action involves any attempted evaluation of a claimed right not to be born." (Original italics.) (Id., at pp. 830-831.)
The basic fallacy of the Curlender analysis is that it ignores the essential nature of the defendants' alleged wrong and obscures a critical difference between wrongful life actions and the ordinary prenatal injury cases noted above. In an ordinary prenatal injury case, if the defendant had not been negligent, the child would have been born healthy; thus, as in a typical personal injury case, the defendant in such a case has interfered with the child's basic right to be free from physical injury caused by the negligence of others. In this case, by contrast, the obvious tragic fact is that plaintiff never had a chance "to be born as a whole, functional human being without total deafness"; if defendants had performed their jobs properly, she would not have been born with hearing intact, but according to the complaint would not have been born at all.[8]
*232 A plaintiff's remedy in tort is compensatory in nature and damages are generally intended not to punish a negligent defendant but to restore an injured person as nearly as possible to the position he or she would have been in had the wrong not been done. (See generally Rest. 2d Torts, § 901, com. a; Stills v. Gratton, supra, 55 Cal. App.3d at p. 706; 4 Witkin, Summary of Cal. Law (8th ed. 1974) Torts, § 842, p. 3137 and cases cited.) Because nothing defendants could have done would have given plaintiff an unimpaired life, it appears inconsistent with basic tort principles to view the injury for which defendants are legally responsible solely by reference to plaintiff's present condition without taking into consideration the fact that if defendants had not been negligent she would not have been born at all. (See Capron, Tort Liability in Genetic Counseling (1979) 79 Colum.L.Rev. 619, 654-657; Comment, "Wrongful Life": The Right Not to be Born (1980) 54 Tulane L.Rev. 480, 494-497.)
If the relevant injury in this case is the change in the plaintiff's position attributable to the tortfeasor's actions, then the injury which plaintiff has suffered is that, as a result of defendants' negligence, she has been born with an hereditary ailment rather than not being born at all. Although plaintiff has not phrased her claim for general damages in these terms, most courts and commentators have recognized that the basic claim of "injury" in wrongful life cases is "[i]n essence ... that [defendants], through their negligence, [have] forced upon [the child] the worse of ... two alternatives[,] ... that nonexistence never being born would have been preferable to existence in [the] diseased state." (Speck v. Finegold (1979) 268 Pa.Super. 342 [408 A.2d 496, 511-512] (conc. & dis. opn. by Spaeth, J.), affd. (1981) 497 Pa. 77 [439 A.2d 110].)
Given this view of the relevant injury which the plaintiff has sustained at the defendant's hands, some courts have concluded that the plaintiff has suffered no legally cognizable injury on the ground that considerations of public policy dictate a conclusion that life even with the most severe of impairments is, as a matter of law, always preferable to nonlife. The decisions frequently suggest that a contrary conclusion would "disavow" the sanctity and value of less-than-perfect human life. (See, e.g., Berman v. Allen, supra, 404 A.2d at pp. 12-13; Phillips v. United States, supra, 508 F. Supp. at p. 543.)
Although it is easy to understand and to endorse these decisions' desire to affirm the worth and sanctity of less-than-perfect life, we question *233 whether these considerations alone provide a sound basis for rejecting the child's tort action. To begin with, it is hard to see how an award of damages to a severely handicapped or suffering child would "disavow" the value of life or in any way suggest that the child is not entitled to the full measure of legal and nonlegal rights and privileges accorded to all members of society.
Moreover, while our society and our legal system unquestionably place the highest value on all human life, we do not think that it is accurate to suggest that this state's public policy establishes as a matter of law that under all circumstances "impaired life" is "preferable" to "nonlife." For example, Health and Safety Code section 7186, enacted in 1976, provides in part: "The Legislature finds that adult persons have the fundamental right to control the decisions relating to the rendering of their own medical care, including the decision to have life-sustaining procedures withheld or withdrawn in instances of a terminal condition. [¶] ... The Legislature further finds that, in the interest of protecting individual autonomy, such prolongation of life for persons with a terminal condition may cause loss of patient dignity and unnecessary pain and suffering, while providing nothing medically necessary or beneficial to the patient." This statute recognizes that at least in some situations public policy supports the right of each individual to make his or her own determination as to the relative value of life and death. (Cf. Matter of Quinlan (1976) 70 N.J. 10 [355 A.2d 647, 662-664, 79 A.L.R.3d 205]; Superintendent of Belchertown v. Saikewicz (1977) 373 Mass. 728 [370 N.E.2d 417, 423-427].)
Of course, in the wrongful life context, the unborn child cannot personally make any choice as to the relative value of life or death. At that stage, however, just as in the case of an infant after birth, the law generally accords the parents the right to act to protect the child's interests. As the wrongful birth decisions recognize, when a doctor or other medical care provider negligently fails to diagnose an hereditary problem, parents are deprived of the opportunity to make an informed and meaningful decision whether to conceive and bear a handicapped child. (See, e.g., Robak v. United States, supra, 658 F.2d 471, 476; Berman v. Allen, supra, 404 A.2d 8, 14; Jacobs v. Theimer, supra, 519 S.W.2d 846, 849; cf. Cobbs v. Grant (1972) 8 Cal.3d 229, 242-243 [104 Cal. Rptr. 505, 502 P.2d 1].) Although in deciding whether or not to bear such a child parents may properly, and undoubtedly do, take into account their own interests, parents also presumptively consider the interests of their future child. Thus, when a defendant negligently fails *234 to diagnose an hereditary ailment, he harms the potential child as well as the parents by depriving the parents of information which may be necessary to determine whether it is in the child's own interest to be born with defects or not to be born at all.[9]
In this case, in which the plaintiff's only affliction is deafness, it seems quite unlikely that a jury would ever conclude that life with such a condition is worse than not being being born at all. Other wrongful life cases, however, have involved children with much more serious, debilitating and painful conditions, and the academic literature refers to still other, extremely severe hereditary diseases.[10] Considering the short life span of many of these children and their frequently very limited ability to perceive or enjoy the benefits of life, we cannot assert with confidence that in every situation there would be a societal consensus that life is preferable to never having been born at all.
While it thus seems doubtful that a child's claim for general damages should properly be denied on the rationale that the value of impaired life, as a matter of law, always exceeds the value of nonlife, we believe that the out-of-state decisions are on sounder grounds in holding that *235 with respect to the child's claim for pain and suffering or other general damages recovery should be denied because (1) it is simply impossible to determine in any rational or reasoned fashion whether the plaintiff has in fact suffered an injury in being born impaired rather than not being born, and (2) even if it were possible to overcome the first hurdle, it would be impossible to assess general damages in any fair, nonspeculative manner.
Justice Weintraub of the New Jersey Supreme Court captured the heart of the problem simply and eloquently in his separate opinion in Gleitman v. Cosgrove (1967) 49 N.J. 22, 63 [227 A.2d 689, 711, 22 A.L.R.3d 1411]: "Ultimately, the infant's complaint is that he would be better off not to have been born. Man, who knows nothing of death or nothingness, cannot possibly know whether that is so. [¶] We must remember that the choice is not being born with health or being born without it ... Rather the choice is between a worldly existence and none at all.... To recognize a right not to be born is to enter an area in which no one can find his way." (See also Becker v. Schwartz, supra, 386 N.E.2d at p. 812; Dumer v. St. Michael's Hospital, supra, 233 N.W.2d at pp. 375-376.)
In responding to this proposition, plaintiff relies on numerous cases which hold that when a defendant has negligently caused a legally cognizable injury, recovery should not totally be denied simply because of the difficulty in ascertaining damages. (See, e.g., Story Parchment Co. v. Paterson Co. (1931) 282 U.S. 555, 563 [75 L.Ed.2d 544, 548, 51 S.Ct. 248].) She emphasizes that although numerous types of harm for example, pain and suffering and mental distress are not readily susceptible to valuation, damages for such items are routinely recoverable in professional malpractice actions, and she argues that if juries are capable of awarding damages for such nonpecuniary harm, they are equally competent to assess appropriate general damages in a wrongful life case.
We believe, however, that there is a profound qualitative difference between the difficulties faced by a jury in assessing general damages in a normal personal injury or wrongful death action, and the task before a jury in assessing general damages in a wrongful life case. In the first place, the problem is not as it was in Story Parchment simply the fixing of damages for a conceded injury, but the threshold question of determining whether the plaintiff has in fact suffered an injury by being born with an ailment as opposed to not being born at all. As one judge *236 explained: "When a jury considers the claim of a once-healthy plaintiff that a defendant's negligence harmed him for example, by breaking his arm the jury's ability to say that the plaintiff has been `injured' is manifest, for the value of a healthy existence over an impaired existence is within the experience [or] imagination of most people. The value of nonexistence its very nature however, is not." (Speck v. Finegold, supra, 408 A.2d at p. 512 (Spaeth, J., conc. & dis.), affd. 439 A.2d 110.)
Furthermore, the practical problems are exacerbated when it comes to the matter of arriving at an appropriate award of damages. As already discussed, in fixing damages in a tort case the jury generally compares the condition plaintiff would have been in but for the tort, with the position the plaintiff is in now, compensating the plaintiff for what has been lost as a result of the wrong. Although the valuation of pain and suffering or emotional distress in terms of dollars and cents is unquestionably difficult in an ordinary personal injury action, jurors at least have some frame of reference in their own general experience to appreciate what the plaintiff has lost normal life without pain and suffering. In a wrongful life action, that simply is not the case, for what the plaintiff has "lost" is not life without pain and suffering but rather the unknowable status of never having been born. In this context, a rational, nonspeculative determination of a specific monetary award in accordance with normal tort principles appears to be outside the realm of human competence.
The difficulty in ascertaining or measuring an appropriate award of general damages in this type of case is also reflected in the application of what is sometimes referred to as the "benefit" doctrine in tort damages. Section 920 of the Restatement Second of Torts which embodies the general California rule on the subject (see, e.g., Maben v. Rankin (1961) 55 Cal.2d 139, 144 [10 Cal. Rptr. 353, 358 P.2d 681]) provides that "[w]hen the defendant's tortious conduct has caused harm to the plaintiff ... and in so doing has conferred a special benefit to the interest of the plaintiff that was harmed, the value of the benefit conferred is considered in mitigation of damages, to the extent that this is equitable."
In requesting general damages in a wrongful life case, the plaintiff seeks monetary compensation for the pain and suffering he or she will endure because of his or her hereditary affliction. Under section 920's benefit doctrine, however, such damages must be offset by the benefits *237 incidentally conferred by the defendant's conduct "to the interest of the plaintiff that was harmed." With respect to general damages, the harmed interest is the child's general physical, emotional and psychological well-being, and in considering the benefit to this interest which defendant's negligence has conferred, it must be recognized that as an incident of defendant's negligence the plaintiff has in fact obtained a physical existence with the capacity both to receive and give love and pleasure as well as to experience pain and suffering. Because of the incalculable nature of both elements of this harm-benefit equation, we believe that a reasoned, nonarbitrary award of general damage is simply not obtainable.
Two of our recent decisions support our conclusion that general damages may not be recovered in a wrongful life action. In Borer v. American Airlines, Inc. (1977) 19 Cal.3d 441 [138 Cal. Rptr. 302, 563 P.2d 858] and Baxter v. Superior Court (1977) 19 Cal.3d 461 [138 Cal. Rptr. 315, 563 P.2d 871], we declined to recognize a new cause of action for the loss of affection and society of the parent-child relationship, relying, inter alia, on the fact that monetary damages would neither relieve nor provide meaningful compensation for the child's or parent's loss (19 Cal.3d at pp. 447, 464) and the fact that "because of its intangible character, damages for such a loss are very difficult to measure." (Id., at pp. 448, 464.) Both of these factors, of course, are present in the case at bar. A monetary award of general damages as opposed to the claim for medical expenses discussed below cannot in any meaningful sense compensate the plaintiff for the loss of the opportunity not to be born, and the assessment of damages is, of course, much more problematical here than in either Borer or Baxter.
V
(5a) Although we have determined that the trial court properly rejected plaintiff's claim for general damages, we conclude that her claim for the "extraordinary expenses for specialized teaching, training and hearing equipment" that she will incur during her lifetime because of her deafness stands on a different footing."[11]
*238 As we have already noted, in the corresponding "wrongful birth" actions parents have regularly been permitted to recover the medical expenses incurred on behalf of such a child. (See, e.g., Schroeder v. Perkel, supra, 87 N.J. 53 [432 A.2d 834, 841]; Speck v. Finegold, supra, 439 A.2d 110, 111; Robak v. United States, supra, 658 F.2d 471, 478; Becker v. Schwartz, supra, 386 N.E.2d 807, 813; Dumer v. St. Michael's Hospital, supra, 233 N.W.2d 372, 377; Jacobs v. Theimer, supra, 519 S.W.2d at p. 849.) In authorizing this recovery by the parents, courts have recognized (1) that these are expenses that would not have been incurred "but for" the defendants' negligence and (2) that they are the kind of pecuniary losses which are readily ascertainable and regularly awarded as damages in professional malpractice actions.
Although the parents and child cannot, of course, both recover for the same medical expenses, we believe it would be illogical and anomalous to permit only parents, and not the child, to recover for the cost of the child's own medical care. If such a distinction were established, the afflicted child's receipt of necessary medical expenses might well depend on the wholly fortuitous circumstance of whether the parents are available to sue and recover such damages or whether the medical expenses are incurred at a time when the parents remain legally responsible for providing such care.[12]
Realistically, a defendant's negligence in failing to diagnose an hereditary ailment places a significant medical and financial burden on the whole family unit. Unlike the child's claim for general damages, the damage here is both certain and readily measurable. Furthermore, in many instances these expenses will be vital not only to the child's well-being but to his or her very survival. (See Schroeder v. Perkel, supra, 432 A.2d 834, 841.) If, as alleged, defendants' negligence was in fact a proximate cause of the child's present and continuing need for such special, extraordinary medical care and training, we believe that it is consistent with the basic liability principles of Civil Code section 1714 to hold defendants liable for the cost of such care, whether the expense is to be borne by the parents or by the child. As Justice Jacobs of the New Jersey Supreme Court observed in his dissenting opinion[13] in *239 Gleitman v. Cosgrove, supra, 227 A.2d at page 703: "While the law cannot remove the heartache or undo the harm, it can afford some reasonable measure of compensation towards alleviating the financial burdens."
Moreover, permitting plaintiff to recover the extraordinary, additional medical expenses that are occasioned by the hereditary ailment is also consistent with the established parameters of the general tort "benefit" doctrine discussed above. As we have seen, under that doctrine an offset is appropriate only insofar as the defendant's conduct has conferred a special benefit "to the interest of the plaintiff that was harmed." Here, the harm for which plaintiff seeks recompense is an economic loss, the extraordinary, out-of-pocket expenses that she will have to bear because of her hereditary ailment. Unlike the claim for general damages, defendants' negligence has conferred no incidental, offsetting benefit to this interest of plaintiff. (Cf. Schroeder v. Perkel, supra, 432 A.2d at p. 842.)[14] Accordingly, assessment of these special damages should pose no unusual or insoluble problems.[15]
VI
In sum, we conclude that while a plaintiff-child in a wrongful life action may not recover general damages for being born impaired as opposed to not being born at all, the child like his or her parents may recover special damages for the extraordinary expenses necessary to treat the hereditary ailment.
The judgment is reversed and the case is remanded to the trial court for further proceedings consistent with this opinion.
Richardson, J., and Broussard, J., concurred.
*240 NEWMAN, J.
(1b-5b) I concur. The evidence of legislative concern mentioned in the majority opinion (see, e.g., pp. 228 and 233, ante) persuades me that basic changes of the kind sought here are better left to the Legislature.
MOSK, J.
I dissent.
An order is internally inconsistent which permits a child to recover special damages for a so-called wrongful life action, but denies all general damages for the very same tort. While the modest compassion of the majority may be commendable, they suggest no principle of law that justifies so neatly circumscribing the nature of damages suffered as a result of a defendant's negligence.
As recently as 1980, the Court of Appeal unanimously decided in Curlender v. Bio-Science Laboratories (1980) 106 Cal. App.3d 811 [165 Cal. Rptr. 477] that a cause of action exists for a wrongful life tort. This court subsequently denied a petition for hearing. Thus Curlender was, and remains, the prevailing law of California. I see no persuasive reason to either abandon its doctrine, or to dilute its effectiveness by limiting recovery to special damages.
Curlender found a breach of duty by the medical laboratory there involved, not only to the parents but to the child yet to be born. It then proceeded to carefully analyze the applicable law, in part, as follows:
"The circumstance that the birth and injury have come hand in hand has caused other courts to deal with the problem by barring recovery. The reality of the `wrongful-life' concept is that such a plaintiff both exists and suffers, due to the negligence of others. It is neither necessary nor just to retreat into meditation on the mysteries of life. We need not be concerned with the fact that had defendants not been negligent, the plaintiff might not have come into existence at all. The certainty of genetic impairment is no longer a mystery. In addition, a reverent appreciation of life compels recognition that plaintiff, however impaired she may be, has come into existence as a living person with certain rights.
".... .... .... ...
"In our consideration of whether the child plaintiff has stated a cause of action, we find it instructive to look first to the statutory law of this *241 state. Our Civil Code section 3281 provides that `[e]very person who suffers detriment from the unlawful act or omission of another, may recover from the person in fault a compensation therefor in money, which is called damages.' Civil Code section 3282 defines detriment as `a loss or harm suffered in person or property.' Civil Code section 3333 provides: `For the breach of an obligation not arising from contract, the measure of damages, except where otherwise expressly provided by this Code, is the amount which will compensate for all the detriment proximately caused thereby, whether it could have been anticipated or not.'
"In addition, we have long adhered to the principle that there should be a remedy for every wrong committed. `Fundamental in our jurisprudence is the principle that for every wrong there is a remedy and that an injured party should be compensated for all damage proximately caused by the wrongdoer. Although we recognize exceptions from these fundamental principles, no departure should be sanctioned unless there is a strong necessity therefor. [¶] The general rule of damages in tort is that the injured party may recover for all detriment caused whether it could have been anticipated or not.' (Crisci v. Security Ins. Co. (1967) 66 Cal.2d 425, 433 [58 Cal. Rptr. 13, 426 P.2d 173].)
"We have concluded that it is clearly consistent with the applicable principles of statutory and decisional tort law in this state to recognize a cause of action stated by plaintiff against the defendants. To do otherwise would negate and run counter to the course of tort law so nobly chartered and enunciated in the landmark cases such as Dillon v. Legg, Rowland v. Christian, Crisci v. Security Ins. Co., and Rodriguez v. Bethlehem Steel Corp. ...
".... .... .... ...
"... Plaintiff's right to damages must be considered on the basis of plaintiff's mental and physical condition at birth and her expected condition during the ... life span ... anticipated for one with her impaired condition. In similar fashion, we reject the notion that a `wrongful-life' cause of action involves any attempted evaluation of a claimed right not to be born. In essence, we construe the `wrongful-life' cause of action by the defective child as the right of such child to recover damages for the pain and suffering to be endured during the ... life span available to such a child and any special pecuniary loss resulting from the impaired condition.
*242 "In California, infants are presumed to experience pain and suffering when injury has been established, even if the infant is unable to testify and describe such pain and suffering. In Capelouto v. Kaiser Foundation Hospitals (1972) 7 Cal.3d 889 [103 Cal. Rptr. 856, 500 P.2d 880], the trial court had failed to instruct the jury on the infant plaintiff's pain and suffering; our high court reversed the jury verdict that awarded only plaintiff's medical expenses. It was observed, with respect to pain and suffering, that `[a]dmittedly these terms refer to subjective states, representing a detriment which can be translated into monetary loss only with great difficulty. [Citation.] But the detriment, nevertheless, is a genuine one that requires compensation [citations], and the issue generally must be resolved by the "impartial conscience and judgment of jurors who may be expected to act reasonably, intelligently and in harmony with the evidence."' (Id. at p. 893.)" (Curlender v. Bio-Science Laboratories, supra, pp. 829-831.) (All italics in original.)
I conclude, as did the Court of Appeal in Curlender, that a cause of action can be stated and that this handicapped child is entitled to her day in court.
Bird, C.J., concurred.
NOTES
[1] The complaint does not state how old Hope was at the time of the examination. It does indicate, however, that Hope was two years old when the complaint was filed in July 1978.
[2] Joy's appeal was taken from the order sustaining the demurrer, a nonappealable order. Under rule 2(c) of the California Rules of Court, however, we treat the notice of appeal as a premature but valid notice of appeal from the subsequently entered judgment of dismissal. (See, e.g., Marcotte v. Municipal Court (1976) 64 Cal. App.3d 235, 239 [134 Cal. Rptr. 314].)
[3] Although in sustaining the demurrer to the fourth cause of action the court struck the parents' claim for damages for emotional distress, the parents' cause of action for damages relating to the support and care of Joy during her minority remains pending in the trial court, and thus the parents' action is not appealable at this time. (See, e.g., Bank of America v. Superior Court (1942) 20 Cal.2d 697, 701-702 [128 P.2d 357].)
[4] While courts and commentators have not always been consistent in their terminology, "wrongful life" has generally referred to actions brought on behalf of children, and "wrongful birth" to actions brought by parents. Some authorities have broken these categories down further (see Comment, "Wrongful Life": The Right Not to be Born (1980) 54 Tulane L.Rev. 480, 483-485), but in this opinion we will follow the general usage: "wrongful life" for all actions brought by children and "wrongful birth" for all actions brought by parents.
[5] The subject has also proved a popular topic for legal commentators. (See, e.g., Capron, Tort Liability in Genetic Counseling (1979) 79 Colum.L.Rev. 618; Note, Father and Mother Know Best: Defining the Liability of Physicians for Inadequate Genetic Counseling (1978) 87 Yale L.J. 1488; Comment, "Wrongful Life": The Right Not to be Born (1980) 54 Tulane L.Rev. 480; Note, A Reassessment of "Wrongful Life" and "Wrongful Birth" (1980) 1980 Wis.L.Rev. 782; Kelley, Wrongful Life, Wrongful Birth and Justice in Tort Law (1979) 4 Wash.U.L.Q. 919.)
[6] Section 43.6 reads in full: "(a) No cause of action arises against a parent of a child based upon the claim that the child should not have been conceived or, if conceived, should not have been allowed to have been born alive.
"(b) The failure or refusal of a parent to prevent the live birth of his or her child shall not be a defense in any action against a third party, nor shall the failure or refusal be considered in awarding damages in any such action.
"(c) As used in this section `conceived' means the fertilization of a human ovum by a human sperm."
[7] In cases involving contagious diseases, doctors have frequently been found to owe a duty of care to a patient's immediate family. (See cases cited in Tarasoff v. Regents of University of California (1976) 17 Cal.3d 425, 436-437 [131 Cal. Rptr. 14, 551 P.2d 334, 83 A.L.R.3d 1166].)
[8] This case would be entirely different if medical knowledge were such that a fetus could be treated prior to birth to cure or alleviate the hereditary defect in question. Under those circumstances, Joy could properly claim that if defendant had not negligently failed to diagnose the hereditary problem, she could have been treated in utero and been born as a healthy or less impaired child. Such an advance in medical science would thus make this case analogous to the prenatal injury decisions discussed above. (See Phillips v. United States (D.S.C. 1980) 508 F. Supp. 537, 543 fn. 12.) The present complaint, of course, does not suggest the availability of any such treatment for Joy's condition, but instead alleges that if James and Donna had known of Hope's condition, they would not have conceived Joy.
[9] On occasion it has been suggested that no wrongful life action may be maintained because it is impossible to determine whether, if the "child-to-be" had been informed of the risks, he or she would have preferred not to be born. As Justice Fuchsberg of the New York Court of Appeals put it in his separate opinion in Becker v. Schwartz, supra, 386 N.E.2d at page 815: "Who then can say, as it was essential to the parents' causes of action that they say for themselves, that, had it been possible to make the risk known to the children-to-be in their cellular or fetal state or, let us say, in the mind's eye of their future parents that the children too would have preferred not to be born at all?"
We do not, however, deny recovery to an infant who is injured when a doctor negligently fails to provide treatment chosen by the infant's parents even though we cannot determine whether the infant would have agreed with the parents' choice of treatment. Similarly, it appears anomalous to deny recovery simply because it was not possible for the "child-to-be" to make a choice. In the preconception or fetal stage, as in childhood, it is parents who nearly always make medical choices to protect their children's interests. (Cf. Matter of Quinlan, supra, 355 A.2d 647, 664.)
[10] In Curlender, for example, where the plaintiff was afflicted with Tay-Sachs disease, the complaint alleged that the child "suffers from `mental retardation, susceptibility to other diseases, convulsions, sluggishness, apathy, failure to fix objects with her eyes, inability to take an interest in her surroundings, loss of motor reactions, inability to sit up or hold her head up, loss of weight, muscle atrophy, blindness, pseudobulper palsy, inability to feed orally, decerebrate rigidity and gross physical deformity.' It was alleged that Shauna's life expectancy is estimated to be four years. The complaint also contained allegations that plaintiff suffers `pain, physical and emotional distress, fear, anxiety, despair, loss of enjoyment of life, and frustration....'" (106 Cal. App.3d at p. 816. See also Capron, Tort Liability in Genetic Counseling (1979) 79 Colum.L.Rev. 618, 650-652 & fn. 151.)
[11] As noted, in a separate cause of action Joy's parents seek to recover, inter alia, for the medical expenses which they will incur on Joy's behalf during her minority. Since both Joy and her parents obviously cannot both recover the same expenses, Joy's separate claim applies as a practical matter only to medical expenses to be incurred after the age of majority.
[12] Under Civil Code section 206, parents have a duty to support an adult child "in need who is unable to maintain himself by work...." Thus, the parents' ability to recover those medical expenses which are reasonably likely to be incurred after the age of majority may depend on whether at the time of trial it can be determined if the child will be able to "maintain himself by work" on reaching adulthood.
[13] Gleitman's denial of damages for medical expenses was recently overruled in Schroeder v. Perkel, supra, 432 A.2d 834.
[14] In permitting parents to recover similar extraordinary medical expenses in Schroeder, the court observed: "By limiting damages to those expenses that are actually attributable to the affliction, we are not conferring a windfall on Mr. and Mrs. Schroeder. Although they may derive pleasure from Thomas, that pleasure will be derived in spite of, rather than because of, his affliction. Mr. and Mrs. Schroeder will receive no compensating pleasure from incurring extraordinary medical expenses on behalf of Thomas. There is no joy in watching a child suffer and die from cystic fibrosis."
[15] Permitting recovery of these extraordinary out-of-pocket expenses whether the cost is to be borne by the parents or the child should also help ensure that the available tort remedies in this area provide a comprehensive and consistent deterrent to negligent conduct.
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40 F.3d 390
Seaboltv.Stewart**
NO. 94-8290
United States Court of Appeals,Eleventh Circuit.
Nov 09, 1994
1
Appeal From: N.D.Ga., No. 92-00181-2-CV-WCO
2
AFFIRMED.
**
Local Rule 36 case
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465 F.Supp.2d 312 (2006)
INLINE CONNECTION CORPORATION, Broadband Technology Innovations, LLC, and Pie Squared, LLC, Plaintiffs,
v.
AOL TIME WARNER INCORPORATED, et al., Defendants.
Inline Connection Corporation, Broadband Technology Innovations, LLC, and Pie Squared, LLC, Plaintiffs,
v.
EarthLink, Inc., Defendant.
Nos. CIV.A. 02-272-MPT, CIV.A. 02-477-MPT.
United States District Court, D. Delaware.
December 5, 2006.
Order Denying Reconsideration January 12, 2007.
*314 Thomas C. Grimm, Esquire and Julia Heaney, Esquire, Morris, Nichols, Arsht & Tunnell LLP, Wilmington, DE, Of Counsel: Ky E. Kirby, Esquire, and C. Joel Van Over, Esquire, Bingham McCutchen LLP, Washington, D.C, James B. Lewis, Esquire, Binghan McCutchen LLP, Palo Alto, CA, Donn P. Pickett, Esquire, Bingham McCutchen LLP, San Francisco, CA, for Plaintiffs Inline Connection Corporation, Broadband Technology Innovations, LLC and Pie Squared, LLC.
Frederick L. Cottrell, III, Esquire, Richards, Layton & Finger, P.A., Wilmington, DE, Of Counsel: Kelly E. Farnan, Esquire, Richards, Layton & Finger, P.A., Wilmington, DE, Robert J. Gunther, Jr., Esquire and Kurt M. Rogers, Esquire, Latham & Watkins LLP, New York City, David A. Nelson, Esquire, Latham & Watkins LLP, Chicago, IL, for Defendant America Online, Inc.
Gary W. Lipkin, Esquire, Duane Morris LLP, Wilmington, DE, Of Counsel: L. Norwood Jameson, Esquire and Matthew C. Gaudet, Esquire, Duane Morris LLP, Atlanta, Georgia, Mark Comtois, Esquire, Duane Morris LLP, Washington, DC; for Defendant EarthLink, Inc.
MEMORANDUM OPINION
THYNGE, United States Magistrate Judge.
I. INTRODUCTION
In this patent infringement case, Inline Communication Corporation[1] ("Inline") sued America Online Inc. ("AOL") on April 12, 2002, and EarthLink, Inc. ("Earth-Link") on June 4, 2002, alleging infringement of U.S. Patent Nos. 5,844,596 ("the '596 patent"), 6,243,446 ("the '446 patent"), and 6,236,718 ("the '718 patent").[2]
*315 On August 31, 2006, AOL and Earth-Link jointly filed a motion for partial summary judgment of limitation of damages pursuant to 35 U.S.C. § 287(a) for failure to mark and motions for partial summary judgment and in limine to preclude damages for customers provisioned through non-infringing central office ("CO") DSLAMS.[3] On September 20, 2006, Inline responded that 1) its expert's damages' methodology is supported by substantial evidence and therefore, any disagreement regarding appropriate methodologies is not properly determined on summary judgment, and 2) damages should not be limited under § 287(a) because there is no product to mark, since Inline did not sell or license to sell products or systems embodying the '446 patent after the June 5, 2001 issuance date.[4]
In this opinion, the court will only address the motion on limitation of damages under § 287(a) regarding the '446 patent. Since the motion on preclusion of damages for non-infringing CO DSLAMS is intrinsically related to the motion in limine to exclude the expert testimony of James E. Malackowski, the court will address those matters in a later opinion.
II. STANDARD OF REVIEW
Summary judgment is proper if the "pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show 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. Pro. 56(c). This standard also applies to patent cases. Johnston v. IVAC Corp., 885 F.2d 1574, 1576-77 (Fed.Cir.1989). The party seeking summary judgment bears the initial burden of establishing the lack of a genuinely disputed material fact by demonstrating that there is an "absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Summary judgment is appropriate when there is no genuine issue of material fact or, when drawing all factual inferences in favor of the nonmoving party, no "reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., mi U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The court is to give the non-moving party the benefit of all justifiable inferences and must resolve disputed issues of fact in favor of the non-movant. Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451, 456, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992). If the non-moving party fails to make a sufficient showing on an essential element of its case on which it has the burden of proof, summary judgment is appropriate. Celotex, All U.S. at 323, 106 S.Ct. 2548.
III. POSITION OF THE PARTIES
AOL and EarthLink argue that Inline should be precluded from recovering damages for any alleged infringement which occurred prior to the dates on which Inline provided actual notice by filing suit on April 12, 2002 and June 4, 2002 respectively. Their primary argument is that Inline *316 and/or its licensee, CAIS,[5] did not provide constructive notice of the '446 patent because it failed to mark any tangible components of the OverVoice system embodying the '596 and '446 patents after they issued.[6] AOL and EarthLink argue that Inline and/or CAIS sold or offered to sell the patented OverVoice system without proper marking before the filing of the lawsuits; therefore, the notice requirements set forth by 35 U.S.C. Section 287(a) were not satisfied. AOL and EarthLink also offer evidence that the OverVoice system contained physical components, such as wall jacks and filters, that could have been marked with the patent numbers.[7]
Inline concedes that damages related to the '596 patent should begin on the dates on which the lawsuits were filed because it can not demonstrate "consistent and continuous" marking.[8] Inline asserts, that "[t]he same analysis, however, does not apply to the '446 patent."[9] Inline contends that damages for infringement of the '446 patent should begin on June 5, 2001, its issuance date, rather than from the filing of the actions, because there is no evidence after June 5, 2001 of any sales of products or systems that embody the '446 patent. Therefore, the requirements of § 287(a) were not triggered and a duty to mark on the part of Inline or its licensee, CAIS, did not exist.[10]
IV. ANALYSIS
As a general matter, patentees must comply with the marking statute in order to recover damages for infringement. The statute provides as follows in pertinent part:
[p]atentees, and persons making, offering for sale, or selling within the United States any patented article for or under them ... may give notice to the public that the same is patented by fixing thereon the word "patent" or the abbreviation "pat.," together with the number of the patent, or when, from the character of the article, this can not be done, by fixing to it, or to the package wherein one or more of them is contained, a label containing a like notice. In the event of failure to do so, no damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice. Filing of an action for infringement shall constitute such notice.[11] (emphasis added).
35 U.S.C. § 287(a). The purpose of the statute is threefold in that it gives patentees the incentive to mark their product and, thus, place the world on notice of the existence of a patent, avoids *317 innocent infringement, and aids the public in identifying patented articles. Nike, Inc. v. Wal-Mart Stores, Inc., 138 F.3d 1437, 1446 (Fed.Cir.1998). Consequently, a patentee is entitled to damages from the time when it either began marking products in compliance with § 287(a), or when it notified the infringer through actual notice, whichever is earlier. Am. Med. Sys., Inc., v. Med. Eng'g Corp., 6 F.3d 1523, 1537 (Fed.Cir.1993). Section 287(a) permits either constructive notice, where the patentee marks the article or product with the patent number, or actual notice. Devices for Medicine, Inc. v. Boehl, 822 F.2d 1062 (Fed.Cir.1987). Actual notice is an affirmative communication by the patentee of a specific charge of infringement against an accused product, device or process. Gart v. Logitech, Inc., 254 F.3d 1334, 1345 (Fed. Cir.2001).
At issue is whether Inline's failure to mark products embodying the '446 patent after the June 5, 2001 issuance date creates a genuine issue of material fact regarding period of time when AOL and EarthLink are potentially liable for damages under § 287(a). AOL and EarthLink contend that Inline's licensee, CAIS, sold unmarked products, which embodied the '446 patent, after the issuance date. According to AOL and EarthLink, absent evidence of continuous and consistent marking, notice was not provided until the filing of the lawsuits. Inline asserts that it did not sell or license products embodying the '446 patent after June 5, 2001. Inline supports its position by referring to the June 1, 2001 Termination/Nonexclusive License Agreement with CAIS. Although not entirely clear, Inline seems to argue that, because it was a "non-producing patentee," absent evidence of sales of products embodying the '446 patent after June 5, 2001, recordation of the patent in the USPTO satisfies the notice requirement under § 287(a).[12]
Although Inline was neither required to mark nor have CAIS, its licensee, mark products or systems prior to the issuance of the '446 patent, Inline is not entitled to damages until the date on which actual notice of infringement was provided to AOL and EarthLink, because its licensee continued to sell and offer for sale, services and products embodying the '446 patent after that patent issued. Moreover, Inline authorized its licensee to continue sell systems covered by the '446 patent after it issued, as evidenced by the Termination/Nonexclusive License Agreement.
There can be no dispute that the '446 patent is a continuation of the '596 patent. See U.S. Patent No. 6,243,446 Bl (related U.S. Application Data indicates that patent '446 is a "[continuation of ... Pat. No. 5,8444,596," (issued December 1, 1998.)). The '596 patent itself is a continuation of Pat. No. 5,010,399, which issued on April 23, 1991. As a result, the '446 patent is a progeny of the '399 patent.
*318 The "Agreement for Cooperative Use of Communication Patents" executed in 19% between Inline and CAIS ("1996 Agreement") granted CAIS exclusive intellectual property rights in the Twisted Pair Patents ("TWP").[13] The opening paragraph of the 1996 Agreement specifically states that Inline
owns patents ... describing new techniques for, among other things, communicating video and high data rate digital signals over twisted pair wires... (these patents are listed in Appendix I) which patents and applications, together with all presently existing and hereafter created inventions, improvements or ideas related thereto and all subsequent modifications, divisions, continuations, reissues, extensions ... or otherwise arising from such patents or applications being collectively referred to [as] the "twisted pair patents" or "TWP patents." (emphasis added).[14]
Appendix I of the 1996 Agreement lists those patents and patent applications which are encompassed by that paragraph. The first patent listed in the appendix is the '399 patent. Also contained in Appendix I are three pending applications filed on December 5, 1991, one of which is the '596 patent (entitled "Two-Way RF Communication at Points of Convergence of Wire Pairs from Separate Internal Telephone Networks"). Because the '446 patent is a continuation of the '596 patent, it falls within the broad language of the 1996 Agreement which provides that the CAIS' license extended to later created continuations [15] and those "otherwise arising from such patents or applications."[16] On June 1, 2001, under the Termination/Nonexclusive License Agreement, CAIS' exclusive license was terminated. Contrary to Inline's position, that agreement did not end CAIS' right to sell products covered by the TWP patents.[17] Therefore, the '446 patent falls squarely within the purview of Termination/Nonexclusive License Agreement which continued after the issuance of the '446 patent.
CAIS first installed the OverVoice system that embodied the '596 patent (and later the '446 patent) in 1997, which predates the issuance of either patent, in hotels and apartments in Arlington, Virginia.[18] No party disputes that the OverVoice system encompasses both patents. In fact, both sides rely on the testimony of Mine's President, David Goodman as proving that the OverVoice system is covered by the '596 and '446 patents.[19]
lnline's position is that it never sold products embodying the '446 patent after the patent issued and therefore, it did not have a duty to mark. In support of its *319 position, Inline relies on § 20.03[7][c][i] of Chisum on Patents, which states, "[t]here is no duty to mark or give notice in lieu thereof if the patent owner neither sells nor authorizes others to sell articles covered by the patent." (emphasis added). Inline also points to the 2001 Termination/Nonexclusive License Agreement as evidence of its intent to "abandon the part of its business covered by" the '446 patent.[20] Although that agreement ended the 1996 Agreement, the preclusive effect of § 287(a) is triggered because CAIS was still authorized as a nonexclusive licensee to sell or offer for sale products and systems covered by the TWP patents. Inline expressly granted CAIS a
non-exclusive fully paid-up perpetual right and license to make equipment and systems embodying any inventions in the TWP patents, to sell and offer for sale such equipment and systems to, and to use such equipment and systems, at hotels and hospitality facilities only... [it] shall further include the right and license to use any equipment and systems embodying the inventions claimed in the TWP patents, such use to be only in connection with the making of such equipment and systems ... in, hotel and hospitality facilities. The right and license to CAIS shall extend also to the hotel and facilities' owners, and their successors, for their use of such equipment and systems at the hotel and hospital facilities.[21] (emphasis added).
The language above clearly demonstrates that CAIS continued as a licensee of Inline, whereby it was authorized to sell or offer for sale, without any obligation to mark, patented products and methods when a duty to mark existed under § 287(a). Therefore, Inline's inference that the 2001 Termination/Nonexclusive License Agreement ended its business relationship with CAIS is inaccurate. Moreover, the quoted language does not demonstrate its intent to "abandon" any business related to the '446 patent. Whether, as a result of that agreement, Inline received or continued to receive any payments, royalties or other compensation is irrelevant. It is the right to make, sell, offer for sale or publically use the patented article that triggers the obligation to mark.
The remaining dispositive issue is whether CAIS produced, sold, or offered for sale, products or methods covered by the '446 patent without proper marking after June 5, 2001. On that issue, the court concludes that CAIS did, in fact, sell and offer to sell the OverVoice system to customers after June 5, 2001.
In support of their position, AOL and EarthLink contend that the bankruptcy court proceedings involving CAIS and several Hilton Hotels demonstrate that CAIS sold the OverVoice system after June 5, 2001. In 1998, CAIS executed a Master License Agreement with the Hilton Hotels Corporation ("HHC") to provide high speed internet access to hotel guests.[22] Under the agreement, CAIS provided high speed data communications service for use with computer equipment "to access the public Internet through dedicated ... telecommunication lines." Further, CAIS, at its expense, was to install, maintain, operate, repair, upgrade, replace and construct necessary improvements, which included connections for power and telephone lines, for the equipment and service. Each hotel was to pay CAIS usage fees on a monthly basis.[23] On October 10, 2001, Ardent *320 Communications (successor to CAIS) filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code.[24] Following those proceedings, CAIS/Ardent sued multiple Hilton entities for failure to remit the proper amount of usage fees between 1999 and October 2002.[25]
Contrary to Inline's argument that the various Hilton entities used the OverVoice systems on an unlicensed basis, there is ample evidence which shows that such use was authorized. As noted previously herein, the Master License Agreement authorizes use of the system installed by CAIS/Ardent. There is no evidence presented that the agreement was terminated by either HHC or CAIS/Ardent either shortly after the Termination/Nonexclusivity License Agreement between Inline and Cais or shortly after the issuance of the '446 patent. Further, in its itemization of damages against one HHC entity, CAIS/ Ardent lists the amount of $18,954.32 as damages for guest room use in 2001 and estimated damages of $13,241.40 for such use between March 1, 2002 and October 8, 2002.[26] Against another hotel, CAIS/Ardent claims damages in the amount of $51,041.46 for use occurring between August 2000 and July 2001 and estimated damages of $68,943.42 from August 2001 to October 2002.[27] Clearly, CAIS/Ardent is relying on the Master Licensing Agreement with HHC in support of its adversary action for non-payment of usage fees. The fact that CAIS/Ardent entered an agreement with HHC authorizing it to use the OverVoice system for internet services and subsequently sued HHC entities on that agreement for failure to pay, refutes Inline's argument that HHC's activities were somehow unauthorized. Whether certain HHC entities failed to properly pay for that usage goes to the issue of contractual damages, not authorized use. There is no evidence that Inline has objected to or intervened for infringement or unauthorized use in the CAIS/Ardent actions against HHC entities. There is no evidence that Inline has sued those entities or CAIS/Ardent for infringement or unauthorized use. There has been no suggestion that Inline objected to CAIS/Ardent's right to pursue its claims against the HHC entities. Such conduct shows that CAIS/Ardent had a limited right to sell products and methods covered by the '446 patent. Moreover, CAIS/Ardent sued for usage fees incurred after June 5, 2001 which confirms, that it offered and provided services embodied by the '446 patent after its issuance date.
All parties acknowledge that the Over-Voice system is covered by the '596 and '446 patents.[28] Inline suggests that CAIS' sale of a service, the highspeed internet, is not a "product" for purposes of § 287(a); rather, it contends that CAIS was merely selling or offering to sell internet access through "previously installed" OverVoice systems. This argument fails. The Federal Circuit has consistently held that "where there are both product and *321 method claims being claimed infringed, the patentee must mark the product" pursuant to § 287(a) in order to recover damages.[29] Therefore, Mine's failure to require CAIS to mark components of the OverVoice system, specifically the wall jack, after the '446 patent issued precludes it from recovering pre-litigation damages.
Since there is no genuine issue of material fact, AOL and EarthLink's motion to for partial summary judgment limiting damages pursuant to 35 U.S.C. § 287(a) is granted.
ORDER
IT IS ORDERED, ADJUDGED AND DECREED that consistent with the Memorandum Opinion of December 5, 2006, Defendants' Joint Motion for Partial Summary Judgment Limiting Damages pursuant to 35 U.S.C. § 287(a) (D.I. 442) is GRANTED.
MEMORANDUM ORDER
I. INTRODUCTION
This is a patent infringement case. On December 19, 2006, Inline filed a motion for reconsideration with respect to the Memorandum Opinion of December 5, 2006, which granted Defendants' Joint Motion for Partial Summary Judgment Limiting Damages pursuant to 35 U.S.C. § 287(a).[1] In that opinion, the court concluded that § 287(a) barred Inline from recovering damages for infringement of the '446 patent that occurred prior to the dates on which AOL and EarthLink received actual notice of the patents-in-suit, April 12, 2002 and June 4, 2002, respectively. In its motion for reconsideration, Inline argues that the court committed two errors: (1) it mistakenly construed "use" of the patented article as a "triggering event" under § 287(a), and (2) since the claims at issue in the '446 patent are not method but "system" claims, the court's legal analysis is incorrect, or the court misunderstood Inline's argument. On January 5, 2007, AOL and EarthLink responded that use of the patented article was irrelevant to the issue presented in their motion for partial summary judgment. Rather, AOL and EarthLink contend that because Inline sold and offered for sale the OverVoice system to customers after the '446 patent issued on June 5, 2001, damages were properly limited pursuant to § 287(a). Moreover, AOL and EarthLink argue that where a patented article contains a tangible item to mark, a party is obligated to do so before it can avail itself of the benefits provided by § 287.
For the reasons discussed below, Inline's motion for reconsideration is denied.
II. STANDARD OF REVIEW
A court will grant a motion for reconsideration only when it appears that the court has "patently misunderstood a party, has made a decision outside the adversarial issues presented by the parties, or has made an error not of reasoning, but of apprehension."[2] A motion for *322 reconsideration which alters, amends, or offers relief from a judgment is properly granted under three distinct circumstances: "(1) there has been an intervening change in the controlling law; (2) there is newly discovered evidence which was not available to the moving party at the time of judgment; or (3) there is a need to correct a legal or factual error which has resulted in manifest injustice."[3]
III. ANALYSIS
As stated in the December 5, 2006 Memorandum Opinion, the marking statute provides that,
[p]atentees, and persons making, offering for sale, or selling within the United States, any patented article for or under them ... may give notice to the public that the same is patented by fixing thereon the word `patent' .... In the event of the failure to do so, no damages shall be recovered by the patentee in any action for infringement.[4]
Inline first contends that this court erred in concluding that, "[i]t is the right to make, sell, offer for sale or publically use the patented article that triggers the obligation to mark." However, contrary to Inline's assertion, this court did not rest its opinion on the premise that use of the patented article triggers a patentee's duty to mark. Rather, the discussion upon which Inline relies was included to address a particular comment it made. The court engaged in an analysis regarding the use of the OverVoice system by hotel guests to refute Inline's extremely tenuous argument that it did not authorize CAIS to sell or offer for sale, systems embodying the '446 patent.[5] In opposition to the motion for summary judgment, Inline directed the court to a 2001 "termination" Agreement between itself and CAIS. However, that Agreement did not end the licensing relationship as Inline purported, nor did it end CAIS' authority to sell or offer for sale, systems covered by the TWP patents.[6] Contrary to Inline's argument, CAIS retained a "non-exclusive fully paid up perpetual right and license to make equipment and systems embodying any invention in the TWP patents (including the '446 patent), to sell and offer for sale, such equipment and systems."[7] This language clearly shows that CAIS continued as a licensee of Inline following the issuance of the '446 patent.
The fact that Hilton Hotels Corporation ("HHC") guests "used" the OverVoice system between 1999 and 2002 was not "the" basis in finding the obligation to mark. *323 Pursuant to the 2001 Agreement CAIS was authorized to sell or offer for sale, systems embodied by the TWP patents. As AOL and EarthLink correctly point out, the dispute between CAIS and the Hilton Hotel entities evidence that CAIS, as a licensee, albeit no longer an exclusive licensee, of Inline, sold and offered for sale the OverVoice systems to HHC (to offer to its guests) after the '446 patent issued absent proper markings. The factual record noted by the court directly refutes any claim by Inline that HHC's activities involving the patented system was somehow unauthorized.[8] Moreover, CAIS is pursuing fees incurred after June 5, 2001 which confirms that it offered for sale services embodied by the '446 patent after it issued.
On page two of its motion for reconsideration, Inline claims that use is never employed in determining whether there is an obligation to mark. Inline is wrong. Maxwell v. J. Baker, Inc., provides that "[a] patentee who makes, uses or sells its own invention is obligated to comply with the marking provisions to obtain the benefit of constructive notice."[9] The Federal Circuit extended this obligation to licensees of the patentee.[10] Since Maxwell involved a system's claim, the findings in the opinion applied to the licensees' use of the system, as evidenced by the Federal Circuit's acknowledgment of Target's (Maxwell's licensee) duty to comply with the marking statute.[11] The court, however, in recognizing the difficulty of ensuring compliance by a third party not related to the patentee, applied a "rule of reason" to determine whether the patentee made reasonable efforts to ensure compliance.[12] Because the patentee demonstrated that she made "extensive and continuous" efforts to ensure Target's compliance, who had marked at least 95% of the shoes sold using the patented system, the court held that she had satisfied the requirements of § 287(a).[13]
Unlike the plaintiff in Maxwell, Inline made no attempt to mark, in that it never required its licensee, CAIS, to mark tangible articles of the system.[14] It is the burden of the patentee to show that either actual or constructive notice occurred and that it complied with the statutory requirements.[15]
*324 Lastly, Inline contends that the court mistakenly concluded that it had a duty to mark when in fact the '446 patent contains only system, and not method, claims. As noted above, this argument is without merit. In referring to the sale of the highspeed internet and the OverVoice system, the court simply analogized between system and method claims, an analysis not dissimilar to that of the Maxwell case. Inline does not cite any affirmative case law which suggests that a patentee may avail itself of the benefits provided by § 287(a), yet does not have a duty to mark merely because its patent contains a system, and not a "method." Moreover, the case law requires, "where there is a tangible item to mark by which notice of the asserted patent can be given," a party is "required to do so in order to satisfy the requirements of § 287(a)." [16]
In conclusion, for the reasons stated herein, Inline's motion for reconsideration (D.I. 586) is DENIED.
NOTES
[1] Inline initially sued AOL and Earthlink. Since the original filing of the complaints, other plaintiffs have been added because of their contractual relationships with Inline. For ease of reference, all plaintiffs shall be referred to as Inline.
[2] Mine's U.S. Patent No. 6,542,585 ("the '585 patent") was subsequently added to the litigation after it was issued in 2003. The '718 patent is no longer at issue in the litigation. Further, the subject matter of the current motions for summary judgment address damages only with respect to two of the three patents in suit: the '596 patent issued on December 1, 1998 and the '446 patent issued on June 5, 2001.
[3] D.I. 445 (Defendants' Joint Opening Brief in Support of Their Motion for Partial Summary Judgment Limiting Damages Pursuant to 35 U.S.C. § 287(a)); D.I. 441 (Defendants' America Online, Inc.'s and EarthLink, Inc.'s Motion for Partial Summary Judgment and Motion In Limine Precluding Damages for Customers Provisioned Through Non-Infringing Central Office DSLAMS).
[4] D.I. 473 (Plaintiffs' Answering Brief in Opposition to Defendants' Motion for Partial Summary Judgment Limiting Damages Pursuant to 35 U.S.C. § 287(a)); D.I. 476 (Plaintiffs' Answering Brief in Opposition to Defendants' Motion for Partial Summary Judgment and Motion In Limine Precluding Damages for Customers Provisioned Through Non-Infringing Central Office DSLAMS).
[5] CAIS is also referred to as Ardent Communication, its successor during bankruptcy proceedings.
[6] The OverVoice system is covered by the '596 and the '446 patents. See D.I. 443, Ex. F at 878:5-879:5 (Goodman Dep. Tr. dated Mar. 21, 2003) (noting that the wall jack for the OverVoice system corresponds to the '446 patent). David Goodman is the owner of Inline and the inventor of the '596 and '446 patents.
[7] See D.I. 443, Ex. D. CAIS Prospectus (showing an image of a wall jack component of the OverVoice system).
[8] In light of Inline's concession regarding the '596 patent, the court's focus on the marking issue will be directed to the '446 patent.
[9] D.I. 473 at 1.
[10] As discussed later herein, Inline licensed CAIS prior to the issuance of the '446 patent.
[11] 35 USC § 287(b)(5)(a) further defines "notice of infringement" as actual knowledge, or receipt by a person of a written notification, or a combination thereof, or information sufficient to persuade a reasonable person that it is likely that a product was made by a process patented in the United States.
[12] In the case of a "non-producing patentee," § 287(a) does not preclude recovery of damages for the period of time when no product covered by the patent is produced or sold. Tulip Computers Int'l B.V. v. Dell Computer Corp., 00-981-KAJ, 2003 WL 1606081, *13, 2003 U.S. Dist. LEXIS 5409, *50 (D.Del. Feb. 4, 2003), rev'd on other grounds, 262 F.Supp.2d 358 (D.Del.2003). Thus, recordation of a patent with the USPTO will serve as constructive notice of the patent's existence and § 287(a) will not limit damages. Id. at 2003 WL 1606081, *13, 2003 U.S. Dist. LEIS 5409, *51. See also Wine Railway Appliance Co. v. Enterprise Ry. Equipment Co., 297 U.S. 387, 56 S.Ct. 528, 80 L.Ed. 736 (1936); Texas Digital Sys., Inc., v. Telegenix, Inc., 308 F.3d 1193 (Fed.Cir.2002) (holding that constructive notice of a patent is presumed in the case of the non-producing patentee). As discussed herein, the court need not address whether Inline is a non-producing patentee for the purposes of § 287(a).
[13] D.I. 475, Ex. 1. The provisions of 1996 Agreement make it clear that CAIS purchased rights to the TWP patents and became Inline's exclusive licensee "to use, make, sub-license or sell on a world-wide basis ... any technology covered by the TWP patents," along with the obligation to fully exploit the technology. Id. at 1, 4, 11.
[14] Id.
[15] That language includes presently existing inventions and "hereafter created . . . continuations " of those inventions, (emphasis added).
[16] Id. Section 2 of the 1996 Agreement also expressly grants to CAIS in its sole and exclusive discretion to use, as it determines necessary, desirable or appropriate, any technology covered by the TWP patents.
[17] D.I. 492, Ex. JJ. In the Termination/Nonexclusive License Agreement, CAIS assigned and transferred all right, title, and interest in the TWP patents to Inline, for which CAIS was granted a nonexclusive license for only its hotel and other hospitality customers.
[18] See D.I. 445 at 3.
[19] See D.I. 443, Ex. F at 878:5-879:5
[20] See D.I. 473 at 2.
[21] See D.I. 492, Ex. JJ at Section 3.
[22] The Master License Agreement was executed approximately three years before the 2001 Termination/Nonexclusive License Agreement between Inline and CAIS.
[23] D.I. 492, Ex. KK at 4.
[24] D.I. 492, Ex. KK at 5.
[25] In February 2004, Ardent brought suit against 6 Hilton entities for collection of fees allegedly owed by each defendant under the Master License Agreement.
[26] D.I. 492, Ex. KK at 13 (Itemization of Plaintiff's [Ardent] Damages). Those figures are damages calculated against the defendant, San Francisco Hilton, Inc.
[27] D.I. 492, Ex. KK. Those figures are damages calculated against the defendant, FC 42 Hotel, LLC.
[28] D.I. 443, Ex. F. In his deposition testimony, Goodman acknowledges that the wall jack for the OverVoice system is covered by the '596 and '446 patents. Goodman also admits that, although the wall jack is only "one component of the OverVoice System," it "in its totality ... embodies the teachings of [the '596 and '446] patents."
[29] See American Med. Sys., Inc. v. Medical Eng'g Corp., 6 F.3d 1523, 1538-1539 (Fed.Cir. 1993)("To the extent that there is a tangible item to mark by which notice of the asserted method claims can be given, a party is obliged to do so if it intends to avail itself of the constructive notice provisions of section 287(a)."); see also IMX, Inc. v. Lendingtree, LLC, No. 03-1067-SLR, 2005 WL 3465555, 2005 U.S. Dist. LEXIS 33179 (D.Del. Dec. 14, 2005) (holding that "where there is a tangible item to mark by which notice of the asserted patent can be given" a party is required to do so in order to satisfy the requirements of § 287(a)).
[1] D.I. 586.
[2] eSpeed, Inc. v. Brokertec USA, L.L.C, No. Civ.A.03-612-KAJ, 2005 WL 83471, at *1 (D.Del. Jan. 11, 2005).
[3] Max's Seafood Cafe, By Lou Ann, Inc. v. Quinteros, 176 F.3d 669, 677 (3d Cir.1999).
[4] 35 U.S.C. § 287(a) (emphasis added).
[5] Inline referred this court to § 20.03[7][c][i] of Chisum on Patents, which states in relevant part that, "[t]here is no duty to mark or give notice in lieu thereof if the patent owner neither sells nor authorizes others to sell articles covered by the patent." (emphasis added).
[6] On page 9 of its Memorandum Opinion, the court determined that the 1996 Licensing Agreement between Inline and CAIS granted exclusive intellectual property rights in the TWP patents to CAIS, including the '446 patent, based on the language of their agreement. The TWP patents consisted of patents already issued, those listed in Appendix I of the agreement, and "all subsequent modifications, divisions, continuations, reissues, extensions... or otherwise arising from such patents or applications." At the time the 1996 Agreement was created, the '596 patent was listed in Appendix I as a pending application; therefore, it was covered by the licensing agreement. Since there can be no dispute that the '446 patent is a continuation of the '596 patent, CAIS' license to sell or offer for sale, products covered by the TWP patents, unquestionably included products covered by the '446 patent.
[7] See D.I. 492, Ex. JJ (Termination/Nonexclusive License Agreement (June 1, 2001)).
[8] Inline practically stated, or at the very least strongly suggested, that the HHC entities were infringing. By its comment, it further implied that CAIS' activities were in violation of the 2001 "termination agreement." Inline's emphasis on the word "termination" in the title of the 2001 Agreement is at best a misnomer and, at worst, a misrepresentation of the content of that agreement.
[9] 86 F.3d 1098, 1111 (Fed.Cir.1996); see American Med. Sys. v. Medical Eng'g Corp., 6 F.3d 1523, (Fed. Cir. 1993); 35 U.S.C. § 287(a).
[10] Maxwell, 86 F.3d at 1111 (noting that the marking provisions apply "to persons making or selling any patented article for or under [the patentee]"); see also Amsted Indus., Inc. v. Buckeye Steel Castings Co., 24 F.3d 178, 185 (Fed.Cir.1994) (noting that § 287(a) applies to express and implied licensees).
[11] Maxwell, 86 F.3d at 1111 (The defendant argued that Target failed to instruct its manufacturers (or users of the system) to mark.).
[12] Id.
[13] at 1111-12.
[14] CAIS was never required to mark the systems it sold, offered for sale, or installed with any of the TWP patents, which include '596 and '446. Inline does not dispute its obligation and failure to mark systems embodying the '596 patent, which is also a "system's" patent.
[15] See Motorola, Inc. v. United States, 729 F.2d 765, 770 (Fed.Cir.1984); Dunlap v. Schofield, 152 U.S. 244, 14 S.Ct. 576, 38 L.Ed. 426 (1894).
[16] IMX, Inc. v. Lendingtree, LLC, No. 03-1067-SLR, 2005 WL 3465555, 2005 U.S. Dist. LEXIS 33179 (D.Del. Dec. 14, 2005). As noted by the inventor, the wall jack is one such tangible component of the OverVoice system that is covered by the '596 and the '446 patents. D.I. 443, Ex. F at 878:5-879:5 (Goodman Dep. Tr. dated Mar. 21, 2003); D.I. 443, Ex. D, CAIS Prospectus. Further, as defendants suggest, Inline could have provided notice of the patent on the OverVoice log-in screen or CAIS' Internet Promotional home page. D.I. 590 at 3-4.
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853 N.E.2d 458 (2003)
341 Ill. App.3d 1128
PEOPLE v. LUDWICK
4-02-0266
Appellate Court of Illinois, Fourth District.
August 28, 2003.
Disposition of Cases by Order in the Appellate Court under Supreme Court Rule 23. Affirmed.
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UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 98-50637
Summary Calendar
_____________________
SUSAN ESQUIVEL,
Plaintiff-Appellee,
versus
COUNTY OF EL PASO; CHARLES MATTOX, County Judge,
Defendants-Appellants.
Appeal from the United States District Court
for the Western District of Texas
USDC No. EP-97-CV-87-H
July 1, 1999
Before POLITZ, BARKSDALE, and STEWART, Circuit Judges.
PER CURIAM:*
County of El Paso and Charles Mattox contest a jury verdict
for Susan Esquivel, on her claim that Appellants failed to make a
reasonable accommodation for her disability as required by the
Americans with Disabilities Act, 42 U.S.C. §§ 12112(a) et seq.
Appellants claim that the district court erred in excluding certain
evidence at trial and in denying their motions for judgment as a
matter of law and for a new trial. We AFFIRM.
*
Pursuant to 5TH CIR. R. 47.5, the Court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
I.
In March 1993, Esquivel, employed by Appellants, reported that
she had been injured on the job. Esquivel, who worked at the
computer “help desk” as an Information Center Coordinator (ICC)
with the County Consolidated Data Processing Department (CDP),
stated that the repetitive hand motions of her job had caused her
to develop carpal tunnel syndrome, causing pain in her wrists,
arms, and shoulders. She underwent surgery on her right hand that
July; on her left hand, that October. She was unable to work
between the surgeries.
That November, Esquivel began discussions with persons at the
CDP regarding her return to work. She was released to work, with
restrictions, by her physician in September 1994. The restrictions
included limitations on the time she should could spend typing,
standing, sitting, and lifting, among others.
Although the testimony at trial conflicted on who initiated
the topic, there was discussion of possibly placing Esquivel in the
position of a customer service representative (CSR), which would be
considered a promotion and had a higher salary. Because of her
medical restrictions, Esquivel was told that there were no
positions for her at CDP.
- 2 -
That October, Esquivel filed her first charge of
discrimination with the Equal Employment Opportunity Commission
(EEOC), claiming that CDP had failed to reasonably accommodate her
disability. And, after applying for a CSR position and being
denied an interview, Esquivel filed a second EEOC complaint in
February 1995. That March, she interviewed for a CSR position, but
was not awarded the job. Finally, that July, Esquivel met with a
CDP supervisor and a vocational therapist; an agreement was reached
allowing Esquivel to return to her ICC position. As of trial,
Esquivel continued to be employed at CDP.
At trial, Esquivel essentially claimed that Appellants had
discriminated against her based on her disability (carpal tunnel
syndrome) by not accommodating her so that she could return to work
during the nine months (September 1994-July 1995) between when she
was released to work (with restrictions) and returned to work. The
jury found that she was an individual with a disability; that
Appellants had kept her from returning to work because of her
disability; and that Appellants had not made a good faith effort to
reasonably accommodate her. Esquivel was awarded $75,000 for pain
and suffering and approximately $14,000 for back pay.
- 3 -
II.
A.
Appellants first claim that the district court erred in
failing to grant their motions for judgment as a matter of law or
for a new trial because: Esquivel is not “disabled” under the ADA;
there is no record of a disability; there is no evidence that
Appellants regarded her as being disabled; she was not qualified
for the CSR position; and she never requested a reasonable
accommodation.
Needless to say, in the light of the relief sought from a jury
verdict, Appellants have a high bar to cross. The denial of a
motion for judgment as a matter of law will be affirmed unless
“there is no legally sufficient evidentiary basis for a reasonable
jury to find for” the nonmovant. FED. R. CIV. P. 50(a). Reversing
the denial of a motion for a new trial is even more difficult; the
denial will be affirmed unless it is clearly shown that there was
“an absolute absence of evidence to support the jury’s verdict”.
Hidden Oaks Ltd. v. City of Austin, 138 F.3d 1036, 1049 (5th Cir.
1998) (emphasis added). Having reviewed the record, we find no
reversible error in the denials of judgment as a matter of law or
for a new trial.
- 4 -
B.
Appellants next contest the denial of their motion to dismiss
for failure to exhaust administrative remedies as to the ICC
position. Such rulings are reviewed de novo. Cf. Dao v. Auchan
Hypermarket, 96 F.3d 787, 788 (5th Cir. 1996). Before filing an
ADA claim, the plaintiff is required to file a charge with the
EEOC. Id. at 788-89. Esquivel did so. Based upon our review of
the records, we find no find no error in the denial of Appellants’
motion.
C.
Finally, Appellants claim error in the exclusion of testimony
and other evidence concerning Esquivel’s work history and medical
condition following her return to work. Because of the broad
discretion afforded to district courts in evidentiary rulings,
“[w]e will reverse the court’s evidentiary rulings only when the
court has clearly abused its discretion and a substantial right of
a party is affected”. Tamez v. City of San Marcos, 118 F.3d 1085,
1098 (5th Cir. 1997), cert. denied, 115 S. Ct. 1073 (1998); FED. R.
EVID. 103. Assuming this issue has been properly briefed, we find
no such abuse of discretion.
III.
For the foregoing reasons, the judgment is
AFFIRMED.
- 5 -
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102 Ariz. 421 (1967)
432 P.2d 433
UNION TITLE COMPANY, an Arizona corporation, Appellant,
v.
James H. BURR, Appellee.
No. 8461.
Supreme Court of Arizona. In Division.
October 18, 1967.
*422 Jennings, Strouss, Salmon & Trask, Phoenix, Thelton D. Beck, Prescott, for appellant.
Hill, Savoy & Flickinger, Phoenix, for appellee.
STRUCKMEYER, Justice.
This action was brought by James H. Burr against the Union Title Company and Apache Country Club, Inc., a building and development corporation, for their failure to pay $28,000 as commission for the procurement of a mortgage. On Burr's application, summary judgment was entered against both defendants, of which only the Union Title Company appeals.
Burr is a real estate broker. By written contract he was employed to secure a mortgage loan for Apache Country Club, Inc., in an amount of not less than $1,400,000, for which it was agreed he was to be paid two per cent of the principal amount of the loan. Burr alleged that he did obtain the loan but that the Union Title Company, escrow agent for Apache, refused to honor Burr's earned commission, although Burr had delivered to Union Title a written notice advising it that he was entitled to the commission out of funds payable to Apache.
Burr's employment contract which was delivered to Union Title provided, in part:
"* * * I [Apache Country Club, Inc.] agree to pay you [Burr] a commission of 2 per cent of the principal amount of the loan, and you are authorized to instruct the escrow agent [Union Title] to pay this commission directly to you from the loan funds in escrow."
It must be emphasized that Burr's initial employment was to obtain a loan to be secured by a mortgage on Apache Country Club property. Burr and his associates attempted to secure the $1,400,000 by this means but were unable to do so. However, a substitute transaction by which Apache obtained the funds needed was worked out.
Russ Lyon, Jr., and A.T. LaPrade, Jr., were interested in buying a large apartment complex known as the Frontier Gardens, then owned by the First Federal Savings & Loan Association. Arrangements were made with First Federal to sell the Frontier Gardens to Apache for $2,400,000. The purchase price was met by Apache giving two mortgages to First Federal, one on the Frontier Gardens for $700,000 and another on its other real estate holdings for $1,700,000. Lyon and LaPrade then bought the Frontier Gardens from Apache for $2,100,000 for which they paid $1,400,000 *423 in cash and assumed the $700,000 mortgage on the Frontier Gardens. In this manner Apache received the $1,400,000 capital which it originally desired.
It is Union Title's position that the summary judgment granted against it by the court below was improper because it never held any "loan funds" in escrow that the only funds of Apache coming into its possession were purchase money funds. With this we are compelled to agree.
As stated, the only funds which passed through the Union Title escrow was the $1,400,000 paid by Lyon and LaPrade as the purchase price for the Frontier Gardens Apartments. The distinction urged is neither trivial nor arbitrary. "Loan funds" simply are not purchase funds. This Court, like Union Title, is not at liberty to change the words of the parties to what might have been agreed upon had the substituted circumstances been considered at the time of the making of the contract.
The deposition of Don W. Heckathorn, president of Apache Country Club, Inc., discloses that he refused to sign a letter on the day of closing of escrow authorizing the deduction of the two per cent commission by Union Title in order that it might be paid to Burr. He testified:
"Q All right. Isn't it also true, Mr. Heckathorn, that on that day you were asked to sign a letter to the title company acknowledging the agreement that you had entered into with Mr. Burr & Associates?
"A I was asked to?
"Q Yes.
"A Yes, I was.
"Q And will you tell me why you refused to sign that letter that day?
"A Because they had not performed under their contract.
"Q And how hadn't they performed, sir?
"A Because of the terms that eventually evolved from this entire transaction was not according to the terms of their contract."
It is apparent that the transaction as finally consummated was not the same transaction contemplated in Burr's written contract of employment. Union's duty as an agent was to comply strictly with the terms of the escrow agreement. Tucson Title Insurance Co. v. D'Ascoli, 94 Ariz. 230, 383 P.2d 119; Malta v. Phoenix Title & Trust Co., 76 Ariz. 116, 259 P.2d 554. Burr's contract of employment, if construed as an assignment of funds to come into existence in the future, was by its language confined to "loan funds". Since no "loan funds" ever came into the Union escrow, Union was without authority to make any disbursements to Burr.
The judgment heretofore entered against Union Title Company is reversed.
McFARLAND, V.C.J., and UDALL, J., concur.
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This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2014).
STATE OF MINNESOTA
IN COURT OF APPEALS
A15-1021
In the Matter of the Welfare of the Children of: S. J., Parent
Filed November 30, 2015
Affirmed
Hooten, Judge
Ramsey County District Court
File No. 62-JV-14-2821
Patricia J. Stotzheim, Stotzheim Law Office & Mediation, St. Paul, Minnesota (for
appellant D.P.)
John J. Choi, Ramsey County Attorney, Kathryn M. Eilers, Assistant County Attorney,
St. Paul, Minnesota (for respondent Ramsey County Community Human Services
Department)
Renee Michalow, St. Paul, Minnesota (for S.J.)
Nicole Gronneberg, St. Paul, Minnesota (for M.L.)
Patrick McGee, Forest Lake, Minnesota (for J.H.)
Thomas Nolan, St. Paul, Minnesota (for Guardian ad Litem)
Considered and decided by Reyes, Presiding Judge; Hooten, Judge; and Kirk,
Judge.
UNPUBLISHED OPINION
HOOTEN, Judge
On appeal from the termination of his parental rights, appellant father argues that
the district court abused its discretion by concluding that there was a statutory ground for
termination and that termination was in the best interests of the child. We affirm.
FACTS
Birth of S.P., Initial Proceedings, and Initial Placement with Appellant
On February 6, 2014, S.P. was born prematurely at 32 weeks gestation to mother
S.J.1 and appellant father D.P. Prior to S.P.’s birth, S.J. was admitted to the hospital in
preterm labor, but insisted on leaving the hospital against the advice of medical
professionals, who told her that her refusal to undergo treatment increased the risk of
complications and death of the unborn baby. Notwithstanding these warnings, S.J. pulled
out her IV, claiming that she did not want to lie in bed all day. Because of her refusal to
accept treatment to arrest her preterm delivery and the concern that her leaving the
hospital against medical advice would result in greater risk to the unborn child, the
medical professionals elected to induce delivery of the unborn child.
Once born, S.P. was admitted to the neonatal intensive care unit (NICU), where
she remained for nearly a month. The district court found that during S.J.’s visits with
S.P. in the NICU, S.J. “exhibited some concerning behavior to medical professionals.”
The medical professionals determined that S.J. had a “significant mental health history,”
1
S.J.’s parental rights were also terminated by the district court’s order, but S.J. did not
appeal from the order.
2
including diagnoses of bipolar disorder, depression, and schizophrenia and that she had
no home and was staying with various family members. On March 4, S.P. was medically
ready to be discharged, but the hospital would not discharge her to S.J.’s care due to
concerns regarding S.J.’s lack of housing and untreated mental health problems. The
same day, the St. Paul Police Department placed S.P. on a 72-hour child protective hold.
On March 7, respondent Ramsey County Community Human Services
Department (the county) filed a children in need of protection or services (CHIPS)
petition, seeking to adjudicate S.P. and her three siblings, who did not have the same
father as S.P., as CHIPS. A child protection social worker (case manager) was assigned
to this case. On March 11, after S.J. admitted that her children were in need of protection
or services, the children were adjudicated as CHIPS, and the county was granted
temporary legal custody of S.P. At the time of the CHIPS adjudication, the district court
found that S.J. had a prior history with the county, including one maltreatment
determination of neglect and two maltreatment determinations of physical abuse
regarding S.P.’s siblings. S.P. was placed with appellant on that date.
S.P.’s placement with appellant ended two days later on March 13 after the
county received a report of a physical altercation that occurred between appellant and S.J.
in the presence of S.P. on March 12. At trial, appellant admitted that he grabbed S.J.’s
wig and threw her phone out the window after she called 911. The county removed S.P.
from appellant’s care because the case manager felt that it was unsafe for S.P. to remain
with appellant as a result of this assault. S.P. was eventually placed in foster care with
S.J.’s mother.
3
On March 25, 2014, a guardian ad litem (GAL) was appointed to advocate for
S.P.’s best interests.
Relevant Information about S.J.
In the termination of parental rights (TPR) order, the district court made findings
regarding S.J. that are relevant to this appeal. The case manager filed out-of-home
placement plans (case plans) for S.J., which required S.J. to accomplish or demonstrate a
number of things in order to regain care, custody, and control of her four children. The
components of S.J.’s case plans included obtaining a psychological assessment and
following all recommendations, seeing an individual therapist, identifying a psychiatrist
and following all medication recommendations, completing a parenting assessment and
following all recommendations, participating in in-home parenting services, finding
affordable and stable housing, finding employment, and cooperating with random weekly
urinalysis testing. Early in this case, the case manager explained to S.J. the county’s
safety concerns that prevented her four children, including S.P., from returning to S.J.’s
care, including her history of untreated mental illness, unstable housing, and child-
protection intervention.
In its TPR order, the district court found that S.J. “did not successfully complete,
or fully engage with, [the] services identified in her case plans.” First, S.J. did not
address her chemical dependency issues. In April 2014, her urinalysis sample tested
positive for cocaine. In May and early June 2014, S.J. submitted urinalysis samples that
tested negative for non-prescribed mood altering substances. But, S.J. did not submit any
urinalysis samples from June 2014 until April 2015, at which time her sample again
4
tested positive for cocaine. S.J. testified that from November 2014 to March 2015 she
used cocaine weekly. S.J. was referred for a chemical assessment in March 2015, but
cancelled one appointment and failed to attend another. At trial, S.J. stated that she was
not chemically dependent and that she did not believe her drug use negatively affected
her ability to parent her children.
Second, S.J. did not successfully engage in psychotherapy and did not
demonstrate compliance with medication management. S.J. did complete several
psychological assessments, which noted past diagnoses of bipolar disorder and
posttraumatic stress disorder. In May 2014, she was diagnosed with posttraumatic stress
disorder and depression, but she did not complete any individual or group psychotherapy
except for two sessions in March or April 2014. S.J. testified that she did not believe she
needs individual psychotherapy and that she did not believe her mental health problems
negatively affected her ability to parent her children.
Third, S.J. underwent a parenting assessment, but did not comply with the
recommendations, which included engaging in individual psychotherapy, abstaining from
mood-altering substances, and attending parenting education and skills training.
Refusal to Sign Case Plan
On April 11, 2014, the case manager filed a case plan for appellant, with a start
date of March 4, 2014. The case plan required appellant to accomplish or demonstrate
the following in order to regain care, custody, and control of S.P.: (1) complete a
parenting assessment and follow all recommendations; (2) participate in parenting
support groups at the FATHER Project; (3) secure basic resources for his family;
5
(4) maintain employment; (5) maintain stable housing; (6) have weekly visits with S.P;
(7) attend all of S.P.’s medical appointments; and (8) satisfy his child-support
obligations. The case plan also stated that appellant needed “to demonstrate that he can
provide a stable environment for his child, by understanding the effects of mental health
issues and [the risk they pose] to his child.” The intent of the case plan was to ensure the
safety, permanency, and wellbeing of S.P, with the ultimate goal of reuniting appellant
with his child.
On March 18, 2014, the case manager met with appellant to discuss the case plan.
During this meeting, the case manager discussed with appellant the requirement that he
demonstrate he could provide a stable environment for S.P. by understanding and
acknowledging the effects of S.J.’s mental health issues and the risk those issues posed to
S.P. Appellant testified that the case manager told him that if he continued to associate
with S.J., he could not have S.P. in his care. At this meeting, the case manager provided
appellant with a copy of the case plan, but appellant refused to sign it.
Failure to Maintain Weekly Visits with S.P.
The case manager initially set up appellant’s supervised visits with S.P. in the
foster home because that would allow appellant more flexibility in scheduling visits
during evenings and weekends. Appellant agreed to that at first, but in May 2014, he
requested that visits take place at a county site instead, which the case manager
accommodated.
In June 2014, appellant and S.J. moved from St. Paul to Owatonna, where they
resided until late August 2014. Appellant testified that he moved to Owatonna in order to
6
obtain stable housing, work, and save money to return to the Twin Cities. Appellant did
not provide the case manager with his address in Owatonna, and he did not tell the case
manager that he was living with S.J. in Owatonna. While appellant was in Owatonna, he
had no contact with S.P, and he did not contact the case manager for assistance in visiting
S.P. The GAL testified that appellant and S.J. “disappeared for three months and made
[a] unilateral decision to disengage from their children.” The GAL testified that he had
less contact with appellant than in a typical case because appellant did not contact him,
and the GAL lacked contact information for appellant throughout much of the
proceedings. The district court found that “for the vast majority of [S.P.’s] out of home
placement,” appellant’s whereabouts were unknown to the case manager. The district
court also found that even when appellant moved back to St. Paul, he failed to
consistently visit S.P.
Back in May 2014, the foster care provider, S.J.’s mother, was granted an order
for protection (OFP) against S.J., which prevented S.J. from having any contact with her,
S.P., and S.P.’s siblings. However, during one of appellant’s visits with S.P. in early
2015, he allowed S.J. to have contact with S.P. Appellant failed to tell the visitation
supervisor that there was an active OFP in place, even though appellant knew about the
OFP. The district court found that both appellant and S.J. “demonstrated an extreme lack
of judgment when they chose to deliberately violate the [OFP].”2 Appellant testified that
2
Appellant correctly notes that the district court erroneously stated that appellant
violated the OFP, as the OFP was issued only against S.J., not appellant. Appellant does
not dispute, however, that he knowingly helped S.J. violate the OFP by having contact
with S.P.
7
he did not visit S.P. for the month and a half prior to trial because he was going through
some “[p]ersonal stuff” because of “this whole case situation.”
Delay in Obtaining Parenting Assessment and Failure to Follow Recommendations
of Parenting Assessment
On May 6, 2014, the county referred appellant to Dr. Frayda Rosen to complete a
parenting assessment. But, appellant did not undergo a parenting assessment for
approximately eight months. He scheduled two appointments in the winter of 2014, but
failed to show up, and he cancelled another appointment. Dr. Rosen assessed appellant
on January 20 and February 11, 2015. Dr. Rosen opined that appellant required
improved parenting knowledge and did not have a good understanding of early childhood
development. Dr. Rosen noted that appellant did not acknowledge S.P.’s developmental
delays, “suggesting he would not support the services [S.P.] require[s] to prevent her
from developing more severe delays as she age[s].” Dr. Rosen opined that appellant did
well interacting with S.P. and meeting her needs during the parental observation. Dr.
Rosen concluded that “[t]he biggest barrier preventing [appellant] from being a
successful and safe parent seemed [to be] his judgment, choices and behaviors[,]
especially in his relationship with [S.P.’s] mother.”
Dr. Rosen made several recommendations, including that appellant maintain
adequate, safe, and stable housing; attend a father’s support group; maintain stable
employment; receive parenting education and skills training during supervised visits with
S.P.; and “remove himself from individuals who are unstable” or who are “involved in
substance abuse and/or . . . with the law.” At trial, Dr. Rosen testified that appellant’s
8
deficits could be addressed with parenting education classes. Appellant did not provide
the case manager with any evidence that he had completed any of Dr. Rosen’s
recommendations. The district court found that at the time of the TPR trial, appellant
continued to reside with S.J., “who admitted at trial that she had been using cocaine on a
weekly basis.”
Appellant testified that he planned to co-parent S.P. with S.J. if he was awarded
custody of S.P. He testified that he would allow S.J. to care for S.P. even when he is not
present. He testified that he does not believe that S.J. has any mental health problems
and that her chemical use of cocaine does not affect her ability to parent S.P. Appellant
testified that S.J. “doesn’t pose a risk” to S.P. Based on this testimony, the district court
found that appellant “would be unable to protect [S.P.] from [S.J.] if [S.P.] was returned
to his care.” The case manager testified that if appellant regained custody of S.P., he
would need to “separate himself” from S.J., and the case manager did not believe that he
would be able to do so. She also testified that appellant continues to minimize S.J.’s
chemical use and mental health issues and that this minimization could pose a risk to S.P.
Failure to Participate in the FATHER Project
The FATHER Project is an organization that provides parenting resources for
fathers. Appellant testified that he tried to enroll in the FATHER Project to satisfy one of
the conditions of his case plan. He received a letter dated March 28, 2014, informing him
that he could not join the FATHER Project, but indicating that other similar programs
were available and providing contact information. However, appellant failed to show this
letter to the case manager or to seek out any other parenting support group.
9
Failure to Maintain Stable Housing
Appellant testified that he has two evictions on his record, which has made it
difficult for him to obtain housing independently. When S.P. was born, appellant was
living in a hotel and was unemployed. When appellant briefly had custody of S.P. in
March 2014, he was living with his brother. Appellant testified that after S.P. was
removed from his care and placed in foster care, appellant was “bouncing around with
family members” for a while. Appellant and S.J. lived in Owatonna during the summer
of 2014. At the time of trial, appellant was living with S.J. in a duplex that S.J. leased,
and they had been living there for six or seven months. Appellant testified that he was
currently working at Burger King. The case manager testified that she was concerned
appellant would be unable to provide safe and stable housing for S.P. because his housing
was dependent upon S.J.
Lack of Attendance at S.P.’s Medical Appointments
Appellant did not attend any of S.P.’s medical appointments throughout the
proceedings. Appellant never called the case manager to see if he could attend any of
S.P.’s medical appointments. S.P. underwent a special education evaluation on June 27,
2014, and was deemed eligible for early childhood special education services based on
her below-average scores in the areas of motor skills and self-care. Appellant did not
make any attempts to learn more about S.P.’s special needs, and he did not attend any
appointments regarding S.P.’s special needs. Appellant testified that he did not agree
with S.P.’s special needs determination, but stated that if S.P. were returned to his care,
he would have her continue with occupational therapy. The case manager testified that if
10
S.P. was returned to appellant’s care, appellant would not be able to provide for S.P.’s
special needs or work effectively with her care providers.
Failure to Stay in Contact with and Cooperate with Case Manager and GAL
On November 7, 2014, the county petitioned the district court for termination of
appellant’s and S.J.’s parental rights. By that date, S.P. had been in out-of-home
placement for approximately 243 days. During the six months preceding the TPR trial,
the GAL tried to speak with appellant at hearings, but appellant was unwilling to speak
with the GAL. The case manager testified that appellant called her only four or five
times throughout the pendency of the case. Appellant testified that the last time he called
the case manager to discuss S.P. was May 2014. He also testified that he never provided
the case manager with his phone number, but he stated that he could have been reached
through S.J.
TPR Trial
The district court held a three-day trial in April 2015 on the county’s petition to
terminate appellant’s and S.J.’s parental rights. By the time of trial, S.P. had been in out-
of-home placement for over one year. The GAL testified that appellant “had an
opportunity to step up to a case plan and didn’t take it.” The GAL and the case manager
recommended that appellant’s parental rights be terminated. After hearing testimony as
to the above facts, the district court filed an order terminating appellant’s parental rights.
The district court concluded that the county had proven by clear and convincing evidence
that appellant’s parental rights should be terminated on three different statutory grounds,
11
that this decision was in the best interests of S.P., and that the county had made
reasonable efforts to reunite appellant with S.P. This appeal followed.
DECISION
Appellant argues that the record lacks clear and convincing evidence to support
the termination of his parental rights under the statute. Courts presume that natural
parents are fit to care for their children, and “[p]arental rights may be terminated only for
grave and weighty reasons.” In re Welfare of Child of J.K.T., 814 N.W.2d 76, 87 (Minn.
App. 2012) (quotation omitted). The petitioning county bears the burden of proving
statutory grounds for termination by clear and convincing evidence. Id. Whether to
terminate parental rights is discretionary with the district court. In re Welfare of Child of
R.D.L., 853 N.W.2d 127, 136 (Minn. 2014). “[O]n appeal from a district court’s decision
to terminate parental rights, we will review the district court’s findings of the underlying
. . . facts for clear error, but we review its determination of whether a particular statutory
basis for involuntarily terminating parental rights is present for an abuse of discretion.”
In re Welfare of Children of J.R.B., 805 N.W.2d 895, 901 (Minn. App. 2011), review
denied (Minn. Jan. 6, 2012); see Minn. Stat. § 260C.301, subd. 1(b) (2014) (listing bases
for terminating parental rights). We will affirm the district court’s decision if any of the
statutory grounds for termination are supported by clear and convincing evidence and
termination of parental rights is in the child’s best interests. In re Children of T.R., 750
N.W.2d 656, 661 (Minn. 2008). We grant the district court’s decision considerable
deference because the district court “is in a superior position to assess the credibility of
witnesses.” In re Welfare of L.A.F., 554 N.W.2d 393, 396 (Minn. 1996).
12
I.
The district court found clear and convincing evidence in support of three statutory
bases for terminating appellant’s parental rights. See Minn. Stat. § 260C.301, subd.
1(b)(2), (4), (5). Appellant asserts that none of these three bases were sufficiently
supported by clear and convincing evidence. We will address termination under section
260C.301, subdivision 1(b)(5), as only one statutory ground must be supported by clear
and convincing evidence in order for us to affirm. See T.R., 750 N.W.2d at 661.
Under Minn. Stat. § 260C.301, subd. 1(b)(5), parental rights may be terminated if
“following the child’s placement out of the home, reasonable efforts, under the direction
of the court, have failed to correct the conditions leading to the child’s placement.” In
analyzing this statutory ground, the district court found that the county’s efforts at
reunification were reasonable. Appellant disputes this finding. In any TPR proceeding,
the district court must make “specific findings” that the county made reasonable efforts to
reunify the child and the parent. Minn. Stat. § 260C.301, subd. 8 (2014). To determine
whether reasonable efforts were made, the district court must consider “whether [the]
services offered to the child and family were: (1) relevant to the safety and protection of
the child; (2) adequate to meet the needs of the child and family; (3) culturally
appropriate; (4) available and accessible; (5) consistent and timely; and (6) realistic under
the circumstances.” Minn. Stat. § 260.012(h) (2014).
“Reasonable efforts at rehabilitation are services that go beyond mere matters of
form so as to include real, genuine assistance.” In re Welfare of Children of S.W., 727
N.W.2d 144, 150 (Minn. App. 2007) (quotations omitted), review denied (Minn. Mar. 28,
13
2007). “The quality and quantity of efforts to rehabilitate and reunify the family impact
the reasonableness of those efforts.” Id. A district court’s finding that the county made
reasonable efforts to reunify the parent with the child is a finding of fact that we analyze
for clear error. See J.R.B., 805 N.W.2d at 901 (stating this court reviews district court’s
findings of fact for clear error). “A finding is clearly erroneous if the reviewing court is
left with the definite and firm conviction that a mistake has been made.” Vangsness v.
Vangsness, 607 N.W.2d 468, 472 (Minn. 2000) (quotations omitted).
The county tried to place S.P. with appellant in March 2014, but that placement
lasted only three days due to the physical altercation that occurred between appellant and
S.J. in the presence of S.P. On March 18, 2014, the case manager met with appellant and
completed a family functional assessment, which was used to prepare appellant’s case
plan. The case plan identified appellant’s parenting strengths and deficits and offered
him services to address the reasons that led to S.P.’s out-of-home placement. The case
plan provided contact information for Dr. Rosen and the FATHERS Project. The GAL
testified that appellant’s case plan was appropriate. The county filed the case plan with
the district court on April 11, 2014.
The county made efforts to help appellant complete his case plan. The case
manager provided appellant with a referral to Dr. Rosen and arranged for appellant to
have supervised visits with S.P. In May 2014, appellant requested that the visitation
location be changed, and the county accommodated that request. Around the same time
period, the case manager met with appellant again to discuss an amended version of his
case plan. Appellant again refused to sign the case plan.
14
For the next three months, the case manager was unable to contact appellant to
discuss his case plan or offer him additional services because appellant moved to
Owatonna with S.J. and did not provide any contact information or contact the case
manager. The record indicates that appellant completely disengaged from his case plan
during the summer of 2014. Even after appellant returned to St. Paul, he did not provide
his contact information to the case manager. The district court found that for the “vast
majority” of S.P.’s out-of-home placement, appellant’s whereabouts were unknown to the
case manager. The record supports this finding. Yet, despite appellant’s general lack of
engagement with his case plan, the county continued to facilitate his supervised visits
with S.P.
Appellant argues that the case plan was not relevant or adequate because it failed
“to address the most concerning issue[] that led to the out-of-home placement,” i.e.,
helping appellant develop insight into S.J.’s mental health problems and the risk that her
problems posed to S.P. This argument is unpersuasive. While the case plan itself did not
explain how appellant was to develop this insight, the parenting assessment addressed
this issue. Dr. Rosen opined that the “biggest barrier” preventing appellant from safely
parenting S.P. had to do with his “judgment, choices and behaviors” in his relationship
with S.J. Dr. Rosen recommended that appellant avoid people who are “unstable” or
“involved in substance abuse.” Dr. Rosen also recommended that appellant receive
parenting education and skills training. If appellant had followed through on these
recommendations, he likely would have gained insight into S.J.’s mental health problems
and how her mental instability negatively affected the wellbeing of their child.
15
Appellant’s other arguments as to the reasonableness of the county’s efforts also
lack merit. He asserts that the case manager’s caseload was too heavy and prevented her
from giving appellant the assistance he needed. The county correctly argues that this
assertion is a “smokescreen” for appellant’s own failure to engage in the case plan and to
provide the case manager with his phone number or other contact information. Appellant
also argues that the case manager and the GAL focused only on the “less substantive”
requirements of the case plan, but this argument is plainly contradicted by the record,
which shows that appellant failed in following Dr. Rosen’s recommendations,
consistently visiting S.P. on a weekly basis, attending S.P.’s medical appointments, and
maintaining stable housing. Because of his failure to follow the case plan, appellant also
failed to gain insight into S.J.’s mental health problems and her inability to parent their
child. The district court’s finding that the county made reasonable efforts toward
reunification is not clearly erroneous.
The district court determined that the county’s reasonable efforts toward
reunification failed to correct the conditions that led to S.P.’s out-of-home placement. At
the time of S.P.’s birth, appellant was unemployed and did not have his own housing. In
March 2014, S.P. was designated as a CHIPS due to S.J.’s mental instability and her
previous history of child maltreatment. Shortly thereafter, S.P. was removed from
appellant’s custody because appellant did not protect S.P. from S.J.’s mental instability
and from his violent encounter with S.J. Appellant’s case plan was designed to correct
the conditions leading to S.P.’s placement in foster care and to ensure S.P.’s safety,
16
permanency, and wellbeing. But, appellant failed to comply with his case plan in several
ways.
Appellant waited eight months to undergo a parenting assessment. Once he was
assessed, he failed to follow through on most of Dr. Rosen’s recommendations, including
receiving parenting skills training, attending a father’s support group, and removing
himself from people who abused drugs. Appellant failed to maintain stable housing
because his housing was dependent upon S.J., who used cocaine and had untreated
mental health problems, both of which posed a risk to S.P. Appellant failed to visit his
daughter weekly, and there were periods when appellant had no contact with S.P., most
notably when he moved to Owatonna with S.J. Finally, appellant never attended any of
S.P.’s medical appointments.
Moreover, appellant failed to comply with his case plan’s requirement that he
protect S.P. from S.J. by allowing S.J. to join him on one of his supervised visits in
violation of the OFP that was in place. At trial, appellant demonstrated that he does not
understand the risk that S.J.’s mental health problems pose to S.P. by stating that he does
not believe that S.J. has any mental health problems. The district court found that
appellant lacked insight into S.J.’s mental health and chemical needs, which greatly
inhibited his ability to parent S.P. The district court also found that appellant lacks the
basic parenting skills necessary to parent his child. These findings are supported by the
record.
The district court did not abuse its discretion in terminating appellant’s parental
rights under Minn. Stat. § 260C.301, subd. 1(b)(5), because, despite the county’s
17
reasonable efforts, appellant failed to correct the conditions leading to the out-of-home
placement.
II.
Appellant also contends that the best interests of the child do not support the
termination of his parental rights. District courts must give “paramount consideration” to
the best interests of the child when terminating parental rights. Minn. Stat. § 260C.301,
subd. 7 (2014). A district court does this by weighing three factors: (1) the child’s
interest in maintaining the parent-child relationship; (2) the parent’s interest in
maintaining that relationship; and (3) any competing interest of the child. In re Welfare
of M.A.H., 839 N.W.2d 730, 744 (Minn. App. 2013). Competing interests of the child
“include a stable environment, health considerations, and the child’s preferences.” Id.
“Where the interests of parent and child conflict, the interests of the child are
paramount.” Minn. Stat. § 260C.301, subd. 7. In its order terminating parental rights, the
district court must explain its rationale for concluding why termination is in the child’s
best interests. In re Tanghe, 672 N.W.2d 623, 625 (Minn. App. 2003). We review the
district court’s best interests determination for an abuse of discretion. J.R.B., 805
N.W.2d at 905.
Here, the district court cited the three M.A.H. factors and concluded that
termination of appellant’s parental rights was in the best interests of S.P. The district
court found that S.P.’s competing needs substantially outweighed any interest that
appellant or S.P. had in maintaining the parent-child relationship. The district court
found that S.P. needs a safe, stable, and loving home; a parent who can protect her from
18
abuse and neglect; a parent who will meet her basic and special needs; and a parent who
will prioritize her needs over the parent’s own needs. The district court found that
appellant cannot provide for any of these needs. These findings are well supported by the
evidence in the record. Both the case manager and the GAL testified about S.P.’s needs,
and both testified that appellant was unable to meet S.P.’s basic or special needs at the
time of trial or in the reasonably foreseeable future. Both also testified that termination
of appellant’s parental rights is in S.P.’s best interests.
The district court also found that S.P. needed permanency and that it was
“contrary to [S.P.’s] best interest[s] to delay permanency any further.” The importance of
permanency for children is recognized by both the legislature and the courts. See Minn.
Stat. § 260C.204 (2014) (providing for permanency progress review when child has been
in foster care for six months); In re Welfare of J.R., Jr., 655 N.W.2d 1, 5 (Minn. 2003)
(“Each delay in the termination of a parent’s rights equates to a delay in a child’s
opportunity to have a permanent home and can seriously affect a child’s chance for
permanent placement.”). Here, the case manager testified that termination of appellant’s
parental rights will provide S.P. with the permanency, consistency, and stability that S.P.
needs.
The district court did not abuse its discretion in determining that termination of
appellant’s parental rights is in the best interests of S.P.
Affirmed.
19
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895 P.2d 497 (1995)
NEAL & COMPANY, INC., an Alaska corporation, Appellant,
v.
The ASSOCIATION OF VILLAGE COUNCIL PRESIDENTS REGIONAL HOUSING AUTHORITY, Appellee.
No. S-6123.
Supreme Court of Alaska.
May 19, 1995.
*499 R.R. De Young, Wade & De Young, Anchorage, for appellant.
Gregory A. Miller and Steve Hutchings, Birch, Horton, Bittner & Cherot, Anchorage, for appellee.
Before MOORE, C.J., and RABINOWITZ, MATTHEWS, COMPTON and EASTAUGH, JJ.
OPINION
MOORE, Chief Justice.
I. INTRODUCTION
Neal & Company (Neal) contracted with the Association of Village Council Presidents Regional Housing Authority (the Housing Authority) to construct eighty-three single-family homes in the vicinity of Bethel. The parties dispute whether the Housing Authority was obligated to supply the sites with a source of permanent electricity for Neal's use during construction.
Neal appeals from a grant of partial summary judgment in favor of the Housing Authority. Neal further appeals the denial of a motion for reconsideration and an order preventing Neal from introducing evidence at trial pertaining to the electricity issue. We affirm.
II. FACTS AND PROCEEDINGS
The Housing Authority is a public corporation that facilitates the construction of housing for Native Alaskans in rural areas of the state. The organization is funded primarily by the United States Department of Housing and Urban Development (HUD). In March 1988, the Housing Authority invited potential bidders to respond to a standard-form HUD contract offering with specifications for the construction of eighty-three single-family homes in the villages of Napakiak, Mekoryuk, Napaskiak, Pitkas Point, and Oscarville.
Neal was the low bidder among six general contractors that submitted proposals. The Housing Authority awarded Neal the contract and directed Neal to begin construction on June 1, 1988. The contract set completion dates of May 25, 1989, for Mekoryuk and Pitkas Point, and September 2, 1989, for the remaining three villages. Soon after Neal was awarded the contract, Neal notified the Housing Authority that it planned to substantially complete construction of all housing units early, by December 1988.
With the exception of Oscarville, the construction sites had not been equipped with permanent electric utility service at the time Neal was awarded the contract.[1] Neal contends that the Housing Authority was required to equip the sites with a source of permanent electricity for Neal to use during construction. The Housing Authority denies this, maintaining that although it possessed a duty to arrange permanent electric service for future homeowners, the bid documents clearly state that Neal was to supply whatever power it would require during the construction process.
Before contract negotiations were finalized, Neal sought information concerning what power sources would be available at the sites. While Neal was preparing its bid for the housing project, Chris Oehler, Neal's *500 project manager, orally inquired of two employees of the project architect regarding the status of permanent electricity service at the construction sites.[2] Oehler later affied that Roger Sieber had informed him that "all necessary arrangements had been made by [the Housing Authority] to assure that permanent electric utility service would be available for use by the contractor during construction on the project." He also affied that Paul Whipple had told him that the Housing Authority was "attempting to complete negotiations with the serving utilities so that permanent electric utility service could be constructed during the summer of 1988."
Despite these representations and the fact that HUD had requested that formal executed agreements with the local utilities be in place before the main construction contract was awarded, the Housing Authority did not complete its discussions with the utilities before it awarded the contract to Neal.
With the exception of one village which was fully equipped with permanent power when Neal required it, Neal completed construction before permanent power lines were extended to the new subdivisions.[3] To satisfy its power requirements during construction, Neal relied on temporary generators. Final acceptance of the housing units was also delayed because mechanical equipment installed in the homes could not be formally inspected without the presence of permanent power.
In October 1990 Neal submitted a written request to the Housing Authority for an equitable adjustment of the final contract price.[4] In its demand for additional compensation, Neal claimed that the Housing Authority's failure to supply permanent electrical power for use during construction resulted in delays and additional costs. The Contracting Officer denied Neal's claim, stating that the Housing Authority was under no contractual duty to supply Neal with electrical power.
Neal pursued its equitable adjustment claim against the Housing Authority in Bethel Superior Court. Among other contract claims, Neal contended that it "suffered substantial construction delays and extra costs as a result of [the Housing Authority's] failure to timely bring permanent electrical power to the construction sites." The Housing Authority denied that it was responsible for supplying permanent power for Neal's use. The parties cross-moved for partial summary judgment on this issue.
In a memorandum decision the superior court granted the Housing Authority's Motion for Partial Summary Judgment. After examining the entire contract, Judge Curda concluded: "The Court sees no evidence, in reviewing the contract, standing alone, which indicates that [the Housing Authority] had a duty to supply permanent power for use by Neal during construction." The court went on to consider the extrinsic evidence offered by Neal, especially pre-bid representations made by the architect which Neal argued led it to expect that permanent power would be available for its use during construction. The court explained that under the facts of the case, debate over the meaning of the contract was a question for the court: "The language of the contract, standing by itself, and in light of the extrinsic evidence provided to this Court, is not reasonably susceptible to both asserted meanings, but only one." The court determined that because the contract was integrated, and because the extrinsic evidence "directly contradicts the contract as interpreted by [the] Court," Oehler's testimony constituted inadmissible parol evidence.
Neal unsuccessfully moved the court for reconsideration. Alaska R.Civ.P. 77(k). The *501 trial court further ruled that based upon the court's decision granting the Housing Authority partial summary judgment, Neal would not be permitted to present additional evidence at trial on the electricity issue. The court explained that "[b]ased on the Court's knocking out that cause of action, hearing evidence on that is not relevant."
On the eve of trial, the parties settled all remaining claims, with Neal preserving the right to appeal from partial summary judgment on the electricity issue. Neal now appeals.
III. DISCUSSION
A. Duty to Supply a Source of Permanent Electricity For Construction Purposes
Neal bases its contention that the Housing Authority was obligated to supply the construction sites with a source of permanent electric power on three primary grounds. First, Neal argues that the language of the contract, taken as a whole, implies that the Housing Authority had a duty to timely supply permanent power to the sites for construction purposes. Neal emphasizes certain contract provisions which direct Neal to "[a]scertain where these services will be available"[5] and require Neal to ensure that "the electrical equipment provided will operate with the site electrical system."[6] (Emphasis added.)
Second, Neal contends that the architect's representations that permanent power "would be available" for Neal's use during construction reinforced the contractor's interpretation of the agreement's express terms. Because this extrinsic evidence does not vary or contradict the terms of the contract as interpreted by Neal, Neal contends that the parol evidence rule is inapplicable.
Finally, Neal argues that at a minimum, it was a third-party beneficiary of the Housing Authority's underlying contract with HUD. Neal notes that the Housing Authority was required to equip the new subdivisions with permanent electric power for the benefit of future homeowners, and emphasizes that HUD had specifically requested that the Housing Authority finalize its agreements with the local utilities before awarding the construction contract to Neal.
The Housing Authority rejects Neal's assertions that it was responsible for erecting a source of permanent power in time for Neal to use during construction. The Housing Authority contends that with regard to electrical power, the contract was reasonably susceptible to only one meaning. Central to the Housing Authority's argument are two express provisions which required Neal to "furnish all ... power ... necessary for performance of the work."[7]
The Housing Authority also identifies contract language which, in its view, explicitly allocated to Neal the risk that a source of permanent power would not be immediately available. In the "Conditions Affecting the Work" clause, for example, Neal represented that it had "satisfied itself as to the general and local conditions which can affect the work or its cost." The provision further specified:
Any failure of the Contractor to take the actions described and acknowledged in this paragraph will not relieve the Contractor from responsibility for estimating properly the difficulty and cost of successfully performing *502 the work or for proceeding to successfully perform the work without additional expense to the [Housing Authority].
In addition to requiring Neal to investigate local conditions, the Housing Authority assumed no responsibility for interpretations other than those made in writing and incorporated into the contract.[8] The bid documents explained the proper procedure for obtaining a formal interpretation: questions shall be submitted in writing before the deadline for bidding, and written interpretations shall thereafter be circulated to each bidder and incorporated into the contract.
The Housing Authority maintains that although Neal acceded to these terms, the contractor did not adequately perform its due diligence inquiry. According to the Housing Authority, Neal failed to visit two of the five job sites or contact any of the local utility companies prior to bidding on the contract. Therefore, the Housing Authority argues that Neal's expectation that permanent power would be provided in time for use during construction was not objectively reasonable.
Finally, the Housing Authority contends that the lower court properly applied the parol evidence rule to bar evidence of pre-bid representations by the architect and correctly entered judgment in favor of the Housing Authority as a matter of law. In the Housing Authority's characterization, because the architect's representations flatly contradict the integrated contract, evidence of these conversations cannot be used to vary the terms of the agreement. The Housing Authority concludes that because Neal otherwise failed to identify any genuine issues of material fact, we should affirm summary judgment in the Housing Authority's favor.
The goal in interpreting any contract is to "`give effect to the reasonable expectations of the parties.'" Stepanov v. Homer Elec. Ass'n, 814 P.2d 731, 734 (Alaska 1991) (quoting Mitford v. de Lasala, 666 P.2d 1000, 1005 (Alaska 1983)). A grant of summary judgment based upon the interpretation of a contract is subject to de novo review. Martech Constr. Co. v. Ogden Envtl. Servs., 852 P.2d 1146, 1149 (Alaska 1993). Summary judgment is inappropriate where the evidence before the trial court establishes that a genuine factual dispute exists as to the parties' intent. Id. The parties' expectations must be gleaned not only from the contract language, but also from extrinsic evidence, including the parties' conduct, goals sought to be accomplished, and surrounding circumstances at the time the contract was negotiated. Peterson v. Wirum, 625 P.2d 866, 870 & n. 7 (Alaska 1981).
1. The contract
The contract language, when read alone, does not support Neal's position. The detailed agreement explicitly stated in two separate passages that electrical power required for construction purposes was the sole responsibility of the contractor. On the first page of the standard-form HUD contract, in regular type, the agreement provided: "The Contractor shall furnish all ... light, heat, [and] power ... necessary for performance of the work... ." In the specifications provided by the Housing Authority for the project, the contract again provided: "Water and electricity for construction shall be the responsibility of and shall be paid by the Contractor."
We find these clauses to be straight-forward. Nowhere in the contract document did the Housing Authority expressly promise that permanent power would be available for Neal's use. Where the agreement did address the contractor's need for electrical power, it used the broad phrases "[t]he Contractor shall furnish" and "the responsibility of ... the Contractor," thereby placing the responsibility on Neal to determine what *503 type of power source it would use during construction. It would be unreasonable to argue that the contractor's duty to "furnish" power simply requires it to pay for electricity used while hooked up to a pre-existing permanent power source. The second clause cited above clearly makes a distinction between the contractor's duty to pay for temporary utilities and its fundamental duty to procure those services for itself.[9]
An interpretation which allocates the duty to provide electrical power during construction solely to Neal is consistent with the remainder of the contract. At the initial stages of the procurement, upon review of the bid documents, it should have been clear to Neal that the installation of permanent electrical power at the remote sites could occur simultaneously with construction. There are at least two distinct passages in the agreement that required Neal to "coordinate all his work with the serving utilities (electrical, telephone, etc.)." Significantly, nowhere did the contract indicate that permanent electrical power would be established by a certain date.
In addition to the fact that the agreement was silent with regard to the date when permanent electrical power would ultimately be available, several provisions placed the risk upon the contractor that permanent power would not be established prior to or during construction. Neal agreed to investigate local conditions which could affect the cost of the work; this would include assessing the progress made at each site in setting up permanent power. The contract further specified that the Housing Authority would be responsible only for contract interpretations made in writing and incorporated into the contract; had Neal experienced any uncertainties after its investigation, it could have requested a formal interpretation.
Instead, Neal now identifies certain language in the contract which, in its view, implied that permanent electrical power would be established at the sites and available for Neal's use either at the outset of construction or before its completion. In referring to temporary utilities, for example, the contract stated: "Ascertain where these services will be available, make temporary connections as required and remove same upon completion of work." (Emphasis added.) Neal also emphasizes the contractual requirement that inspections were to utilize "the site electrical system." Neal contends that from this language, it formulated a reasonable expectation that the Housing Authority intended to set up permanent electrical power in time for Neal to use during construction.
In light of the provisions which placed the risk upon Neal that permanent power would not be available for construction use, Neal's interpretation misses the mark. The language requiring the contractor to "[a]scertain where these services will be available" should actually be read as a further directive to Neal to inquire into or "ascertain" the specific conditions at the five sites. As for the language which required inspections to utilize "the site electrical system," we agree with the analysis of the trial court. In light of the two provisions which placed responsibility for temporary power squarely on the contractor, see supra notes 5 and 7, the inspection term must be read narrowly: "If inspection cannot occur until permanent power is available, then [the Housing Authority] has a duty to promptly make power available for inspection purposes." (Emphasis added.)
Finally, Neal draws our attention to some remaining language from the contract to support its position. Neal points out that the contract offered distinct warnings regarding a lack of certain services at the construction sites. For instance, the contract specifically cautioned that "[t]he Contractor should be aware of the lack of rooming and dining facilities in some villages." Neal infers that if the Housing Authority was under no duty to supply permanent power, the contract would have offered as specific a warning about the unavailability of electricity.
Neal's argument is not persuasive. In light of the two provisions discussed above which explicitly stated that the contractor *504 was to be responsible for providing electric power for construction purposes, as well as the terms which placed the risk upon Neal that permanent power might not be available in time for the contractor's use, it is clear that Neal was adequately warned.
Based on the foregoing analysis, we can come to no other conclusion but that the language of the agreement clearly placed the burden upon potential bidders to investigate the availability of power at the outset and, if necessary, to make other arrangements to meet construction requirements. We therefore agree with the conclusion of the trial court that the contract provides "no evidence ... standing alone, which indicates that [the Housing Authority] had a duty to supply permanent power for use by Neal during construction."
2. Extrinsic evidence
With no firm indication from the contract that a genuine issue of material fact exists as to the parties' intent, we turn to the extrinsic evidence. Foremost is the affidavit of Neal's project manager Chris Oehler, in which Oehler reported the pre-bid oral representations made by the architect that "all necessary arrangements had been made by [the Housing Authority] to assure that permanent electric utility service would be available for use by the contractor during construction on the project." The superior court concluded that this evidence was barred by operation of the parol evidence rule.
In Western Pioneer, Inc. v. Harbor Enterprises, Inc., 818 P.2d 654 (Alaska 1991), we reversed a superior court's application of the parol evidence rule, and in doing so, summarized the current status of the rule in Alaska:
The parol evidence rule is implicated when one party seeks to introduce extrinsic evidence which varies or contradicts an integrated contract. Once the rule is triggered, the parties' reasonable expectations are determined by applying a three-step test. The first step is to determine whether the contract is integrated. The second step is to determine what the contract means. Determining the meaning of a contract is treated as a question of law for the court except where there is conflicting extrinsic evidence on which resolution of the contract's meaning depends. Whether there is conflicting extrinsic evidence is a question resolved by the court. Even where there is conflicting extrinsic evidence the court decides the question of meaning except where the written language, when read in context with its subject matter, is reasonably susceptible to both asserted meanings... . Extrinsic evidence may always be received in resolving these first two inquiries. The third step is to determine whether the prior agreement conflicts with the integrated writing. Whether there is conflicting extrinsic evidence depends on whether the prior agreement is inconsistent with the integration. Inconsistency is defined as "the absence of reasonable harmony in terms of the language and respective obligations of the parties."
Id. at 657 n. 4 (citations omitted) (emphasis added).
The parties do not dispute the trial court's conclusion that the contract was fully integrated. Under the steps articulated in Western Pioneer it thus becomes necessary to elaborate upon what the contract means in view of the extrinsic evidence. Because the procedural posture of this case is such that the question of meaning has never been presented to the trier of fact, we must consider whether the contract, when read in context with the extrinsic evidence, is "reasonably susceptible to both asserted meanings." Western Pioneer, 818 P.2d at 657 n. 4.
After considering all of the extrinsic evidence presented, we remain convinced that the contract does not contain a promise by the Housing Authority to supply Neal with a source of electricity for use during construction. The strongest evidence that Neal presents is the pre-bid oral statements made by the architect to Oehler noting that permanent electrical service "would be available" for Neal's use. Taken alone, these statements might be construed either as a promise or a prediction. However, in light of the written language of the contract and other surrounding circumstances, it is clear that the statements could not have reasonably *505 been interpreted to have been anything but predictions.
As noted above, bid documents provided by the Housing Authority contained two explicit provisions vesting the responsibility for providing all light, heat, and power necessary for construction with the contractor. Upon learning that there might soon be a convenient on-site source of permanent electrical power, however, Neal made no attempt to secure a written addendum to the contract through the formal procedures outlined by the bid documents. Moreover, in the face of two express terms imputing familiarity with local conditions to the contractor, Neal apparently chose not to visit two of the construction sites or contact any of the local utilities to discuss their scheduling intentions until after the contract was awarded. Finally, although the contract documents permitted Neal to complete construction as late as May and September 1989, at the time of the contract award Neal voluntarily chose to accelerate its schedule and aim for completion by December 1988.
Although courts will look to extrinsic evidence to assist in questions of contract interpretation, we cannot ascribe undue weight to statements which, by the contract's terms, are not controlling. In this regard, we adhere to the rule-of-thumb articulated in Alaska Diversified Contractors, Inc. v. Lower Kuskokwim School District, 778 P.2d 581 (Alaska 1989), cert. denied, 493 U.S. 1022, 110 S.Ct. 725, 107 L.Ed.2d 744 (1990): "`after the transaction has been shown in all its length and breadth, the words of an integrated agreement remain the most important evidence of intention.'" Id. at 584 (quoting Restatement (Second) of Contracts § 212 cmt. b). Despite the architect's alleged pre-bid statements, when the testimony is viewed in context with all of the extrinsic evidence, it cannot be said that the contract language is "reasonably susceptible" to Neal's interpretation.
In view of this analysis, we conclude that the superior court properly applied the parol evidence rule to bar Oehler's testimony. To the extent that the architect's oral representations implied that the Housing Authority was willing to take on some "responsibility" for supplying a source of electricity for use during construction, the statements are not in "reasonable harmony" with the obligations of the parties as set out in the written agreement. The architect's pre-bid statements therefore directly contradict the meaning of the integrated agreement and will not be permitted to vary the terms of the contract.
3. Third-party beneficiary
Neal subtly presents one final argument to support its contention that the Housing Authority was responsible for providing the contractor with a source of permanent power. In Neal's view, it was a third-party beneficiary of the underlying contract between the Housing Authority and HUD. The record shows that HUD desired that the Housing Authority would have final agreements with the local utilities in place before awarding the main construction contract bid. From this, Neal infers that the Housing Authority possessed a duty to supply Neal with permanent electric power for construction.
This argument also lacks merit. Although Neal may have been at least an incidental third-party beneficiary of the Housing Authority's contract with HUD, a third-party right in a contract will not be implied absent evidence showing that the parties intended that at least one purpose of the contract is to benefit the third party. Stewart-Smith Haidinger, Inc. v. Avi-Truck, Inc., 682 P.2d 1108, 1112 (Alaska 1984). Because Neal presented no supporting affidavits tending to show that there is a genuine issue for trial on this claim, Neal's third-party beneficiary argument cannot provide a basis for reversal.
We conclude that there are no genuine issues of material fact tending to show that the parties expected the Housing Authority to supply the sites with a source of permanent electricity for use during construction. Since under the contract Neal was therefore solely responsible for meeting its own power requirements, Neal's claim for an equitable adjustment of the contract price was properly denied as a matter of law. We affirm the grant of partial summary judgment in favor of the Housing Authority.
*506 B. Neal's Motion for Reconsideration
Neal additionally appeals from its unsuccessful motion for reconsideration in response to the trial court's entry of partial summary judgment. Neal urged the court to postpone its final decision until the court had an opportunity to hear all of the evidence at trial, especially expert testimony concerning "standard public construction industry practices." During brief oral argument at the pre-trial conference, Neal made two alternative requests of the court: (1) grant a short continuance to allow the court to process the arguments in Neal's newly submitted 60-page brief; or (2) designate the decision as a final judgment under Alaska Civil Rule 54(b).
Under Alaska Civil Rule 77(k), a litigant may move the court to reconsider a ruling under certain limited circumstances:
(i) The court has overlooked, misapplied, or failed to consider a statute, decision or principle directly controlling; or
(ii) The court has overlooked or misconceived some material fact or proposition of law; or
(iii) The court has overlooked or misconceived a material question in the case; or
(iv) The law applied in the ruling has been subsequently changed by court decision or statute.
A trial court's decision on a motion to reconsider will not be reversed on appeal absent an abuse of discretion. State v. Alaska Continental Dev. Corp., 630 P.2d 977, 990 (Alaska 1980); Brown v. State, 563 P.2d 275, 279 (Alaska 1977); Miller v. McManus, 558 P.2d 891, 892 (Alaska 1977).
Given the evidence presented by the record, we cannot say that in denying Neal's motion to reconsider Judge Curda clearly erred. First, upon review of Neal's motion, we fail to detect any legal proposition that differs from those originally raised in opposition to the Housing Authority's motion for summary judgment. In light of this and the superior court's original twenty-page memorandum decision which thoroughly addressed the facts and Neal's various arguments, we are not convinced that in entering summary judgment, the court "overlooked" a material question, fact, or principle bearing on the case.
Second, in referring to the two experts that Neal planned to present at trial and requesting that the court review the contractor's trial brief, Neal effectively moved the trial court to reconsider its ruling based upon evidence that was not before it at the time it rendered its decision.[10] Neal provided no explanation for the delay in presenting the evidence.[11] Moreover, Neal had ample opportunity to secure the affidavits and depositions that it deemed necessary to oppose the summary judgment motion. The Housing Authority moved for partial summary judgment approximately a year and a half after the initiation of the case. Neal was given two forty-five-day continuances to conduct additional discovery. Following oral argument, Neal supplemented the record.
We refuse to allow a motion for reconsideration to be used as a means to seek an extension of time for the presentation of additional evidence on the merits of the claim. To do so would defeat the limited purpose of Rule 77(k): to remedy mistakes in judicial decision-making where grounds exist, while recognizing the need for a fair and efficient administration of justice. There being no compelling justification for re-opening the merits of Neal's claim, we affirm the *507 superior court's denial of Neal's motion for reconsideration.
C. Evidentiary Ruling
Finally, Neal appeals the trial court's evidentiary ruling which followed the denial of Neal's motion for reconsideration and precluded Neal from presenting further evidence on the electricity issue at trial. Neal argues that the ruling was in error because under Alaska Civil Rule 54(b), a grant of partial summary judgment not entered as a final judgment may be revised at any time after additional evidence is heard at trial. Neal therefore contends that in situations such as this where the party desires to present additional evidence, unless a Rule 54(b) final judgment is entered, the trial court is obligated to continue hearing evidence on the decided issue.
We do not agree. In cases partially adjudicated on a summary judgment motion, Alaska Civil Rule 56(d) provides that the facts that pertained to the entry of partial summary judgment "shall be deemed established." Although the trial court retains the option to hear additional evidence on the matter, see Alaska N. Dev., Inc. v. Alyeska Pipeline Serv. Co., 666 P.2d 33, 38 (Alaska 1983), cert. denied, 464 U.S. 1041, 104 S.Ct. 706, 79 L.Ed.2d 170 (1984), the court is not required to do so. Like other questions of evidentiary relevance, this decision is reserved for the discretion of the trial court. Id. at 42.
We cannot say that Judge Curda was clearly mistaken in refusing to allow Neal to present additional evidence on the electricity issue at trial. We therefore affirm.
IV. CONCLUSION
Neal has not shown that a genuine issue of material fact exists as to the parties' expectations concerning whether the Housing Authority was responsible for providing a source of permanent electricity for Neal's use during construction. We agree with the trial court that the construction contract was reasonably susceptible to only one interpretation: that the Housing Authority was not responsible for supplying Neal with a source of permanent electricity and that, consequently, Neal is not entitled to an equitable adjustment on that basis.
AFFIRMED.
NOTES
[1] Housing Authority Executive Director John Guinn affied that permanent electrical power was present at four sites within a distance of 200 to 800 feet. Nevertheless, only one of the five construction sites was directly outfitted with a source of permanent electricity which could support Neal's power requirements.
[2] The inquiries were made specifically to employees of Kowchee, Inc., the project architect, which possessed the authority to act as a conduit for dialogue between the Housing Authority and the contractor.
[3] Permanent electrical service arrived at the unequipped sites on the following dates:
Mekoryuk December 16, 1988
Napakiak December 18, 1988
Napaskiak April 1, 1989
Pitkas Point April 20, 1989
[4] The standard-form HUD contract allows the contractor to request an equitable adjustment to compensate for site conditions that "differ materially from those ordinarily encountered and generally recognized as inhering in work of the character provided for in the contract."
[5] The relevant portion of the "Temporary Facilities and Controls" section provided:
1. Temporary Utilities: Water and electricity for construction shall be the responsibility of and shall be paid by the Contractor. Ascertain where these services will be available, make temporary connections as required and remove same upon completion of work.
2. Temporary Heat: Furnish temporary heat by methods approved by the Architect... .
(Emphasis added.)
[6] In the "Description of Systems" section, the contract stated: "The contractor shall be responsible for verifying that the electrical equipment provided will operate with the site electrical system... ."
[7] The "Contractor[']s Responsibility for Work" clause stated: "The Contractor shall furnish all necessary labor, materials, tools, equipment, water, light, heat, power, transportation, and supervision necessary for performance of the work and shall properly protect it until acceptance by the [Housing Authority]." (Emphasis added.) See also supra note 5.
[8] The "Conditions Affecting the Work" clause further provided:
The [Housing Authority] assumes no responsibility for any conclusions or interpretations made by the Contractor based on the information made available by the [Housing Authority]. Nor does the [Housing Authority] assume responsibility for any understanding reached or representation made concerning conditions which can affect the work by any of its officers or agents before the execution of this contract, unless that understanding or representation is expressly stated in the contract.
(Emphasis added.)
[9] In addition, the contractor's responsibility to pay for utility connections or extensions is detailed separately in the contract.
[10] Neal apparently never provided the trial court with affidavits describing the experts' testimony, and the experts' depositions were not filed with the trial court until the day of the pre-trial conference two days after the motion to reconsider. In addition, although it was timely, Neal submitted its trial brief the Monday following the court's Friday entry of partial summary judgment.
[11] Summary judgment was entered on October 1, 1993. Neal explains that because Chris Oehler could not be deposed until mid-September 1993, in order to save money, Oehler and Neal's experts were deposed on the same trip. However, even if the depositions were scheduled too late to obtain copies in time to submit to the court, Alaska Civil Rule 56(e) allows a party to submit supporting affidavits to oppose summary judgment. Earlier, Neal submitted an affidavit from Oehler even though he was incarcerated out-of-state. Neal does not explain why it would have been infeasible to submit affidavits outlining the opinions of the experts as well.
| {
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NOT DESIGNATED FOR PUBLICATION
No. 121,808
IN THE COURT OF APPEALS OF THE STATE OF KANSAS
In the Interest of P.H.,
A Minor Child.
MEMORANDUM OPINION
Appeal from Sedgwick District Court; J. PATRICK WALTERS, judge. Opinion filed June 5, 2020.
Affirmed.
Michael E. Lazzo, of Wichita, for appellant natural father.
Julie A. Koon, assistant district attorney, and Marc Bennett, district attorney, for appellee.
Before ARNOLD-BURGER, C.J., MALONE AND GARDNER, JJ.
PER CURIAM: S.H. (Father) appeals the district court's finding that he is unfit to
parent his daughter, P.H. Father argues that there is insufficient evidence to support the
district court's findings and that the State failed to plead the facts properly for which the
district court terminated his parental rights.
The record reflects that although Father completed court ordered tasks, Father
failed to implement secondary change. Additionally, a review of the record shows the
State alleged the facts and grounds necessary to find Father lacked effort in adjusting his
circumstances, conduct, or condition to meet the needs of P.H., and the district court's
finding is supported by the record. Because there is clear and convincing evidence to
support the district court's ruling, we affirm.
1
FACTUAL AND PROCEDURAL HISTORY
A.H. (Mother), age 28, gave birth to P.H. in February 2018. Immediately
following the birth, police placed P.H. in protective custody because of Mother's
"history" and safety concerns of hospital staff. Although not explicitly explained, the
concerns about Mother's "history" involve Mother's involuntary manslaughter conviction
for the brutal death of her two-year-old daughter in 2012. She also had another child for
whom she relinquished her parental rights after leaving the child with caregivers for long
periods of time and physical abuse.
The district court held a temporary custody hearing a few days later, and Father,
age 17 and living with his mother, appeared at the hearing. The district court ordered P.H.
to remain in the temporary custody of the Department of Children and Families (DCF).
The court also adopted the State's proposed orders. These orders included that Father
should: (1) abstain from the use of illegal drugs or alcohol; (2) obtain and maintain full-
time employment; (3) obtain and maintain appropriate housing; (4) complete a clinical
interview and assessment, anger management classes, parenting classes, and a substance
abuse evaluation; and (5) participate in hair follicle testing as scheduled and random
urinalysis testing.
Four months later, Mother and Father submitted no-contest statements, and the
district court adjudicated P.H. as being a child in need of care. The district court ordered
P.H. to remain in the custody of DCF.
Less than a month after the adjudication hearing, the State moved for a finding of
unfitness and termination of parental rights for both parents. The motion stated that
Father was arrested and charged with aggravated robbery about a week after P.H.'s birth.
Father was detained at the Juvenile Detention Facility until March 29, 2018, The motion
stated that SFCS did not have contact with Father at first, but Father eventually met with
2
SFCS in late June 2018. Father said he was employed and completed a substance abuse
evaluation but had not completed a clinical assessment. The motion also stated Father
was charged with "pedestrian use sidewalk."
The termination hearing occurred nine months after the State's motion for finding
of unfitness. After ruling on two motions in limine and determining the presumption of
unfitness applied to Mother, the State presented evidence through 15 witnesses as for
Mother's and Father's alleged unfitness. See K.S.A. 2019 Supp. 38-2271(a)(4) ("It is
presumed . . . that a parent is unfit . . . if the State establishes, by clear and convincing
evidence, that: . . . (4) the parent has been convicted of causing the death of another child
. . . ."). Neither Mother nor Father testified.
After hearing the testimony and considering the exhibits, the district court held
that Mother and Father were unfit and terminated their parental rights. Specifically, the
district court found that Father was unfit due to: "[f]ailure of reasonable efforts made by
appropriate public or private agencies to rehabilitate the family [K.S.A. 2019 Supp. 38-
2269(b)(7)]" and "[l]lack of effort on the part of the parent to adjust the parent's
circumstances, conduct or conditions to meet the needs of the child [K.S.A. 2019 Supp.
38-2269(b)(8)]." The district court also found that termination of parental rights was in
the child's best interests.
Father timely filed this appeal.
ANALYSIS
When reviewing a finding of parental unfitness, this court must determine, after
reviewing all of the evidence in a light most favorable to the State, whether a rational
fact-finder could have found the determination to be highly probable, i.e., by clear and
convincing evidence. See In re B.D.-Y., 286 Kan. 686, 705-06, 187 P.3d 594 (2008); In re
3
K.P., 44 Kan. App. 2d 316, 318, 235 P.3d 1255 (2010). In making this determination, the
appellate court does not weigh conflicting evidence, pass on the credibility of witnesses,
or redetermine questions of fact. In re B.D.-Y., 286 Kan. at 705.
As provided in K.S.A. 2019 Supp. 38-2269(a), the State must prove a parent is
unfit "by reason of conduct or condition which renders the parent unable to care properly
for a child and the conduct or condition is unlikely to change in the foreseeable future."
The statute contains a nonexclusive list of nine factors that singularly or in combination
may constitute unfitness. K.S.A. 2019 Supp. 38-2269(b), (f). The statute lists four other
factors to be considered when, as here, the parent no longer has physical custody of a
child. K.S.A. 2019 Supp. 38-2269(c).
On appeal, Father mainly argues that the State failed to properly plead the facts for
which the district found him unfit. Father argues that the issue in his case is whether the
parent must be given notice "that such conduct is being considered as a reason for
termination, and given the opportunity to change such conduct, before it is used as the
basis to terminate his rights." Father made a similar argument throughout the termination
hearing. Because this is the bulk of his argument, it will be addressed first.
Father was properly notified of the facts and circumstances for which the district court
terminated his parental rights under K.S.A. 2019 Supp. 38-2269(b)(8).
As noted, the district court terminated Father's parental rights, in part, on the
grounds that he lacked effort "to adjust the parent's circumstances, conduct or conditions
to meet the needs of the child pursuant to [K.S.A. 2019 Supp. 38-2269(b)(8)]." To
support an unfitness finding under this factor, the State presented the testimony of many
police officers who testified at length about Father's contact with law enforcement and his
reputation within the Wichita Police Department. The State's theory appeared to be that
Father lacked effort to adjust his conduct to meet the needs of P.H. because of his
4
continued negative law enforcement interactions. As to Father's negative interactions
with law enforcement, the evidence showed:
• Before P.H.'s birth, police contacted Father after police received a report that
persons involved in a car accident fled to a "nearby red shed" where Father was
located. Police located three stolen vehicles and other stolen property at the red
shed. Police saw Father leave the shed and contacted him. A trooper testified that
Father was "very standoffish" when the trooper tried to speak with him and when
the conversation "went downhill" his lieutenant stepped in, took custody of Father
and interviewed him. Father was never charged with any crimes related to this
incident.
• Officers Jamie Thompson and Jeffrey Walters of the Wichita Police Department
testified that they were tasked with locating Father and Father's brother after they
were named suspects in an aggravated robbery a few weeks after P.H. was born.
Officers located Father after seeing him sitting in the passenger seat of a vehicle
that Mother was driving. Officers then detained Father and he was interviewed.
Upon a search of Mother's home, where Father and his brother resided, police
located a bag that contained a social security card for Father's brother, four
syringes, and a "spoon that had methamphetamine paraphernalia residue on it."
But police did not find any evidence that connected Father to the contents of the
bag. Father's brother fled the house, but police eventually apprehended him.
• Walters has responded to reports of "disturbances, suspicious characters, check
shots, [and] reports of shots fired that have all been somehow linked to that
residence" of Father. That said, Walters has never arrested Father on these other
reports.
5
• Four months after P.H.'s birth, Officers Brek Train and Brandon Faulkner of the
Wichita Police Department responded to a riot call at Father's home. Train
testified that a woman told police that men associated with an address near
Father's had shot at Father's house. After investigating, police concluded that the
gunfire was in response to fireworks "being shot off too late" in the street. Train
also determined that there was return gunfire from the porch of Father's house
because he found cartridge casings on the front porch that were a different caliber
than the casings reportedly fired toward Father's home. Police found some casings
at a location that "appeared as if they were [being fired] toward the house" while
the others were found on the front porch of the house being fired at. Train and
Faulkner determined that there were three children residing in the home, but no
one suffered any gunshot wounds. Police never arrested or charged Father this
incident.
• Six months after P.H.'s birth, Officer Blake McElwain of the Wichita Police
Department testified that police received a disturbance call alleging an individual
had pointed a gun at Father. Although Father was the victim, McElwain could not
contact Father because Father fled and "jumped off a balcony."
• One year after P.H.'s birth, Officer Jax Rutledge of the Wichita Police Department
testified that he responded to a traffic accident involving Father. After
investigating, Rutledge determined that while Father was driving "at an excessive
rate of speed," Father tried to "pass a vehicle by going into oncoming traffic, and
that vehicle had then turned in front of him, and he smacked it, and both vehicles
went basically off of the road at that point."
Following the accident, Rutledge interviewed Father, and Father gave him
inconsistent stories about how the accident occurred. First, he claimed his brakes
were not working. Then he claimed he was driving 35 miles per hour. Eventually,
6
Father alleged he was going "40 to 50 miles an hour," but Rutledge determined
Father was going 60 miles per hour. Father said he was "just trying to pass the car
because he was in a hurry" but also said he was being chased by his brother. After
investigating, Rutledge determined that there was no vehicle behind Father during
the accident, and Rutledge cited Father for failing to have proof of insurance,
driving on a suspended license, and careless driving.
• Malachi Wulf testified that he called police after witnessing an incident about a
month after the car accident. Wulf testified that he saw Father and two others
driving down the street "at a high rate of speed." The car "had to hit the brakes"
because there were two kids in the street. The kids did not get hit, "but they ran up
in their yard screaming." A pickup was following the car, and the person inside the
pickup "pulled up behind the individuals and was yelling at them something in
Spanish." Wulf saw the people in the car "jump out" and the individual sitting in
the back seat waved a gun. The car then "did a burnout and accelerated away."
Wulf testified that the incident was "crazy" and he had "never seen nothing like
that in life." Wulf knew Father was in the car because Father lived across the street
from Wulf's sister. It is not clear whether Father was the person waving the gun.
As to Father's reputation within the law enforcement community, the evidence
showed:
• Dalena Mar, a social worker for DCF, testified that DCF requested police put P.H.
in protective custody after she was born. Mar testified that DCF did not give the
police any information about Mother's involuntary manslaughter conviction.
Instead, when DCF mentioned that one parent was Father, "the officer
automatically responded that he knew who that was and that they didn't have an
issue putting the child in police protective custody based on their knowledge of
[Father]." Mar testified to other concerns and made recommendations, but the
7
district court found it would "disregard her recommendations" because Mar had
not been involved in the case for one year.
• Walters testified that he had interacted with Father several times and he has had
"only negative interactions" with Father. Walters testified "[a]nytime that [he]
would deal with [Father] under any circumstances for the rest of [his] career, [he]
would always use caution more than [he] would an average citizen." Walters
explained that Father "obviously [has] a lot of animosity toward law enforcement"
because anytime police drove by Father's residence, "it would not be unusual for
[Father] to be out in the front yard flipping us off, saying 'Fuck the police,' things
of that nature." Walters testified that "veteran officers" who have worked in the
area where Father and his brother resided, "had experiences with [Father] enough
that they wanted to warn [him] to be careful if [he had] to deal with him."
• McElwain testified that he was familiar with Father before he responded to the
disturbance call because of his reputation as a "troublemaker." McElwain testified
that officers are advised to use caution when dealing with Father.
• Train testified that he was aware of Father's reputation, despite not working in the
area where Father resides. Law enforcement had discussed Father at squad
meetings, and Train learned that Father is "known to carry firearms" and Father
had been "involved in robberies and chases with the police department." Train
testified that he was told "[t]o be cautious" when dealing with Father.
• Faulkner testified that he was familiar with Father's address because it is
"[p]robably one of the most well-known addresses to law enforcement in the
Planeview area just from the calls that [they] get from that area." Faulkner added
that Father is "probably the most well known" individual from this address.
Faulkner also testified that Father has a reputation as "[t]roublemaker" within the
law enforcement community.
8
Wulf also testified that he had another negative, and allegedly unlawful, encounter
with Father involving a gun around three weeks before the termination hearing. Wulf
testified that while at his sister's house, Father was outside "revving" the engine of his
car. Wulf asked Father if he would "'quiet that down'" because the noise was scaring his
two-year-old niece. Wulf testified that he was "told in an unpleasant way to mind [his]
own f'ing business." Wulf saw that Father had a gun in his waistband which he pulled out
"and had it down by his side" as Wulf walked away. Wulf testified that the incident "just
throws [him] off." He added, "Like why did he even pull a gun on a car incident, you
know? That's dumb."
As shown, the State presented detailed evidence supporting their claim that Father
had a reputation as a troublemaker within the law enforcement community and that he
continued to have negative interactions with law enforcement after the birth of P.H.
Father does not appear to dispute this evidence. Rather, Father argues the State should
have given him notice that his negative law enforcement contact was being considered as
a ground for termination because without notice, he was not given a chance to make
changes to this behavior. The State argues that Father's argument "defies common sense"
and is "illogical." The State maintains that "one of the overriding focuses of a CINC case
is to make sure that the parents can provide a safe and stable home for their child" and
therefore a court should not have to tell Father to "refrain from negative law enforcement
contact and stop associating with people involved in criminal activity and illegal drugs."
Father relies on K.S.A. 2019 Supp. 38-2266(b) to support his argument. This
subsection states, "Whenever a pleading is filed requesting termination of parental rights
or appointment of a permanent custodian, the pleading shall contain a statement of
specific facts which are relied upon to support the request, including dates, times and
locations to the extent are known." K.S.A. 2019 Supp. 38-2266(b). In the State's motion
for finding of unfitness and termination of parental rights, the State alleged the following
relevant facts:
9
• Father failed to provide a safe and stable living environment for P.H.
• There were concerns for P.H.'s safety in Father's care.
• Father had a history of criminal activity.
• Father did not make the necessary changes in lifestyle to keep P.H. safe.
• Father was arrested, and later charged, with aggravated burglary.
• Father was detained at the Juvenile Detention Facility and released on March 29,
2018.
• Father was charged with pedestrian use sidewalk.
The State then requested termination of Father's parental rights on these grounds
and alleged facts:
• K.S.A. 2019 Supp. 38-2269(b)(3): "Father has a history of substance abuse. . .
tested positive for THC and benzodiazepine. He admitted marijuana use. . ."
• K.S.A. 2019 Supp. 38-2269(b)(5): "Father charged with aggravated robbery, a
level three (3) person felony . . ."
• K.S.A. 2019 Supp. 38-2269(b)(7): "The court, DCF, and SFCS have made
extensive efforts to assist Father in stabilizing his situation to place him in a
position to provide appropriate care to his child. Efforts include referral to
complete court orders, case plan tasks, and drug screenings, as well as visitations
with his child. . ."
• K.S.A. 2019 Supp. 38-2269(b)(8): "Father has failed to modify his situation to
place him in a position to provide appropriate care for his child. . . . Father has
continued to engage in illegal activity and has been charged with aggravated
robbery."
Father also cites In re J.W., No. 112,668, 2015 WL 8590309 (Kan. App. 2015)
(unpublished opinion), to support his position that parents need to be "notified of
10
conditions which require a change, before those conditions can be used against them to
terminate their parental rights." In In re J.W., a panel of this court found that the agency
placed in charge of the children's care did not provide "'reasonable efforts'" when they
"set up requirements for reintegration which are outside of the parameters of the written
permanency plan without amendment of the plan." 2015 WL 8590309, at *11. Father
relies on this decision to suggest that Father was "not told of the concern about negative
police involvement."
Father's argument is not persuasive. Although there was never a court order or
case plan task that directly advised Father to avoid negative law enforcement contact, the
State alleged the specific facts relied on to support their argument that Father failed to
adjust his conduct to meet the needs of his child. The State specifically alleged Father
"continued to engage in illegal activity" as support for their request to terminate his
parental rights under K.S.A. 2019 Supp. 38-2269(b)(8). This is distinguishable from In re
J.W. The court there was considering whether the agency provided reasonable efforts to
rehabilitate the family under K.S.A. 2014 Supp. 38-2269(b)(7) when it failed to notify
Mother until two weeks before trial that reintegration would not be considered until her
boyfriend moved out. In other words, the court was examining whether the agency had
fulfilled its responsibilities. 2015WL 8590309 at *11. Here, by highlighting negative law
enforcement contacts the district court was focused on whether Father had done enough
to adjust his circumstances and conduct to meet the needs of P.H. under K.S.A. 2019
Supp. 38-2269(b)(8)—particularly her safety and security needs.
Additionally, we agree with the State that Father's argument ignores the fact that
he consistently lied to his case managers about his contacts with law enforcement. The
SFCS caseworker testified that she would ask Father monthly whether he had any law
enforcement contact. Father said he did not until the car wreck in late February 2019. The
caseworker testified that although he told her about the wreck, she did not learn the truth
about the wreck until a week before the termination hearing. Father told the caseworker
11
that he had hydroplaned and denied hitting another car. Similarly, neither parent notified
the caseworker when Father was placed in juvenile detention for aggravated robbery, nor
was she notified when he was released. She was also never told why Father was placed in
juvenile detention. And the caseworker was never told about the fireworks incident
leading to the exchange of gunfire.
The evidence presented at trial supports the State's position that Father lacked
effort to adjust his circumstances, conduct, or conditions to meet the needs of P.H. Before
P.H. was born, Father had established a reputation as a troublemaker within the law
enforcement community. After P.H.'s birth, but before P.H. was adjudicated as needing
care, Father was arrested and charged with aggravated burglary. After P.H. was
adjudicated; gunfire was exchanged at Father's house; an individual pulled a gun on
Father, but he fled before police arrived; and Father was involved in a car accident after
he swerved into oncoming traffic while illegally trying to pass another car. Together with
these incidents reported to police, the State presented testimony that Father pulled a gun
on his neighbor's brother after being asked to quiet down.
As argued by the State, Father failed to address the chaos in his life when he
continued to engage in behaviors that led to creating an unsafe environment for P.H.
When reviewed in a light most favorable to the State, a rational fact-finder could find the
district court's decision under K.S.A. 2019 Supp. 38-2269(b)(8) to be highly probable and
supported by clear and convincing evidence. See In re B.D.-Y., 286 Kan. at 705-06.
Reasonable efforts made by public or private agencies to rehabilitate the family have
failed because Father failed to implement secondary change.
A district court may find a parent unfit if there is clear and convincing evidence
that the reasonable efforts made by public or private agencies to rehabilitate the family
have failed. K.S.A. 2019 Supp. 38-2269(b)(7). As to this termination ground, Father
12
argues that the "uncontroverted evidence disproved these claims" because Father
completed all court orders. The State argues that despite Father completing the court
orders, "he was not forthcoming with case workers about his repeated law enforcement
contacts or his continued association with individuals associated with criminal activity."
As noted by Father, the district court found that "for all intents and purposes, the
parents have complied with the orders of the Court as directed by the caseworker." The
State concedes as much. That said, the State argues that Father failed to implement
secondary change after completing these orders. This assertion is supported by the record.
Along with Father's negative law enforcement contacts, witnesses testified to the
following:
• Kristen Peterman, an employee at DCF, defined secondary change as "an
internalization" of what a parent has learned in classes or services and "applying
what [the parent has] learned to your day-to-day life." Based on the actions of
Father, Peterman testified that she was concerned that Father's behavior doesn't
"necessarily demonstrate that [he has] an understanding of what [he] learned in
classes or therapy." For example, Father is "still associating with individuals who
have criminal activity" and having that association puts P.H. at a safety risk.
Peterman expressed similar concerns with Father's behavior, stating, "When there
are weapons that aren't stored properly, that are shot over a dispute with a
neighbor, reckless driving, . . . having law enforcement pursue your car and the
parent getting arrested, all of that creates safety risks for the child."
• Alanea Hanna, a social worker for SFCS, testified that she is concerned with
Fathers "risky or at-risk behavior" and his failure to implement secondary change.
Hanna testified that she believed Father's law enforcement contact "has been to the
point where if [P.H.] was present, she would be harmed. . . . [I]f [P.H.] would have
been in the home on any of those occasion that we have heard, she could be placed
13
in harm." Hanna testified that although visitations went well with Father,
"[v]isitation is different than having a child in your care at all times." Hanna also
testified that SFCS had trouble addressing some concerns with Father because
Father was not forthcoming with his behavior.
• SFCS caseworker Lavana Faine testified that Father completed all court orders
and recommended reintegration. Faine was the only witness to make this
recommendation but she recommended reintegration contingent upon SFCS
completing a six-month reintegration plan. Faine testified that she was unaware of
Father's criminal behavior, despite asking him monthly if he had contact with law
enforcement. Faine initially testified that Father implemented secondary change.
Yet on cross examination, Faine testified that after hearing all the evidence
presented at trial, she has safety concerns for P.H. and conceded that Father has
failed to make secondary changes.
When reviewed in a light most favorable to the State, a rational fact-finder could
find the district court's decision based on K.S.A. 2019 Supp. 38-2269(b)(7) to be highly
probable and supported by clear and convincing evidence. See In re B.D.-Y., 286 Kan. at
705-06. Although Father completed the court ordered tasks, Father failed to implement
the secondary change necessary to create a safe environment for P.H. in order to
rehabilitate the family.
For all the reasons stated above, we find that clear and convincing evidence
supported the district court's finding of parental unfitness as to Father.
Affirmed.
14
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 14-1103
DEREK N. JARVIS,
Plaintiff - Appellant,
v.
THE CHRISTMAS ATTIC,
Defendant - Appellee.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Claude M. Hilton, Senior
District Judge. (1:12-cv-01010-CMH-TRJ)
Submitted: April 24, 2014 Decided: April 29, 2014
Before NIEMEYER, SHEDD, and FLOYD, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Derek N. Jarvis, Appellant Pro Se. Victor M. Glasberg, VICTOR
M. GLASBERG & ASSOCIATES, Alexandria, Virginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Derek N. Jarvis appeals the district court’s January
17, 2014, order denying his motion to file a second amended
complaint. Because we affirmed the dismissal of his previous
complaint, the time period for filing an amended complaint had
expired. See Fed. R. Civ. P. 15(a). Accordingly, we affirm.
We deny Jarvis’ motion to proceed in forma pauperis, deny
Appellee’s motion to designate Jarvis as a “vexatious litigant,”
and dispense with oral argument because the facts and legal
contentions are adequately presented in the materials before
this court and argument would not aid the decisional process.
AFFIRMED
2
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Case: 09-50948 Document: 00511138631 Page: 1 Date Filed: 06/10/2010
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
June 10, 2010
No. 09-50948
Summary Calendar Lyle W. Cayce
Clerk
UNITED STATES OF AMERICA,
Plaintiff-Appellee
v.
JOSE BOLIVAR CIENFUEGOS-POMPA, also known as Jose P. Cienfuegos,
Defendant-Appellant
Appeal from the United States District Court
for the Western District of Texas
USDC No. 6:09-CR-86-1
Before KING, STEWART, and HAYNES, Circuit Judges.
PER CURIAM:*
Jose Bolivar Cienfuegos-Pompa (Cienfuegos) pleaded guilty to a superseding
information charging that he was an illegal alien in possession of at least one of six
enumerated firearms. Cienfuegos preserved his right to appeal the district court’s denial of
his suppression motion. He now argues that the district court clearly erred in denying the
motion with respect to the firearms that were seized without a warrant on April 15, 2009.
He argues that his surrender of the firearms was not the result of free and voluntary consent.
“In reviewing the denial of a motion to suppress, the district court’s factual findings
are reviewed for clear error, and its legal conclusions . . . are reviewed de novo.” United
*
Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not be published
and is not precedent except under the limited circumstances set forth in 5TH CIR . R. 47.5.4.
Case: 09-50948 Document: 00511138631 Page: 2 Date Filed: 06/10/2010
No. 09-50948
States v. Jacquinot, 258 F.3d 423, 427 (5th Cir. 2001). Voluntariness of consent is a finding
of fact reviewed for clear error. United States v. Arias-Robles, 477 F.3d 245, 248 (5th Cir.
2007). When, as here, the district court’s finding of consent is based on oral testimony at a
suppression hearing, the clear error standard is particularly strong because the district court
had the opportunity to observe the demeanor of the witnesses. See United States v. Gonzales,
79 F.3d 413, 421 (5th Cir. 1996).
A search pursuant to consent is a well-established exception to the Fourth Amendment
requirement of a warrant. United States v. Tompkins, 130 F.3d 117, 121 (5th Cir. 1997).
Where an appellant challenges the voluntariness of consent to a search, the Government must
prove that consent was freely and voluntarily given by a preponderance of the evidence.
United States v. Santiago, 410 F.3d 193, 198-99 (5th Cir. 2005). That burden is not satisfied
by a mere submission to a claim of lawful authority. United States v. Villareal, 963 F.2d
770, 777 (5th Cir. 1992). In evaluating the voluntariness of consent, the examining court
should consider “(1) the voluntariness of the defendant’s custodial status; (2) the presence
of coercive police procedures; (3) the extent and level of the defendant’s cooperation with
police; (4) the defendant’s awareness of his right to refuse consent; (5) the defendant’s
education and intelligence; and (6) the defendant’s belief that no incriminating evidence will
be found.” United States v. Jenson, 462 F.3d 399, 406 (5th Cir. 2006). All six factors are
relevant; however, no one is dispositive. Arias-Robles, 477 F.3d at 248.
On appeal, Cienfuegos challenges the district court’s findings with respect to a lack
of coercion. He argues that his actions amounted to no more than a mere submission to a
claim of lawful authority. Warden Bernstein testified at the suppression hearing that he
considered his actions to be a “knock and talk” and that he “basically asked [Cienfuegos] if
he would mind getting the weapons” for him. Bernstein’s testimony thus supports the district
court’s finding of a lack of coercion. Moreover, “[t]he mere failure of the officers to give
an encyclopedic catalogue of everything they might be interested in does not alone render
the search involuntary.” United States v. Davis, 749 F.2d 292, 295 (5th Cir. 1985).
Although Cienfuegos may have assumed that Warden Bernstein’s inquiry related only to his
earlier hunting violations, there is no evidence in the record to support the conclusion that
Warden Bernstein intentionally misrepresented his purpose for requesting to see the firearms.
2
Case: 09-50948 Document: 00511138631 Page: 3 Date Filed: 06/10/2010
No. 09-50948
Cienfuegos did not provide any such testimony; nor does the cross-examination of the
Government’s witnesses reveal such a ruse.
Cienfuegos has not shown that the district court clearly erred in determining that
consent for the search was voluntarily given. See Arias-Robles, 477 F.3d at 248.
Accordingly, the judgment is AFFIRMED.
3
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588 F.2d 1351
Richardsv.McKenzie
No. 78-6474
United States Court of Appeals, Fourth Circuit
11/7/78
1
N.D.W.Va.
VACATED AND REMANDED
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52 Cal.App.4th 618 (1997)
THE PEOPLE, Plaintiff and Respondent,
v.
RICHARD CANNIFF MESCE, Defendant and Appellant.
Docket No. A071221.
Court of Appeals of California, First District, Division Two.
February 4, 1997.
*620 COUNSEL
Geri Lynn Green, under appointment by the Court of Appeal, for Defendant and Appellant.
Daniel E. Lungren, Attorney General, George Williamson, Chief Assistant Attorney General, Ronald A. Bass, Assistant Attorney General, Christopher W. Grove and Tyler R. Meade, Deputy Attorneys General, for Plaintiff and Respondent.
[Opinion certified for partial publication.[*]]
*621 OPINION
LAMBDEN, J.
Defendant Richard Canniff Mesce pleaded no contest to a charge of misdemeanor assault in 1987 and was consequently convicted. Effective 1993, Penal Code section 12021, subdivision (c), made it an offense to possess any firearm within 10 years after conviction of various misdemeanor offenses, including the type of assault previously committed by defendant. In the case before us defendant was convicted of violating this statute, among others. He contends the ex post facto clauses of the federal and state Constitutions protect him from prosecution under the statute and require reversal of his conviction for its violation. We disagree because we find the statute's effect is not retroactive. In an unpublished portion of the opinion, we also reject defendant's other challenges to his conviction.
BACKGROUND
Defendant was charged with attempted murder (Pen. Code, §§ 664, 187; except as noted, unspecified references are to the Penal Code); assault with a deadly weapon, involving personal use of a firearm (§ 245, subd. (a)(2), 1192.7, subd. (c)(8), 12022.5), and unlawful possession of a firearm within 10 years of being convicted of a misdemeanor assault (§ 12021, subd. (c)).
The victim testified defendant fired shots at him with a revolver. The other witness testified she saw the victim running near her house while a man fired a rifle towards him. Defendant denied firing any shots and claimed to have been in a shed on his own property, at the local Coast Guard station or traveling by boat between those two locations. He also claimed on the day of the alleged shooting the victim had threatened to kill him and had, contrary to the allegations, actually fired shots at him.
The jury acquitted defendant of attempted murder but found him guilty of aggravated assault with a firearm and guilty of possession of a firearm by one previously convicted of a misdemeanor assault. The court denied probation and sentenced defendant to prison for a total term of seven years, including a two-year concurrent term for the firearms possession conviction. Defendant promptly appealed.
DISCUSSION
I. The statute is not retroactive
(1) An ex post facto law is one which later punishes an act done before the enactment of the law. The ex post facto law and its evil twin, the bill of *622 attainder (legislation which purports to convict by decree and without the inconvenience of trial), have been anathema to the American legal system from its inception. Although courts traditionally refer to the ex post facto prohibition in the singular, actually two such proscriptions exist in the United States Constitution and a third in the California Constitution. (U.S. Const., art. I, § 9, cl. 3, § 10; Cal. Const., art. I, § 9.)
The effect of the ex post facto prohibition is to invalidate: "[(1)] Every law that makes an action done before the passing of the law, and which was innocent when done, criminal; and punishes such action. [(2)] Every law that aggravates a crime, or makes it greater than it was, when committed. [(3)] Every law that changes the punishment, and inflicts a greater punishment, than the law annexed to the crime, when committed. [(4)] Every law that alters the legal rules of evidence, and receives less, or different testimony, than the law required at the time of the commission of the offense, in order to convict the offender." (Calder v. Bull (1798) 3 U.S. (3 Dall.) 386, 390 [1 L.Ed. 648, 650], italics omitted; Collins v. Youngblood (1990) 497 U.S. 37, 42 [110 S.Ct. 2715, 2719, 111 L.Ed.2d 30].)
(2a) The second and third of the foregoing categories are in contention here and, taken together, pose the question whether section 12021, subdivision (c), imposes additional punishment retroactively upon the defendant for his previous misdemeanor. (See Cummings v. Missouri (1866) 71 U.S. (4 Wall.) 277, 325-326 [18 L.Ed.2d 356, 363-364], as quoted in Weaver v. Graham (1981) 450 U.S. 24, 28 [101 S.Ct. 960, 963-964, 67 L.Ed.2d 17] [holding the ex post facto clause prohibits any law which "`imposes a punishment for an act which was not punishable at the time it was committed; or imposes additional punishment to that then proscribed'"]; Beazell v. Ohio (1925) 269 U.S. 167, 169-170 [46 S.Ct. 68, 69, 70 L.Ed. 216], as quoted in Collins v. Youngblood, supra, 497 U.S. 37, 42 [110 S.Ct. 2715, 2719].)
(3) In Collins v. Youngblood, supra, 497 U.S. 37, the United States Supreme Court discusses the meaning of the ex post facto clause: "Although the Latin phrase `ex post facto' literally encompasses any law passed `after the fact' it has long been recognized by this Court that the constitutional prohibition on ex post facto laws applies only to penal statutes which disadvantage the offender affected by them. [Citations.]" (497 U.S. 37, 41 [110 S.Ct. 2715, 2719].) The California Supreme Court has observed there is no significant difference between the federal and state constitutional ex post facto provisions and quoted Collins to affirm the exclusive categories established by Calder v. Bull, supra, 3 U.S. (3 Dall.) 386, almost 200 years ago. (Tapia v. Superior Court (1991) 53 Cal.3d 282, 295-297 [279 Cal. Rptr. 592, 807 P.2d 434].)
*623 "Through this prohibition, the Framers sought to assure that legislative Acts give fair warning of their effect and permit individuals to rely on their meaning until explicitly changed. [Citations.] The ban also restricts governmental power by restraining arbitrary and potential vindictive legislation. [Citations.] [¶] In accord with these purposes, our decisions prescribe that two critical elements must be present for a criminal or penal law to be ex post facto: it must be retrospective, that is, it must apply to events occurring before its enactment, and it must disadvantage the offender affected by it. [Citations.]" (Weaver v. Graham, supra, 450 U.S. 24, 28-29 [101 S.Ct. 960, 964], fns. omitted; see also Pro-Family Advocates v. Gomez (1996) 46 Cal. App.4th 1674, 1683 [54 Cal. Rptr.2d 600]; People v. McVickers (1992) 4 Cal.4th 81, 85 [13 Cal. Rptr.2d 850, 840 P.2d 955]; Collins v. Youngblood, supra, 497 U.S. 37, 41 [101 S.Ct. 2715, 2718-2719]; U.S. v. Huss (9th Cir.1993) 7 F.3d 1444, 1447.)
(2b) An analogous question was posed and settled in People v. Mills (1992) 6 Cal. App.4th 1278 [8 Cal. Rptr.2d 310] (Mills) which upheld the 1989 amendment to section 12021, subdivision (a), which extended the previous ban of concealable firearms to make possession by a felon of any firearm a further felony. The court in Helmer v. Miller (1993) 19 Cal. App.4th 1565, 1571 [25 Cal. Rptr.2d 8], followed Mills and a line of older cases which upheld convictions despite similar ex post facto challenges (People v. Venegas (1970) 10 Cal. App.3d 814, 822 [89 Cal. Rptr. 103] [upholding 1965 amendments which lengthened the maximum sentence for firearm possession by a felon]; People v. James (1925) 71 Cal. App. 374, 378 [235 P. 81] (James) [rejecting a challenge to felon-in-possession law]; People v. Camperlingo (1924) 69 Cal. App. 466, 472 [231 P. 601] (Camperlingo) [same]; cf. People v. McCloskey (1926) 76 Cal. App. 227, 229-230 [244 P. 930] [rejecting argument that felon-in-possession law infringed a vested property right]; People v. Smith (1918) 36 Cal. App. 88, 90 [171 P. 696] [upholding 1917 statute which criminalized carriage of concealed weapons in urban areas]).
In Mills, the court affirmed the defendant's conviction for being a felon in possession of a shotgun even though at the time of his prior offense and sentencing, a convicted felon was barred only from carrying concealed firearms. The court adopted the California Supreme Court's analysis in In re Ramirez (1985) 39 Cal.3d 931, 936-937 [218 Cal. Rptr. 324, 705 P.2d 897] (Ramirez), which held a prison inmate's forfeiture of sentence credits for prison misconduct was solely the result of the later misconduct and not of the prior offense for which the sentence was being served; therefore, changes in the rules effecting such forfeitures did not violate the ex post facto clause. The Mills court quoted former Justice Lucas in Ramirez as follows: "It is true *624 that the 1982 amendments apply to petitioner only because he is a prisoner and that he is a prisoner only because of an act committed before the 1982 amendments. Nonetheless, the increased sanctions are imposed solely because of petitioner's prison misconduct occurring after the 1982 amendments became effective." (Ramirez, supra, at p. 936; quoted in Mills, supra, 6 Cal. App.4th 1278, 1285.)
The Supreme Court in Ramirez reasoned the new statute only applied to the defendant because he was a convicted felon, a status he had achieved before the statute in contention became effective. Since the new statute applied only to an event occurring after its effective date, i.e., the defendant's possession of a weapon after the statute became effective, the sanctioned event occurred after the effective date of the statute and the amendment was not retroactive. As stated by the Mills majority: "[T]he fact of his prior conviction only places him into a status which makes the new law applicable to him. The legal consequences of his past conduct were not changed only a new law was applied to his future conduct." (6 Cal. App.4th 1278, 1286.)
We find applying section 12021, subdivision (c), to defendant did not violate constitutional ex post facto principles because defendant was convicted based on conduct occurring after the effective date of the statute.
II. The statute does not punish the defendant for his original offense
Similar reasoning has been applied to statutes which impose heavier punishments upon offenders who have previously violated the law.
California cases have allowed the application of enhancements punishment based on previous convictions. In People v. Jackson (1985) 37 Cal.3d 826 [210 Cal. Rptr. 623, 694 P.2d 736] (overruled on different grounds in People v. Guerrero (1988) 44 Cal.3d 343, 355-356 [243 Cal. Rptr. 688, 748 P.2d 1150]), a serious-felony enhancement was based on a prior burglary conviction occurring before the enhancement was enacted, and the court stated: "No constitutional bar prevents the application of section 667 to the later offense solely because the prior conviction which serves as a basis for the enhancement was committed before the initiative passed. In the context of habitual criminal statutes, `increased penalties for subsequent offenses are attributable to the defendant's status as a repeat offender and arise as an incident of the subsequent offense rather than constituting a penalty for the prior offense.' [Citation.]" (People v. Jackson, supra, 37 Cal.3d at p. 833; see also People v. Williams (1983) 140 Cal. App.3d 445, 448 [189 Cal. Rptr. 497]; People v. Dolliver (1986) 181 Cal. App.3d 49, 57 [225 Cal. Rptr. 920].)
*625 Likewise, former section 12021, subdivision (a), the amendment which was in contention in Mills, supra, 6 Cal. App.4th 1278, withstood an ex post facto attack in James, supra, 71 Cal. App. 374. The court in James cited Camperlingo, supra, 69 Cal. App. 466, in which the court upheld a felon-in-possession conviction even though the felony of which the defendant had been convicted was committed prior to the passage of the act which created the crime of felon-in-possession. The Camperlingo court's analysis (id., at pp. 470-473) was criticized by the dissent in Mills for not considering cases dealing with the "increase of disabilities, burdens or penalties previously imposed on or resulting from criminal acts for which defendant was previously convicted[.]" (Mills, supra, 6 Cal. App.4th 1278, 1298.)
Clearly not every law which merely "disadvantages" the defendant retrospectively is an ex post facto law. The Mills majority did not succumb to the confusion engendered by the United States Supreme Court's use of the term "disadvantaged" in Weaver v. Graham, supra, 450 U.S. 24 as well as in two later decisions. The Mills dissent, however, and defendant in this case, have mistakenly contended retrospective "disadvantage," such as a limitation on the right to possess a gun, is equivalent to punishment and therefore indicative of an impermissible ex post facto law. However, the United States Supreme Court has corrected the ambiguity created by its prior references to "disadvantage" by stating: "After Collins [supra, 497 U.S. 37], the focus of the ex post facto inquiry is not on whether a legislative change produces some ambiguous sort of `disadvantage,' ... but on whether any such change alters the definition of criminal conduct or increases the penalty by which a crime is punishable." (California Dept. of Corrections v. Morales (1995) 514 U.S. 499, 506-507, fn. 3 [115 S.Ct. 1597, 1602, 131 L.Ed.2d 588, 595].)
The distinction is not always made in the cases between the terms "retrospective ... [l]ooking back on, contemplating, or directed to the past," and "retroactive ... [i]nfluencing or applying to a period prior to enactment." (American Heritage Dict. (3d ed. 1992) pp. 1541-1542.) It is a distinction which is not merely pedantic, since it leads to a description of what is permitted in a law contended to be ex post facto: looking to the past to inform the present, and also what is prohibited: acting presently to change the past. Accordingly, the question is not whether this convicted miscreant is presently denied the advantage of armaments, but rather whether the statute aims to change the punishment for the original crime. The former inquiry leads naturally to an equal protection argument long settled by cases allowing the Legislature to limit the application of laws to a uniform class of persons such as previously convicted felons. (People v. Dubose (1974) 42 Cal. App.3d 847 [117 Cal. Rptr. 235]; James, supra, 71 Cal. App. 374, 378-379.) The answer to the latter question must be negative.
*626 As pointed out by the majority in Mills, "`[s]ome ex post facto questions of the increased-punishment type have arisen in connection with the passage of habitual criminal laws, which imposed enhanced penalties for later offenses if the defendant has previously been convicted of one or more crimes. If the defendant commits crime A at a time when there is no habitual criminal statute, then such a statute is passed imposing increased punishment for a second offense, and then the defendant commits crime B, it is not within the ex post facto prohibition to apply the habitual criminal statute to crime B. No additional punishment is prescribed for crime A, but only for the new crime B, which was committed after the statute was passed. Similarly, it is permissible to define a crime as limited to certain conduct engaged in by persons who have heretofore been convicted of some other offense and to apply the statute to one whose earlier offense and conviction predated the enactment of this statute.' [Citation.]" (Mills, supra, 6 Cal. App.4th 1278, 1286, quoting 1 LaFave & Scott, Substantive Criminal Law (1986) § 2.4, p. 139.)
The Mills dissent assumes any increased disability and burden, i.e., the inability to own a firearm, is a further punishment of the defendant's prior conduct, without acknowledging the critical question of whether the statute creates a new punishment for the prior offense or, rather, prohibits to an identifiable class of persons the subsequent conduct of owning a gun by reason of their status as convicted offenders arguably more likely to misuse firearms. The distinction presented by a statute prohibiting such conduct by convicted offenders is the same one presented by enhancements of punishments imposed on those convicted of future and distinct offenses; in both instances the defendants have by their proven conduct separated themselves into an identifiable class to which the Legislature's police powers may apply, so long as persons similarly situated are treated equally. (See In re Eric J. (1979) 25 Cal.3d 522, 530 [159 Cal. Rptr. 317, 601 P.2d 549] regarding equal protection.)
The instant case is not distinguishable from Mills, supra, 6 Cal. App.4th 1278, because there is no reasonable distinction between subdivisions (a) and (c) of section 12021 which would invalidate the reasoning of the opinion. The Mills court has itself so concluded in In re Evans (1996) 49 Cal. App.4th 1263 [57 Cal. Rptr.2d 314] (Evans) (conviction reversed on equal protection grounds; the court found unconstitutional the classification of those permitted relief from the operation of section 12021, subdivision (c)).
In a late-filed letter brief, defendant attempts to rely upon Evans, supra, 49 Cal. App.4th 1263 to contend his "inability" to petition for restoration of the *627 right to possess a firearm, and thereby avoid prosecution under section 12021, subdivision (c), must invalidate his conviction under said section. We first note the Evans court had the opportunity to invalidate the entire statute but chose instead to interpret the statute expansively. In the instant case there is no evidence of any such petition nor, in fact, any language contained in section 12021, subdivision (c)(3), which would have prevented this defendant from seeking relief by such a petition within the statutory time limits.
Accordingly, even assuming the argument to have been timely raised, which is not the case, we reject defendant's contention his conviction was void as a violation of the equal protection clause. First, there is no evidence he did petition for restoration of his right to bear arms pursuant to subdivision (c)(3) of section 12021, as did the defendant in Evans, supra, 49 Cal. App.4th 1263. Second, this defendant was not prevented from making such a petition under the language of subdivision (c)(3), assuming he even knew the statute and its provision for relief existed. Third, the Evans court correctly used the remedy of expanding the inclusionary provision of the statute permitting petition for restoration of the right to possess firearms rather than nullifying the entire statute. Defendant appears to argue but for his "prevention" from petitioning for restoration of the right to possess firearms, his right to do so would have been restored and he could not have been found in criminal violation of the statute. This is speculative at best and certainly unpersuasive.
III., IV.[*]
.... .... .... .... .... .... .... .
CONCLUSION
Accordingly, having found no violation of the ex post facto provisions of the United States and California Constitutions inherent in the statute and the defendant having advanced no other tenable arguments, we affirm the judgment.
Haerle, Acting P.J., concurred.
HODGE, J.,[] Dissenting in part.
I dissent from the affirmance of the judgment of conviction on the charge of unlawful possession of a firearm in violation of Penal Code section 12021, subdivision (c) (section 12021(c)).
*628 I.
The ex post facto clause prohibits any law which punishes persons, or increases their punishment, for conduct predating its enactment. (See Cummings v. Missouri (1866) 71 U.S. (4 Wall.) 277, 325-326 [18 L.Ed. 356, 363-364], quoted in Weaver v. Graham (1981) 450 U.S. 24, 28 [101 S.Ct. 960, 963-964, 67 L.Ed.2d 17]; and see Beazell v. Ohio (1925) 269 U.S. 167, 169-170 [46 S.Ct. 68, 69, 70 L.Ed. 216], quoted in Collins v. Youngblood (1990) 497 U.S. 37, 42 [110 S.Ct. 2715, 2719, 111 L.Ed.2d 30].) Thus, no statute can be applied to a defendant if its effect on him is (1) retrospective, and (2) punitive. (Pro-Family Advocates v. Gomez (1996) 46 Cal. App.4th 1674, 1683 [54 Cal. Rptr.2d 600]; People v. McVickers (1992) 4 Cal.4th 81, 85 [13 Cal. Rptr.2d 850, 840 P.2d 955]; see Weaver v. Graham, supra, 450 U.S. 24, 31 [101 S.Ct. 960, 965-966]; Collins v. Youngblood, supra, 497 U.S. 37, 41 [110 S.Ct. 2715, 2718-2719]; U.S. v. Huss (9th Cir.1993) 7 F.3d 1444, 1447.)
The majority holds that section 12021(c), as applied to defendant, is neither retrospective nor punitive. I disagree. The conclusion that the law is not retrospective rests entirely on nonbinding authorities which are either inapposite or which reflect a fatal logical error. The conclusion that the law is not punitive is unsound because (1) the challenged law subjects defendant to imprisonment, a forthrightly penal effect; (2) the law substantially burdens defendant by prohibiting him from engaging in otherwise lawful activities; and (3) the law lacks any bona fide purpose other than punishment. Furthermore, I question whether imposition of such consequences can ever be constitutionally predicated on a charge to which the defendant pleaded guilty, like the defendant here, with no notice that his plea would later disable him from possessing firearms, and would expose him to imprisonment should he do so.
II.
The Supreme Court has declared that a law is "retrospective" for purposes of the ex post facto clause "if it `changes the legal consequences of acts completed before its effective date.'" (Miller v. Florida (1987) 482 U.S. 423, 430 [107 S.Ct. 2446, 2451, 96 L.Ed.2d 351], quoting Weaver v. Graham, supra, 450 U.S. 24, 31 [101 S.Ct. 960, 965-966].)[1]
The law here was explicitly "retrospective" under any rational application of this test. It indisputably changed the legal consequences of acts completed *629 before its effective date. First it disabled defendant from engaging in otherwise lawful conduct of a type enjoyed, and indeed cherished, by many citizens.[2] Second, it imposed a prison sentence for violating that prohibition. The prohibition would not have applied, and defendant's conduct could not have been punished, but for his preenactment conduct.[3] Therefore those effects were retrospective as to him.
The majority's conclusion to the contrary rests largely on the majority opinion in People v. Mills (1992) 6 Cal. App.4th 1278 [8 Cal. Rptr.2d 310], which in turn relied upon (and declared "determinative") the Supreme Court's analysis in In re Ramirez (1985) 39 Cal.3d 931, 936-937 [218 Cal. Rptr. 324, 705 P.2d 897]. In truth Ramirez is only remotely pertinent to the validity of the statute before us. A prison inmate filed a petition challenging the application to him of a new statutory plan for the accrual and loss of sentence-reduction credits. Prison authorities had found an infraction by the petitioner and reduced his credits by 48 days. The petitioner contended that this violated the ex post facto clause, because under the rules in effect at the time of his offense he was exposed to maximum credit loss of 15 days.
The Supreme Court held that the amendments were not retrospective because they concerned only the sanctions for misconduct while in prison, i.e., after their adoption. In a passage subsequently quoted and italicized in Mills, the Supreme Court wrote, "It is true that the 1982 amendments apply to petitioner only because he is a prisoner and that he is a prisoner only because of an act committed before the 1982 amendments. Nonetheless, the increased sanctions are imposed solely because of petitioner's prison misconduct occurring after the 1982 amendments became effective." (Ramirez, supra, 39 Cal.3d at p. 936; see People v. Mills, supra, 6 Cal. App.4th at p. 1285.)
Nothing in Ramirez has any logical parallel in the circumstances before us. The petitioner's preenactment conduct in that case was a cause of the *630 subsequent penalty (and the penalty was a consequence of the prior offense) only in a purely factual sense, i.e., the petitioner would not have been in prison, and would not have been subject to discipline for prison misconduct, had he not previously been sentenced to imprisonment following conviction of a felony. The relevance of the prior conviction was entirely circumstantial. Indeed, the prisoner's offense is never described; the court says only that the petitioner had been "imprisoned for a crime committed before January 1, 1983." (39 Cal.3d at p. 934.) The prisoner's offense was nothing more than a historical antecedent to his presence in the prison population. It was legally irrelevant to any disciplinary case against him. It follows that the effects of the amended credit forfeiture rules were not legal consequences of acts completed before their effective date.
The statute before us, on the other hand, looks backwards in a way that the amendments in Ramirez, supra, 39 Cal.3d 931 could not be said to do. The prior conviction here is not merely a historical precondition for the punishment now being imposed, but an explicit element of the offense of which he has been convicted. Moreover, nothing in Ramirez suggests that the challenged amendments imposed any new burden of compliance on prisoners; rather they redefined the consequences which might flow from subsequent prison misconduct. Here, the statute instantly imposed a new prohibition, legally disabling defendant from engaging in a theretofore lawful activity, and conditioning that prohibition explicitly, directly, and unconditionally on preenactment conduct.
The prior offense here was not a mere happenstance; it was an element of the current offense. (People v. Venegas (1970) 10 Cal. App.3d 814, 822 [89 Cal. Rptr. 103].) Therefore, unlike the warden in Ramirez, supra, 39 Cal.3d 931 who had no occasion to present evidence of the prisoner's preenactment offense the prosecutor here was compelled to prove the prior offense beyond a reasonable doubt. To suggest that a statute explicitly predicating its effect on such proof is not "retrospective" offends both the plain meaning of that term and the core values reflected in the ex post facto clause.
The second major source of support for the holding in Mills was the general principle that "... a statute which increases the punishment of prior offenders is not an ex post facto law if it is applied to events occurring after its effective date." (6 Cal. App.4th at p. 1286.) This rule, however, is by its terms inapplicable to section 12021, which does not simply impose an "increase[d] ... punishment [on] prior offenders," but which creates a crime which can only be committed by prior offenders. The Mills majority fails to distinguish between a law which imposes an enhanced punishment based on demonstrated recidivist tendencies and one which imposes a *631 unique prohibition on otherwise lawful conduct, explicitly predicated on preenactment conduct.
The Mills majority seems to say that this distinction between persons punished more severely due to prior offenses and those punished only because of prior offenses must be challenged, if at all, as a violation of equal protection. (6 Cal. App.4th at p. 1286.) This is a pure example of the fabled red herring. Indeed, it could be drawn across the path of any ex post facto challenge, however meritorious. Every law increasing punishment retrospectively can be conceptualized as establishing a classification (prior offenders) subjected to disparate treatment (punishment). Yet no court (before Mills) ever implied that an ex post facto challenge to such a law is somehow superseded by the equal protection clause. The end result of the Mills treatment would be to render the ex post facto clause entirely superfluous by ceding its entire domain to the equal protection clause. The law, of course, is otherwise. If a statute contains the elements of an ex post facto law, it is to that extent void (Pro-Family Advocates v. Gomez, supra, 46 Cal. App.4th 1674, 1683), regardless whether it might be supported by a state interest sufficient to defeat an equal protection challenge.
Moreover, the Mills majority based its rejection of the equal protection argument on the premise that the law in question "acts uniformly on all persons in the affected class." (6 Cal. App.4th at p. 1287.) This is no answer to an equal protection challenge. The gist of such a challenge is that the law unconstitutionally imposes consequences on members of the class, which consequences are not shared by others. Here the challenged law does not "act uniformly" on all those subject to its terms. When it takes effect, those who have not yet suffered a disqualifying conviction may avoid the burden of the law by refraining from the commission of a predicate offense. By committing such an offense, the perpetrator voluntarily assumes the risk of being prosecuted, convicted, and as a consequence, disabled from further possession of firearms. In contrast, those who have already suffered a qualifying conviction when the law takes effect suddenly find themselves subjected to a new and unheralded burden, the risk of which they never had the opportunity to assume, and the imposition of which they never had an opportunity to avoid. Here, defendant woke up on January 1, 1994 seven years after pleading no contest to the most innocuous form of criminal assault known to our law suddenly burdened with a disability of which neither he nor the Legislature had any inkling when he committed the prior offense, or pleaded no contest to doing so. Such a disability was manifestly retrospective.
After Ramirez, the two most closely relied-upon cases in Mills are People v. James (1925) 71 Cal. App. 374, 378 [235 P. 81] and People v. Camperlingo (1924) 69 Cal. App. 466, 472 [231 P. 601]. Both decisions suffer from *632 this same failure to distinguish between a law which prohibits certain conduct and punishes prior offenders more severely and one which prohibits conduct by, and punishes, only prior offenders. The distinction is critical, for the repeat-offender cases rely on a rationale which has no proper application in the present context. Their rationale is that "increased penalties for subsequent offenses are attributable to the defendant's status as a repeat offender and arise as an incident of the subsequent offense rather than constituting a penalty for the prior offense." (In re Foss (1974) 10 Cal.3d 910, 922 [112 Cal. Rptr. 649, 519 P.2d 1073], italics added; see People v. Mills, supra, 6 Cal. App.4th at p. 1287, quoting People v. Jackson (1985) 37 Cal.3d 826, 833 [210 Cal. Rptr. 623, 694 P.2d 736], overruled on other grounds in People v. Guerrero (1988) 44 Cal.3d 343, 355 [243 Cal. Rptr. 688, 748 P.2d 1150]; Parke v. Raley (1992) 506 U.S. 20, 26-27 [113 S.Ct. 517, 521-522, 121 L.Ed.2d 391]; McDonald v. Massachusetts (1901) 180 U.S. 311, 312 [21 S.Ct. 389, 390, 45 L.Ed. 542] ["The punishment is for the new crime only, but is the heavier if he is an habitual criminal."].) In other words, having committed a second, independently defined crime, the defendant subjects himself to the Legislature's broad power to determine the penalties for that crime; and in exercising that power, the Legislature may view recidivism as grounds to enhance the penalty for the new offense. The defendant has no cause for complaint in such a case: the prohibition itself does not single him out as a prior offender; rather, like the rest of the public, he has been, at all relevant times, on notice of the consequences for violating it; and like other members of the public, he may avoid those consequences by conforming his conduct to the general laws. That his failure to do so is not the first of its kind supports an inference, with which there can be no constitutionally grounded quarrel, that he merits a more burdensome punishment. The Legislature is entitled, in other words, to find that the classic concerns of sentencing retribution, deterrence, and incapacitation favor enhanced punishment for those who repeatedly violate criminal laws of general application.
This rationale appears inapplicable to a statute which by its terms makes prior conviction an essential condition of any punishment. In such a case it is tautological to say that the defendant possesses the "status [of] a repeat offender." He can only be considered a repeat offender by assuming the point in issue, i.e., that the statute under scrutiny may be constitutionally applied to him. The defendant has violated that statute, if at all, only by virtue of the former offense. The more precise and fair-minded premise is that the defendant is a former offender, now exposed to punishment because of conduct only made unlawful by conviction of the former offense. The newly threatened punishment cannot plausibly be construed as an "incident" solely of the subsequent conduct, for that conduct would not expose the *633 defendant to any sanction without the prior offense. In contrast to the second offense cases, the law exposes such a defendant to an immediate and unconditional burden, based entirely on the prior offense, which he did not share with the rest of the public and could not avoid by conforming his conduct to the laws generally applicable to such activities.
Indeed, a statute such as the one before us places the preenactment offender in a uniquely burdensome position. Unlike persons convicted of no prior offense, he is unable to protect his right to engage in the proscribed activity by conforming his conduct to the general requirements of the criminal law, and unlike persons convicted of disqualifying offenses after enactment of the disqualifying statute he cannot voluntarily assume the disability imposed on him. At no time can he be said to have had a meaningful opportunity to preserve or waive his freedom to engage in the activity in question. His choices are only to accept an unheralded prohibition which he never voluntarily encountered, or to disregard that prohibition and suffer punishment unique to his class.
For all these reasons, I find the central legal principle cited in Mills, supra, 6 Cal. App.4th 1278, James, supra, 71 Cal. App. 374, and Camperlingo, supra, 69 Cal. App. 466, insufficient to support the conclusions reached in those cases. Nor are the other cases they cite supportive of those conclusions. In People v. Venegas, supra, 10 Cal. App.3d 814, 822, the court upheld a statute which lengthened the sentence for firearm possession by an exfelon. The defendant's argument appeared to be, in essence, that the sentence for such an offense was fixed as of the time of the prior offense, not the time of the unlawful possession. As his argument conceded, however, the prohibition itself existed at the time of his prior conviction. His possession was therefore at all times unlawful. He would seem no more entitled to cite some earlier penalty provision than would any other offender who commits a crime for which the punishment has recently been increased. Although the court cited James and Camperlingo and the second-offender rationale, the holding would appear to rest on the more basic proposition that where conduct has been unlawful at all relevant times, it is no violation of the ex post facto clause to increase the punishment for such conduct, provided the enactment of the increase precedes the violation of the statute.
In People v. McCloskey (1926) 76 Cal. App. 227, 229-230 [244 P. 930], the argument addressed here was not considered; rather the defendant contended that "`one cannot lawfully be convicted of a crime for continuing to own and possess that which had lawfully become his property.'" (Id. at p. 229.) The court rejected this argument, noting that the statute did not fall within any of the recognized definitions of an ex post facto law.
In People v. Smith (1918) 36 Cal. App. 88, 90 [171 P. 696], the court upheld a conviction under a 1917 statute criminalizing the carriage of *634 concealed weapons in urban areas. The offense could be committed without a prior conviction; the only effect of such a conviction was to elevate the offense to a felony. The statute therefore resembled the one before us less than one enhancing punishment based on prior offenses.
In sum, I believe the majority in Mills, supra, 6 Cal. App.4th 1278 was mistaken in holding that a statute of this type is not retrospective. That case failed to recognize, and thus perpetuated, the erroneous equation in James, supra, 71 Cal. App. 374 and Camperlingo, supra, 69 Cal. App. 466 between statutes which predicate a wholly new and unique disability on preenactment conduct, and those which enhance the punishment for criminal offenses based upon the defendant's having suffered prior convictions. That critically erroneous equation has since been implicitly reiterated in two decisions, from the same district, which uncritically apply Mills. (Helmer v. Miller (1993) 19 Cal. App.4th 1565, 1571 [25 Cal. Rptr.2d 8]; In re Evans (1996) 49 Cal. App.4th 1263, 1268-1269 [57 Cal. Rptr.2d 314].) I cannot join the majority in promulgating it further.
III.
I also disagree with the majority's conclusion that section 12021(c), as applied to defendant, is not punitive. The majority quotes language from Chief Justice Rehnquist to the effect that a measure is not "punitive" for ex post facto purposes merely because it "disadvantages" prior offenders. (California Dept. of Corrections v. Morales (1995) 514 U.S. 499, 506-507, fn. 3 [115 S.Ct. 1597, 1602, 131 L.Ed.2d 588, 595].) Yet the statute here did not merely "disadvantage" defendant; it flatly prohibited him from engaging in otherwise lawful conduct of a type enjoyed by many Americans. This prohibition was not enforced by civil or regulatory means, but by prosecution and punishment of any violation as a felony. There is no doubt that imprisonment constitutes "punishment" for purposes of ex post facto analysis. (People v. McVickers, supra, 4 Cal.4th 81, 85.) To belittle such a consequence as a mere "disadvantage" compromises the majority's analysis.
In considering whether a particular statutory effect is "punitive," the ultimate issues are legislative purpose and statutory effect. (People v. McVickers, supra, 4 Cal.4th 81, 87, fn. 1.) These questions require an inquiry into legislative motives. (Ibid. ["the government's motivation is central to the question whether the legislation is `vindictive' or `arbitrary' and hence must be banned"].) Thus "a statute has been considered nonpenal if it imposes a disability, not to punish, but to accomplish some other legitimate governmental purpose." (Trop v. Dulles (1958) 356 U.S. 86, 96 [78 S.Ct. 590, 595, 2 L.Ed.2d 630]; People v. McVickers, supra, 4 Cal.4th 81, 85.) However, the inquiry into legislative purpose must be genuine and searching; it is not concluded by the Legislature's "mere assertion of a nonpunitive *635 purpose." (People v. McVickers, supra, 4 Cal.4th at p. 88; see U.S. v. Huss, supra, 7 F.3d 1444, 1447-1448 ["[A] legislature may not insulate itself from an ex post facto challenge simply by asserting that a statute's purpose is to regulate present conduct rather than punish prior conduct. The overall design and effect of the statute must bear out the non-punitive intent."]; Pro-Family Advocates v. Gomez, supra, 46 Cal. App.4th 1674, 1684, fn. 12 ["The mere assertion of a nonpunitive regulatory purpose does not end our inquiry. We must test the proffered purpose to determine if it is consistent with the regulation."].)
In conducting this inquiry we are to consider relevant factors such as "`[w]hether the sanction involves an affirmative disability or restraint, whether it has historically been regarded as a punishment, whether it comes into play only on a finding of scienter, whether its operation will promote the traditional aims of punishment retribution and deterrence, whether the behavior to which it applies is already a crime, whether an alternative purpose to which it may rationally be connected is assignable for it, and whether it appears excessive in relation to the alternative purpose assigned....'" (People v. McVickers, supra, 4 Cal.4th at p. 85, quoting Kennedy v. Mendoza-Martinez (1963) 372 U.S. 144, 168-169 [83 S.Ct. 554, 567-568, 9 L.Ed.2d 644], fns. omitted.)
While I find several of these factors to be equivocal, the rest point toward a finding of punitive purpose: The sanction here involves an affirmative disability and restraint, i.e., a prohibition, enforced by imprisonment, on the possession of property which others may lawfully possess. It comes into play only upon a finding of scienter. (See People v. Howard (1976) 63 Cal. App.3d 249, 257 [133 Cal. Rptr. 689] [to violate section 12021, "a defendant must have knowledge of the character of the object possessed"]; People v. Valencia (1989) 214 Cal. App.3d 1410, 1416 [263 Cal. Rptr. 301] [crime of possessing sawed-off shotgun was shown if defendant "knew she had possession of the item in question"].) And even if not violated, the prohibition inflicts a significant legal injury which may be understood to exact retribution for, if not deter, offenses of the type included within its sweep.
Most significantly, however, I do not believe the prohibition on firearms possession by violators of Penal Code section 240 can be rationally assigned to any purpose other than the infliction of additional punishment upon past offenders. This follows because of the triviality of the underlying offense, its inadequacy as a predictor of future lawlessness, the completely irrational exclusion of greater, necessarily inclusive offenses, and the utterly incoherent explanation which appears in the legislative record. I find the conclusion *636 inescapable that the avowed purpose of the specific provision affecting defendant is inconsistent with the overall scheme of section 12021, rests on one or more misconceptions of law, and is therefore, at best, "arbitrary" as applied to defendant.
The offense of simple misdemeanor assault verges on triviality, particularly in light of the consequences imposed by section 12021(c) on its perpetrators. It is nothing more than an attempted battery "an unlawful attempt, coupled with a present ability, to commit a violent injury on the person of another." (Pen. Code, § 240; cf. id., § 242 ["A battery is any willful and unlawful use of force or violence upon the person of another."].) Despite the reference to "violent injury," such an offense need not involve any real "violence" at all. (1 Witkin & Epstein, Cal. Criminal Law (2d ed. 1989) Crimes Against the Person, § 404, pp. 466-467 ["The words `violence' ... and `violent' [in these statutes] ... have no real significance.... `[T]he least touching' may constitute battery...."]; People v. Babich (1993) 14 Cal. App.4th 801, 809 [18 Cal. Rptr.2d 60] ["Convictions of simple assault and battery do not necessarily imply findings of violence or menace."].) Since the offense can be predicated on the least touching, or attempted touching, it does not necessarily reflect moral turpitude or a general readiness to do evil. (See People v. Thomas (1988) 206 Cal. App.3d 689, 694 [254 Cal. Rptr. 15].)
The details of defendant's particular violation of Penal Code section 240 are unknown, beyond the fact that it stemmed from an altercation in a bar. Defendant denied any recollection of the underlying events a claim which may deserve more credence than usual, given the setting. In any event, such a conviction could rest on such minimally violent conduct as is described above.
Section 12021 would leverage this most innocuous of physical crimes against the person into a 10-year prohibition on the possession of firearms, with violations punishable by up to 3 years in prison. (§ 12021(c); see Pen. Code § 18.) I find this consequence to be rationally disproportionate to the predicate offense.[4]
Even if the relative inconsequentiality of simple assault were not enough by itself to establish a marked disproportion between the underlying predicate offense and the ultimate sanction, section 12021(c) irrationally includes *637 that offense while excluding several neighboring offenses, most or all of which necessarily include simple assault as a lesser included offense. Section 12021(c) does not impose a firearms-possession disability on persons convicted of a misdemeanor assault on school or park property (Pen. Code, § 241.2), or on a custodial officer (Pen. Code, § 241.1), a juror (Pen. Code, § 241.7), a public transit employee or passenger (Pen. Code, § 241.3), or on a school district peace officer (Pen. Code, § 241.4) or employee (Pen. Code, § 241.6). Yet the statute does list five other offenses which appear quite near the included statutes in the code: assault on an officer or other person performing official or emergency duties (Pen. Code, § 241); battery on a peace officer, public safety provider, process server, former spouse, fiance, fiancee, or dating partner (Pen. Code, § 243); assault with a stun gun or taser (Pen. Code, § 244.5); assault with a deadly weapon (Pen. Code, § 245); and assault on a school employee with a deadly weapon, firearm, stun gun, or taser (Pen. Code, § 245.5).
The rational explanation for the above classification is not inadvertence or incrementalism, as the majority apparently assumes, but a deliberate distinction between offenses serious enough to warrant imposition of a firearms disability and offenses lacking sufficient predictive valence for that purpose. Against this light the inclusion of simple misdemeanor assault (Pen. Code, § 240) is completely irrational and arbitrary doubly so, considering that the omitted offenses all necessarily include the offense of simple assault. Thus a defendant convicted of one of these greater offenses is better off, in terms of legal ability to possess firearms, than one convicted of the lesser included offense. Indeed, a defendant in a misdemeanor prosecution under one of the omitted statutes would be well advised to think twice before permitting the jury to be instructed on the lesser included offense; a defendant who hopes to hunt ducks within the ensuing ten years might well prefer conviction of the greater offense.
But it is not merely the unfairness of such a regimen which is of concern. It is the patent irrationality of supposing that if a jury convicts the defendant of simple assault, the Legislature presumes the defendant unfit to possess firearms, but no such presumption arises if the defendant is convicted of the necessarily inclusive greater offense of simple assault on a school employee. Such a statutory scheme is manifestly arbitrary and peremptory.
Nor does anything in the legislative history shed a favorable light on this facially irrational classification scheme. On the contrary, any lingering hope for a bona fide alternative purpose is eradicated by an attempt to fathom the Legislature's reasons for including Penal Code section 240 (and its conceptual twin, Penal Code section 242) in section 12021(c).
*638 As enacted in 1990, section 12021(c) listed 20 disqualifying misdemeanors, each of which involved violence tending to interfere with law enforcement, or the threat of such violence, or the misuse of firearms or their equivalent. (Stats. 1990, ch. 9, § 2, p. 52.)[5] The rational explanation for the inclusion of these offenses, while excluding Penal Code section 240 and the other assaultive offenses noted above, is a legislative judgment that only these 20 offenses warranted the inference of increased dangerousness which justified imposition of the disability. A legislative concern to avoid overinclusion is further suggested by the temporary inclusion, and eventual deletion, of at least one other firearms-related offense. (See Assem. Bill No. 497 (1989-1990 Reg. Sess.) as amended June 23, 1989, at p. 9 [adding Pen. Code, § 374c ("shooting a[] firearm from or upon a public road or highway")]; cf. Stats. 1990, ch. 9, § 2, p. 52 [omitting Pen. Code, § 374c].)
In 1993, the Legislature adopted Assembly Bill No. 242, one effect of which was to amend section 12021(c) to add five code sections to the list of offenses triggering the ten-year prohibition. (Stats. 1993, ch. 600, § 1.) The stated purpose of the bill was "to deter firearm possession among individuals with a record of domestic violence." (Sen. Floor Rep., Assem. Bill No. 242 (Aug. 31, 1993), italics added; Sen. Com. on Judiciary, Hearing on Assem. Bill No. 242 (July 13, 1993); see Assem. Com. on Public Safety, Hearing on Assem. Bill No. 242 (June 3, 1993) ["to protect victims of domestic *639 violence from further harm at the hand of a person who already has injured them"].)
Consistent with this overarching purpose, three of the newly added disqualifying offenses concerned domestic or relational violence. (Stats. 1993, ch. 600, § 1, citing Pen. Code, §§ 273.5 [willfully injuring spouse, cohabitant, or family member]; 273.6 [violation of order restraining domestic violence]; 646.9 [stalking].) The remaining two, however, had nothing to do with domestic violence. They were Penal Code sections 240 and 242, which respectively penalize simple misdemeanor assault and simple misdemeanor battery. These offenses are not only definitionally unrelated to domestic violence; as previously noted, they scarcely involve "violence" at all, in any but the most dilute and abstract sense. Accordingly their inclusion in Assembly Bill No. 242 is on its face somewhat curious.
The inclusion of these offenses is explained only in two materially identical reports before the Assembly Committee on Public Safety. (Assem. Com. on Public Safety, Hearing on Assem. Bill No. 242 (Apr. 20, 1993); Assem. Com. on Pub. Safety, Hearing on Assem. Bill No. 242 (June 3, 1993) (collectively Reports).)[6] The Reports state that in identifying predicate offenses, section 12021(c) as enacted in 1990 "refers to the code sections setting forth the punishment for the crimes as opposed to the code sections defining the crimes.... Last year the Sutter County District Attorney suggested referencing section[] 240 ..., since section[] 241 [is] listed among the sections which would subject the person to the additional penalty.[[7]] [¶] Section 240 defines an assault. Section 241 provides what the punishment of [sic] an assault is.... The most universal practice is to charge someone with violating section[] 240.... [P]eople are never convicted [under] ... section[] 241...." (Assem. Com. on Public Safety (June 3, 1993) Rep. on Assem. Bill No. 242, italics added, references to Pen. Code, §§ 242 & 243 omitted.)
This extremely perplexing exposition could be taken, at first glance, to mean that the author of the proposed "correction" believed that the Legislature originally intended to include simple misdemeanor assault in the list of predicate offenses. There is no suggestion in any of the materials provided that any legislator proposed or intended to include simple misdemeanor assault as defined in Penal Code section 240. Legislative history indicates *640 the contrary. Thus a Senate Floor Report on the 1990 amendments could only be referring to Penal Code section 241, subdivision (b) when it stated that the bill "would expand the classes of individuals so prohibited [from possessing firearms] to include misdemeanor offenders convicted of ... assaulting a peace officer or individual involved in official duties...." (Sen. Rules Com., 3d reading analysis of Assem. Bill No. 497 (Feb. 7, 1990) p. 3.) Moreover, as previously noted, an intention to include simple assault seems irreconcilable with the Legislature's exclusion of several adjacently defined forms of assault, each more serious than, and definitionally incorporating, a simple assault. Indeed, had the Legislature not been intent on avoiding overinclusion, it could simply have stated that any person convicted of misdemeanor assault, of any kind, would be subject to the ban. Instead it specifically enumerated the forms of assault which would be included, most of them involving either a threat to law enforcement officers or processes, or the use of firearms, deadly weapons, or their equivalent.
In any event, the legislative rationale is riddled with misinformation. Each of the italicized statements is either misleading or erroneous. It is untrue that the code sections listed in the 1990 statute failed to define substantive crimes. The most that can be said in support of this statement is that the statutes concerning assaults do not separately and individually define the word "assault." No such definition is required, however, to supply a sufficient description of the conduct enjoined. The term "assault" is well understood in our law, and moreover is explicitly defined in Penal Code section 240. Both the common legal meaning and the statutory definition are implicitly incorporated in the statutes proscribing more specific forms of assault. There is no more reason for an explicit cross-reference to that definition than there is for a definition, or cross-reference to a definition, of the word "firearm." It simply was not legally necessary to cite section 240 in order to give effect to the citation of one or more of the statutes included in the 1990 version of the statute.
The quoted rationale suggests a particular concern with the supposed ineffectiveness of citing Penal Code section 241 without an accompanying citation to Penal Code section 240.[8] Section 241, subdivision (b) (241(b)), defines the crime of, and prescribes the punishment for, assault on a police officer or other person performing official or emergency duties.[9] The author of the proposed "correction" was apparently confused by the inclusion under *641 the same section number of subdivision (a) (§ 241(a)), which sets out the punishment for simple misdemeanor assault as defined in section 240.[10] Admittedly, the enumeration of these provisions would be more systematic if subdivisions (a) and (b) of section 241 appeared in separate sections, rather than two subdivisions of the same section. However, the intent and effect of the statutes, and the meaning of a citation to one or the other, is plain enough: Section 240 defines a simple assault. Section 241(a) prescribes the punishment for a simple assault. Section 241(b) defines and prescribes the punishment for simple misdemeanor assault on a peace officer.[11]
Likewise, I am more than satisfied that neither the text of the statutes nor actual usage within the judicial system furnishes any reason to suppose that, as the author of the correction claimed, "people are never convicted [under] ... section[] 241." (Assem. Com. on Public Safety (June 3, 1993) Rep. on Assem. Bill No. 242.) A conviction of simple misdemeanor assault on a peace officer is, of logical necessity, a conviction under section 241(b). Since section 241(a) merely prescribes the punishment for another offense (simple misdemeanor assault), it would be nonsensical to speak of a conviction under section 241(a). By process of elimination, the only "conviction" which can be attributed to "241" must be a conviction of assault on a peace officer under subdivision (b). Thus, a number of published opinions speak of convictions under section 241(b) simply as convictions under "241."[12] To be *642 sure, some newer decisions tend to cite the offense specifically to section 241(b).[13] Furthermore, some older decisions cited the offense to both sections 240 and 241.[14] However, the practice of referring to a violation of section 241(b) as one simply of "241" was common in 1990, and the Legislature must be presumed to have been aware of it when it included a reference to "241" in section 12021's list of predicate offenses.
By the same token, the author of the 1993 committee report was apparently not aware of this practice, and erroneously asserted its nonexistence as a reason for adding Penal Code section 240 to the list. Since the added citation of that statute was completely superfluous for this purpose, and no other rational purpose appears, I conclude that the inclusion of that statute was, for purposes of ex post facto analysis, arbitrary and punitive.[15] Since I also believe section 12021(c) is retroactive as applied to defendant, I would hold that its application to him offends the ex post facto clause, and that the judgment of conviction on that count must be reversed.
IV.
I am further concerned by the application of section 12021 to defendant because his 1987 conviction rested on a plea of no contest an admission of criminal culpability which could not have been knowing and voluntary since it could not place him on notice that the state would, as a direct consequence of his plea, prohibit him from possessing firearms and imprison him as a felon for any violation of that prohibition. I do not believe such a result is to be tolerated in light of the rule that a defendant must be advised of the direct consequences of his or her plea at the time the plea is entered. (See In re *643 Birch (1973) 10 Cal.3d 314, 321-322 [110 Cal. Rptr. 212, 515 P.2d 12] [conviction on guilty plea to lewd conduct, based on public urination, reversed for failure to advise of sex offender registration requirement]; People v. McClellan (1993) 6 Cal.4th 367, 376 [24 Cal. Rptr.2d 739, 862 P.2d 739] [error not to advise defendant charged with sexual assault of sex offender registration requirement]; In re Evans, supra, 49 Cal. App.4th at p. 1269 [not reaching objection in section 12021(c) case, but assuming potential merit].)[16]
Moreover, apart from California authorities concerning the necessity of adequate advisements of the consequences of a plea, we should be concerned by the notion that the state may in 1987 receive and accept a plea necessarily premised on the consequences to be reasonably anticipated at that time and then, years later, peremptorily change those consequences to the defendant's significant harm. In my view, the state's calculated retrospective infliction of such unpredictable consequences offends fundamental principles of fairness and therefore implicates the due process clause.
Defendant testified without contradiction that his plea of no contest had virtually no legal consequences at the time he entered it; there was "no fine, no sentence.... [n]o other admonition whatsoever." Little did he know that seven years later, his decision not to contest that charge would ripen into a felony conviction for violating a prohibition which, at the time of his offense and plea, was not even a glimmer in the legislative eye. Furthermore, the reasonably foreseeable consequences of such a plea rarely include anything approaching the magnitude and seriousness of the consequence imposed by section 12021. Defendant here testified that his 1987 plea had no practical immediate consequences. Yet six years later it directly and automatically operated to disable him from possessing firearms a disability embodied in a statutory prohibition which ripened into a prison term.[17]
*644 If the ex post facto clause does not prohibit such a result, I would conclude that the due process clause, with its guarantee of fundamentally fair procedures, does so.[18]
I would reverse the judgment of conviction under section 12021(c).
Appellant's petition for review by the Supreme Court was denied May 14, 1997.
NOTES
[*] Pursuant to California Rules of Court, rules 976(b) and 976.1, this opinion is certified for publication with the exception of parts III and IV.
[*] See footnote, ante, page 618.
[] Judge of the Alameda Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
[1] The majority rejects the term "retrospective" in favor of "retroactive." The United States Supreme Court has employed the word "retrospective" in the context of the ex post facto clause for at least 83 years. (See Bugajewitz v. Adams (1913) 228 U.S. 585, 591 [33 S.Ct. 607, 608, 57 L.Ed. 978].) The word focuses quite appropriately on whether a statute looks backwards. If it does as is patently the case with the statute before us the test is met, and the statute must be held retrospective. The ex post facto analysis must then proceed to the question whether the statute's effect is punitive.
[2] At oral argument both parties became embroiled in the question whether the ability to possess firearms is a "right" or a "privilege." I see no significance in the distinction for purposes of determining the retrospectivity vel non of a prohibition conditioned on preenactment conduct. It is enough to say that before the prohibition was enacted, defendant was free to possess firearms, and that when the prohibition took effect this freedom was revoked based entirely on his preenactment conduct. Such an effect is "retrospective."
[3] I use the term "preenactment" for brevity and convenience, fully recognizing that the applicable date for most purposes is not the date of enactment, but the date on which the statute takes effect. In the present context, the distinction is factually irrelevant, and "preenactment" makes up in succinctness what it may lack in precision.
[4] I recognize that the "fit" is better than it might be given the statute's provisions for relief from the prohibition. However, I do not believe that the possibility of petitioning a court for extaordinary relief, which may be granted or denied within a very broad discretion, outweighs the hugely disproportionate penal sanctions and other considerations favoring characterization of the measure as "punitive."
[5] The offenses included in the 1990 enactment were: carrying a deadly weapon with intent to prevent a person from testifying (Pen. Code, § 136.5, as adopted by Stats. 1982, ch. 1101, § 1, p. 4002); threatening with force or violence because of assistance in prosecution (Pen. Code, § 140); bringing a weapon into a public building or meeting (Pen. Code, § 171b); possessing a loaded firearm in a state office, the capitol grounds, or school grounds (Pen. Code, § 171c); possessing a loaded firearm in the Governor's mansion or the residence of a constitutional officer (Pen. Code, § 171d); assault on an officer or other person performing official or emergency duties (Pen. Code, § 241); battery on a peace officer, public safety provider, process server, former spouse, finance, fiancee, or dating partner (Pen. Code, § 243); assault with a stun gun or taser (Pen. Code, § 244.5); assault with a deadly weapon (Pen. Code, § 245); assault on a school employee with a deadly weapon, firearm, stun gun, or taser (Pen. Code, § 245.5); grossly negligent discharge of a firearm (Pen. Code, § 246.3); discharging a firearm at an unoccupied aircraft, motor vehicle, or dwelling house (Pen. Code, § 247); exhibiting a deadly weapon or firearm in a rude, angry, or threatening manner, or using it in a fight (Pen. Code, § 417); exhibiting a replica of a firearm in a rude, angry, or threatening manner, or using it in a fight (Pen. Code, § 417.2, as amended by Stats. 1988, ch. 1605, § 2, pp. 5820-5821); possessing a firearm on the grounds of a public educational institution (Pen. Code, § 626.9); permitting another to discharge a firearm from a vehicle (Pen. Code, § 12034, subd. (b)); discharging a firearm from a vehicle (§ 12034, subd. (d)); selling a concealable firearm to a minor (Pen. Code, § 12100, subd. (a)); possessing armorpiercing ammunition (Pen. Code, § 12320); and carrying a loaded or concealable firearm, or a deadly weapon, while participating in a strike (Pen. Code, § 12590). (§ 12021(c), as adopted by Stats. 1990, ch. 9, § 2, p. 52.)
The foregoing descriptions apply to the cited statutes as in effect in 1990. Several of the statutes have been materially altered since then. They are identified here by citing the last amending or enacting statute prior to 1990.
[6] Four and one-half months after filing its brief in this matter, respondent submitted a voluminous "legislative history" consisting of many hundreds of pages of unindexed, unauthenticated, and unintelligibly organized materials. Respondent has not drawn our attention to any part of these materials except to allude to the rationale discussed in the text, which we had already discovered through independent efforts.
[7] Apparently this same proposal had been "deleted from the bill in the Senate" during the previous legislative session. (Reports, supra.)
[8] A substantially identical situation exists with respect to misdemeanor battery, as set forth in Penal Code sections 242 and 243, subdivision (a). We will largely ignore those statutes for the sake of simplicity, but recognize that our analysis seems to apply to them with equal force.
[9] "When an assault is committed against the person of a peace officer, firefighter, emergency medical technician, mobile intensive care paramedic, lifeguard, process server, traffic officer, or animal control officer engaged in the performance of his or her duties, or a physician or nurse engaged in rendering emergency medical care outside a hospital, clinic, or other health care facility, and the person committing the offense knows or reasonably should know that the victim is a peace officer, firefighter, emergency medical technician, mobile intensive care paramedic, lifeguard, process server, traffic officer, or animal control officer engaged in the performance of his or her duties, or a physician or nurse engaged in rendering emergency medical care, the assault is punishable by a fine not exceeding two thousand dollars ($2,000), or by imprisonment in the county jail not exceeding one year, or by both the fine and imprisonment." (§ 241(b).)
[10] Section 241(a) provides, "An assault is punishable by a fine not exceeding one thousand dollars ($1,000), or by imprisonment in the county jail not exceeding six months, or by both the fine and imprisonment."
[11] The other specialized forms of assault and battery cited in the same chapter of the Penal Code follow this same pattern, declaring simply that an "assault" (or battery) under stated circumstances is punishable in a stated manner. (See Pen. Code, §§ 241.1, 241.2, 241.4, 241.6, 241.7, 243.1, 243.2, 243.3, 243.5, 243.6, 243.7, 243.8.)
[12] E.g., In re Lynch (1972) 8 Cal.3d 410, 431 [105 Cal. Rptr. 217, 503 P.2d 921]; People v. Tanner (1979) 24 Cal.3d 514, 572 [156 Cal. Rptr. 450, 596 P.2d 328] (dis. opn.); People v. Jones (1981) 119 Cal. App.3d 749, 755 [174 Cal. Rptr. 218]; People v. Fimbres (1980) 104 Cal. App.3d 780, 782, fn. 1 [163 Cal. Rptr. 876]; People v. Martinez (1977) 75 Cal. App.3d 859, 863 [142 Cal. Rptr. 515]; In re Becker (1975) 48 Cal. App.3d 288, 291 [121 Cal. Rptr. 759]; In re Wells (1975) 46 Cal. App.3d 592, 600 [121 Cal. Rptr. 23]; Rose v. City of Los Angeles (1984) 159 Cal. App.3d 883, 888 [206 Cal. Rptr. 49]; Michael R. v. Jeffrey B. (1984) 158 Cal. App.3d 1059, 1067 [205 Cal. Rptr. 312]; Krueger v. City of Anaheim (1982) 130 Cal. App.3d 166, 170, 173 [181 Cal. Rptr. 631].
[13] E.g., People v. Simons (1996) 42 Cal. App.4th 1100, 1109, fn. 5 [50 Cal. Rptr.2d 351]; People v. White (1991) 227 Cal. App.3d 886, 888 [278 Cal. Rptr. 48]; People v. Delahoussaye (1989) 213 Cal. App.3d 1, 5, 7 [261 Cal. Rptr. 287]; People v. Mitchell (1988) 199 Cal. App.3d 300, 302 [244 Cal. Rptr. 803].
[14] E.g., In re James M. (1973) 9 Cal.3d 517, 520 [108 Cal. Rptr. 89, 510 P.2d 33]; Raymond B. v. Superior Court (1980) 102 Cal. App.3d 372, 374 [162 Cal. Rptr. 506]; In re Kubler (1975) 53 Cal. App.3d 799, 802 [126 Cal. Rptr. 25]; People v. Townsend (1971) 20 Cal. App.3d 688, 691, 697 [98 Cal. Rptr. 25]; People v. Booher (1971) 18 Cal. App.3d 331, 333 [95 Cal. Rptr. 857]; People v. Colbert (1970) 6 Cal. App.3d 79, 81 [85 Cal. Rptr. 617].
[15] Furthermore, even if the peculiarities of statutory enumeration furnished a logical reason to add section 240 to the list, I would not find a bona fide alternative purpose without some additional showing that the Legislature could not achieve the same objective by more closely tailored means, e.g., renumbering the affected statutes to eliminate the perceived anomaly. I consider it inherently arbitrary to subject a large class of misdemeanants to draconian penalties simply to ensure that more serious offenders are prevented from taking cover behind infelicities in codification. Such retrospective "corrections" to poorly drawn statutes themselves provoke the core concerns of the ex post facto clause.
[16] A defendant waives an objection for failure to advise of the consequences of a plea by neglecting to raise the objection at the sentencing hearing. (People v. McClellan, supra, 6 Cal.4th at p. 377.) Such a waiver can hardly be found, however, where the objection could not have been raised at the time of the plea, as is patently the case here. (Cf. ibid. [error waived where defense had notice of proposed consequence and could easily have raised objection along with others at sentencing].)
[17] I note that the constitutional dubiousness of such proceedings is cast in a still darker light when the plea was entered in municipal court where, as Justice Arabian commented in People v. Welch (1993) 5 Cal.4th 228, 239 [19 Cal. Rptr.2d 520, 851 P.2d 802], "... defendants frequently plead guilty and receive summary probation without counsel...," and the pleas entered may not always comply with due process safeguards.
[18] This case illustrates as well as any the law of unintended consequence which applies universally to ill-conceived legislation. Penal Code section 240 traditionally has been the offense at the lowest totem of culpability, utilized conjointly by prosecutors and defenders to dispose of insignificant cases by plea when trial was not worth the effort. Police officers, not immune to indiscretions in their personal lives, have occasionally suffered convictions of section 240. Upon the enactment of section 12021(c), police and prosecuting authorities confronted the problem of their officers having become instant felons by virtue of possessing firearms in the course of their duties. Military personnel share with police the possibility of similar career-ending consequences.
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17‐593
United States v. Stewart
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
_______________
August Term, 2017
(Argued: February 26, 2018 Decided: November 5, 2018)
Docket No. 17‐593
_______________
UNITED STATES OF AMERICA,
Appellee,
‐‐ v. ‐‐
SEAN STEWART,
Defendant‐Appellant,
RICHARD CUNNIFFE, ROBERT STEWART, aka Bob,
Defendants.
_______________
B e f o r e:
KATZMANN, Chief Judge, LEVAL, Circuit Judge, and BERMAN, District Judge. *
Judge Richard M. Berman, United States District Court for the Southern District of
*
New York, sitting by designation.
_______________
Defendant‐appellant Sean Stewart appeals from a judgment of conviction
entered on February 24, 2017, in the United States District Court for the Southern
District of New York (Swain, J.). In connection with an insider trading scheme,
the defendant‐appellant was found guilty after a jury trial of conspiracy to
commit securities fraud and tender offer fraud, in violation of 18 U.S.C. § 371;
conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349; six counts of
securities fraud, in violation of 15 U.S.C. §§ 78j(b) and 78f; and tender offer fraud,
in violation of 15 U.S.C. §§ 78n(e) and 78ff. On appeal, the defendant‐appellant
argues that he was deprived of an opportunity to examine a key witness in light
of that witness’s improper invocation of the Fifth Amendment privilege against
self‐incrimination; that his due process rights were violated by the district court’s
decision not to immunize that witness in order to allow the witness to testify
without fear of self‐incrimination; and that several evidentiary errors were made.
Although we disagree with the defendant’s constitutional arguments, we
nevertheless find that certain impeachment material that might have influenced
the jury’s deliberations should not have been excluded. Accordingly, the
judgment of the district court is VACATED and REMANDED.
Judge Berman dissents in a separate opinion.
_______________
BROOKE E. CUCINELLA (Sarah K. Eddy, Brian Blais, and Margaret
Garnett, on the brief), Assistant United States Attorneys, for
Geoffrey S. Berman, United States Attorney for the Southern
District of New York, New York, NY.
ALEXANDRA A.E. SHAPIRO, (Sean Nuttall, on the brief), Shapiro Arato
LLP, New York, NY, for Sean Stewart.
2
PER CURIAM:
This is an unusual insider trading case, in that defendant‐appellant Sean
Stewart does not contest that he provided material, nonpublic information to his
father, Robert Stewart. Rather, Sean readily acknowledges that “he was very
close to his father, routinely confided in him, and even occasionally mentioned
potential deals,” and that his father and others then invested based upon that
information. Def. Br. 1. The key question facing the jury was whether to believe
Sean when he denied that he knew that his father would trade on the
information that Sean had provided. Evidently they did not, as Sean was
convicted on all counts brought against him.
The government’s case largely hinged on the so‐called “silver platter
statement,” in which Sean purportedly told Robert that he expected Robert to
invest based upon information to which Sean had access through his work as an
investment banker. In this matter, a silver platter proved to be the government’s
silver bullet. Because we agree that Sean should not have been precluded from
3
impeaching the silver platter statement, however, we VACATE the conviction
and REMAND this matter to the district court for further proceedings.1
BACKGROUND
Sean Stewart testified that he was “very close” to his parents growing up
and that he had an “excellent” relationship with his father, Robert Stewart, in
particular. Tr. 1129‐30. Into adulthood, Sean would regularly speak with his
parents several times per week by phone and would see them in person once or
twice per month. Among the topics that they often discussed were Sean’s career
and what he was working on. Although Sean knew that company policy forbade
him from discussing confidential information with anyone other than his
colleagues, he did not abide by that rule. Rather, he admitted that he “spoke very
freely” with his family, explaining that he “grew up in a household where there
were no secrets, and [his family] shared everything about [their] lives.” Id. at
1189.
1 In light of this disposition, the defendant’s procedural reasonableness challenge to his
sentence is now moot.
4
Sean began working as an analyst at JP Morgan Chase in 2003. Among the
matters that Sean worked on while at JP Morgan was the sale of a
pharmaceutical research company, Kendle International, Inc. Robert began
purchasing Kendle common stock on February 7, 2011, shortly after Sean had
attended a kick‐off meeting for the Kendle project. In addition, Robert asked a
colleague, Mark Boccia, to make further investments in Kendle on Robert’s
behalf. Boccia began doing so in mid‐February, with some of the investments
made on his own behalf and some on behalf of Robert. Kendle’s acquisition was
publicly announced on May 4, 2011. The following day, Robert sold his Kendle
securities, and, acting on Robert’s advice, Boccia did the same. Boccia then paid
Robert a share of his trading profits in cash.
At around the same time, JP Morgan was also involved in the sale of
Kinetic Concepts, Inc., a medical device company known as “KCI.” Although
Sean did not work on the KCI transaction directly, he was involved with
ensuring that it was properly staffed. Boccia began purchasing KCI call options
on behalf of both himself and Robert on April 5, 2011, with Robert this time
telling Boccia that Sean “knew that [KCI was] going to merge.” Id. at 371. Robert
5
also asked another colleague, Richard Cunniffe, to purchase KCI call options on
his behalf, explaining that he could not do so directly because “he was too close
to the source.” Id. at 623. Cunniffe began purchasing KCI call options on April 21,
2011. In addition, Robert began personally purchasing KCI common stock on
May 5, 2011, the same day on which he had sold his Kendle shares. The KCI
transaction was publicly announced on July 13, 2011, generating significant
profits for Cunniffe and Robert, though Boccia’s options had already expired by
that time.
Meanwhile, on May 25, 2011, Sean was made aware that the Financial
Industry Regulatory Authority (“FINRA”) was investigating suspicious trading
in Kendle securities. In connection with that investigation, Sean was asked
whether he knew any of the individuals whose names appeared on a list
circulated by FINRA. Although Robert appeared on the list, Sean initially denied
recognizing any of the listed names. JP Morgan requested that Sean review the
list again after FINRA inquired further, at which time Sean acknowledged that
the list included his father’s name. JP Morgan’s legal and compliance staff
subsequently arranged to meet with Sean on August 26, 2011.
6
The night before that meeting, Sean and Robert met at the Yale Club.
According to Sean, he told Robert about the upcoming meeting and said that
Robert’s name had appeared on FINRA’s list. Sean testified that he confronted
his father about the Kendle trades because he was “confused, ashamed, [and]
taken aback,” and he “wanted to know why [Robert] would do something so
foolish, so stupid,” as Sean knew Robert might have learned of the Kendle
transaction from their conversations. Id. at 1235. Sean described Robert as
“embarrassed” and “nervous” upon being asked about Kendle, claiming to have
invested based upon public information, though Sean did not believe him. Id.
The following day, Sean told JP Morgan compliance and legal personnel
that he had not discussed Kendle with his father. Sean has admitted that he
“lied,” explaining that he “was nervous about [Robert] getting in trouble” and
recognized that his father’s investments “would be potentially damaging for
[his] prospects” professionally. Id. at 1236. Sean claimed that a few days after his
meeting at JP Morgan, he told Robert “to never do that again, and [Robert]
promised that he would not.” Id. at 1237. Sean believed Robert, who Sean
described as having been “pretty shaken up” by the experience. Id. at 1251.
7
Although neither FINRA nor JP Morgan took any disciplinary measures
against Sean, FINRA nevertheless referred the matter to the Securities and
Exchange Commission, which conducted its own investigation. The SEC spoke
with Robert, who acknowledged that Sean worked at JP Morgan but denied
having discussed Kendle with Sean either before or after he had purchased the
company’s stock. The SEC subsequently closed its investigation without taking
any enforcement action.
Sean left JP Morgan for Perella Weinberg Partners, a boutique investment
bank, in September 2011. While at Perella Weinberg, Sean worked on the
acquisitions of Gen‐Probe, Inc., and CareFusion, both medical device companies,
and learned of the planned acquisition of Lincare Holdings, Inc., a home
healthcare company. Cunniffe purchased the securities of each of these
companies in advance of the acquisitions, doing so at the suggestion of Robert in
each instance, and sold the securities after each acquisition was publicly
announced. Each time, Cunniffe shared the investment proceeds with Robert.
The profits from these five investments totaled $1.15 million. In
approximate terms, Cunniffe received $1 million; Robert received $150,000; and
8
Boccia lost money as a result of the expiration of his KCI call options. There is no
evidence that Sean directly profited from the investments.
Unbeknownst to Robert, the Federal Bureau of Investigation approached
Cunniffe sometime in the spring of 2015, after all of the investments at issue.
Cunniffe decided to cooperate with the FBI, and subsequently recorded several
conversations with Robert. Most relevant to this litigation is a conversation
between Robert and Cunniffe that occurred on March 24, 2015, during which
they had the following exchange regarding Robert’s Kendle investments:
Robert: And then like about a year later I get a call from the SEC
questioning me on that transaction. [Indiscernible] 5,000 dollar
transaction. What are they gonna do? And then nothing happened. I
don’t know what they’re doing now. I figure it’s a 3 year statute, 4
year, 5 year whatever it it’s way way over that. But it pretty much put
a fear in me that a [indiscernible].
Cunniffe: Would scare the shit out of me [indiscernible] that’s for
sure.
Robert: Yeah. I mean I still, I still remember being [indiscernible] years ago.
Sean would always say, ah I can’t believe you [indiscernible]. Said I can’t
believe it. I handed you this on a silver platter and you didn’t invest in this,
and you know. I said, Sean, did you ever get a call from the SEC, like
I’m gonna actually do this [indiscernible], and he says [indiscernible].
I mean [Laughter]. Yeah, that is something.
9
Supp. App. 143‐44 (alterations in original, emphasis added). The district court
referred to the italicized portion of this conversation as the “silver platter
statement,” nomenclature which we hereby adopt.2
Robert was arrested and interviewed by the FBI shortly thereafter. During
the attendant questioning, Robert claimed that Sean only learned of the Kendle
trades “after the fact,” at which point Sean became “[s]urprised and ang[ry],”
prompting Robert to acknowledge that “it was stupid” for him to have invested.
S.D.N.Y. Dkt. No. 120‐2 at 11, 16. When asked why Sean told Robert about other
deals that he was working on following the Kendle episode, Robert speculated
that Sean “figured I probably wouldn’t do it again—you know—in his eyes,
y’know—I’m his father—I’m—y’know—on a pedestal.” Id. at 16. Robert
repeatedly denied that Sean was aware of any of the other investments or that
Sean had intended that Robert would trade on any of the information that Sean
had provided.
2 At trial, Sean expressly denied having said “anything like that” to Robert. Tr. 1328.
10
The FBI asked Robert twice about the silver platter statement. The
following colloquy occurred near the start of the interview:
FBI: [H]ow do you explain a comment you made to Rick [Cunniffe],
that Sean got angry with you when he gave you this information on a
silver platter and you didn’t invest.
Robert: I think I was just saying to Rick because Sean said, “Uh
y’know, all these deals—if you were trading—you could have made
like millions of dollars[,]” and I said, “Sean nobody’s going to trade
and make millions of dollars on this stuff.” That wasn’t his intention.
FBI: So why was Sean giving you this information?
Robert: I think he was just proud of the fact that he was doing deals
and y’know, almost like [“]hey, this deal is going to go way up[,”] not
intending that somebody was going to trade on it.
Id. at 1‐2. Subsequently, the interview returned to the same topic:
FBI: So why did he get mad at you? Why did he get mad at you and
say, “I served this up to you on a silver platter and you didn’t invest
in it.” Why did he get mad at you about that?
Robert: Um, I think that—that day, he was clearly drinking.
FBI: You remember that day specifically?
Robert: I remember—y’know—during that period, because he was
getting divorced, he’s—y’know—and um, he just said[,] I think he
might’ve said, “Y’know, Uh, y’know, I said I was working on this
deal—gee, if you had invested, you would’ve made millions of
dolars.” And I said, “Sean, y’know, people[,] y’know[.]”
11
FBI: Get arrested for that?
Robert: “Get arrested for making millions and millions of dollars on
confidential information.”
FBI: Mmhm.
Robert: And that was the end of the conversation.
Id. at 11.
The operative indictment was filed in the Southern District of New York
on July 15, 2015, charging both Sean and Robert with conspiracy to commit
securities fraud and tender offer fraud, conspiracy to commit wire fraud, tender
offer fraud, and six counts of securities fraud. Robert pleaded guilty to a single
conspiracy count on August 12, 2015, while Sean proceeded to trial. The parties
engaged in extensive motion practice before that trial commenced. The following
recitation reflects only those motions and rulings as are relevant to this appeal.
First, Sean moved to preclude introduction of the silver platter statement
as hearsay. The district court denied that motion, reasoning that Robert’s
relaying of the statement to Cunniffe was against Robert’s penal interest.
Having failed to exclude the silver platter statement, Sean subsequently
moved for leave to introduce Robert’s post‐arrest statements to the FBI in order
12
to impeach the credibility of the silver platter statement. That, too, was denied,
on the ground that Robert did not specifically state that the silver platter
statement had not been made.
Next, Sean sought to compel Robert’s testimony via subpoena. Robert
responded by invoking his Fifth Amendment right against self‐incrimination in
response to each topic on which either Sean or the government hoped to inquire,
after which the district court conducted an in camera proceeding with only Robert
and his counsel present to assess the viability of Robert’s claimed privilege. The
district court thereafter sustained Robert’s invocation of the Fifth Amendment.
As a last resort, Sean sought to have Robert immunized in order to allow
him to testify without the risk of self‐incrimination. The district court denied that
request as well, finding an absence of extraordinary circumstances that would
merit providing Robert with immunity for his testimony.
Sean’s trial began on July 27 and concluded on August 9, 2016. The
cornerstone of his defense was his professed belief that he could trust his father,
who Sean not did intend or expect would misappropriate his confidences for
pecuniary gain. To rebut that argument, the government relied heavily on the
13
silver platter statement. The jury convicted Sean on all counts on August 17,
2016. This appeal followed.
DISCUSSION
I. Privilege Against Self‐Incrimination
In relevant part, the Fifth Amendment provides that “[n]o person . . . shall
be compelled in any criminal case to be a witness against himself.” U.S. Const.
amend. V. “The privilege afforded not only extends to answers that would in
themselves support a conviction under a . . . criminal statute but likewise
embraces those which would furnish a link in the chain of evidence needed to
prosecute the claimant for a . . . crime.” Hoffman v. United States, 341 U.S. 479, 486
(1951). “To sustain the privilege, it need only be evident from the implications of
the question, in the setting in which it is asked, that a responsive answer to the
question or an explanation of why it cannot be answered might be dangerous
because injurious disclosure could result,” the assessment of which requires that
the trial judge “‘be governed as much by his [or her] personal perception of the
peculiarities of the case as by the facts actually in evidence.’” Id. at 486‐87
(quoting Ex Parte Irvine, 74 F. 954, 960 (C.C.S.D. Ohio 1896) (Taft, J.)).
14
The danger that Robert’s potential testimony posed to him is evident from
the subject‐matter on which the parties sought to question him. Those topics
were submitted in advance to the district court and clearly related to both his
trading activities and the veracity of his prior statements to the FBI and SEC.
Robert expressly invoked his Fifth Amendment privilege against self‐
incrimination with respect to each such topic, after which the district court
discussed these issues further with Robert’s counsel in camera. Moreover, the
government made clear that it believed Robert had engaged in additional insider
trading for which he had not been charged and that he had also violated 18
U.S.C. § 1001(a) by making false statements to federal law enforcement officials.
Although trial judges must engage in a “particularized inquiry as to
whether each of [a witness’s] claims of privilege could provide evidence that
would tend to incriminate him” if the danger of self‐incrimination “is not readily
apparent from the implications of the questions asked or the circumstances
surrounding the inquiry,” this is not such a case. Estate of Fisher v. Comm’r of
Internal Revenue, 905 F.2d 645, 649, 651 (2d Cir. 1990). Where the hazards of self‐
incrimination are readily apparent, a witness’s invocation of the privilege against
15
self‐incrimination need not be tested by the rote recitation of questions that have
obvious answers of which the judge is already aware.
II. Procedural Due Process
“The government is under no general obligation to grant use immunity to
witnesses the defense designates as potentially helpful to its cause but who will
invoke the Fifth Amendment if not immunized.” United States v. Ebbers, 458 F.3d
110, 118 (2d Cir. 2006). Nevertheless, “under ‘extraordinary circumstances,’ due
process may require that the government confer use immunity on a witness for
the defendant.” United States v. Praetorius, 622 F.2d 1054, 1064 (2d Cir. 1979). A
defendant requesting such relief must make a two‐pronged showing:
First, the defendant must show that the government has used
immunity in a discriminatory way, has forced a potential witness to
invoke the Fifth Amendment through overreaching, or has
deliberately denied immunity for the purpose of withholding
exculpatory evidence and gaining tactical advantage through such
manipulation. . . . Second, the defendant must show that the evidence
to be given by an immunized witness will be material, exculpatory
and not cumulative and is not obtainable from any other source.
Ebbers, 458 F.3d at 119 (internal quotation marks and citations omitted). “We
review the court’s factual findings about government actions and motive for
16
clear error, but its ultimate balancing for abuse of discretion,” although the
situations in which conferring immunity would be required are “[s]o few and
exceptional” that “we have yet to reverse a failure to immunize.” United States v.
Ferguson, 676 F.3d 260, 291 (2d Cir. 2011). This case is no exception.
Sean first argues that the district court engaged in discriminatory tactics by
conferring immunity on Boccia while declining to immunize Robert. The district
court did not abuse its discretion in rejecting that argument. “Our Circuit’s
approach to defense witness immunity . . . recognizes the essential unfairness of
permitting the Government to manipulate its immunity power to elicit testimony
from prosecution witnesses who invoke their right not to testify, while declining
to use that power to elicit from recalcitrant defense witnesses testimony” that
might exculpate a defendant. United States v. Dolah, 245 F.3d 98, 106 (2d Cir. 2001),
abrogated on other grounds by Crawford v. Washington, 541 U.S. 36 (2004). Yet such
decisions are not discriminatory if they are “consistent with legitimate law
enforcement concerns.” Ebbers, 458 F.3d at 119.
Robert and Boccia were not similarly situated from a law enforcement
perspective. For instance, Boccia and Sean never met, whereas Robert spoke with
17
Sean regularly and served as a conduit for the material nonpublic information
provided by Sean. In addition, Boccia traded in securities for only two of the five
companies at issue in this action, and actually lost money doing so, whereas
Robert profited by trading, directly and indirectly, in the securities of all five
companies. Relatedly, Boccia last traded on information provided by Sean in June
2011, whereas Robert did so in 2014, just a few short months before his arrest.
These distinctions provide ample justification for their disparate treatment.
Nor was it an abuse of discretion for the district court to find that the
government did not overreach. “Prosecutorial ‘overreaching’ can be shown
through the use of ‘threats, harassment, or other forms of intimidation.’” Id.
(quoting Blissett v. Lefevre, 924 F.2d 434, 442 (2d Cir. 1991)). That is simply not
borne out by the record here. The prosecutors in question submitted declarations
asserting that they did not state, suggest, or imply that Robert would face adverse
consequences based on whether or not he chose to testify at Sean’s trial. In
response, all that Sean musters are vague statements made by Robert’s counsel to
the district court that summarize communications between himself and the
government at a high level of generality. The record before us is otherwise barren
18
as to the substance of any representations made by the government to Robert. In
light of the minimal evidence submitted, the facts adduced are insufficient to
establish prosecutorial overreach.
Because Sean has not satisfied the first prong of the requisite showing, we
need not consider the second.
III. Admissibility of Robert’s FBI Interview
For present purposes, we assume arguendo that the silver platter statement
was admissible. The questions then become (1) whether the exclusion of Robert’s
post‐arrest statements to the FBI was erroneous and, if so, (2) is it sufficient,
standing on its own, to require that Sean’s conviction be vacated. For the reasons
set forth in this section, we answer those questions in the affirmative. This
narrow ground mandates that Sean be given a new trial, regardless of whether or
not the silver platter statement was itself hearsay.3
3 The dissent focuses primarily on the ʺpowerfulʺ and ʺoverwhelmingʺ evidence
mustered by the government, as compared to the ʺfeebleʺ defense offered by Sean.
Dissent at 1. But Sean does not challenge the sufficiency of the evidence against him,
and the crux of the dispute is not whether there was an adequate basis for the juryʹs
verdict. Rather, the key question is whether Seanʹs defense was prejudiced by
preclusion of impeachment evidence. We find that it was. That does not mean, of
19
We review the exclusion of Robert’s post‐arrest interview “deferentially”
for “abuse of discretion,” as we do with all evidentiary rulings. United States v.
Dupree, 706 F.3d 131, 135 (2d Cir. 2013). “A district court ‘abuses’ or ‘exceeds’ the
discretion accorded to it when (1) its decision rests on an error of law (such as
application of the wrong legal principle) or a clearly erroneous factual finding, or
(2) its decision—though not necessarily the product of a legal error or a clearly
erroneous factual finding—cannot be located within the range of permissible
decisions.” Zervos v. Verizon N.Y., Inc., 252 F.3d 163, 169 (2d Cir. 2001).
A. Inconsistent Statements
Following the district court’s ruling that the silver platter statement was
admissible, Sean moved for leave to introduce excerpts from Robert’s post‐arrest
FBI interview in which Robert was asked about the silver platter statement. The
district court did not grant such leave, reasoning that “Robert never specifically
denie[d] that [Sean] made the ‘silver platter’ statement itself,” Special App. 3‐4,
course, that we are somehow second‐guessing the jury’s assessment of the evidence
presented, or that we necessarily believe in Sean’s innocence. Those questions are not
for this panel to answer. Rather, we find only that Sean was deprived of the opportunity
due him to defend himself against the evidence introduced at trial.
20
such that the FBI interview and the silver platter statement were not “inconsistent”
for purposes of Federal Rule of Evidence 806.4
4 In the interest of clarity, we reiterate that Robert stated as follows to the FBI:
FBI: [H]ow do you explain a comment you made to Rick [Cunniffe], that
Sean got angry with you when he gave you this information on a silver
platter and you didn’t invest.
Robert: I think I was just saying to Rick because Sean said, “Uh y’know, all
these deals—if you were trading—you could have made like millions of
dollars”[,] and I said, “Sean nobody’s going to trade and make millions of
dollars on this stuff.” That wasn’t his intention. . . . I think he was just proud
of the fact that he was doing deals and y’know, almost like [“]hey, this deal
is going to go way up[,”] not intending that somebody was going to trade
on it. . . .
FBI: So why did he get mad at you? Why did he get mad at you and say, “I
served this up to you on a silver platter and you didn’t invest in it.” Why
did he get mad at you about that?
Robert: Um, I think that—that day, he was clearly drinking. . . . I
remember—y’know—during that period, because he was getting divorced,
he’s—y’know—and um, he just said[,] I think he might’ve said, “Y’know,
Uh, y’know, I said I was working on this deal—gee, if you had invested,
you would’ve made millions of dollars.” And I said, “Sean, y’know,
people[,] y’know[,] . . . Get arrested for making millions and millions of
dollars on confidential information.” . . . And that was the end of the
conversation.
S.D.N.Y. Dkt. No. 120‐2 at 1‐2, 11. Furthermore, we also reiterate that the silver platter
statement refers specifically to the following recollection by Robert: “I mean I still, I still
remember being [indiscernible] years ago. Sean would always say, ah I can’t believe
21
“A hearsay declarant may . . . be impeached by showing that the declarant
made inconsistent statements,” based upon the theory that such a declarant “‘is in
effect a witness’” and therefore “‘[h]is credibility should in fairness be subject to
impeachment . . . as though he had in fact testified.‘” United States v. Trzaska, 111
F.3d 1019, 1024 (2d Cir. 1997) (quoting Fed. R. Evid. 806 advisory committee’s
note). “[S]tatements need not be diametrically opposed to be inconsistent.” United
States v. Agajanian, 852 F.2d 56, 58 (2d Cir. 1988) (quoting United States v. Jones, 808
F.2d 561, 568 (7th Cir. 1986)). As our sister Circuit has recognized in a related
context, “explanations and denials run the gamut of human ingenuity, ranging
from a flat denial, to an admitted excuse, to a slant, to a disputed explanation, or to
a convincing explanation”; a statement could fall at any point on this spectrum
and still be inconsistent. United States v. Meza, 701 F.3d 411, 426 (5th Cir. 2012).
Accordingly, we apply “two tests to determine inconsistency,” asking whether
there is “any variance between” the impeachment material and the hearsay
statement “that has a reasonable bearing on credibility” or whether a jury could
you [indiscernible]. Said I can’t believe it. I handed you this on a silver platter and you
didn’t invest in this . . . .” Supp. App. 143.
22
“reasonably find that a witness who believed the truth of the facts” asserted in the
hearsay statement “would have been unlikely to make a statement” of the
impeachment material’s “tenor.” Ebbers, 458 F.3d at 123 (quoting Trzaska, 111 F.3d
at 1024‐25). We need only consider the first of these tests.
Robert need not have explicitly denied the silver platter statement to render
his discussions with the FBI admissible. Although Robert has consistently
acknowledged that some exchange took place between himself and Sean, the
precise contents and the import of those discussions have not been similarly
uniform. To render the statements inconsistent for purposes of Rule 806, it was
enough that excerpts from his FBI interview varied from his earlier recitation of
the silver platter statement in a manner such that they cast a different meaning on
his discussions with Sean. We find that there is a material difference between the
possibility that Sean might have said “I can’t believe . . . you didn’t invest,” Supp.
App. 143, as opposed to Sean having said “if you were trading—you could have
made like millions of dollars,” S.D.N.Y. Dkt. No. 120‐2 at 2. The former suggests
that Sean expected that Robert would trade, while the latter does not.
That distinction has a reasonable bearing on the credibility of the silver
23
platter statement. See Ebbers, 458 F.3d at 123. Regardless of which version of the
conversation between Sean and Robert was correct, if either, “the fact of the
inconsistency gives the jury an insight into the witness’s state of mind; the
inconsistency shows that the witness is either uncertain or untruthful. In either
event, the inconsistency calls into question the witness’s believability.” Robert P.
Mosteller, et al., 1 MCCORMICK ON EVIDENCE § 34 (7th ed.).
B. Harmless Error Review
The government argues that even if the impeachment materials are
admissible, their exclusion was harmless error. “In order to uphold a verdict in the
face of an evidentiary error, it must be ‘highly probable’ that the error did not
affect the verdict.” United States v. Dukagjini, 326 F.3d 45, 61 (2d Cir. 2003) (quoting
United States v. Forrester, 60 F.3d 52, 64 (2d Cir. 1995)). Put another way, an
“erroneous admission of evidence is harmless ‘if the appellate court can conclude
with fair assurance that the evidence did not substantially influence the jury.’”
United States v. Al‐Moayad, 545 F.3d 139, 164 (2d Cir. 2008) (quoting United States v.
Garcia, 291 F.3d 127, 142 (2d Cir. 2002)). When assessing the importance of
improperly excluded evidence, we consider the following factors:
24
(1) the importance of the unrebutted assertions to the government’s
case; (2) whether the excluded material was cumulative; (3) the
presence or absence of evidence corroborating or contradicting the
government’s case on the factual questions at issue; (4) the extent to
which the defendant was otherwise permitted to advance the defense;
and (5) the overall strength of the prosecution’s case.
United States v. Oluwanisola, 605 F.3d 124, 134 (2d Cir. 2010). Based upon these
considerations, excluding Robert’s post‐arrest FBI interview was not harmless.
The government contends that the impeachment material would have been
cumulative of evidence that was already before the jury in the form of Robert’s
April 16, 2015, conversation with Cunniffe, in which Robert claimed that Sean was
unaware of his investment activities. 5 But that argument does not address the full
5 In relevant part, Robert and Cunniffe had the following dialogue on April 16, 2015:
Cunniffe: In terms of Sean, do you ever throw him money? Or no?
Robert: No.
Cunniffe: No you don’t. That is what I thought. I thought it was just out of the
goodness and kindness of his heart.
Robert: No, it’s just, you know, it’s just stuff he mentions as he goes around,
you know, ‘Oh, I am working on this, I am working on that.’
Cunniffe: That is what I figured.
25
breadth of Robert’s post‐arrest statements. Indeed, it ignores their most salient
feature: Robert’s FBI interview offered fundamentally distinct recollections of the
silver platter exchange that cast a different light on Sean’s intentions. Such
evidence is not cumulative, “particularly where the case revolved around what
[Sean] told [Robert] and what [Robert] told him,” because “stray bits” of evidence
touching upon similar subject matter, such as Robert’s statements exculpating
Sean, “do not substitute for [Robert’s] direct account” of his discussion with Sean.
United States v. Scully, 877 F.3d 464, 475 (2d Cir. 2017).
The only other argument offered by the government is its conclusory
assertion that “[t]here is no reasonable possibility that . . . [the jury] would have
reached a different result” if it had heard Robert’s post‐arrest statements to the
FBI. Gov’t Br. 38. We cannot say the same. “We have repeatedly held that the
Robert: I never told him like, I’ve done anything.
Cunniffe: Okay. Okay. . . . So you never told him you even invested. . . .
Robert: No. No.
Jt. App. 680‐81 (ellipses in original).
26
strength of the government’s case is the most critical factor in assessing whether
error was harmless.” United States v. McCallum, 584 F.3d 471, 478 (2d Cir. 2009).
Given the difficulty of objectively evaluating this factor, appellate courts often look
to the length of jury deliberations and the necessity of a modified Allen charge as
useful proxies. See, e.g., Parker v. Gladden, 385 U.S. 363, 364 (1966) (“[T]he jurors
deliberated for 26 hours, indicating a difference among them as to the guilt of the
petitioner.”); Zappulla v. New York, 391 F.3d 462, 471 (2d Cir. 2004) (“The length
and deliberative conduct by the jury . . . suggests that a conviction was not
assured, at least without the [erroneously admitted] confession.”); United States v.
Grinage, 390 F.3d 746, 752 (2d Cir. 2004) (“After brief deliberations, the jurors sent a
note that they were hung and, only after a modified Allen charge did they reach a
verdict. . . . This was a close case.” (internal citation omitted)).
Here, the trial lasted only eight days, yet the jury deliberated for five.
Moreover, the jurors reported that they were at an impasse and believed
themselves to be deadlocked on the third day of deliberation, prompting the
district court to provide a modified Allen charge in the hopes of spurring them to
reach consensus. This cuts strongly against the government’s unsupported
27
assertion that admission of Robert’s post‐arrest interview would have made no
difference to the jury.
We must also consider “the importance of the unrebutted assertions to the
government’s case.” Oluwanisola, 605 F.3d at 134. “As a general matter, the
prosecution knows intimately the strengths and weaknesses of its case.” Zappulla,
391 F.3d at 471. The silver platter statement was quite literally the first thing
mentioned in the government’s opening statement to the jury, and it was the
very last thing discussed in the government’s rebuttal summation. In its closing
arguments, the government referred to the silver platter statement as
“devastating” no fewer than three times, Tr. 1558, 1559, 1561, describing it as a
“candid admission [that] put the lie to Sean Stewart’s testimony,” id. at 1443, for
which “Sean Stewart couldn’t come up with an explanation,” id. at 1561. Such
“heavy reliance . . . expose[s] its central role in persuading the jury to convict,” as
the government “clearly understood that [the silver platter] statement was a
powerful weapon” in its arsenal. Wood v. Ercole, 644 F.3d 83, 96‐97 (2d Cir. 2011).6
6 The dissent argues that the strength of the evidence is such that Sean may well have
been convicted even absent the silver platter statement. However, that possibility does
28
To be clear, we do not mean to suggest that the government’s emphasis on
the silver platter statement was improper. The district court ruled that the silver
platter statement was admissible. Under those circumstances, it is
understandable that the government would introduce and rely on it. But the
government’s apparent recognition regarding “the impact [the] statement would
have on the jury” nevertheless confirms our belief that it was, in fact, important
to the prosecution’s case. Id. at 98; see also Zappulla, 391 F.3d at 472 (“The fact that
the prosecutor relied on the confession, thereby running the risk of reversal on
appeal, tends to show that the prosecutor understood . . . that the confession was
not “render[] harmless” the exclusion of Robert’s post‐arrest statements once the silver
platter statement was introduced, Dissent at 20, because neither we nor the dissent can
know what result would have obtained had the government not introduced it in the
first place. Indeed, the heavy emphasis the government placed on the silver platter
statement, as well as the government’s concession at oral argument that the statement’s
introduction would not have been harmless (assuming arguendo that it had been
erroneous), both suggest that it did not only ʺadd[]incrementallyʺ to the prosecution’s
case. Id. Much of the evidence marshaled by the dissent is undisputed, see id. at 11‐19,
but the silver platter statement is by far the most compelling evidence contradicting
Seanʹs own testimony that he did not intend for Robert to benefit from the information
Sean was relaying to him. As intent to benefit the tippee is an element of securities
fraud, we cannot know whether Sean would have been convicted if the silver platter
statement had not been introduced—or, alternatively, if it had been introduced but
impeached.
29
a crucial piece of evidence.”). In light of the silver platter statement’s importance,
that it went unrebutted is a critical strike against the notion that exclusion of
Robert’s post‐arrest statements to the FBI might have been harmless error.
To find Sean guilty, the jury had to conclude that Sean intended that his
father would trade, thus personally benefitting from the misappropriation of his
employer’s material nonpublic information. See Dirks v. SEC, 463 U.S. 646, 663 n.23
(1983) (“Scienter—‘a mental state embracing intent to deceive, manipulate, or
defraud’—is an independent element of a Rule 10b‐5 violation.” (quoting Ernst &
Ernst v. Hochfelder, 425 U.S. 185, 193 n.12 (1976)); United States v. Martoma, 894 F.3d
64, 76 (2d Cir. 2018) (“[T]he personal benefit element can be met by evidence that
the tipper’s disclosure of inside information was intended to benefit the tippee.”).
That conclusion was powerfully supported by evidence that Sean had said to
Robert, “I can’t believe it. I handed you this on a silver platter and you didn’t
invest in this.” Supp. App. 143. While other evidence of Sean’s guilt was proffered,
the silver platter statement was the most suggestive evidence of Sean’s intent that
Robert should trade on the tips Sean supplied.
30
The jury’s decision on the crucial question of Sean’s intent might well have
been influenced by a doubt as to whether Sean had truly said that he served up
information on a silver platter or that he could not believe Robert had not traded
on it. Robert’s post‐arrest statements did not repeat those critical details, the
absence of which might have supported inferences that Sean did not know,
expect, or intend that his father would invest based upon their discussions. If the
silver platter statement is “damning proof” that Sean “acted with deliberate
intent that his father trade on material nonpublic information,” as argued by the
government, S.D.N.Y Dkt. No. 101 at 20, then it hardly seems unlikely that
Robert’s alternative versions of the same conversation between himself and Sean
might have influenced the jury’s deliberations. Although Robert never expressly
denied the silver platter statement, his post‐arrest recollections offer a potentially
different interpretation that could, at minimum, have tempered the statement’s
“devastating” effect.
On this record, we cannot conclude with fair assurance that the admission
of Robert’s post‐arrest FBI interview might not have substantially influenced the
jury. See Al‐Moayad, 545 F.3d at 164. The dissent is surely correct that evidence
31
supporting several elements of the counts against Sean was “overwhelming,”
Dissent at 1; indeed, much of it was undisputed. Nevertheless, Seanʹs intent was
the central point of contention between the parties. On that issue, the
governmentʹs evidence was at its weakest. The dissent’s compelling recitation of
evidence relating to other elements of the crimes alleged does not make the
evidence of intent any stronger. Because the impeachment material might have
undermined the silver platter statement in the eyes of the jury, it risked leaving the
government “with a substantially weaker case” as to Seanʹs intent such that “a
guilty verdict would be far from assured.” Wood, 644 F.3d at 96.
With great respect for the district court, because this evidentiary error was
not harmless, we are compelled to vacate Sean’s conviction. We therefore need not
reach the question whether the silver platter statement was admissible under a
hearsay exception—either the penal interest or the co‐conspirator exception.
Nonetheless, because the district court will need to rule of the admissibility of the
silver platter statement upon retrial, we think it desirable to give the court
guidance on this question. The district court did not rule on whether the silver
platter statement was admissible under the co‐conspirator exception to the
32
hearsay rule as codified at Federal Rule of Evidence 801(d)(2)(E). If the district
court had decided that it was admissible under the co‐conspirator exception, we
would have affirmed that ruling. There is ample evidence in the record to show by
a preponderance that a conspiracy existed between Robert and Sean with the
objective that Robert trade on the information Sean provided, and that Robert’s
silver platter statement to Cunniffe furthered the objective of the Robert‐Sean
conspiracy.7 This may prove a stronger basis for admission of the silver platter
7 We note that the co‐conspirator exception looks not to whether the declarant (Robert)
made the statement to one who conspired with him (Cunniffe)—which the district court
appeared to treat as the test—but rather whether the declarant (Robert) conspired with
the defendant against whom the statement is offered (Sean), and that the statement was
made during the course of their conspiracy and in furtherance of its objective. United
States v. Farhane, 634 F.3d 127, 161 (2d Cir. 2011) (citation omitted). The co‐conspirator
exception stems from the theory that persons in a conspiracy with one another act as
each other’s partners or representatives in carrying out the objectives of the conspiracy.
2 MCCORMICK ON EVIDENCE, supra, § 259; see also Edmund M. Morgan, The Rationale of
Vicarious Admissions, 42 Harv. L. Rev. 461, 464 (1929). The McCormick treatise explains:
Conspiracies to commit a crime . . . are analogous to partnerships. . . . If A
and B are engaged in a conspiracy, the acts and declarations of B
occurring while the conspiracy is actually in progress and in furtherance
of the design . . . . may . . . be introduced against A as representative
admissions to prove the truth of the matter asserted. . . . Federal Rule
801(d)(2)(E) is consistent with the foregoing analysis, treating as [a
33
statement than the penal interest exception. Of course, we express no view on Sean
Stewart’s ultimate guilt or innocence, which must be decided by a jury of his peers
if he is retried.
CONCLUSION
For the foregoing reasons, we VACATE Sean Stewart’s conviction and
REMAND this matter to the district court for further proceedings.
party’s] admission a statement ‘made by the party’s co‐conspirator during
and in furtherance of the conspiracy.
2 MCCORMICK ON EVIDENCE, supra, § 259 (footnotes omitted).
34
BERMAN, District Judge, dissenting:
I. Overview
Defendant Sean Stewart was fairly tried and convicted of all nine insider
trading related counts in the Indictment. The Government’s case against Sean
consisted of powerful direct and circumstantial evidence and was
“overwhelming.” See United States v. Dowdell, 737 F. App’x 577, 583 (2d Cir. 2018)
(“[T]he government’s evidence would have been overwhelming even if [the
excluded evidence had been admitted.]”), cert. petition docketed sub nom. Derrick
Wilson v. United States, No. 18‐6417 (U.S. Oct. 24, 2018). It included Sean’s own
incriminating admissions, the testimony of 20 witnesses one of whom was a
cooperator, recorded conversations, and written trading records and emails
reflecting illegal securities trades.
Sean’s defense, by contrast, was feeble. Sean took the stand and admitted
that he knowingly and regularly disclosed details of confidential deals that he
was working on at JPMorgan Chase (JPMorgan) and Perella Weinberg Partners
(Perella) to his father Robert Stewart (a certified public accountant and former
1
chief financial officer).1 Robert Stewart, together with his associates, made over
$1.1 million trading on Sean’s inside information. Sean admitted that he knew
that Robert purchased and sold shares of Kendle International Inc. (Kendle) after
Robert had learned from Sean that Sean was working on a deal at JPMorgan
involving the acquisition of Kendle. Sean also confirmed that he intentionally
(and regularly) violated “bedrock” finance industry confidentiality norms and
obligations and lied to JPMorgan and to Perella – and to industry regulators,
including the Financial Industry Regulatory Authority (FINRA) – by consistently
discussing his deal work with Robert (and other family members). Perhaps most
tellingly, Sean testified that he lied about disclosing inside information because
he “knew it would be potentially damaging for my prospects at the time. I had worked
extremely hard to get to the position I was in at that point, and I thought anything might
potentially derail my future.”2 Tr. 1236. “Intent elements are everywhere in our law
and are generally proved with circumstantial evidence. Insider trading is no
1 The majority acknowledges that “although Sean knew that company policy
forbade him from discussing confidential information with anyone other than his
colleagues, he did not abide by that rule.” Op. at 4 (citation omitted).
2 Sean also testified that his father, Robert Stewart, lied to a Securities and
Exchange Commission (SEC) investigator about Sean’s disclosures of inside information
to him. Id. at 1350. Sean explained that his father protected him the same way he
protected his father. Id.
2
different. A factfinder may infer the tipper intended to benefit the tippee from
the sort of objective evidence that is commonly offered in insider trading cases.”
United States v. Martoma, 894 F.3d 64, 76 (2d Cir. 2017) (rehearing en banc denied)
(citations omitted).
Sean’s unpersuasive and inconsistent excuses for improperly disclosing
confidential business matters to Robert and other family members were that he
“grew up in a household where there were no secrets, and we shared everything
about our lives”; and that his father lied when he said to Sean that he would
never trade based on anything they had ever discussed (following the unlawful
insider Kendle trades). Tr. 1189, 1251. It is no surprise that Sean’s jury – whose
task it was to assess witness credibility and to decide what the facts were – used
common sense and rejected Sean’s “tight knit family” story. See United States v.
Payne, 591 F.3d 46, 60 (2d Cir. 2010) (“Assessments of witness credibility and
choices between competing inferences lie solely within the province of the
jury.”).3
3 The key question facing the jury, according to the majority, “was whether to
believe Sean when he denied that he knew that his father would trade on the
information that Sean had provided.” Op. at 3. The majority acknowledges that
“[e]vidently, they did not, as Sean was convicted on all counts brought against him.”
Id.
3
In sum, this case is about a sophisticated, Yale educated mergers and
acquisitions investment banker, Sean Stewart, who knew to a certainty that he
was obligated not to “tip off” family and friends about companies and corporate
deals that he was working on. Yet, he did exactly that. And, almost immediately
after Robert Stewart received inside deal information from his son Sean, Robert
and his associates traded in securities of companies involved in those deals.
When the Stewarts were caught, Robert pled guilty to one count of
conspiracy to commit securities fraud based upon inside information. One of
Robert’s associates, Richard Cunniffe (“Cunniffe”), who also traded upon Sean’s
inside information, pled guilty to insider trading and wire fraud.
Sean pled not guilty and was the principal defense witness at his trial.
(Robert refused to testify at Sean’s trial.) Sean’s testimony clearly was not
persuasive to the jury, as he was convicted of all nine counts charged in the
Indictment, i.e., one count of conspiracy to commit securities fraud and tender
offer fraud; one count of conspiracy to commit wire fraud; six counts of securities
fraud; and one count of securities fraud in connection with a tender offer.
4
II. The Majority Opinion
In analyzing Robert Stewart’s May 14, 2015 post arrest statements and the
doctrine of “harmless error,” the majority fails to acknowledge the
overwhelming evidence of the Defendant’s guilt, although it is clearly laid out in
the trial transcript. See pp. 9‐14 infra. The majority also ignores longstanding
Second Circuit precedent, including Perkins v. Herbert, 596 F.3d 161, 179 (2d Cir.
2010) and United States v. Reifler, 446 F.3d 65, 87 (2d Cir. 2006), which hold that
“the strength of the prosecution’s case [is] the most important factor in our
inquiry.” This factor compels a finding that any error in this case was harmless.
And, in remanding for a new trial, the majority fails to defer to the jury in
Sean Stewart’s case. “Because we accord a high degree of deference to the jury’s
evaluation of witnesses credibility, jury verdicts should be disturbed with great
infrequency.” See Maureen Christensen v. Cty. of Dutchess, N.Y., 548 F. App’x 651,
653 (2d Cir. 2013).
III. Sean’s Conviction
The jurors in Sean’s case appear to have been thorough and professional
throughout their deliberations, as the ten (10) notes sent by the jury to the district
judge confirm. Because this was a financial crimes case, the jury was required to
5
sort through well over 1,000 trial exhibits, including securities trading records,
emails, phone call recordings, and the JPMorgan and Perella employee codes of
conduct. The jury also had to assess the credibility of the 20 witnesses at trial,
including the Defendant and cooperating witness Richard Cunniffe. The jury
started its deliberations on Tuesday, August 9, 2016 at 12:20 p.m., and reached its
verdict on Wednesday, August 17, 2016 at 9:59 a.m., a total of 4.5 days. Jurors
deliberated from 9:30 a.m. to no later than 4:30 p.m.; did not sit on weekends;
and did not sit at all on Monday, August 15, 2016.
IV. Silver Platter Statement
District Judge Laura T. Swain was at all times thorough and fair to the
parties in this criminal litigation.4 Judge Swain correctly admitted into evidence
4 Two of Judge Swain’s substantive instructions to the jury were as follows:
(1) “In order to establish the third [insider trading] factor that Mr. Stewart
anticipated that his father would trade on the information, the
government must prove beyond a reasonable doubt that, at the time the
information was disclosed, Mr. Stewart anticipated that his father
would use the information to trade in securities or cause others to use
the information to trade in securities. The government cannot prevail by
establishing only that Mr. Stewart shared information that he was
required to keep confidential. The government must, instead, prove
beyond a reasonable doubt that at the time the information was
disclosed, Mr. Stewart anticipated that his father would use that
information to trade in securities.” Tr. 1605‐06.
6
the silver platter statement, after having determined that it was “probative of
Robert’s alleged collusion with Sean.” S.D.N.Y. Dkt. 153. She also stated that the
Government had made a “strong” argument for admission under Federal Rule of
Evidence 801(d)(2)(E) because the silver platter statement involved “a discussion
between admitted co‐conspirators.” S.D.N.Y. Dkt. 153. Admission of the silver
platter statement, as the majority acknowledges, is consistent with United States
v. Farhane, 634 F.3d 127, 161 (2d Cir. 2011), because the statement was made
during the course of and in furtherance of a conspiracy.
Post Arrest Statements
Following briefing and oral argument, Judge Swain denied Sean Stewart’s
motion to admit the post arrest statements made by Robert Stewart. She did so
(2) “Because an essential element of the crime charged is intent to defraud,
good faith on the part of Mr. Stewart is a complete defense to the charge
of insider trading. That is, the law is not violated if the defendant held
an honest belief that his actions were not in furtherance of any unlawful
scheme. Thus, it is a complete defense to the charge of insider trading if
Mr. Stewart believed, in good faith, that any information that he
provided to his father would not be used for trading purposes. A person
who acts on a belief or opinion honestly held that turns out to be wrong,
is not punishable under these statutes.” Tr. 1608.
The jury obviously concluded by its verdict that Sean anticipated and intended that his
father would use the inside information provided by Sean to trade in securities, and that
Sean had acted in bad faith.
7
because she found “no inconsistency” between Robert’s post arrest statements
and the silver platter statement.5 S.D.N.Y. Dkt. 136.
In concluding that the post arrest statements were not inconsistent with
the silver platter statement, Judge Swain may have been persuaded by the facts
that the post arrest statements appear to be a desperate attempt to minimize
Sean’s illegal behavior and that they do not include a disavowal or revocation of
the silver platter statement. Rather, the post arrest statements seek to explain
away Sean’s unlawful behavior by reference to his “divorce,” his “bragging,” his
“drinking problem,” and his unawareness of “what he’s saying.” See S.D.N.Y.
Dkt. 120, Ex. B.
Robert’s post arrest statements include the following quotations: “I
remember – y’know – during that period, because he was getting divorced, he’s–
y’know‐‐and um, he just said…I think he might’ve said, ‘Y’know, Uh, y’know, I said I
was working on this deal – gee, if you had invested, you would’ve made millions of
dollars[’]”; “I think [Sean] was just – you know – kind of bragging. Sean’s
5 The majority describes two tests for inconsistency: (1) “any variance between
the statement and testimony that has a reasonable bearing on credibility;” and (2)
“could the jury reasonably find that a witness who believed the truth of the facts
testified to would have been unlikely to make a statement of this tenor.” United
States v. Trzaska, 111 F.3d 1019, 1025 (2d Cir. 1997) (citations omitted)).
8
bragging about, ‘Hey, I’m working on this deal, that deal’”; “I think that – that
day [Sean] was clearly drinking. . . . [H]e’s got a drinking problem”; and
“Y’know – I think – sometimes he [Sean] doesn’t realize what he’s saying.” Id.
(emphasis added). Although the majority believes that the post arrest statements
may have left the Government “with a substantially weaker case,” Op. at 32, it
seems at least equally likely that Robert’s comments may further have convinced
the jury of Sean’s guilt.
In analyzing harmless error, the majority errs when it concludes that jury
deliberations were exceptionally long and that the jury was deadlocked. Four
and one half days of deliberations over nine counts in a securities fraud case is
not, in my experience, excessive. Trial judges routinely advise jurors – as Judge
Swain did at Sean’s trial – that they may take as much time as they need for full
review, discussion and consideration of the evidence. And, a careful review of
the trial transcript and the jury notes presented to the district judge on Thursday,
August 11, 2016 and Friday, August 12, 2016, shows that the majority incorrectly
concludes that the jury was “deadlocked.” Op. at 27. The records show only that
the jury may have been temporarily stuck or at impasse as to one particular
count – out of the nine counts in the Indictment. S.D.N.Y. Dkt 181, Court Ex. 15
9
(Jury Note, dated August 11, 2016: “If it is a split vote on a count and the jury is
stuck . . . ?); id., Court Ex. 22 (Jury Note, dated August 12, 2016: “If the jury is at
an impasse on a particular count . . . ?”); Tr. 1705 (District court: “You’ve
indicated in your note that you’re at an impasse with respect to a particular
count.”). The jury was able to reach unanimous agreement as to that particular
count – and to reach a verdict of guilty on all nine counts – following a routine
instruction from Judge Swain to return to the jury room and review and continue
to discuss the evidence and their views with each other.
V. The Overwhelming Strength of the Prosecution’s Case Against Sean
The majority contends that Judge Swain’s post arrest statement ruling was
error and an abuse of her discretion. It requires that the jury’s guilty verdict be
vacated, and directs that there be a new trial. In my view, even assuming,
arguendo, that the post arrest statements were legally inconsistent with the silver
platter statement, Judge Swain’s failure to admit the post arrest statements was
harmless error because the strength of the Government’s case (i.e., the evidence
of Sean’s guilt) was overwhelming. See Reifler, 446 F.3d at 87 (“In assessing [an]
error’s likely impact . . . the strength of the prosecution’s case is probably the
single most critical factor’”) (quoting Latine v. Mann, 25 F.3d 1162, 1167–68 (2d
10
Cir. 1994)); United States v. Rolle, 631 F. App’x 17, 21 (2d Cir. 2015) (“[A]ny error
was harmless in light of the overall strength of the governmentʹs case.”); United
States v. Gupta, 747 F.3d 111, 136‐37 (2d Cir. 2014); United States v. Miller, 626 F.3d
682, 690 (2d Cir. 2010) (“Here, there can be no serious claim that the district
court’s evidentiary ruling had any likelihood of affecting the outcome of the case.
The government’s evidence of guilt was overwhelming.”).
The direct and circumstantial evidence of Sean’s guilt was overwhelming
and included substantial evidence that Sean intended that Robert trade upon
Sean’s tips.
A. Evidence of Sean’s Intent
1. Sean admitted at trial that in violation of his ethical obligations he
had often disclosed inside information to his father, Robert Stewart,
about deals and companies he was working on at JPMorgan (2003 to
2011). The inside information included details about mergers and
acquisitions involving Kendle International Inc. (“Kendle”) and
Kinetic Concepts, Inc. (“KCI”). Sean also knew that Robert “may
have picked up the name Kendle and traded in [the] stock” from
their unlawful discussion. Tr. 1235.
2. Sean also admitted that he continued to disclose inside information
to his father after leaving JPMorgan to join Perella and after he knew
Robert had traded in Kendle stock. At Perella, the inside information
disclosed related to mergers and acquisitions involving Lincare
Holdings, Inc. (“Lincare”), CareFusion Corp. (“Carefusion”), and
Gen‐Probe Inc. (“Gen‐Probe”).
11
3. Sean’s explanation for disclosing confidential information to his
family included: “[Sean:] Yeah, with [my wife] and with my parents
we had a very, very close relationship, and I spoke very freely with
them. I grew up in a household where there were no secrets, and we
shared everything about our lives.”). Id. at 1185. Sean: “I’ve come to
know now that [Robert] traded in these stocks and, unfortunately,
the only way he could have gotten that information is from our
discussions.” Id. at 1252. Sean’s wife was a mergers and acquisitions
attorney at a prominent New York City law firm.
4. Sean also admitted at trial that he had violated the JPMorgan and
Perella codes of conduct by disclosing confidential client
information. Surprisingly, this does not seem to be of great concern
to the majority who observe: “Although Sean knew that company
policy forbade him from discussing confidential information with
anyone other than his colleagues, he did not abide by that rule.” See
Op. at 4 (citation omitted).
5. Sean testified that immediately after JPMorgan’s compliance officers
reached out to him in August 2011 to schedule an interview
regarding the FINRA list of persons who suspiciously traded in
Kendle stock, Sean met with his father at the Yale Club and told
Robert that Robert’s name was on the list.
6. But Sean lied to JPMorgan when he said his father’s name was not
on the FINRA list. Sean’s email to JPMorgan, dated August 2, 2011,
falsely stated “don’t know anyone [on the list].” Supp. App. 77. At
his August 26, 2011 interview with JPMorgan’s compliance officers
about the FINRA list, Sean lied again when he denied that his father
could have gotten information from him regarding Kendle. Id; see p.
11 infra. After the interview, Sean “called [his] dad and let him know
that the investigation had been concluded. I told him to never do that
again, and he promised that he would not.” Tr. 1237.
7. Sean admitted that apart from discussing the names of companies
involved in mergers and acquisitions he was working on, he also
12
provided his father with details about the timing of public
announcements related to those deals. Id. at 1188 (Defense counsel:
“And did you ever tell your father anything about the timing of the
Kendle deal?” Sean: “Only that the expected or targeted
announcement [of Kendle’s acquisition] date conflicted with our
wedding.” Defense Counsel: “So you did talk to him about the timing.”
Sean: “Yes.”) (emphasis added).
8. At his guilty plea on August 12, 2015, Robert stated: “I obtained
material, nonpublic information about a number of securities from
my son, who I understand had access to this information in the
course of his job. For certain of these securities, I provided the
information to another individual, Rick Cunniffe, so that he could
trade in these securities and share trading profits with me.” S.D.N.Y.
Dkt. 33.
9. At Sean’s trial, the Government introduced into evidence the
following April 16, 2016 recorded conversation between Robert
Stewart and cooperator Richard Cunniffe:
Cunniffe: Did Sean, uh did Sean do this [provide inside
information] out of the goodness and kindness of his heart
for you?
Robert: No, you know what? I think he gets angry at times.
Angry at the industry.
Cunniffe: Oh, yeah?
Robert: And it was only . . . I think it was only three—three
times. He has actually told me some other ones and I just
discounted them and just sa[id] that you know what, I don’t
want to know about it[.] App. 678‐79.6
6 See also p. 6 supra where Robert, in his post arrest statements, also attributes
Sean’s disclosures of inside information to Sean’s drinking problem; Sean’s divorce;
Sean’s bragging; and Sean’s lack of awareness.
13
B. Sean’s Full Awareness of the Requirement of Confidentiality
10. Sean went to work at JPMorgan after he graduated from Yale in 2003.
He started as an analyst in the mergers and acquisitions group. In
2006, he was promoted to “associate.” Tr. 133. In 2010, he was
promoted to “vice president.” Id. at 1135. Sean testified that he “knew
everything that was going on” when working on a “particular
transaction,” id. at 1334, and that the majority of the deals he worked
on involved public companies. Id. at 1136.
11. Sean testified that he knew that “confidentiality was the bedrock
principle of [his] job.” Id. at 1359 (emphasis added). He understood
that “we were not expected to talk about confidential information
with anyone not involved in a particular deal team.” Id. at 1188. Sean
testified that he received “extensive” compliance training at
JPMorgan, id. at 1188, i.e., at least once a year from 2003 to 2011. Sean
also testified that he also “underwent new employee compliance
training” when he joined Perella in October of 2011. Id. at 1358.
12. Sean admitted at trial that he lied when he affirmed to JPMorgan on
July 26, 2011 that he was “in compliance with [JPMorgan’s] code of
conduct,” because he had disclosed confidential information about
JPMorgan’s clients, including Kendle, to his parents and his wife. Id.
at 1356‐58.
13. Sean also admitted at trial that he disclosed confidential information
to his father about the Lincare, CareFusion, and Gen‐Probe deals
which he either learned about or worked on at Perella, id. at 1252;
and that he lied to Perella when he “affirmed that [he] was in
compliance with [its] confidentiality policies.” Id. at 1360.
14. At Sean’s trial, the Government presented as an exhibit JPMorgan’s
Code of Conduct which states: “Do not disclose confidential
information to anyone outside the firm unless you are authorized to
do so. Where such disclosure is authorized, the confidentiality or
14
privacy agreement may be required. Check with the legal and
compliance department.” Id. at 1357.
15. The Government also presented as an exhibit at Sean’s trial Perella’s
written policy on confidential information which states: “Existing or
potential client or investor information, information about the
existence of or the potential for a client, client assignment, investor
or investment should be considered confidential information. . . . You
may not disclose confidential information to any person outside the
firm, including family members, except as required in the performance
of the firm’s business activities.” Id. at 1359‐60 (emphasis added).
C. Sean’s Lies During the FINRA and SEC Investigations
16. Sean learned of a FINRA inquiry into suspicious Kendle stock
trading on May 25, 2011, when he was forwarded an email from a
colleague. The Government presented phone records at Sean’s trial
showing that Sean spoke to Robert that same day and many more
times in the days and weeks shortly afterward. Supp. App. 16‐28; see
also pp. 1‐2 supra.
17. The Government presented at trial an August 2, 2011 email from
JPMorgan to Sean and other JPMorgan employees which contained
a list of names of persons who traded in Kendle stock (provided to
JPMorgan by FINRA). JPMorgan requested that its employees
review the list to see if there were any familiar names on it so that
JPMorgan could notify FINRA. The list included “Robert Stewart.”
Supp. App. 99. Sean testified that he knew that the purpose of a
FINRA cross check was to “look out for potential insider trading.”
Tr. 1151.
Sean’s response email to JPMorgan, also dated August 2, 2011, stated
“don’t know anyone [on the list].” Supp. App. 77. Sean testified that
he lied to JPMorgan about the FINRA list because, as noted, he
“knew it would be potentially damaging for my prospects at the
time. I had worked extremely hard to get to the position I was in at
15
that point, and I thought anything might potentially derail my
future.” Tr. 1236 (emphasis added).
18. JPMorgan’s compliance officer, Ryan Hickey, testified at Sean’s trial
that after Sean denied knowing anyone on the FINRA list (that
included his father’s name), and after a FINRA examiner followed
up with Hickey by asking to see Sean’s response, JPMorgan, in turn,
asked Sean about the list a second time. Following the second
inquiry, Sean admitted to JPMorgan that his father’s name was,
indeed, on the FINRA list.
19. JPMorgan’s compliance officer also testified that Sean told him that
he (Sean) had “no work discussions” with his father. Tr. 902, 1338.
20. Sean testified that, at his August 26, 2011 meeting with JPMorgan’s
compliance officials about the FINRA list, he also lied about his
father’s trading: “I lied. I told them that there was no way that my
dad could have gotten that information from me regarding the
purchase of Kendle.” Id. at 1236‐37.
21. An SEC investigator, Michael Watson, testified at Sean’s trial that in
May 2013 he interviewed Robert about his 2011 Kendle trading.
Robert told Watson that his Kendle trades had been based on his own
research, and that “he did not talk to his son about any work‐related
matters.” Id. at 217.
22. Sean testified that his father “lied about [his and Sean’s] conduct
when he spoke to the SEC.” Sean said that Robert “protected [Sean] the
same way [Sean] had protected him.” Id. at 1350 (emphasis added); see
also p. 1 n.1 supra.
D. Robert Stewart and His Associates’ Unlawful Trades
23. Robert Stewart, Richard Cunniffe, and Mark Boccia (“Boccia”)
traded securities and profited from the inside information provided
16
by Sean. They engaged in trades in Kendle, KCI, Lincare, Carefusion
and Gen‐Probe.
24. The Government presented trading records at trial that showed that
– even after their Kendle trades – Robert Stewart and his associates
continued to make trades in companies during the time periods that
Sean was working on deals involving those same companies,
namely, KCI, Lincare, CareFusion Corp., and Gen‐Probe. See ¶¶ 28‐
37 infra. These records corroborated testimony from Robert Stewart’s
associates that Robert was passing along insider stock tips to them
from Sean. See, e.g., Tr. 531, 775; Supp. App. 30, 32; see also ¶¶ 28‐37
infra.
25. At his guilty plea on May 15, 2015, Richard Cunniffe admitted that
he had unlawfully traded in stock options of KCI, Gen‐Probe,
Lincare, and Carefusion, based upon insider information he received
from Robert. Cunniffe agreed to cooperate with the Government and
to record conversations with Robert. Tr. 625. Cunniffe testified that
Robert told him that “it was [Sean] who was giving [Robert] the
information on the stocks[.]” Tr. 733 (emphasis added); 623‐624
(Cunniffe: “He told me that his son Sean had given him the
information.”).
Cunniffe also testified that when Robert told him he was getting
information from Sean, Cunniffe told Robert that he “didn’t want to
know anything about it[.] I wanted to keep as much distance from
any knowledge of the information. I knew [Robert] was an
accountant and a CFO of some firms in the past[.] . . . I wanted to
keep as much distance as possible.” Id. at 662.
26. At Sean’s trial, the Government questioned Cunniffe as follows:
Government Attorney: “Do you know why [Robert] asked you to
make those trades in your account as opposed to his account?” Id. at
623. Cunniffe replied: “I had asked him why he didn’t do it in his
own account, and he had mentioned that he was too close to the source.”
Id. (emphasis added).
17
27. Mark Boccia testified at Sean’s trial that Robert had asked him to
purchase Kendle stock options on Robert’s behalf in 2011. As noted,
Kendle was a company which Sean was advising in confidential
acquisition negotiations.
E. Additional Trades Based on Inside Information
28. Cunniffe testified that in or about March 2012, when Sean was
representing Hologic, Inc. in negotiations towards an acquisition of
Gen‐Probe, Robert told Cunniffe that he “should take a look at
GPRO, the ticker symbol for Gen‐Probe” because it was “going to be
a takeover target.” Tr. 711‐12. Cunniffe purchased Gen‐Probe call
options and made $181,000 in profits which he split with Robert.
Supp. App. 29.
29. Boccia and Cunniffe each testified that in or about the summer of
2013, when JPMorgan was representing KCI (Kinetic Concepts, Inc.)
in negotiations concerning KCI’s acquisition by Apax Partners,
Robert asked them to purchase KCI call options on his behalf. Tr. 368‐
69 (Government Attorney: “What prompted you to buy KCI on April
5th?” Boccia: “Bob came to me and says, Mark, I’ve got another stock
I just want to get a few units in, can you buy them for me, I think it’s
going to be another short‐term thing. So I bought them.”); id. at 645
(Cunniffe: “Bob said he was interested in buying some call options,
and I asked him at what strike [price] and at what maturity date he
wanted to make the purchase.”).
30. Cunniffe testified that in or about June 2012 (which was soon after
Sean had learned that Linde AG was seeking to acquire Lincare,
Supp. App. 54, Robert told Cunniffe that “he had received another
tip and that [Cunniffe] should look at LNCR, which is Lincare.” Tr.
725. Cunniffe invested in Lincare stock, and thereafter, split profits
of approximately $414,000 with Robert.
18
31. Cunniffe testified that in the summer of 2014 (when Sean was
representing Carefusion in negotiations concerning Carefusion’s
acquisition by Becton, Dickinson & Co.), Robert told Cunniffe that
“he should take a look at CFN [i.e., Carefusion].” Id. at 755. Cunniffe
then made trades in Carefusion stock options which generated
approximately $444,000 in profit. Supp. App. 32. He split the profit
with Robert.
32. The Government presented at trial Robert Stewart’s trading records
which show that he traded in Kendle stock from February 2011
through May 2011. App. 588. At the time, Sean was working on the
Kendle acquisition deal at JPMorgan. The Government presented
Boccia’s trading records which show that he traded in Kendle stock
options during the same time period. Supp. App. 37‐38.
33. The Kendle stock options which Boccia purchased had strike prices
timed throughout May 2011 (the same month in which Kendle’s
acquisition was announced). Kendle’s stock price was then at a high
point. See Tr. 367‐77 (Government Attorney: “Why did you sell all of
your Kendle holdings on May 5th?” Boccia: “Because Bob had said
to me, hey, Mark, I think I want to get out of the options, I don’t think
it’s going to go any higher.”).
34. The Government presented trading records which show that both
Boccia and Cunniffe traded in KCI stock options from February
through July 2011. Supp. App. 37‐41. This was the time period that
JPMorgan was representing KCI in its acquisition negotiations.
35. The Government presented trading records which show that
Cunniffe traded in Gen‐Probe options in April and May 2012. Supp.
App. 42. This was the time period that Sean was working on the Gen‐
Probe acquisition deal at Perella.
36. The Government presented emails which show that Sean received an
update about the Lincare acquisition by Linde AG on June 12, 2012.
19
Supp. App. 42‐45. Cunniffe testified that he purchased Lincare stock
options at the end of June 2012 after getting a tip from Robert.
37. The Government presented trading records which show that
Cunniffe traded in Carefusion stock options from September
through October 2014. Supp. App. 32‐34. This was a few months after
Sean worked on the Carefusion acquisition deal at Perella.
Paragraphs 1‐37 above clearly demonstrate the overwhelming strength of
the Government’s case against Sean. And, these paragraphs do not include the
silver platter statement. The point is that even without the silver platter
statement, the Government would have presented powerful evidence of Sean’s
intent to commit insider trading and benefit his father. See ¶¶ 28‐37. The silver
platter statement made the Government’s case even stronger, i.e., adding
incrementally to the overwhelming evidence of Sean’s guilt. The evidence
renders harmless any error by the district court in excluding the post arrest
statements.
Respectfully, I believe the majority errs in vacating Sean’s conviction and
ordering a new trial.
20
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IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
RITCHIE MULTI-STRATEGY
GLOBAL, LLC, f/k/a/ CAPITAL, LLC,
Plaintiff,
C.A. NO. N18C-05-050 MMJ CCLD
V.
HUIZENGA MANAGERS FUND, LLC,
Defendant.
Submitted: December 17, 2018
Decided: January 15, 2019
On Defendant’s Motion to Dismiss the Amended Complaint
GRANTED IN PART.
MEMORANDUM OPINION
John A. Sensing, Esq. (Argued), Ryan C. Cicoski, Esq., Attorneys for Plaintiff
Steven L. Caponi, Esq., Matthew B. Goeller, Esq., K&L Gates, LLP, Christopher J.
Barber, Esq. (Argued), Williams Montgomery & John Ltd., Attorneys for Defendant
JOHNSTON, J.
FACTUAL AND PROCEDURAL CONTEXT
This case is one of nine actions brought by either the Defendant or an entity
related to the Plaintiff. Two cases Were flled in Cook County, Illinois, one case in
1
DuPage County, Illinois, one case in Madison County, Illinois, one case in St.
Clair County, Illinois, three cases in Delaware Superior Court, and one action in
the Delaware Court of Chancery. The first two cases Were brought by Huizenga
Managers Fund, LLC in Cook County. The subsequent cases Were filed by various
Ritchie entities. All of the pending Illinois cases have been transferred to Cook
County.
The 2007 Illinois suit arose from a dispute over the sale of securities.
Huizenga Managers Fund, LLC (“Huizenga”) is a hedge fund. Ritchie Multi-
Strategy Global (“Ritchie”) made two sales of securities to Huizenga through a
Subscription Agreement. Huizenga brought suit against Ritchie in the Cook
County Circuit Court in Illinois, alleging violations of the Delaware Securities Act
(“DSA”). After a twenty-siX-day trial, the Cook County court entered judgment in
favor of Huizenga in regard to one of the two sales. On appeal, the Illinois Court
of Appeals affirmed that judgment and granted Huizenga’s cross-appeal for
recovery relating to the other sale as Well. The trial court entered a second
judgment On November 9, 2017, Ritchie filed a notice of appeal of the second
judgment.
Huizenga’s second pending Cook County action asserts claims for fraud,
conspiracy and fraudulent transfer in connection With the judgments
A Ritchie entity filed the first Delaware action in this Court,l seeking
indemnification from Huizenga. By Opinion dated December 21, 2017, this Court
stayed in favor of the Illinois litigation.2
The Madison County Illinois case Was filed by “John Doe” against
Huizenga, alleging disclosure of confidential information and seeking injunctive
relief`. The next Illinois action originally Was filed in St. Clair County, also seeking
injunctive relief on the basis of disclosure of confidential information. The St.
Clair County judge transferred that case to Cook County.
A Ritchie entity filed suit in the Delaware Court of Chancery3 alleging
disclosure of confidential information and seeking injunctive relief. A motion to
dismiss is pending.
This action is the second Delaware Superior Court Case. A Ritchie entity
alleges breach of contract on the grounds that Huizenga pursued judgments in the
lllinois litigation, and disclosed confidential information in the course of the
judgment collection proceedings
lN17C-05-598 MMJ CCLD.
2 Ritchie v. Huizenga Managers Fund, LLC, 2017 WL 7803924 (Del. Super.).
3 C.A. No. 2018-0196-SG.
3
The latest DuPage County, Illinois action filed by a Ritchie entity alleged
that Huizenga disclosed confidential information and made disparaging comments
in breach of contract. Plaintiff s motion to voluntarily dismiss Was granted.
The pending DuPage County appeal Was dismissed by Order dated
December 21, 2018.
In the third case in Delaware Superior Court,4 a Ritchie entity requests
indemnification in connection With the Illinois judgments. Defendant’s motion to
dismiss or stay is in the briefing stage.
Pending before the Court at this time is Huizenga’s Motion to Dismiss the
Amended Complaint. Huizenga Managers Fund, LLC (“Huizenga”) contends that:
venue in Delaware is improper and the Mc Wane factors favor two prior actions in
Cook County, Illinois; this Court lacks jurisdiction over the claims of Ritchie
Multi-Strategy Global, LLC (“Ritchie”); and Ritchie has failed to state a claim
upon Which relief may be granted.
STANDARD OF REVIEW
Rule l2(b)(3) governs a motion to dismiss or stay on the basis of improper
venue. In Mc Wane Cast Iron Pz`pe Corp. v. McDowell- Wellman Engineerz`ng C0. ,5
4 Ni 8C-08-246 MMJ CCLD.
5 263 A.2d 281 (Del. 1970).
the Delaware Supreme Court prescribed a three-part test Delaware courts must
consider When deciding Whether to stay or dismiss an action: “(l) is there a prior
action pending elsewhere; (2) in a court capable of doing prompt and complete
justice; (3) involving the same parties and the same issues?”6 If those three factors
are satisfied, “Mc Wane and its progeny establish a strong preference for the
litigation of a dispute in the forum in Which the first action Was filed.”7 “[T]hese
concepts are impelled by considerations of comity and the necessities of an orderly
and efficient administration of justice.”8
When reviewing a motion to dismiss pursuant to Rule 12(b)(6), the Court
must determine Whether the claimant “may recover under any reasonably
conceivable set of circumstances susceptible of proof`.”9 The Court must accept as
true all non-conclusory, Well-plead allegations10 Every reasonable factual
inference Will be drawn in favor of the non-moving party.ll If the claimant may
recover under that standard of revieW, the Court must deny the motion to dismiss.12
6 LG Electronics, Inc. v. lnterdigital Communications, lnc., 114 A.3d 1246, 1252 (Del. 2015)
(citing McWane)).
7 Ia’. (internal quotations omitted).
8 McWane, 263 A.2d at 283.
9 Spence v. Funk, 396 A.2d 967, 968 (Del.1978).
10 Id.
ll Wilmington Sav. Fund, Soc ’y, F.S.B. v. Anderson, 2009 WL 597268, at *2 (Del. Super.) (citing
DO€ v. Cahl'll, 884 A.2d 45], 458 (Del.ZOOS)).
12 Spence, 396 A.2d at 968.
ANALYSIS
First Delaware Superior Court Action
Stayed Under McWane
In the first Delaware Superior Court action, this Court granted in part
Huizenga’s motion to Dismiss or Stay.13 This Court found that the action in
Illinois filed in 2007 is a prior action involving the same parties.
Ritchie argued that the prior action is “effectively resolved.” Ritchie urged
the Court not to consider: a remaining Writ of certiorari to the United States
Supreme Court; and the determination of attorneys’ fees and prejudgment interest,
significant enough to Warrant pending status under Mc Wane.
HoWever, on November 9, 2017,14 Ritchie filed Notices of Appeal
challenging the entry of the second judgment That judgment therefore Was not
final.15 Ritchie Was free to make its indemnification argument on appeal, raising
the possibility of conflicting rulings between this Court and the Illinois Court_one
of “the precise problems Mc Wane strives to eliminate.”16 This Court found that the
2007 Illinois action remained pending for Mc Wane purposes
13 Ritchie v. Huizenga Managers Fund, LLC, 2017 WL 7803924, at *4.
14 Two days after oral argument on this pending motion.
15 See Walsh v. Union Oil C0. of Calz'fornia, 268 N.E.2d 706, 712 (stating that a judgment
becomes final after the denial of appeal).
'6 Choice Hotels Intern., Inc. v. Columbus-Hunt Park DR. BNK Investors, LLC, 2009 WL
3335332, at *8 (Del. Ch.).
6
This Court also found that the second Mc Wane factor had been met. The
pending prior action was before a court with the capacity to hear it. As a court of
general jurisdiction,17 the Circuit Court of Cook County, lllinois is capable of
“doing prompt and complete justice.”18 “[T]he full faith and credit clause of the
Constitution precludes any inquiry into the merits of the cause of action, the logic
or consistency of the decision, or the validity of the legal principles on which the
judgment is based.”19 Allowing this claim for indemnification to proceed in the
forum in which the underlying action has been litigated for ten years allows for
prompt justice, in line with “the general policy embedded in the Mc Wane doctrine
that all related claims should be heard in the court in which an action is first
brought.”zo
“Mc Wcme does ‘not require that the parties and issues in both actions be
identical Substantial or functional identity is sufficient.”’21 To determine whether
issues are sufficiently identical for Mc Wane purposes, courts ask whether “the
17 Ill. Const., art. 6, § 9.
'8 McWane, 263 A.2d at 283.
19 V.L. V. E.L., 136 S. Ct. 1017, 1020 (2016).
20 See Fuisz v. Biovail Techs., Ltd., 2000 WL 1277369, at *1 (Del. Ch.).
21 LG Electronics, lnc. v. lnterDigital communications lnc., 98 A.3d 135, 146 (Del. Ch.)
(quoting AT&T Corp. v. Prime Security Distribs., Inc., 1996 WL 633300, at *2 (Del. Ch.)).
7
events underlying all the claims arose out of a common nucleus of operative
facts.”22
The events underlying the first Delaware action are substantially identical to
the pending lllinois action. Ritchie is seeking relief based on the contract that
facilitated the sales involved in the Illinois action. Both cases arise out of the same
sales of securities between the same parties. Therefore, both actions involve the
same issues under Mc Wane. Indemnification could have been brought in the
Illinois action as a matter of lllinois procedure and would not have been prohibited
by Delaware substantive law. As a practical matter, the indemnification sought by
Ritchie is a pending contractual setoff that should have been brought in the prior
pending case.
This Court concluded that there is a prior action, pending before a court
capable of doing prompt and complete justice, between the same parties, and
involving the same issues. Therefore, the case must be stayed until the prior action
is final. At that point, the Court can rule on Huizenga’s argument that the case
should be dismissed under Rule l2(b)(6).
22 Kennedy v. Barboza, 2016 WL 6276903, at *5 (Del. Super.).
8
McWane F actors Favor a Stay in T his Case
Ritchie argues that the subject of this case is “purely contractual.” The
specific allegations in this Complaint seek relief for Huizenga’s alleged breaches
of its contractual obligations to indemnify Ritchie and to keep business information
confidential. Ritchie further states that certain amendments to the Operating
Agreement are presumptively valid and support venue in Delaware. The validity
of the amendments (also referred to as “Resolutions” or “Consents”) was raised in
the action first filed in St. Clair County and transferred to Cook County.
lt cannot be disputed that the original action involving the basic disputes
among the parties was filed in Illinois. At this juncture, there are multiple cases
pending in Cook County, Illinois. Even though the Ritchie entities in certain
actions are legally distinct, the Plaintiff in this case has not disputed that all of the
Ritchie entities are related. Although the claims in the various actions may have
been styled to assert different theories for relief, all claims are based on the same
operative facts. The contracts at issue appear to involve identical or similar
language defining the rights and obligations of the parties. lf all of the cases had
been brought in Delaware in the first instance, it is likely that the cases would have
been consolidated _ at the very least for purposes of case management
For the same reasons set forth in this Court’s December 21, 2017 Opinion,
the Mc Wane factors weigh in favor of staying this case.
CONCLUSION
Defendant’s Motion to Dismiss the Amended Complaint is hereby
GRANTED IN PART. The Court finds that there is at least one prior action
pending in Illinois, in a court capable of doing prompt and complete justice,
3
involving substantially the same parties and substantially the same issues.2
IT IS SO ORDERED.
norabl€Mary M. Johnston
23 See McWane, 263 A.2d at 283.
10
ill
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26 F.3d 125
Wise (John K.)v.Owens (David), Freeman (Robert), Smith (Richard), Henry(Terry), Beard (Jeffrey), Owens (Sgt.)
NO. 93-7440
United States Court of Appeals,Third Circuit.
Apr 04, 1994
1
Appeal From: M.D.Pa.
2
AFFIRMED IN PART, REVERSED IN PART.
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969 A.2d 173 (2009)
291 Conn. 908
STATE OF CONNECTICUT
v.
Kenneth Martin SELLS.
Supreme Court of Connecticut.
Decided April 8, 2009.
Michael O. Sheehan, special public defender, in support of the petition.
Melissa Patterson, deputy assistant state's attorney, in opposition.
The defendant's petition for certification for appeal from the Appellate Court, 112 Conn.App. 775, 964 A.2d 97 (2009), is denied.
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185 Cal.App.2d 788 (1960)
THELMA LEE DAVIS, Appellant,
v.
ERNEST DAVIS, Respondent.
Civ. No. 24878.
California Court of Appeals. Second Dist., Div. One.
Oct. 31, 1960.
Crooks & Gunter and Milton R. Gunter for Appellant.
Carl A. Earles for Respondent.
LILLIE, J.
Defendant husband was served with a copy of summons and complaint in a divorce action; after a hearing on the order to show cause (February 13, 1959) counsel orally agreed that defendant need not plead to the complaint until 10 days after written notice to his counsel. On February 18, 1959, defendant's counsel prepared and submitted to plaintiff's attorney a letter confirming their oral understanding that pending their "working out of the details of a settlement" he would have 10 days in which to plead and "no default will be taken without first giving written notice" to him. This letter was signed by plaintiff's counsel February 19, 1959. Thereafter various conversations occurred between counsel in an effort to settle the property rights of the parties, particularly those relating to certain realty held in joint tenancy which plaintiff claimed as community property. Pending negotiations, default was entered on April 13, 1959; on December 16, 1959, plaintiff obtained a default decree of divorce against defendant which judgment was entered December 23, 1959.
On February 23, 1960, defendant filed a notice of motion to set aside default and default judgment under section 473, Code of Civil Procedure. At the hearing on the motion, certain facts having come to his attention, defendant's counsel requested and the lower court granted permission to file an amended motion. He did so setting up therein the additional ground of "extrinsic fraud," alleging that the failure of plaintiff's counsel to comply with the written agreement of February 19, 1959, resulting in an interlocutory decree without notice to defendant, deprived him of his day in court and right to be heard. The main issue between plaintiff and defendant was division of the joint tenancy real property; in the default decree plaintiff was awarded the same as community property. Plaintiff appeals from the order granting the motion to vacate and set aside default and default judgment.
[1-3] The rule that an order granting relief from default generally will be upheld is predicated on two principles--the discretion of the lower court will not be disturbed except for manifest abuse; and the remedial power to grant relief should be freely exercised to carry out the policy in favor of trial *791 on the merits (Burbank v. Continental Life Ins. Co., 2 Cal.App.2d 664 [38 P.2d 451]; Kalson v. Percival, 217 Cal. 568 [20 P.2d 330]; Waybright v. Anderson, 200 Cal. 374 [253 P. 148]; Stub v. Harrison, 35 Cal.App.2d 685 [96 P.2d 979]); and a reviewing court is much more disposed to affirm an order when the result is to compel a trial upon the merits than it is when the judgment by default is allowed to stand. (O'Brien v. Leach, 139 Cal. 220 [72 P. 1004, 96 Am.St.Rep. 105]; Berri v. Rogero, 168 Cal. 736 [145 P. 95].)
The record discloses that originally defendant relied in his notice of motion to vacate upon "mistake, inadvertence, surprise or excusable neglect" under section 473 of the Code of Civil Procedure. Later, defendant amended his motion and alleged, in addition to the grounds specified in section 473, "extrinsic fraud," in that the default judgment was taken without notice to defendant, who first became aware of its entry when served with a writ of possession to remove him from the family home which had been awarded to plaintiff under the judgment; defendant and his counsel at all times relied upon the written agreement of February 19, 1959; negotiations for settlement of the property rights of the parties were pending; counsel for defendant was advised by plaintiff's counsel at the hearing on the original motion that he had written a letter to him dated March 6, 1959, notifying him plaintiff intended to take a default and that the same was addressed and sent to defendant's counsel at 111 East Vernon Avenue, Los Angeles (his true address was 1111 East Vernon Avenue, Los Angeles); the purported letter to defendant's counsel, having been misdirected by plaintiff's counsel, was never received by the former; and at no time before judgment was entered was either defendant or his counsel notified that plaintiff intended to take a default.
In the last analysis, in support of his motion to vacate defendant relied solely upon his claim of "extrinsic fraud" independent of the grounds set forth in section 473. [4] Although it is true that there appears to be no statutory authority for such motion, judicial decision has extended its use to include "extrinsic fraud" in a situation of this kind. The origin of such procedure is explained in Norton v. Atchison, T. & S.F. R. Co., 97 Cal. 388 [30 P. 585, 32 P. 452, 33 Am.St.Rep. 198], discussed fully in Olivera v. Grace, 19 Cal.2d 570 [122 P.2d 564, 140 A.L.R. 1328], and In re Estrem Estate, 16 Cal.2d 563 [107 P.2d 36], and recognized as an established practice in those and other authorities. (Cowan v. Cowan, 72 *792 Cal.App.2d 868 [166 P.2d 21] and Watson v. Watson, 161 Cal.App.2d 35 [325 P.2d 1011].) [5, 6] To an application for relief based upon extrinsic fraud, the restrictions of section 473, among which is the six-month's time limit, do not apply (Evry v. Tremble, 154 Cal.App.2d 444 [316 P.2d 49]; Miller v. Cortese, 110 Cal.App.2d 101 [242 P.2d 84]); however, even so, where the invalidity of a judgment must be shown by extrinsic fraud a motion to vacate it can only be entertained when made within a reasonable time (Cowan v. Cowan, supra, 72 Cal.App.2d 868 [166 P.2d 21]), the determination of which is wholly within the court's discretion. (McGuinness v. Superior Court, 196 Cal. 222 [237 P. 42, 40 A.L.R. 1110]; Richert v. Benson Lumber Co., 139 Cal.App. 671 [34 P.2d 840]; Smith v. Jones, 174 Cal. 513 [163 P. 890]; Barnett v. Reynolds, 124 Cal.App. 750 [13 P.2d 514].) [7] We cannot say under the circumstances at bar that there exists in this respect an abuse of the lower court's discretion; it appears that the defendant pursued his remedy within a short time after discovery of the existence of the judgment.
[8] As to the merits of such motion, as in the case of one made under section 473, it is addressed to the sound discretion of the lower court. (Watson v. Watson, 161 Cal.App.2d 35 [325 P.2d 1011].) Filed both in support of, and in opposition to, the motion were various affidavits for the consideration of the trial judge. [9] The rule for resolving factual conflicts created by affidavits is the same as that governing oral testimony--it is primarily for the lower court to determine the credibility of the affiants and the weight of their averments, and its determination is rarely disturbed on appeal. (Zuver v. General Development Co., 136 Cal.App. 411 [28 P.2d 939]; Williams v. Reed, 43 Cal.App. 425 [185 P. 515]; Brown v. DeWaard & Sons, 99 Cal.App. 222 [278 P. 257]; Estate of McCarthy, 23 Cal.App.2d 398 [73 P.2d 914].)
[10] The lower court obviously accepted as true the assertions contained in the supporting affidavits--that defendant at times was out of the city, that while here he lived in the same place he had resided at the time of the hearing on the order to show cause, that he was unaware that plaintiff intended to take a default against him, that the first he knew of the entry of judgment was when the writ of possession was served on him, and that he immediately advised his counsel of this; and that defendant's counsel relied upon his written agreement with plaintiff's counsel requiring the latter to *793 notify him in writing if default would be taken, the negotiations were pending although defendant had been out of the city for protracted times, that he did not know of the entry of default and default judgment until so advised by his client, that he at no time received any letter purportedly misdirected to him by plaintiff's counsel at 111 East Vernon, Los Angeles, and that he knew nothing of plaintiff's intention to take a default against his client. The lower court obviously rejected the assertions contained in the counteraffidavits--in particular, plaintiff's claim that on March 5, 1959, she called defendant and told him that her attorney was going to take a judgment against him; and that of her counsel that he telephoned defendant's counsel of his intention to request entry of default. On the contrary, both defendant and his counsel averred that they were entirely without notice. It was established without conflict that default was entered on April 13, 1959, and that plaintiff's counsel waited for a period in excess of six months (Code of Civ. Proc., 473; Holsinger v. Holsinger, 95 Cal.App.2d 835 [214 P.2d 412]) to procure the default judgment on December 16, 1959, which was not entered until December 23. Perhaps this factor too, as well as the matter of plaintiff's good faith, was considered by the trial court in determining the issues of credibility and weight of the evidence. In any event, if the lower court believed the letter of March 6th advising defendant's counsel of the planned default had actually been written by plaintiff's counsel, it is undisputed that it was misdirected and never received by the former. Inasmuch as it was not received, then no written notice was given to defendant's counsel as required by the agreement; and, according to defendant's version neither he nor his counsel had any actual knowledge that plaintiff intended to take a default or that such a judgment was rendered, until long after it was entered.
That this constitutes extrinsic fraud is clear under the authorities. Nothing appearing in the record to the contrary, we do not know whether the trial court found actual fraud to exist in the conduct of plaintiff and her counsel; but where, as here, the appeal is based solely on the clerk's transcript all presumptions are in favor of the order. (Watson v. Watson, 161 Cal.App.2d 35 [325 P.2d 1011].) [11] However it is unnecessary to rely upon any such inference, for "Extrinsic fraud that deprives the adversary of fair notice of a hearing may exist even though such was accomplished by mistake. Actual fraud is not required. (Antonsen v. Pacific Container *794 Co., 48 Cal.App.2d 535 [120 P.2d 148]; Rogers v. Mulkey, 63 Cal.App.2d 567 [147 P.2d 62]; Chung Gee v. Quan Wing, 103 Cal.App.2d 19 [229 P.2d 50]; Wells v. Zenz, 83 Cal.App. 137 [256 P. 484].) Thus, this divorce, when secured, was subject to being set aside because of this fraud." (Wendell v. Wendell, 111 Cal.App.2d 899, 900 [245 P.2d 342].) [12] It is well established that in cases where the aggrieved party is unable to make out a case of intentional fraud, the courts on motion will extend a liberal interpretation to relieve him from a judgment taken without a fair adversary hearing. (Evry v. Tremble, 154 Cal.App.2d 444 [316 P.2d 49]; Watson v. Watson, 161 Cal.App.2d 35 [325 P.2d 1011].) [13] The basis for equitable relief in these cases, whether it be denominated "extrinsic fraud" or "extrinsic mistake," is that which has resulted in a judgment taken under circumstances of unfairness and injustice without affording a party the opportunity to participate in the proceedings. (Saunders v. Saunders, 157 Cal.App.2d 67 [320 P.2d 131]; Dei Tos v. Dei Tos, 105 Cal.App.2d 81 [232 P.2d 873].)
[14] On appeal the burden of showing abuse of discretion or error rests on the appellant (Stevens v. Stevens, 129 Cal.App.2d 19 [276 P.2d 139]; Hayden v. Hatch, 134 Cal.App.2d 765 [286 P.2d 541]; Watson v. Watson, 161 Cal.App.2d 35 [325 P.2d 1011]); neither is here apparent.
For the foregoing reasons the order is affirmed.
Wood, P. J., and Fourt, J., concurred.
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588 F.2d 368
79-1 USTC P 13,271
Estate of Genevieve ROLIN, Deceased, Haydee Rolin and MarineMidland Bank New York, Executors, Appellees,v.COMMISSIONER OF INTERNAL REVENUE, Appellant.
No. 80, Docket 78-4043.
United States Court of Appeals,Second Circuit.
Argued Dec. 4, 1978.Decided Dec. 6, 1978.
William B. Warren, New York City (Patricia B. Real, Dewey, Ballantine, Bushby, Palmer & Wood, New York City, of counsel), for appellees.
Ernest J. Brown, Atty., Tax Div., Dept. of Justice, Washington, D. C. (M. Carr Ferguson, Asst. Atty. Gen., Gilbert E. Andrews, Mary L. Jennings, Attys., Tax Div., Dept. of Justice, Washington, D. C., of counsel), for appellant.
Before KAUFMAN, Chief Judge, and SMITH and VAN GRAAFEILAND, Circuit judges.
IRVING R. KAUFMAN, Chief Judge:
1
In this case, we must determine the effectiveness, for estate tax purposes, of an instrument by which the executors of the estate of Genevieve Rolin purported to renounce her interest in a trust created by her late husband, Daniel. The Tax Court held the renunciation effective. 68 T.C. 919 (1977). We affirm.
2
Daniel established the trust in 1958, retaining for life the income plus the power to amend or revoke the trust at any time. Upon his death, the corpus was to be divided into two parts: "Trust A" would receive an amount equal to the maximum marital deduction available to Daniel's estate under I.R.C. § 2056, and "Trust B" would receive the remainder.1 Genevieve would receive the income of both trusts for life. In addition she was granted the right to invade the corpus of Trust A at any time and in any amount during her life, and she also received a general testamentary power of appointment over its assets. If she failed to exercise the power, Trust A would be merged into Trust B at her death and the assets distributed to the Rolins' issue.
3
Daniel died on September 30, 1968. Genevieve, who was then 72 years old and suffering from a heart ailment, died four months later. Between Daniel's death and her own, Genevieve had not received the income from either trust, nor had she attempted to invoke the power of appointment over Trust A.2 As soon as Genevieve's executors qualified, they attempted to renounce her interest in the trust. Even without the Trust A assets, her estate was larger than Daniel's; consequently, the progressive rate structure of the federal estate tax would render inclusion of those assets in her estate disadvantageous to the Rolins' heirs. Thus, the tax saving to Daniel's estate created by the marital deduction of I.R.C. § 2056(b)(5) would be more than offset by the increased liability of Genevieve's estate under § 2041, which taxes property over which the deceased held a general power of appointment at death. If the renunciation is held effective, Daniel's estate will pay about $35,000 more estate tax than otherwise, but Genevieve's will pay approximately $99,000 less.
4
We agree with the Tax Court that the renunciation was effective in this case. New York law3 permits executors, within a reasonable time, to disclaim legacies to which their testator was entitled. Estate of Dreyer v. Commissioner of Internal Revenue, 68 T.C. 275 (1977), Acq., 1978-12 I.R.B. 6; Estate of Hoenig v. Commissioner of Internal Revenue, 66 T.C. 471 (1976), Acq., 1978-12 I.R.B. 6. Moreover, disclaimers "relate back" to the date of the gift (here, September 30, 1968, the date of Daniel's death) and prevent title from ever vesting. Albany Hospital v. Albany Guardian Society, 214 N.Y. 435, 441, 108 N.E. 812 (1915).
5
The Commissioner does not dispute this, nor does he now contend that the Tax Court erred in holding that the power to disclaim is not limited to legatees, and extends to Inter vivos gifts taking effect at death. See 68 T.C. at 925 (citing cases). Rather, he argues that because a power of appointment is not a descendable property right but a personal privilege that expires at death, Mastin v. Merchants National Bank, 278 Ala. 261, 264, 177 So.2d 817, 820 (1965), there was nothing for the executors to disclaim. How, he asks, could they renounce a power they could not exercise?We are of the view, however, that New York courts would permit executors to renounce powers and other interests held by their testator at death to the same extent they permit disclaimers of legacies.4 Outright ownership necessarily includes both a life estate and a general testamentary power of appointment.5 It is not any more anomalous to permit retroactive renunciation of those rights when they stand alone than it is when they are merely part of the bundle of rights constituting a fee simple. Furthermore, since the principle of retroactive renunciation is that a disclaimer of an interest may be treated as relating back in time, it seems irrelevant to the efficacy of that principle that the interest has expired. It is agreed on all sides that Hoenig and Dreyer correctly stated the law of New York with respect to legacies; accordingly, we conclude that a New York court would find the disclaimer in the instant case effective.
6
Nor does § 2041 require a different result. That provision cannot be viewed in isolation from the rest of the Code. Section 2033 includes in the gross estate "the value of all property to the extent of the interest therein of the decedent," and the predecessor to § 2041 was first enacted because Congress was doubtful whether the forerunner of § 2033 would reach property as to which decedent did not hold fee simple title but merely a testamentary power of appointment. United States v. Field, 255 U.S. 257, 265, 41 S.Ct. 256, 65 L.Ed. 617 (1921). Moreover, the statute was amended in 1942 in response to Helvering v. Safe Deposit & Trust Co., 316 U.S. 56, 59-62, 62 S.Ct. 925, 86 L.Ed. 1266 (1942), which held that only Exercised powers were taxable. See, e. g. H.R.Rep.No. 2333, 77th Cong., 2d Sess. 160-61 (1942). See generally B. Bittker & L. Stone, Federal Income Estate and Gift Taxation 1093-96, 1240-48 (4th ed. 1972). The clear congressional purpose in enacting § 2041 was merely to ensure that, since the possessor of a general testamentary power of appointment may control the disposition of the property after his death as fully as the owner of a fee simple title, such powers are taxed in the same manner as outright ownership. Because, as Hoenig and Dreyer held, an executor's power to make a timely retroactive renunciation does not transgress the policy of § 2033, neither is it inconsistent with § 2041.6
7
Indeed, this result comports well with more general considerations of estate tax policy. So long as assets do not escape taxation entirely and no specific provision of the Code is contravened, taxpayers are generally permitted to arrange their affairs to minimize estate tax liability. See, e. g., Estate of Charles W. Smith v. Commissioner of Internal Revenue,565 F.2d 455, 457-58 (7th Cir. 1977) (per curiam). Here, the trust agreement gave Genevieve the right to renounce her interest in the trust within 14 months of Daniel's death, and it specifically provided that her executors might exercise that right should she die before accepting the benefits of the trust. Since New York courts would uphold her executors' renunciation, and since the Trust A assets will be taxed as part of Daniel's estate, I.R.C. §§ 2036, 2038, we see no reason to deny effect to this provision of the trust agreement. Accordingly, the judgment of the Tax Court is affirmed.
1
Under Daniel's will, the trust assets were to include his residuary estate in addition to the corpus existing at the time of his death
2
Despite his argument in the Tax Court, the Commissioner now concedes that a renunciation made by Genevieve herself would have been effective. This point is well supported in New York law. See note 4 Infra
3
The effectiveness of a disclaimer of a power of appointment must be judged, in the first instance, by its validity under the law of the decedent's domicile. Treas. Reg. § 20.2041-3(d)(6). Both Genevieve and Daniel were New York residents when they died
4
No New York case specifically addresses an executor's renunciation of a general testamentary power of appointment held by the decedent at death. Nevertheless, it is true that interests in trusts may be renounced. In re Matthiessen, 175 Misc. 466, 23 N.Y.S.2d 802 (Orange County Sur.Ct. 1940). This principle includes powers of appointment. In re Finucane's Will, 199 Misc. 1069, 100 N.Y.S.2d 1005 (Monroe County Sur.Ct. 1950). Although these lower court decisions are not controlling on us, Commissioner of Internal Revenue v. Estate of Bosch, 387 U.S. 456, 87 S.Ct. 1776, 18 L.Ed.2d 886 (1967), we find them helpful in determining the issue of New York law confronting us
5
We decline to engage in semantic quibbling as to whether a power is an attribute of ownership or a personal right. Clearly, it has elements of both. For most practical purposes, however, a general power of appointment approximates ownership. American Law of Property S 23.4 (A. J. Casner ed. 1952). This is especially true where, as here, a general testamentary power is coupled with a life estate in the appointive property. Cf. I.R.C. § 2056(b) (5)
6
The Commissioner has argued that a holding for the taxpayer in this case would read § 2041 out of the Code, because the executor of a donee of an unexercised general power would almost always disclaim, leaving in doubt only whether the disclaimer was timely. The timeliness limitation, however, is a substantial one. Transfers made before December 31, 1976 are subject, in addition to the timeliness requirements of local law, to the "reasonable time" limitation of Treas. Reg. § 20.2041-3(d)(6). And for transfers occurring after that date, I.R.C. § 2518(b)(2) requires, in the case of an adult, renunciation within nine months of the creation of the power
Indeed, it is apparent that there can be effective posthumous disclaimers of powers only when the donee dies shortly after the donor, for otherwise the power will vest irrevocably through passage of time.
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73 Cal.App.3d 279 (1977)
140 Cal. Rptr. 680
YTTRUP HOMES, Plaintiff and Respondent,
v.
COUNTY OF SACRAMENTO et al., Defendants and Appellants. JOSEPH BENVENUTTI et al., Plaintiffs and Respondents,
v.
COUNTY OF SACRAMENTO et al., Defendants and Appellants. FLOWERS AND OATES, Plaintiff and Respondent,
v.
COUNTY OF SACRAMENTO et al., Defendants and Appellants.
Docket Nos. 16049, 16050, 16051, 16052.
Court of Appeals of California, Third District.
August 15, 1977.
*282 COUNSEL
John B. Heinrich, County Counsel, and Monte L. Fuller, Deputy County Counsel, for Defendants and Appellants.
Panattoni & Farrell and Carl B. Panattoni for Plaintiffs and Respondents.
OPINION
REYNOSO, J.
The City of Sacramento and County of Sacramento, appellants, bring this consolidated appeal from four judgments of the Superior Court of Sacramento County holding that respondent's are entitled to have portions of their tax payments refunded because their tax assessments had included tax-exempt properties. We deal with properties leased to the public bodies listed for the uses mentioned: First, Chancellor of the State Community Colleges used for state community college system administrative purposes; second, Sacramento City-County Library used for administrative purposes; and third, Los Rios Community College District used for maintenance offices, college-related warehouse and an administrative center.
Each of the actions in the superior court has common elements: (1) Respondents claim a tax exemption because they had leased property to a specific state agency; (2) respondents brought suit to obtain a tax refund rather than pursue an administrative remedy before the county assessment appeals board (hereinafter Board); and (3) in each case, after the action had been taken under submission, the action was reopened to receive evidence as to the fact that taxes had been collected on behalf of the City of Sacramento by the county.
Appellants' principal argument[1] is that the properties involved are neither public schools nor a free public library. As explained below, we reject that argument. However, we agree with appellants in one particular matter the property must be used for a tax-exempt purpose on the date the tax lien attaches. In addition, we discuss our conclusion that on remand the reversionary interest is not taxable.
*283 I
(1) A public school is a public school. A free public library is a free public library. That Webster's Dictionary does not define schools as incorporating administrative offices or warehouses does not persuade us that property used for those purposes are not, in fact, a part of schools or libraries. Neither does Webster's include "principal's office" or "faculty lounge" within the definition of schoolhouse. Rather, we find persuasive (1) the purpose for which property is used and (2) the purpose for the exemption.
With respect to the use of the property, appellants appear to make a two-part argument. First, they repeat that administration buildings and warehouses are not within the definition of either the public school system or a free public library. Second, appellants argue that the properties, being warehouses and administration buildings, are not "exclusively used" for public school purposes and are not a free library open to the public.
Warehouses and administrative buildings are not constitutionally defined as schools, appellants tell us. California Constitution, article IX, section 6 provides: "The public school system shall include all kindergarten schools, elementary schools, secondary schools, technical schools, and State colleges, established in accordance with law and, in addition, the school districts and the other agencies authorized to maintain them." We find appellants' suggestion unacceptable.
The properties were used for and by public schools and the library. No challenge is made that the use was proper for those purposes.
(2) The real issue would appear to be whether properties were used exclusively for exempt purposes. "[T]he expression `exclusively used' has been interpreted to mean not only primary but also certain types of *284 incidental use as well. However, ... in order to secure a tax exemption based on `incidental use,' such incidental use must be directly connected with, essential to, and in furtherance of the primary use [citations omitted] and must be reasonably necessary for the accomplishment of the primary purpose for which the tax-exempt institution was organized." (Italics in original; Honeywell Information Systems, Inc. v. County of Sonoma (1974) 44 Cal. App.3d 23, 27-28 [118 Cal. Rptr. 422].) The record reveals that all leased structures were connected with the everyday and regular administrative processes of either the Sacramento City-County Library, the Los Rios Community College District or the state community college system. Thus, we conclude that the properties were used exclusively for public schools and libraries.
The purpose for the exemption fortifies our conclusion. We note that article XIII, section 3, subdivision (d) exempts property used for libraries and museums that are free and open to the public, and property used exclusively for public schools and community colleges. (3) "The exemption of property used for public school purposes is not for the benefit of the private owner who may rent his property for said purposes, but for the advantage of the school district that may be compelled to rent property rather than to buy land and erect buildings thereon to be used for the maintenance of its school. With this advantage the school district is able to rent property for a lower rental than the owner of the same property would be willing to accept from a private individual, for the reason that if rented to a school district the owner is relieved from the payment of taxes thereon. On the other hand, if there is no exemption from taxation of property in private ownership but rented to a school district and by it used exclusively for public school purposes, then a school district, when finding it necessary to rent property to be used in the work of maintaining its school, must compete with private persons and pay the same or higher rental than private persons would pay in order to secure property of the same kind and character." (Ross v. City of Long Beach (1944) 24 Cal.2d 258, 262-263 [148 P.2d 649].) Ross, we believe, controls. The public policy consideration of the constitutional provision favors the grant of tax exemption.
II
(4) Respondents contend that the trial court improperly allowed a refund in case No. 248776 because the property was not used for a tax-exempt purpose on the date that the tax lien attached. We agree.
*285 Although the Revenue and Taxation Code makes provision for refund of taxes in cases in which a charitable organization acquires property after the lien date but before the first day of the fiscal year, the section does not mention property which is exempt under the public school exemption. (Rev. & Tax. Code, § 271, see also language used in Rev. & Tax. Code, § 270.) No procedure exists for a refund of taxes collected on property that was not exempt on the lien date and which subsequently becomes tax exempt during that fiscal year. Further support for this interpretation is found in the procedure for filing an affidavit claiming that the property is tax exempt. A person claiming the free public library or public school exemption must file an affidavit between the lien date March 1 (Rev. & Tax. Code, § 2192) and March 15 (Rev. & Tax. Code, §§ 254, 255, subd. (a).)
Since the significant event appears to be the status of the property on March 1, we conclude that the trial court erred in ordering a refund for the portion of taxes paid on the property in fiscal year 1969-1970. On remand, the Board should be directed to deny refund of the taxes paid on the property during this period.
III
On remand from the trial court, the Board was ordered to assess the value of that portion of the parcels attributed to the tax-exempt use. We approve the procedure.
(5) The value of the lessor's reversionary interest in the property leased is not taxable.
First, the constitutional provision exempting this property contains the phrase "property used for libraries" and "property used exclusively for public schools." (Italics added; Cal. Const., art. XIII, § 3, subd. (d).) The language appears to exempt all such property regardless of whether the property is a present possessory interest or a future interest. Revenue and Taxation Code section 104 provides that "real estate" or "real property" includes: "(a) [t]he possession of, claim to, ownership of, or right to the possession of land." Thus, a reversionary interest (a right to the possession of land) is property within the statute and, accordingly, is property used by a school or library.
Second, the public policy behind the exemption for public schools and free public libraries would be destroyed if the reversionary interest were *286 taxed. Taxing the reversionary interest would mean that the lessor would pass the costs on to the lessee and the lessee would consequently bear the costs of the tax on the reversionary interest. Thus, the public policy that was mentioned in Ross would be defeated by imposition of such a tax.
Third, the cases that have allowed deduction of the value of the reversionary interest are of a nature different from the present case. These cases, City of Palo Alto v. County of Santa Clara (1970) 5 Cal. App.3d 918, 920-921 [85 Cal. Rptr. 544]; Rothman v. County of Los Angeles (1961) 193 Cal. App.2d 522, 523 [14 Cal. Rptr. 427]; Ohrbach's Inc. v. County of Los Angeles (1961) 190 Cal. App.2d 575, 580-581 [12 Cal. Rptr. 132], involved the question of whether a nontax-exempt lessor would be allowed to deduct the value of an exempt possessory interest of a lessee. All of the cases involved the question of what tax, if any, a nontax-exempt lessor must pay on a lease to a tax-exempt lessee. In all these cases the courts held that the lessor could properly be taxed on the value of the reversionary interest since the value of the interest while the lessor was not in possession was equivalent to the rent received on the property. In none of the cases was the property used for either "free public libraries" or "public schools." The rationale does not apply in such cases.
The judgment in case No. 248776 is reversed. All other judgments are affirmed.
Friedman, Acting P.J., and Evans, J., concurred.
A petition for a rehearing was denied September 2, 1977, and appellants' petition for a hearing by the Supreme Court was denied October 13, 1977. Clark, J., was of the opinion that the petition should be granted.
NOTES
[1] We rule on each of the ancillary arguments as follows: (1) Respondents are not required to pursue their administrative remedy. This is not a question of valuation nor is it an issue of misclassification. An exception to the exhaustion rule exists when, as here, the facts are undisputed and the property assessed is tax-exempt. (Star-Kist Foods, Inc. v. Quinn (1960) 54 Cal.2d 507, 510 [6 Cal. Rptr. 545, 354 P.2d 1].) (2) We agree that there is a distinction between the exemption granted charitable institutions (see Cal. Const., art. XIII, § 3, subd. (d) and § 4, subd. (b)) and the exemption which pertains to public schools and free public libraries. Basically, the welfare exception applies where property is used and owned by certain specified organizations. The ownership requirement does not apply to the public schools and free public libraries. Accordingly, arguments based on the welfare exemption do not apply. (3) The trial court did not commit prejudicial error by reopening the cases to allow further proof of fact. Such an order rests with the sound discretion of the trial court. (Cappa v. Oscar C. Holmes, Inc. (1972) 25 Cal. App.3d 978, 985-986 [102 Cal. Rptr. 207].) We find no prejudice.
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12 So.3d 415 (2009)
SUCCESSION OF Kathryn LAMBERT.
No. CA 08-1550.
Court of Appeal of Louisiana, Third Circuit.
May 6, 2009.
John Edward Fitz-Gerald, Attorney at Law, Lake Charles, LA, for Appellee, Michael Glenn Lambert.
C.R. Whitehead, Jr., Whitehead Law Offices, Natchitoches, LA, for Appellant, Julie Boudreaux.
Jeffrey Howerton Thomas, Thomas Law Firm, Natchitoches, LA, for Appellee, Jerry Glenn Lambert.
William Alan Pesnell, The Pesnell Law Firm, Shreveport, LA, for Appellee, Jerry Glenn Lambert.
Michael Glenn Lambert, Montalba, TX, In Proper Person.
Court composed of OSWALD A. DECUIR, JIMMIE C. PETERS, and SHANNON J. GREMILLION, Judges.
GREMILLION, Judge.
Julie Lambert Boudreaux, daughter of the deceased Kathryn Lucille Andrews Lambert, appeals the trial court's judgment in favor of her father, Jerry Lambert, finding that Julie was not entitled to receive a 1/4 share of retirement funds upon Jerry's remarriage. For the following reasons, we affirm.
*416 FACTUAL AND PROCEDURAL BACKGROUND
Kathryn died May 1, 1994, leaving behind a Last Will and Testament which provided:
At my death, I leave all of the property I die possessed of to my two children, Julie Ann Boudreaux and Michael Glenn Lambert, in the proportions of an undivided one-half (½) interest to each, subject to the statutory usufruct which I hereby confirm in favor of my husband, Jerry Glenn Lambert, to last until his death or remarriage.
Since her death, litigation concerning Jerry's IRA, which was community property, has been ongoing. A judgment of possession recognized Julie and her brother as naked owners of their mother's one-half interest in the IRA account. Following Jerry's remarriage in 1997, his children demanded their one-half interest in the account. Jerry responded by seeking to have the IRA account removed from the list of community assets. The trial court found that the IRA account was community property and that La.R.S. 9:1426 applied to it to create a continuing usufruct in favor of Jerry.
In an unpublished opinion rendered in November 2007, we affirmed the finding of the trial court that the IRA account was community property, but remanded the case for a determination of whether the IRA was in pay status at the time of Kathryn's death.[1] We stated, "the legal usufruct created by La.R.S. 9:1426 would unquestionably exist if a recurring payment was being made from the Main Stay IRA at the time of Kathryn's death." Following a hearing in April 2008, the trial court found that the IRA was in a pay status prior to Kathryn's death and that the legal usufruct provided by La.R.S. 9:1426 applied to the IRA and "to all funds and proceeds from that account."
Julie now appeals and asserts as error the trial court's failure to address the applicability of La.R.S. 9:1426 to "lump sum payments" or "mandatory withdrawals" as required by federal law.
DISCUSSION
Appellate review of a question of law is simply a decision as to whether the trial court's decision is legally correct or incorrect. Jim Walter Homes, Inc. v. Jessen, 98-1685 (La.App. 3 Cir. 3/31/99), 732 So.2d 699. If the trial court's decision was based on its erroneous application of law, its decision is not entitled to deference by the reviewing court. Kem Search, Inc. v. Sheffield, 434 So.2d 1067 (La.1983). When an appellate court finds that a reversible error of law was made in the lower court, it must redetermine the facts de novo from the entire record and render a judgment on the merits. Lasha v. Olin Corp., 625 So.2d 1002 (La.1993).
Louisiana Revised Statute 9:1426 discusses a surviving spouse's usufruct of a retirement plan (emphasis added):
A.(1) If a recurring payment is being made from a public or private pension or retirement plan, an annuity policy or plan, an individual retirement account, a Keogh plan, a simplified employee plan, or any other similar retirement plan, to one partner or to both partners of a marriage, and the payment constitutes community property, and one spouse dies, the surviving spouse shall enjoy a legal usufruct over any portion of the continuing recurring payment which was the deceased spouse's share of their *417 community property, provided the source of the benefit is due to payments made by or on behalf of the survivor.
(2) This usufruct shall exist despite any provision to the contrary contained in a testament of the deceased spouse.
B. The usufruct granted by this Section shall be treated as a legal usufruct and is not an impingement upon the legitime and a naked owner shall not have a right to demand security.
The issues in this case are whether La. R.S. 9:1426 applies to a "lump sum periodic payment" or to a "mandatory withdrawal" as required by federal law.[2] Julie argues that the usufruct attaches to "the periodic payments but not to the principle." Julie goes on to state:
There is nothing in this statutory provision which allows [Jerry] to withdraw either voluntarily or by any mandatory provision of federal tax law without having to pay over to [Julie] her 25% share of the principle of the retirement funds.
It is respectfully submitted that the judgment of the trial court be modified to require [Jerry] to pay over to [Julie] 25% of the principle of any periodic or mandatory withdrawals from retirement funds required by federal law.
This issue appears to be res novo in Louisiana law and one that is not addressed by La.R.S. 9:1426. However, in examining the purpose behind La.R.S. 9:1426, we find that the legislature intended to protect the surviving spouse's usufruct of community retirement funds until his death in priority over the claims of naked ownership of the heirs' portion of the funds. The article does not distinguish between types of payments, only calling them "recurring payments." It does not distinguish between recurring payments comprised of principle versus interest, or a combination of both, although we note that the usufruct applies to any portion of the continuing "recurring payments." The overall policy of protecting a surviving spouse's ability to provide for himself during retirement appears to outweigh the heirs' right to the community portion. Spaht and Moreno, 16 La.Civ. L. Treatise, Matrimonial Regimes § 3.44 (3 ed.) recently addressed some of the issues surrounding IRA accounts in relation to La.R.S. 9:1426 (emphasis added) (footnotes omitted):[3]
A narrow Louisiana statute adopted in 1990 protects the covered spouse who is collecting IRA or other pension benefits when the other spouse dies. It was originally added to the Louisiana Civil Code as Article 890, redesignated as La. Civ.Code art. 890.1 and provided that the covered spouse will continue to receive the cash flow coming from the IRA until death even if the heirs of the deceased spouse might have claims to part of the asset under community property principles. In 1997, Article 890.1 was redesignated as La.R.S. 9:1426.
R.S. 9:1426 applies to "a public or private pension or retirement plan, an annuity policy or plan, an individual retirement account, a Keogh plan, simplified employee plan, or any other similar retirement plan." If a spouse dies while the surviving spouse is receiving "a recurring payment" from the plan, the survivor enjoys a legal usufruct over the continuing recurring payment which was the deceased spouse's share of their *418 community if the source of the benefit is traced to payments made by or on behalf of the survivor. The usufruct is mandatory and applies even if a testament provides otherwise.
Although R.S. 9:1426 calls this a "legal usufruct," it is not provided that the usufruct terminates upon remarriage, as Civil Code Article 890 provides with respect to the regular legal usufruct of the surviving spouse. As a legal usufruct, it would be free of the normal requirements of security, but R.S. 9:1426 goes further and so specifies in the third paragraph. It also provides that such a usufruct is not an impingement on the legitime of forced heirs.
The basic policy behind R.S. 9:1426 protecting the rights of the living spouse to a retirement benefit at the expense of the heirs of the deceased spouse would seem to apply also in the case of a death of the other spouse before regular distributions are begun. However, R.S. 9:1426 strictly construed seems to apply if the "recurring payment is being made... and one spouse dies." As suggested in the next section, the underlying policy seems broader, and the provision might well be construed to apply more broadly by analogy.
Since the right of the living spouse is a usufruct of money that would otherwise go to the heirs, the usufructuary has the right to spend those funds. In so doing, the usufructuary incurs the obligation to compensate the naked owners for those sums at the termination of the usufruct, which would normally be upon the death of the usufructuary.
Spaht and Moreno go on to discuss the case where recurring payments have not yet begun when the spouse dies. In addressing the issue of principle versus interest and forcing a surviving spouse to distribute a "lump sum" amount to the naked owners upon the death of a spouse, these authors note the unresolved complexities created by the statute, but suggest that public policy in favor of the surviving spouse outweighs the naked owners' rights (emphasis added):
This apparent conclusion under the general law and R.S. 9:1426 is obviously a messy, complicated one. For example, the continuing IRA payment could be partly return of principal and partly investment income. The latter would presumably be a fruit owned by the usufructuary and the former would have to be accounted for to the naked owners at the termination of the usufruct over the recurring benefit.
In any event, the IRA fund could well be considered as any other community asset in the absence of special rules, and there appear to be no special state law rules to govern the situation other than Article 890 by its terms and R.S. 9:1426 by analogy. Perhaps the trust law might be invoked, with the result that the heir's interest is not in the underlying IRA assets but in the beneficial rights under the trust. And, like life insurance ownership by the non-covered spouse, it is a right that is virtually worthless. Also, it could be a disastrous tax situation if a state court in such a situation would order half the account paid to the heirs. This would probably be a distribution of the IRA subject to taxation and penalty, to be paid by the initial contracting spouse.
Despite its complexity, however, this approach does balance the rights of the parties so as to give substantial protection to the surviving spouse's interests and does fulfill the policy of providing retirement income to spouses no longer able to work, rather than benefitting what would normally be the next generation.
*419 ....
It would diminish [the surviving spouse's] interests to give half of [his IRA fund] up to the heirs of the deceased. Even under state policies, where a statutory usufruct would allow the survivor to enjoy the benefits of the fund until death or remarriage, there is a similar policy which may militate against recognition of the heirs' claims.
Id.
Spaht & Moreno suggest that the public policy in favor of the surviving spouse is so strong, that a fortiori, La.R.S. 9:1426 would probably apply even if recurring payments had not yet begun. Thus, any mandatory federal withdrawals are "recurring payments" within the meaning of the statute. The law provides us with nothing to restrict a broad reading of La. R.S. 9:1426. Accordingly, we find that federally mandated withdrawals fall within its ambit. Accordingly, we affirm the trial court's finding that any mandatory federal withdrawals of principle and/or interest are "recurring payments" subject to Jerry's usufruct.
The situation of voluntary lump sum withdrawals presents a more difficult issue. Although it is clear that the policy is to protect the retirement funds of the surviving spouse, one can envision a situation in which the surviving spouse withdraws a large portion of the funds pursuant to his legal usufruct and disposes of all of the money leaving nothing to reimburse the naked owner at his death. However, there is no present issue regarding lump sum withdrawals and this court does not issue advisory opinions. Accordingly, we leave this issue for another day.
CONCLUSION
The judgment of the trial court finding that Jerry's IRA account was in pay status, and that his usufruct applies to recurring payments from his IRA account, is affirmed. Additionally, we find that federally mandated withdrawals are "recurring payments" within the meaning of La.R.S. 9:1426. All costs of this appeal are assessed against Julie Lambert Boudreaux.
AFFIRMED.
PETERS, J., dissents and assigns written reasons.
PETERS, J., dissenting.
I respectfully disagree with the majority both in its determination that any future federally-mandated withdrawal of principal or interest is subject to Jerry Lambert's usufruct and in its conclusion that the issue of voluntary lump-sum withdrawals from the retirement plan is not now before us. I would hold that the usufruct mandated by La.R.S. 9:1426 applies only to recurring payments being made at the time Kathryn Lambert died, not to future federally-mandated increased or additional withdrawals of principal or interest nor to voluntary lump-sum withdrawals by Mr. Lambert.
The salient facts in this case were set forth in this court's prior unpublished opinion, Succession of Kathryn Andrews Lambert, 07-630, pp. 1-2 (La.App. 3 Cir. 11/7/07):
Jerry and Kathryn Lambert were married and had two children, Julie and Michael. During the marriage, Jerry worked at Texaco and accumulated a substantial retirement pension. There is no dispute that the pension was a community asset. In June of 1989, Jerry and Kathryn elected to receive a lump sum payment of $320,851.76 from the pension in lieu of an annuity. This money was rolled over into an IRA with Main Stay mutual funds. The record is devoid of any evidence as to the pay status of the IRA at that time. In 1992, *420 Kathryn executed a last will and testament, leaving all her property to Julie and Michael, subject to a usufruct in favor of Jerry until his death or remarriage. Kathryn died in May of 1994. At the time of Kathryn's death, the IRA had a value of $560,229.11.
After her death, but prior to the opening of Kathryn's succession, Jerry rolled the Main Stay funds over to yet another IRA, run by Edward D. Jones. When the succession of Kathryn Lambert was opened in April of 1995, the detailed descriptive list included the account as community property. A subsequent judgment of possession recognized Julie and Michael as naked owners of Kathryn's one-half interest in the account, subject to the usufruct defined by Kathryn's will.
Jerry remarried in 1997, prompting Julie and Michael to demand their mother's one-half interest in the account. Jerry responded by seeking to re-open the succession and have the IRA removed from the list of community assets. After much legal wrangling, the trial court ultimately decided that the IRA was derived from community funds and was, therefore, a community asset to be included in the succession. However, he found that La.R.S. 9:1426 applied, creating a legal usufruct in favor of Jerry to run until his death, despite the terms of Kathryn's will. From this decision, all parties appeal.
In the prior decision, this court affirmed the trial court's decision in part, but held that there was insufficient evidence in the record to determine whether recurring payments were being received from the Main Stay IRA during Mrs. Lambert's life and remanded the case, instructing the trial court to supplement the record on that narrow issue. In doing so, this court noted that "the legal usufruct created by La.R.S. 9:1426 would unquestionably exist if a recurring payment was being made from the Main Stay IRA at the time of Kathryn's [Mrs. Lambert's] death." Id. at p. 4 (emphasis added).
On remand, the trial court factually concluded that at the time of Mrs. Lambert's death, the Main Stay IRA was making distributions of $3,497.06 per month and, thus, was "in pay status." Based on this conclusion, it entered a judgment that "the legal usufruct of La.R.S. 9:1426 attaches to all funds and proceeds from that account [the Main Stay IRA]." The trial court's factual finding that the IRA was "in pay status" at Mrs. Lambert's death is not the issue before us. Instead, we are called upon to determine the extent, if any, that Mr. Lambert's usufruct applies to future additional or increased distributions that are mandated by federal rules, as well as any attempt by Mr. Lambert to receive lump-sum payments of either the principal or accumulated interest. The trial court's judgment applies the usufruct to both. The majority agrees with the trial court on the first issue, but declines to address the second.
The majority finds that any future distributions caused by federally-mandated withdrawal rules would be subject to the usufruct established by La.R.S. 9:1426. In reaching this conclusion, the majority relies solely on the discussion of La.R.S. 9:1426 in Spaht and Moreno, 16 La.Civ.L.Treatise, Matrimonial Regimes § 3.44 (3 ed.).
I do not find that this authority stands for the proposition espoused by the majority. At best, it recognizes that the specific language of the statute does not address all the situations involving pension plans that may arise at the death of a spouse. While acknowledging that the basic policy behind La.R.S. 9:1426 is "protecting the rights of the living spouse to a retirement *421 benefit at the expense of the heirs of the deceased spouse," the authors attempt to expand its application based on suggestions that "the underlying policy seems broader, and the provision might well be construed to apply more broadly by analogy." Id. (emphasis added). The conclusion of the authors is not, as the majority suggests, that La.R.S. 9:1426 is applicable to all situations of pension distribution, but that the approach suggested by the authors would fulfill an unstated legislative policy. In fact, the authors even suggest that La.R.S. 9:1426 "would seem to apply also in the case of a death of the other spouse before regular distributions are begun." Id. (emphasis added).
In interpreting a statute, we must start with the mandate that "[w]hen a law is clear and unambiguous and its application does not lead to absurd consequences, the law shall be applied as written and no further interpretation may be made in search of the intent of the legislature." La.Civ.Code art. 9 (emphasis added). Louisiana Revised Statutes 9:1426 is clear and unambiguous and its strict application will lead to no absurd consequences. The usufruct provided to the surviving spouse is triggered by a recurring payment that is already being made at the time of the other spouse's death, and the usufruct over the amount being paid at that time is maintained as a legal usufruct. This language satisfies the basic policy behind the statute that the retirement benefit being enjoyed by the surviving spouse at the time of the death of the other spouse is protected at the expense of the heirs. As I read the statute, the legislature obviously concluded that this specific language was sufficient to protect the surviving spouse. That is to say, if a couple is receiving a retirement benefit that is sufficient for their needs, one can assume that it will be sufficient for the survivor's needs. To extend the usufruct to any increases, mandated or otherwise, or any lump sum withdrawals would defeat the ownership rights of the legal heirs. The authors of the Treatise, and in following their logic, the majority in this matter, attempt to substitute their own policy conclusions for the clear letter of the law.
Given the clear language of the statute, I would not extend Mr. Lambert's usufruct to any distributions over and above the monthly amount being paid at the time of Mrs. Lambert's death. At the same time, I would address Ms. Boudreaux's argument that the trial court erred in not holding that Mr. Lambert's usufruct does not extend to any lump sum payments, and would rule in her favor for the reasons previously stated. The majority declines to address this issue, finding that "there is no present issue regarding lump sum withdrawals." However, the trial court's judgment is not limited to recurring payments; it attaches the usufruct to "all funds and proceeds" from the Main Stay IRA, which would include any lump-sum withdrawals from that account. If this court refuses to address that issue, then in the future the issue of lump-sum withdrawals would be res judicata. Thus, a decision from this court addressing the issue of lump-sum withdrawals is not an advisory opinion.
Accordingly, I would reverse the trial court's judgment in part and amend it to hold that the legal usufruct of La.R.S. 9:1426 attaches only to the recurring payments of $3,497.06 per month that were being made at the time of Kathryn Lambert's death.
NOTES
[1] Succession of Kathryn Andrews Lambert, 07-630 (La.App. 3 Cir. 11/07/2007) (an unpublished opinion).
[2] In order to avoid tax liabilities, federal law requires minimum mandatory distributions from a traditional IRA after the age of 70½.
[3] We note that throughout the discussion in the article La.R.S. 9:1426 is mistakenly referred to as La.R.S. 9:1246. We have taken the liberty to correct the typographical error throughout the quoted material.
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245 B.R. 903 (1999)
In re HERCULES AUTOMOTIVE PRODUCTS, INC., Debtor.
J. Coleman Tidwell, Trustee, Plaintiff,
v.
Wedgestone Financial, Wedgestone Automotive Corporation, Wedgestone Partners, Fey Automotive Products, Inc., Resource Holdings Associates, PFG Corporation, Jeffrey S. Goldstein, John C. Shaw, James J. Pinto, David L. Sharp, Defendants.
Bankruptcy No. 96-10514-JDW. Adversary No. 98-1019.
United States Bankruptcy Court, M.D. Georgia, Macon Division.
October 29, 1999.
*904 *905 *906 J. Coleman Tidwell, Wesley J. Boyer, Macon, GA, for Chapter 7 Trustee.
Valerie A. Hammett, Atlanta, GA, Robert T. Kugler, Minneapolis, MI, for Defendants.
MEMORANDUM OPINION
JAMES D. WALKER, Jr., Bankruptcy Judge.
This matter comes before the Court on Motion for Partial Summary Judgment filed by Valerie A. Hammett and Robert T. Kugler, attorneys for Defendants Wedgestone Financial, Wedgestone Automotive Corporation, Wedgestone Partners, Fey Automotive Products, Inc., Resource Holdings Associates, PFG Corporation, Jeffrey S. Goldstein, John C. Shaw, James J. Pinto, and David L. Sharp ("Defendants").[1] Defendants seek summary judgment on certain counts in the complaint filed by J. Coleman Tidwell, Chapter 7 Trustee ("Trustee") for the bankruptcy estate of Hercules Automotive Products, Inc. ("Debtor"), including allegations that Defendants converted $204,167.00 belonging to Debtor; that Defendants converted Debtor's customer base; that Defendants converted inventory belonging to Debtor; that Debtor has a claim for conspiracy; that Defendants tortiously interfered with Debtor's contractual and business relations; that Defendants are holding certain business records of Debtor; and that Trustee may add other claims and defendants to this case. Defendants also ask the Court to strike Trustee's pleadings regarding 100,000 shares of Wedgestone Financial stock and regarding Debtor's customer base.[2] These are core matters within the meaning of 28 U.S.C. § 157(b)(2)(A), (E), and (O). After considering the pleadings, evidence and applicable *907 authorities, the Court enters the following findings of fact and conclusions of law in compliance with Federal Rule of Bankruptcy Procedure 7052.
Findings of Fact
In late 1994, Wedgestone Automotive Corporation ("Wedgestone Automotive")[3] formed Debtor, a Delaware corporation and its wholly-owned subsidiary, for the purpose of acquiring the assets of Hercules Bumpers, Inc. ("Hercules"). Debtor acquired Hercules' assets on January 9, 1995. Wedgestone Automotive was also the sole owner of Fey Automotive Products, Inc. ("Fey"), Hercules' principal in the automobile bumper industry. The asset purchase agreement made Wedgestone Automotive sole owner of two companies which together manufactured and distributed approximately half of all truck bumpers sold in the United States apart from those sold by the major automobile manufacturers themselves.
The principal markets of Hercules and Fey were distinct, but their respective interests nevertheless put them in natural competition with one another. Hercules sold its products primarily in the substantial bumper aftermarket that existed because rear bumpers were optional equipment on trucks sold in the consumer market at the time. Automobile dealers could purchase trucks without the optional rear bumpers and install Hercules' bumpers which were promoted as the strongest available. Successfully employing this sales strategy, Hercules dominated the aftermarket. Fey, on the other hand, sold its bumpers primarily to automobile repair shops in the after-crash market, which it dominated. Nothing about either Hercules or Fey's product, however, restricted it to its respective market. Hercules would have profited from inroads in the after-crash market, and Fey would have likewise profited from inroads in the aftermarket.
Defendants acknowledge that a substantial number of Trustee's claims raise questions of fact that must be decided at trial.[4] In the present motion the Court must nevertheless address some of these, both for the sake of context and for the bearing they have on this motion. The first pertains to Defendants' intent with regard to Debtor's purchase of Hercules' assets. While Defendants state that Fey first contacted Hercules about a potential merger in 1993, Trustee states that both Fey and Wedgestone Financial first contacted Hercules in 1992, not for the purpose of merger, but to purchase Hercules' customer list.[5] Trustee alleges that Fey and the Wedgestone group had no interest in merger until Hercules refused their offer to purchase its customer base and began negotiating with a company interested in purchasing and operating Hercules as a going concern. According to Trustee, the Hercules owners wanted to keep the Hercules business in operation while Defendants merely wanted to get Hercules' customer base and eliminate Hercules as Fey's competitor.
*908 There are questions regarding Hercules' financial condition when it was negotiating with Defendants. Trustee disputes the allegation that Hercules made no profit from 1985 to 1993, but he does not dispute the fact that when Debtor purchased Hercules' assets, "Hercules was a highly troubled business that would have to be turned around in order to survive." (Def.'s st. Undisputed Facts ¶ 35.) Perhaps to accomplish the needed turnaround, Defendants caused Debtor to enter into two separate, five-year management consultation service agreements with entities associated with the Wedgestone group, Wedgestone Partners and PFG Corporation ("PFG").[6] At present, the Court addresses only the nature of the funds Debtor transferred pursuant to these agreements. Defendants' intent in causing Debtor to enter into these agreements remains a question of fact for trial.
Pursuant to these agreements, Debtor paid Wedgestone Partners and PFG a total of $204,167.00. Trustee argues that there is no documentation indicating that Debtor ever received the services for which it contracted, and the facts are subject to interpretation. Arguably Wedgestone Partners and PFG fulfilled their contractual obligations to Debtor, but it could also be argued that they performed the services, not for Debtor as a distinct entity, but for the Wedgestone group as a whole. These considerations raise questions for trial. Of relevance to this motion, however, is that Debtor transferred $204,167.00 to Defendants pursuant to a contractual relationship that Debtor had with Wedgestone Partners and PFG.
While some Defendants had contractual obligations to Debtor, others, serving as its officers and directors, also owed it fiduciary obligations. Questions of fact remain regarding their conduct in managing Debtor's affairs. It is an undisputed fact, however, that in managing Debtor's affairs, Defendants caused Debtor to enter into a supply contract with Fey. In 1995, Debtor lost the supplier of a material necessary for the manufacture of its MSOET line, a specialty bumper that had been one of Hercules' most important products. Pursuant to Defendants' management decisions, Debtor replaced the MSOET line with the Surestep unit, a product manufactured by its competitor Fey.
While operating Debtor, Defendants also transferred a significant portion of Debtor's sales force to Fey. Again, Trustee may argue that Defendants' transfer of Debtor's sales force raises questions to be considered at trial, but of relevance to the Court's consideration of the present motion are facts pertaining to the nature of the customer base that Trustee alleges Defendants misappropriated. The pertinent facts are that no evidence indicates Debtor ever made, or took steps to protect, a tangible list of its customers, or that Fey ever received such a list, and no evidence indicates that Debtor ever made restrictive covenants with its salespersons.
In addition to questions regarding the nature of Debtor's property, the Court must address questions regarding the value of property Debtor obtained from Defendants. Debtor purchased 100,000 shares of Wedgestone Financial stock pursuant to a requirement, imposed by Charles W. Brady,[7] as a condition of his willingness to go forward with the asset purchase agreement, that Wedgestone Financial pay $100,000.00 in legal fees that he had incurred. To meet Brady's requirement, and with his agreement, Wedgestone Financial arranged for Debtor to purchase 100,000 shares of Wedgestone *909 Financial stock at a price of $100,000.00. Then within six months of the asset purchase Debtor would, at its option, either transfer the 100,000 shares of Wedgestone Financial stock to Brady, or pay him $100,000.00. Evidence in the record indicates that though Wedgestone Financial's stock traded for $1.04 per share at one point, it traded infrequently and at variable prices that were often considerably lower than $1.00 per share.
The events immediately precipitating the shutdown of Debtor's manufacturing operations in Pelham, Georgia, and the transfer of Debtor's plating line inventory valued at $308,000.00 also bears recitation here. Shortly before the shutdown of Debtor's facilities in February 1996, the local power company demanded that Debtor pay approximately $150,000.00 in power bills incurred by Hercules before Debtor purchased its assets. Though Debtor attempted to explain that it was a distinct entity from Hercules, the local power company threatened to shut off power to Debtor's facilities if the bills were not paid. Because Debtor had inventory at its facilities consisting of nickel in solution and related chemicals, the imminent power shutoff threatened to create hazardous waste problems. To address these threatened problems, Debtor transferred $308,000.00 in inventory to Fey. Trustee disputes none of this, but where Defendants state that the inventory was transferred to Fey "at cost," (Def.'s st. of Undisputed Facts ¶ 86), Trustee alleges that Debtor was not paid. Defendants cite no portion of the record substantiating payment.
Conclusions of Law
Federal Rule of Bankruptcy Procedure 7056 adopts Federal Rule of Civil Procedure 56(c), which provides for the entry of summary judgment "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 judgment as a matter of law." FED.R.CIV.P. 56(c). In Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986), the United States Supreme Court stated that "the party seeking summary judgment always bears the initial responsibility of informing the [Court] of the basis for its motion, and identifying those portions of `the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex, 477 U.S. at 323, 106 S.Ct. 2548. Because Defendants have moved for summary judgment on certain claims alleged by Trustee, they bear the initial burden of either negating factual elements essential to Trustee's claims on which they seek summary judgment, or to show that the record lacks evidence that Trustee must have in order to meet his burden of proof. See Clark v. Coats & Clark, Inc., 929 F.2d 604, 606-09 (11th Cir.1991).
If Defendants meet their initial burden, then the burden shifts to Trustee to "set forth specific facts showing that there is a genuine issue for trial." FED.R.CIV.P. 56(e). If Trustee fails to meet his burden imposed by Rule 56(e), then entry of summary judgment for Defendants is mandated. Celotex, 477 U.S. at 322, 106 S.Ct. 2548. Trustee is entitled to have the Court believe his evidence, however, and if the evidence raises an issue of material fact for trial, summary judgment will be denied. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-55, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
I. Interwoven web of relations negates Trustee's ability to show requirements of "stranger doctrine" essential to tortious interference claim
Defendants have moved for summary judgment on Trustee's claims for tortious interference with contract and malicious interference with Debtor's business relations. In Georgia law, though tortious interference with contractual relations and *910 tortious, or malicious, interference with business relations are distinct torts, they nevertheless have similar elements. See Britt/Paulk Ins. Agency, Inc. v. Vandroff Ins. Agency, Inc., 952 F.Supp. 1575, 1581 (N.D.Ga.1996). Both claims require Trustee to show that Defendants were strangers to Debtor's contractual or business relations. See Atlanta Mkt. Ctr. Management Co. v. McLane, 269 Ga. 604, 609 n. 2, 503 S.E.2d 278, 283 n. 2 (1998) (common "stranger doctrine" applies to distinct torts of interference with business relations and interference with contractual relations). The evidence shows that Defendants were not strangers to Debtor's contractual or business relations, and thus cannot be subjected to a claim that they tortiously interfered with them.
A stranger to a contractual or business relation is an "`intermeddler' acting improperly and without privilege." Renden, Inc. v. Liberty Real Estate Ltd. Partnership, 213 Ga.App. 333, 336, 444 S.E.2d 814, 818 (1994). Georgia courts prescribe no test for identifying a stranger, but in Britt/Paulk the court listed a number of factors based upon which Georgia courts have identified parties who were not strangers to complainants' contractual or business relations, and against whom complainants improperly alleged claims of tortious interference. See 952 F.Supp. at 1584. Of these factors, the most pertinent holds that if Defendants and Debtor were both "parties to a comprehensive interwoven set of contracts or relations," then Defendants were not strangers to Debtor's business or contractual relations. Id.
In its recent decision in Atlanta Mkt. Ctr., the Georgia Supreme Court endorsed a line of cases that restricts the scope of possible defendants vulnerable to tortious interference claims. See Atlanta Mkt. Ctr., 269 Ga. at 610, 503 S.E.2d at 283-84. These cases restrict the number of possible defendants subject to tortious interference claims by placing restrictions on the number of persons who may be "strangers" to complainants' business and contractual relations. Id. Another line of cases applied a more expansive interpretation of the term "stranger" as applied in tortious interference questions. Sunamerica Fin., Inc. v. 206 Peachtree St., Inc., 202 Ga.App. 790, 415 S.E.2d 677 (1992), is representative of this line of cases. In Sunamerica, rather than holding that parents could not be strangers to their subsidiaries' relations as matter of law, the court gave parents a qualified privilege to intervene in their subsidiaries' business and contractual relations. Sunamerica, 202 Ga.App. at 797-98, 415 S.E.2d at 684. The court held that under some circumstances, a parent might be a stranger to its subsidiary's relations, and a claim against the parent for tortious interference could be sustained.
Specifically disapproving of Sunamerica by name, the Georgia Supreme Court held in Atlanta Mkt. Ctr. that "all part[ies] to an interwoven contractual arrangement are not liable for tortious interference with any of the contracts or business relationships." Atlanta Mkt. Ctr., 269 Ga. at 610, 503 S.E.2d at 283-84 (citing Jefferson-Pilot Communications Co. v. Phoenix City Broad., Ltd., 205 Ga.App. 57, 60, 421 S.E.2d 295, 298-99 (1992) with approval). It follows from the holding in Atlanta Mkt. Ctr. that as a matter of law, a parent corporation cannot be a stranger to its subsidiaries' business or contractual relations, and that no claim can be sustained against a parent for tortious interference with such relations. Based upon Atlanta Mkt. Ctr., this Court must conclude that because Debtor was created and operated as a subsidiary of Wedgestone Automotive within the interwoven set of fiduciary and contractual relations that constituting the Wedgestone Financial conglomerate, Trustee can maintain no claim against Defendants for tortious, or malicious, interference with Debtor's business or contractual relations.
This conclusion applies to any claim for tortious interference as applied to Fey as well. The Atlanta Mkt. Ctr. holding *911 bars claims against parents for tortious interference with their subsidiaries' relations, but the court articulated no such principle barring tortious interference claims brought against siblings. Nevertheless, while it is true that Fey was in natural competition with Debtor, and that Fey itself owed no fiduciary obligation to Debtor, even Fey appears to have had a contractual relation of its own with Debtor.[8]
The facts do not explicitly state, and the Court does not find, that Fey supplied the Surestep unit directly to Debtor. If it did, however, then Fey had a relationship with Debtor similar to the one the defendant in Britt/Paulk had with the plaintiff. In Britt/Paulk, the defendant was a supplier of insurance products, and the plaintiff was a distributor of the insurance products that defendant supplied. The court determined that the multi-tiered marketing structure created by contracts between the plaintiff and defendant prevented the defendant from being a stranger to the plaintiff's business relations with customers who purchased the products supplied by the defendant. See Britt/Paulk, 952 F.Supp. at 1585. The factual distinction between Britt/Paulk and this case is that in Britt/Paulk, the plaintiff served as agent for the distribution of the defendant's products, while in this case, Debtor sold Fey's product in place of one that it had manufactured itself. The factual distinction does not change the legal import of Britt/Paulk to this case, however, which rests upon the "series of dependent relationships" created by multi-tiered marketing structures like the one central to matters in Britt/Paulk, or the one between Fey and Debtor, which though peripheral, was constitutive of the larger interests of Wedgestone Financial. See id. Furthermore, this same analysis would apply even if Fey did not directly supply the Surestep bumpers to Debtor.
Even if Debtor acquired the Surestep bumpers indirectly from Fey, Trustee still could not show that Fey was a stranger to Debtor's business relations. The Surestep bumpers may have passed from Fey through an intermediary to Debtor, or perhaps the bumpers never actually passed directly to Debtor but rather were delivered directly to Debtor's customers, and of course, there may have been arrangements that the Court has not contemplated. Nevertheless, such arrangements would not break the series of dependent relationships that defeat the essential "stranger" element of tortious interference that Trustee must establish to sustain this claim. Instead, the series of dependent relationships would have been expanded.
Pursuant to the Georgia Supreme Court's holding in Atlanta Mkt. Ctr. that the stranger doctrine restricts the number of possible defendants subject to tortious interference claims, it is appropriate to treat the arrangement by which Debtor obtained Surestep bumpers from Fey, regardless of its structure, as constitutive of the set of interwoven relations to which both Fey and Debtor were parties. Even Fey, Debtor's natural competitor, was no stranger to Debtor's business or contractual relations. Thus, summary judgment must be granted for Defendants because Trustee cannot show an essential element of his claim for tortious interference with Debtor's contractual and business relations.
II. Trustee has no claim for conversion of $204,167.00 or customer base; fact question remains regarding inventory
Defendants seek summary judgment on allegations that they converted certain items of Debtor's property, including $204,167.00 Debtor paid Wedgestone Partners and PFG, the allegedly misappropriated Hercules' customer base, and $308,000.00 in inventory transferred to *912 Fey when Debtor terminated its manufacturing operations. The prima facie case for conversion actions is stated in City of College Park v. Sheraton Savannah Corp., 235 Ga.App. 561, 509 S.E.2d 371 (1998). As to each item of property, Trustee must prove (1) that Debtor has title to the property, (2) that Debtor has the right to possess it, (3) that Defendants have possession of the property, (4) that Defendants have refused demands to turn it over, and (5) the value of the property. College Park, 235 Ga.App. at 564, 509 S.E.2d at 374.
A. Because $204,167.00 was paid pursuant to contract Trustee cannot show Debtor's title
Trustee has no action for Defendants' conversion of the $204,167.00 paid Wedgestone Partners and PFG because the money was paid pursuant to a contract for services. Because it was paid to Wedgestone Partners and PFG, title to the money passed to them with possession. Trustee is thus unable to meet the first element of the prima facie case for conversion as prescribed in College Park because he cannot show that Debtor has title to the money.
The Georgia Court of Appeals has held that "[i]f there is no liability except that arising out of breach of the express terms of [a] contract, the action must be in contract[.]" Commercial Bank & Trust Co. v. Buford, 145 Ga.App. 213, 215, 243 S.E.2d 637, 638-39 (1978). Georgia courts do allow claims for conversion of money. Hudspeth v. A & H Constr., 230 Ga.App. 70, 71, 495 S.E.2d 322, 323 (1997). If the money is paid pursuant to a contract, however, the claim cannot be based on the breach of duties created by the contract. Distinct from a claim ex contractu, a conversion claim for money must be based on a breach of duties, distinct from contractual obligations, arising either from statute or flowing from relations created by the contract. See Unified Services, Inc. v. Home Ins. Co., 218 Ga.App. 85, 87, 460 S.E.2d 545, 547-48 (1995); Commercial Bank & Trust, 145 Ga.App. at 214-15, 243 S.E.2d at 638-39. Furthermore, a claim for conversion of money must establish that the allegedly converted money is specific and identifiable, or specifically "earmarked" for some particular purpose. Hudspeth, 230 Ga.App. at 71, 495 S.E.2d at 323; Unified Services, 218 Ga.App. at 89, 460 S.E.2d at 549. Earmarking overcomes the presumption that one in possession of money has title to it, thus allowing the complainant to establish the first element of the prima facie case for conversion, i.e., that plaintiff has title to the allegedly converted property. See generally Adler v. Hertling, 215 Ga.App. 769, 772-74, 451 S.E.2d 91, 96-97 (1994)("specific and identifiable" nature of funds necessary to establish plaintiff's title and right to possess).
In Unified Services, an insurance broker was contractually obliged to accept its client's premium payments and remit the money to the insurer. In defense to the insurer's claim against it for conversion of funds it received from the client but which it did not remit, the brokerage argued that the insurer's action was properly on the contractual obligation to remit the premium, not in tort. The court pointed out, however, that pursuant to Georgia statute, the broker was deemed the agent of both the insurer and the client for the purpose of collecting and remitting the premium. Unified Services, 218 Ga.App. at 87-88, 460 S.E.2d at 548. The insurer thus properly based its action ex delicto on extra-contractual duties created by statute. Id.
As stated supra, however, an action for conversion of money requires more than an extra-contractual basis for the action. The plaintiff must also show that the allegedly converted money was earmarked for some particular purpose, or that the money can otherwise be specifically identified as money held by the defendant to which the plaintiff continues to hold title. Failing this, the plaintiff cannot meet the first *913 elements of the prima facie case for conversion.
In Hudspeth, the defendant received money from the plaintiff specifically for the purpose of purchasing real property in which the plaintiff was to receive a one-third interest. Focusing on the issue of "earmarking," the court did not address the defendant's extra-contractual duties to the plaintiff.[9] Rather, the court focused on the fact that because the money was earmarked for a specific purpose, it was specifically identifiable as money in the defendant's possession to which the plaintiff had not surrendered title. Hudspeth, 230 Ga.App. at 71, 495 S.E.2d at 323 (citing Unified Services, 218 Ga.App. at 89, 460 S.E.2d 545); and see Adler, 215 Ga.App. at 772-74, 451 S.E.2d at 96-97. Earmarking thus allowed the plaintiff to show the first element of the prima facie case for conversion as outlined in College Park.[10]
The facts of this case make it clear that Trustee cannot establish the first element of conversion as outlined in College Park. In Unified Services, the insurance broker received a specifically identifiable sum of money earmarked for the purpose of remitting it to the insurer, and in Hudspeth, the defendant received a specific sum of money earmarked for the purpose of purchasing a one-third interest in a parcel of real estate. The evidence indicates no purpose for Debtor's payment of $204,167.00 to Defendants other than to meet Debtor's contractual obligation to pay for services. When possession of the $204,167.00 passed from Debtor to Defendants, title passed with it, and any action for the money paid should properly be on the contract. Given the foregoing, summary judgment must be granted for Defendants on Trustees allegations that they converted the $204,167.00 that Debtor paid them.
B. Georgia statute supercedes conversion action for customer base
Trustee has no action against Defendants for their conversion of Debtor's customer base because Georgia's Trade Secrets Act of 1990[11] (the "Act") "supercede[s] conflicting tort, restitutionary, and other laws of [Georgia] providing civil remedies for the misappropriation of a trade secret." O.C.G.A. § 10-1-767(a). The alleged customer base, or Debtor's customer "list," to use the language of Georgia law, is defined by statute to be a "trade secret," a term which "means information including . . . a list of actual or potential customers[.]" O.C.G.A. § 10-1-761(4).
Pursuant to O.C.G.A. § 10-1-767(a), the remedies provided by the Act for misappropriation of a trade secret are exclusive. Thus, Trustee's only remedy for the alleged misappropriation of Debtor's customer base would either be a suit in equity for injunctive relief under O.C.G.A. § 10-1-762, or an action for damages under O.C.G.A. § 10-1-763. Neither is available to Trustee, however, because Debtor did not take the steps necessary under Georgia law to protect its customer base as a trade secret.
To ensure that its customer list would be recognized as a trade secret subject to the Act's protection, Debtor should have reduced its customer list to tangible, written form. Before the Georgia General Assembly adopted the Act, the Georgia Supreme *914 Court categorically held that "[c]ustomer lists are not trade secrets." See Am. Photocopy Equip. Co. v. Henderson, 250 Ga. 114, 115, 296 S.E.2d 573, 575 (1982). Then in Avnet, Inc. v. Wyle Lab., Inc., 263 Ga. 615, 437 S.E.2d 302 (1993), decided subsequent to the Act's adoption, the court narrowly construed the definition of "trade secret," limiting it to tangible lists of customers reduced to a written form of some sort. 263 Ga. at 620, 437 S.E.2d at 305; see also Amerigas Propane v. T-Bo Propane, 972 F.Supp. 685, 696-98 (S.D.Ga.1997) (citing Allen v. Hub Cap Heaven, Inc., 225 Ga. App. 533, 536, 484 S.E.2d 259, 263 (1997) and DeGiorgio v. Megabyte Int'l, Inc., 266 Ga. 539, 540, 468 S.E.2d 367, 369 (1996)) (1996 amendments did not abrogate Avnet holding that protected customer lists must be in tangible form).
Trustee has presented no evidence that Debtor ever reduced its customer list to tangible, written form, nor has he presented evidence that Defendants misappropriated such a tangible list belonging to Debtor. To the contrary, Trustee's pleadings indicate that no such tangible list existed. Trustee's allegation is that Defendants misappropriated the customer base by transferring Debtor's sales personnel to the employ of Fey, effectively asking the Court to hold Defendants liable for conversion of knowledge that Debtor's sales personnel gained while in Debtor's employ.
There are two critical problems with the claim Trustee attempts to articulate. First, Trustee's allegations do not, and as explained supra they cannot, constitute a conversion claim. Even if Debtor had taken steps to protect its customer list as a trade secret, its salespersons' use of their knowledge of the information contained in the list could have been limited only through legally valid, enforceable restrictive covenants. See Amerigas, 972 F.Supp. at 697. If Debtor had entered into such restrictive covenants with its former employees, Trustee would have an action against them because the Act expressly states that it does not affect such contractual duties or remedies. See O.C.G.A. § 10-1-767(b)(1).[12] Thus to the extent Debtor had restrictive covenants with its former salespersons, Trustee's allegations should have been stated as claims against them for use of information gained while employed in Debtor's sales force.
The second problem with Trustee's claim becomes apparent when the Court considers the fact that no evidence in the record indicates that Debtor ever entered into restrictive covenants with its former salespersons. Though in theory Trustee would have had a claim against Debtor's employees for use of information they gained while working for Debtor, he would have to base the claim on enforceable restrictive covenants, and Trustee has presented no evidence that Debtor had restrictive covenants with members of its sales force.
Summary judgment for Defendants on Trustee's allegations that they converted Debtor's customer base must be granted. This does not mean, however, that evidence of Defendants' transfer of Debtor's sales force to Fey is irrelevant to the issues remaining for trial. See O.C.G.A. § 10-1-767(b)(2).[13] Defendants' transfer of Debtor's sales force to Fey may support Trustee's allegation that they never intended to operate Debtor as a going concern and that Defendants only intended to *915 obtain Hercules' customer base and eliminate Hercules as a competitor of Fey. Furthermore, the fact that Defendants did not cause Debtor to take the steps necessary to protect its customer base may be evidence of Defendants' alleged breach of their fiduciary duties to Debtor. Of course, the Court will not consider or weigh such evidence until trial. Here, the Court holds only that though such evidence may be relevant to matters remaining for trial, that same evidence prevents Trustee from sustaining an action against Defendants for misappropriation of Debtor's customer base.
C. Question of fact remains as to whether Defendants converted inventory belonging to Debtor
In their Statement of Undisputed Facts, Defendants state that Debtor transferred $308,000.00 in inventory to Fey "at cost" when it shut down operations at its facility in Pelham, Georgia. (Def.'s st. Undisputed Facts at ¶ 86.) It is not entirely clear what Defendants mean when they say the inventory was transferred "at cost." Presumably Defendants mean they paid Debtor its cost for the materials, but Trustee has argued that Debtor was not paid.
The question presented would have been easily settled had Defendants pointed to evidence, or introduced evidence into the record, that Debtor received payment for the inventory, or otherwise received a credit offsetting any amount it might have owed other members of the Wedgestone group. Defendants would have thus shifted the burden to Trustee to come forward with evidence showing the contrary. FED.R.CIV.P. 56(e). Defendants have not met their burden, however, and summary judgment must be denied.
III. Certain allegations relevant to issues of material fact that remain for trial
Defendants have moved for summary judgment on Trustee's allegations of conspiracy, and they have moved to strike Trustee's pleadings regarding the value of its customer base and the value of 100,000 shares of Wedgestone Financial stock that Debtor purchased. The Court finds that Defendant's motion with respect to each of these should be denied. Trustee's action in conspiracy is appropriately pleaded, and the Trustee's valuations of the alleged customer base and the 100,000 shares of Wedgestone stock are relevant to issues of material fact remaining for trial.
A. Conspiracy is appropriately plead as an aggravating factor in civil actions
Defendants have misunderstood the holding of the case they cited, Savannah College of Art & Design, Inc. v. Sch. of Visual Arts of Savannah, Inc., 219 Ga. App. 296, 464 S.E.2d 895 (1995). The court in Savannah College did state that a civil conspiracy "`of itself furnishes no cause of action.'" 219 Ga.App. at 297, 464 S.E.2d at 896 (quoting Cook v. Robinson, 216 Ga. 328, 328-29, 116 S.E.2d 742, 744-45 (1960)). The meaning of this phrase, however, is not that conspiracy is improperly pleaded in a civil action, but that conspiracy alone is insufficient to support a civil action.
Unlike criminal conspiracy, which is a crime in itself, a civil conspiracy cannot be pleaded as the gravamen of a civil complaint. Nevertheless, conspiracy may be "pleaded and proved as aggravating the wrong of which the plaintiff complains, enabling him to recover in one action against all defendants as joint tortfeasors." Cook, 216 Ga. at 329, 116 S.E.2d at 745. Trustee's claim for conspiracy to defraud is thus appropriate, and Defendants' motion for summary judgment will be denied.
B. Evidence of customer base's value is relevant to essential element of damages in Trustee's remaining claims though no claim for misappropriation exists
As stated earlier in this opinion, Debtor has no claim for Defendants' misappropriation *916 of Debtor's customer base. Nevertheless, Trustee presents evidence valuing the customer base that may be relevant to the material issue of damages remaining in certain claims, including fraud and breach of fiduciary duties, that must be tried. Accordingly, though the Court grants summary judgment for Defendants on Trustee's claim for conversion of the customer base, the Court will not strike Trustee's pleadings regarding its value.
C. Material issue of fact remains regarding valuation of 100,000 shares of stock Debtor purchased from Wedgestone Financial
Defendants argue that Trustee has no basis upon which to avoid Debtor's payment of $100,000.00 for 100,000 shares of Wedgestone Financial stock. The gist of Defendants' argument is that because Wedgestone Financial's stock traded at $1.04 per share in November 1994, Debtor received reasonably equivalent value for the $100,000.00 it paid. Trustee presents evidence, however, that the trading price of Wedgestone Financial's stock fluctuated widely. Because the reasonably equivalent value of the 100,000 shares of stock Debtor purchased might have been considerably below the $100,000.00 paid, the stock's value is an issue of material fact for trial. Trustee's claim is thus appropriate, and the Court will not strike his pleadings with respect to it.
IV. The Court's discretion governs amendment of claims and joinder of defendants
Trustee has not made a request pursuant to Federal Rule of Civil Procedure 15, made applicable to adversary proceedings by Federal Rule of Bankruptcy Procedure 7015, to add new claims by amending his pleadings. Trustee will be allowed to amend his pleadings "only by leave of the court or by written consent of the adverse party; and leave shall be freely given [if] justice so requires." FED. R. CIV. P. 15. The Court will have broad discretion, depending upon the circumstances prevailing when, and if, Trustee moves to amend his pleadings to grant or deny his request. See Campbell v. Emory Clinic, 166 F.3d 1157, 1162 (11th Cir.1999). It would be premature for the court to rule at this time on any claims that Trustee may or may not wish to bring by amending his complaint without having first considered the requirements of justice with respect to the claim.
The Eleventh Circuit has stated that "[p]rejudice and undue delay are inherent in an amendment asserted after the close of discovery and after dispositive motions have been filed, briefed, and decided." Id. (citing Jameson v. Arrow Co., 75 F.3d 1528, 1534 (11th Cir.1996)). Thus, it may not be an abuse of the Court's discretion to deny any request to add claims that Trustee might submit subsequent to the rendering of this opinion simply because any such request would necessarily come after the disposition of this motion for partial summary judgment. This observation will be given its due weight should Trustee seek to amend his complaint, but justice may nevertheless require the Court to grant Trustee leave to amend his pleadings. It would be an abuse of the Court's discretion to dismiss at present any future claims Trustee may seek to add without having first considered the requirements of justice respecting them.
Similar considerations control the possible addition of other defendants. The applicable procedural rules are FED. R.BANKR.P. 7019, which adopts FED. R.CIV.P. 19. Given that the operative terminology in Rule 19 provides circumstances under which "[a] person . . . shall be joined as a party in the action," it may even be mandatory for the court to order an as yet undiscovered and unnamed defendant to be joined in this action. See FED.R.CIV.P. 19(a) (emphasis added). While it is unlikely that such a necessary defendant will be discovered, given that litigation in this case is in its latter stages *917 with discovery closed and dispositive motions filed, it is nevertheless premature for the Court to say that such a defendant does not exist. Therefore, Defendants' motion for summary judgment on the addition of other claims or defendants must be denied.
V. Defendants stand "ready, willing, and able" to turn Debtor's business records over at Trustee's request
Trustee does not oppose Defendants' motion for summary judgment with respect to the turnover of Debtor's business records, and Defendants have stated that they "remain ready, willing, and able" to turn business records of Debtor that they are holding over to Trustee at his request. (Def.'s Opening br. in Support of Motion at p. 5.) Given these conditions, Defendants' motion with respect to Count VII of the complaint will be granted.
Conclusion
Trustee cannot sustain his claims for tortious interference with Debtor's contractual and business relations, for conversion of $204,167.00 Debtor paid pursuant to contractual obligations, or for conversion of Debtor's customer base. With regard to these claims, summary judgment will be granted. Summary judgment will also be granted on Count VII for lack of opposition. Trustee's remaining claims, including his allegations of conspiracy and conversion of $308,000.00 in inventory raise issues of material fact. Also, his pleadings regarding the value of 100,000 shares of Wedgestone Financial stock and his pleadings regarding the value of Debtor's customer base are relevant to remaining issues of material fact. Summary judgment will be denied with regard to these matters.
NOTES
[1] MCB Corporation, Richard A. Bartlett, Jerry M. Seslowe, and Eric H. Lee were dismissed in the "Consent Order Dismissing Claims" issued July 12, 1999.
[2] The consent order of July 12, 1999 dismissed claims regarding accounting and insurance fees, as well.
[3] Wedgestone Automotive was a wholly-owned subsidiary of Wedgestone Financial. Though considerable reorganization of Wedgestone Financial has taken place since the petition of April 19, 1996, the Court will refer to Defendants as they existed on the date of the petition. All Defendants were either owners, officers, directors, or subsidiaries of Wedgestone Financial, or subsidiaries of its subsidiaries, or Defendants were entities having contractual relations with Wedgestone Financial, its subsidiaries or their subsidiaries, and were owned by major shareholders of Wedgestone Financial.
[4] Defendants acknowledge remaining questions of fact with regard to allegations of actual fraud, breach of fiduciary duties, voidable preferences, and fraudulent transfers.
[5] Before November 14, 1994, Fey was the automotive division of Standun, Inc. On November 14, 1994, Wedgestone Financial acquired Standun, Inc.'s automotive division assets and transferred them to Fey Automotive Products, Inc. On November 18, 1994, Wedgestone Financial created Wedgestone Automotive as a holding company for Wedgestone Financial's automotive industry assets.
[6] Wedgestone Partners is a general partnership with John C. Shaw, direct or indirect owner of 38.8 percent of Wedgestone Financial's stock, as a general partner. James J. Pinto owns one hundred percent of PFG Corporation's stock, and a percentage of Wedgestone Financial's stock, as well.
[7] Brady and Chattahoochee Leasing Corporation owned 90 percent of Hercules' outstanding stock.
[8] Fey's president, Defendant David L. Sharp, was also president of Wedgestone Automotive and Debtor. Accordingly, Sharp owed Debtor fiduciary duties though Fey did not.
[9] Such duties nevertheless existed. The defendant owed the plaintiff the duties of a co-adventurer, thus allowing an extra-contractual basis for the tort claim. Also, note that in Unified Services, the brokerage, deemed an agent, never had title to the money. The insurer, as the brokerage's principal, acquired title to the money immediately upon the brokerage's receipt of it.
[10] The court of appeals' analysis did not address the first element of conversion, but it based its holding that an action for conversion of money would lie for earmarked money on Unified Services, which in turn based its holding on Adler.
[11] Codified at O.C.G.A. §§ 10-1-760 to 10-1-767.
[12] O.C.G.A. § 10-1-767(b)(1) states that
(b) This article shall not affect:
(1) Contractual duties or remedies, whether or not based upon misappropriation of a trade secret; provided, however, that a contractual duty to maintain a trade secret or limit use of a trade secret shall not be deemed void or unenforceable solely for lack of a durational or geographical limitation on the duty[.]
[13] O.C.G.A. § 10-1-767(b)(2) states that
(b) This article shall not affect:
(2) Other civil remedies that are not based upon misappropriation of a trade secret[.]
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571 F.2d 582
Soefkerv.Massachusetts Mutual Life Ins. Co.
No. 76-2295
United States Court of Appeals, Sixth Circuit
2/15/78
1
W.D.Tenn.
AFFIRMED
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673 F.Supp. 262 (1987)
Henry Lee THOMAS, Plaintiff,
v.
Alvin RIDDLE, Sergeant Johnson, Three Unknown Members of the Tactical Unit of the East Chicago Police Department, James Peterson, John J. Grode, Marcellis J. Burk, Frank Braun, Charles Schenk, John Smith, William Behrens and Colin Simpson, Defendants.
No. 85 C 9032.
United States District Court, N.D. Illinois, E.D.
October 23, 1987.
*263 M. Fred Friedman, Chicago, Ill., for plaintiff.
Paul M. Sheridan, Asst. Corp. Counsel, Chicago, Ill., Karen Diamond, Asst. State's Atty., Chicago, Ill., for defendants.
MEMORANDUM OPINION AND ORDER
ASPEN, District Judge:
Plaintiff Henry Lee Thomas brought this action under 42 U.S.C. § 1983 (1982) against nine police officers and an Assistant States Attorney for violation of his civil rights as a result of his illegal arrest for a murder. Some of those defendants now seek to dismiss the complaint. Defendant Colin Simpson, an Assistant States Attorney for Cook County, has filed a motion to dismiss the complaint as to him on the basis of absolute immunity. Defendant Cook County Sheriff's Police Officers James Peterson, Frank Braun, Charles Schenk, John Smith and William Behrens ("the Cook County defendants") also seek dismissal of portions of the complaint under the doctrine of collateral estoppel. Finally, defendants Marcellis J. Burke and John J. Grode, City of Chicago Police Investigators, move this Court to dismiss the complaint as to them for failure to state a claim upon which relief can be granted, Fed.R.Civ.P. 12(b)(6), or, in the alternative, for an order requiring Thomas to file a more definite statement. For the reasons noted, we grant Simpson's motion in part and deny it in part; we deny the Cook County defendants' motion; and we grant Burke and Grode's alternative motion for a more definite statement.
FACTS[1]
We relate the facts briefly as they are pertinent to the instant motions. Thomas alleges that he was arrested without probable cause and without an arrest warrant by certain of the defendants in connection with a murder investigation. He contends that his car and house were also illegally searched without a warrant; that he was transported from Indiana to Illinois without an extradition hearing; that he was forced to confess by virtue of defendants' improper actions and in violation of his constitutional rights. Thomas filed a pretrial motion in his criminal case to suppress all the fruits of his illegal arrest. The state trial court determined that Thomas was arrested without probable cause and suppressed all physical evidence but not the confession on the grounds that it was sufficiently attenuated from the illegal arrest. Thomas was brought to trial, and the confession was used against him. He was convicted of murder and sentenced to 40 years and confined. His conviction was vacated and remanded for a new trial. The State, however, failed to bring the case within 120 days in violation of the Speedy Trial Act, and Thomas was released on May 2, 1985, seven years after his illegal arrest. This action followed.
Defendant Simpson
Defendant Simpson argues that we must dismiss all claims against him because he is entitled to absolute immunity as a prosecutor. In Imbler v. Pachtman, 424 U.S. 409, 426, 96 S.Ct. 984, 993, 47 L.Ed.2d 128 (1976) the Supreme Court held that prosecutors enjoy the same absolute immunity under § 1983 that the prosecutor enjoys at common law. The Court, however, left standing a line of decisions which had allowed only qualified immunity for prosecutors engaged in certain investigative activities. Id. One of the cases left standing was a Seventh Circuit case, Hampton v. *264 City of Chicago, 484 F.2d 602 (7th Cir. 1973), cert. denied, 415 U.S. 917, 94 S.Ct. 1413-14, 39 L.Ed.2d 471 (1974). In Hampton, 484 F.2d at 608, the Seventh Circuit distinguished quasi-judicial activities of prosecutors, which are entitled to absolute immunity, from "investigatory activities normally performed by lawmen, such as police officers," which were only entitled to a qualified immunity. The Seventh Circuit has recently reiterated this distinction, see Rakovich v. Wade, 819 F.2d 1393, 1398 n. 5 (7th Cir.1987); Henderson v. Lopez, 790 F.2d 44, 45 (7th Cir.1986). Simpson does not dispute this distinction but merely contends all of his activities were within the quasi-judicial mode. The complaint mentions Simpson three times. First, it alleges that "[d]uring all times mentioned herein, Colin Simpson was an Assistant States Attorney for the County of Cook, and was acting under color of the statutes and ordinances of the State of Illinois." (¶ 7). Next, it is charged that Thomas' arrest "was approved by defendants Simpson, Grode, Peterson, Burke, Braun, and Schenk, or in the alternative his arrest was ratified by defendants Simpson, Grode, Peterson, Burke, Braun and Schenk as part of defendant's investigation of the death of Terrell" (¶ 14).[2] Finally, Thomas alleges that "[a]t Niles, plaintiff was placed in an interrogation room and repeatedly questioned for more than twelve hours by various combinations of defendants Smith, Behrens, Peterson, Grode, Burke, Braun, Schenk and Simpson." (¶ 25). In deciding a motion to dismiss, we must take the allegations of the complaint as true and view them, as well as all reasonable inferences therefrom, in the light most favorable to the plaintiff. Ellsworth v. City of Racine, 774 F.2d 182, 184 (7th Cir.1985), cert. denied, 475 U.S. 1047, 106 S.Ct. 1265, 89 L.Ed.2d 574 (1986).
To the extent that Thomas' allegation (that Simpson approved or ratified Thomas' allegedly unconstitutional arrest) refers to Simpson giving legal advice as to the legality of the warrantless arrest of Thomas, Simpson is absolutely immune. In Henderson v. Lopez, 790 F.2d 44, 47 (7th Cir.1986), the Seventh Circuit held that a prosecutor is engaged in a quasi-judicial activity when advising law enforcement officials on legal issues. Id. Accordingly, Simpson is absolutely immune from liability for approving or ratifying Thomas' warrantless arrest. However, we find that the allegations as to the interrogation of Thomas raise an inference that Simpson's activities were investigatory in nature.[3] Thomas' allegation that Simpson took part in the twelve-hour marathon interrogation raises an inference that Simpson's activity was investigative in nature. At this point we lack the sufficient factual background to make the determination as to whether Simpson's participation in the interrogation was indeed investigatory, and thus protected *265 only with a qualified immunity, or whether it was in furtherance of a decision to initiate a prosecution against Thomas. Accordingly, the motion to dismiss the claim against Simpson for his participation in the interrogation is denied.
Cook County Defendants
The Cook County defendants move this Court to dismiss the allegations of Thomas' complaint that charge he was threatened or abused while in custody because the state trial court judge in Thomas' motion to suppress his confession found "that at no time were there any threats made to [Thomas] by any of the police officers involved." (Tr. at 22). In the suppression ruling, the state trial court judge also found that the confession was sufficiently attenuated from the illegal arrest so that it did not need to be suppressed. The Cook County defendants have not submitted the transcript of the state court proceedings and have only submitted seven pages of the transcript in which the judge denied Thomas' motion to suppress. It is therefore unclear under exactly which grounds Thomas sought to have his confession suppressed. The appellate court indicated that the factual finding of no physical abuse was merely one of the factors cited by the trial judge to support its factual finding that Thomas' confession was sufficiently attenuated from his illegal arrest so that it need not be suppressed. On appeal, the appellate court found the trial court's determination of attenuation to be "contrary to the manifest weight of the evidence." People v. Thomas, 123 Ill.App.3d 857, 866, 79 Ill.Dec. 278, 285, 463 N.E.2d 832, 839 (1st Dist.1984). This was so because, "[w]ith the exception of the absence of physical abuse, the very factors cited by the court as attenuating [were] found to have exacerbated the effect of the illegal arrest." Id. Accordingly, the lower court's judgment was reversed, and the case remanded for a new trial.
The Cook County defendants do not dispute the fact that the appellate court did not review the lower court's finding of no physical abuse or threats; rather, they argue that because it was not specifically reversed by the appellate court, Thomas should be bound by that finding. Under Illinois law,[4] in order for the doctrine of collateral estoppel to apply, there must have been a finding of a specific material and controlling fact in the former case, and it must conclusively appear that the issue of fact was so in issue that it was necessarily determined by the court rendering the judgment. If there is any uncertainty because more than one distinct issue of fact was presented, estoppel will not be applied. Case Prestressing Corp. v. Chicago College of Osteopathic Medicine, 118 Ill. App.3d 782, 785, 74 Ill.Dec. 382, 386, 455 N.E.2d 811, 815 (1st Dist.1983). A party invoking collateral estoppel must not only plead the former action as a bar, but must also prove the existence and character of the former judgment as well as its legal effect. Edwards v. City of Quincy, 124 Ill.App.3d 1004, 80 Ill.Dec. 142, 146, 464 N.E.2d 1125, 1129 (4th Dist.1984). This burden of proof is of clear and convincing evidence. Lester v. Arlington Heights Federal Savings & Loan, 130 Ill.App.3d 233, 239, 85 Ill.Dec. 619, 623, 474 N.E.2d 33, 37 (2d Dist.1985).
Thomas argues there can be no collateral estoppel effect to the trial court's finding of no threats or abuse because in Illinois if there is any discrepancy between the trial and reviewing court, the "res judicata effect applies to the reviewing court's decision." Edwards v. Quincy, 124 Ill. App.3d 1004, 1013, 80 Ill.Dec. 142, 149, 464 N.E.2d 1125, 1132 (4th Dist.1984). Accordingly, Thomas argues that, because the lower court's decision not to suppress his confession was reversed, all findings made by the trial court are no longer res judicata. We could find no Illinois cases which addressed the specific situation in this case, that is, where a reviewing court reverses a *266 trial court's decision on one ground while not addressing the other grounds. However, it is clear under Illinois law that if the reviewing court in this case had affirmed on only one ground and declined to rule on the other grounds as unnecessary to its decision, those grounds would no longer be entitled to collateral estoppel effect. Reighley v. Continental Illinois National Bank & Trust, 323 Ill.App. 479, 489, 56 N.E.2d 328, 332 (1st Dist.1944), aff'd, 390 Ill. 242, 61 N.E.2d 29 (1945) ("we follow the uniform rule that our failure to pass upon the trial court's finding as unnecessary to our decision, does not leave that finding res judicata between the parties.") Thus, it would be inconsistent to have a different rule apply to situations where the reviewing court reverses on only one ground and does not address the other grounds. Moores states that when a judgment is reversed by an appellate court on a single ground and remanded with the other determinations of the trial court left intact; the unreversed determinations of the trial court are generally adhered to on remand, but this is an application of the doctrine of law of the case rather than collateral estoppel. 1B J. Moore, J. Lucas & T. Currier, Moores Federal Practice ¶ 0.416[2] (2d Ed. 1984). This is because a judgment that has been vacated, reversed or set aside on appeal is thereby deprived of all conclusive effect, both as to res judicata and as to collateral estoppel. Id. This is the situation in the present case. The appellate court reversed the trial court's denial of the suppression motion on the grounds that the factors cited by the lower court, other than the absence of physical abuse, were contrary to the weight of the evidence but did not specifically consider whether the trial court's finding of no physical abuse was also against the weight of the evidence. Accordingly, we find that the trial court's finding of no physical abuse or threats to Thomas is not entitled to collateral estoppel effect.[5]
Accordingly, because we find Thomas is not precluded by collateral estoppel from relitigating the issue of whether he was subjected to physical or psychological abuse in an effort to obtain his confession, we deny the Cook County defendants' motion for partial summary judgment.
Defendants Burke and Grode
The two defendant Chicago Police Investigators Burke and Grode seek to have Thomas' complaint dismissed or, in the alternative, that this Court require Thomas to file a more definite statement to which they can respond. Burke and Grode did not file a memorandum in support of their motion as required by Local Rule 13(b). "Failure to file a supporting memorandum ... shall not be deemed to be a waiver of the motion ... but the court on its own motion or that of a party may strike the motion...." Local Rule 13(b). The purpose of such a rule is apparent in this case. When Thomas filed its response to Burke and Grode's motion which was filed without a memorandum in support, he was essentially forced to speculate as to the nature and legal grounds of Burke and Grode's objections to his complaint. Burke and Grode then filed a reply to Thomas' response which stated they did not file a memorandum in support because "their motion is so basic that they did not think this Honorable Court would need ... a memorandum...." Although the alleged *267 deficiencies of Thomas' complaint may be obvious to Burke and Grode, they are not so obvious to this Court. Furthermore, the purpose of a detailed memorandum in support is not only to assist this Court to decide the merits, but also to apprise the responding party of the grounds in support so that they may respond to each specific ground. We now have a reply memorandum raising numerous issues to which Thomas has not had a chance to reply. Thomas did, however, mention in his response that he thought that at least one paragraph of his complaint could be amended to more specifically allege the actions of Burke and Grode. Accordingly, we direct Thomas to amend his complaint to include that specific allegation and to amend it further to attempt to satisfy those issues raised by Burke and Grode's reply. If Burke and Grode are dissatisfied with the amended complaint, they may file a second motion to dismiss and a memorandum in support with citations to legal authority justifying their position.
Accordingly, pursuant to our discussion above, we strike defendants Burke and Grode's motion to dismiss and direct Thomas to file an amended complaint within ten days of this order.
In conclusion, we grant in part and deny in part Simpson's motion to dismiss; we deny the Cook County defendants' motion to dismiss portions of the complaint under the doctrine of collateral estoppel; and finally, we strike defendants Burke and Grode's motion to dismiss but grant their motion for a more definite statement. Accordingly, Thomas is directed to file an amended complaint within ten days of this order. It is so ordered.
NOTES
[1] For purposes of this motion to dismiss, we take all allegations of the complaint as true and view all reasonable inferences therefrom in the light most favorable to the plaintiff.
[2] We note that according to the Illinois Appellate Court opinion in the underlying case, People v. Thomas, 123 Ill.App.3d 857, 860, 79 Ill.Dec. 278, 281, 463 N.E.2d 832, 835 (1st Dist.1984), Simpson's only participation in the interrogation was to be present when Thomas gave the inculpatory statement after the interrogation session. However, as this is a motion to dismiss, we examine only the allegations of the complaint.
[3] We also find that there could be an inference that his activities were all "in furtherance of a decision to initiate prosecution, and were therefore quasi-judicial in nature...." Joseph v. Patterson, 795 F.2d 549, 555 (6th Cir.1986) (trial court decision to dismiss complaint against prosecutor for his alleged interrogation of witness on grounds of absolute immunity remanded for development of the record to determine whether the interrogation was in furtherance of a decision to prosecute), cert. denied, ___ U.S. ___, 107 S.Ct. 1910, 95 L.Ed.2d 516 (1987); see also Myers v. Morris, 810 F.2d 1437, 1451 (8th Cir.1987) (Prosecutor absolutely immune for role in interviewing victims because it was an "integral part of her advocatory functions, i.e. her ongoing prosecutorial responsibilities to decide whom to charge and to prepare for the presentation of her cases."); Forsyth v. Kleindienst, 599 F.2d 1203 (3d Cir.1979), cert. denied 453 U.S. 913, 101 S.Ct. 3147, 69 L.Ed.2d 997 (1981) (If Attorney General's authorization of warrantless wiretap was made in attempt to secure information to determine whether to initiate a criminal prosecution, then he was entitled to absolute immunity. Case remanded to district court for development of the record), cert. denied, 453 U.S. 913, 101 S.Ct. 3147, 69 L.Ed.2d 997 (1981). However, as this is a motion to dismiss, we make the inferences in favor of the plaintiff.
[4] Because we are to give the same preclusive effect to state court judgments that those judgments would be given in the courts of the states from which they emerged, Marrese v. American Academy of Orthopaedic Surgeons, 470 U.S. 373, 105 S.Ct. 1327, 84 L.Ed.2d 274 (1985), we must look to Illinois law to determine the collateral estoppel effect of the state court finding.
[5] Even if we did find that the trial court's statements concerning physical abuse or threats could operate with collateral estoppel effect, despite the appellate court's reversal of the ultimate issue of fact, that is whether the confession was sufficiently attenuated from the illegal arrest, it would still not apply to any claims Thomas may have for excessive force under the Fourth Amendment because it is a different factual determination whether the police used unreasonable force during his arrest. Assuming without deciding that Thomas was not a pretrial detainee, the Fourth Amendment standard for excessive force in arrest situations would apply. See Lester v. Chicago, 830 F.2d 706, 713 n. 7 (7th Cir.1987). The collateral estoppel effect would only apply to the part of his claim under the Fifth Amendment that the defendants sought to obtain his confession by way of physical or psychological threats, see, e.g. S. Nahmod, Civil Rights and Civil Liberties Litigation § 3.05 (3d Ed.1986), and not to his claim that as a consequence of defendants' violation of his Fourth Amendment right, his illegal arrest, he was improperly forced to confess.
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275 N.J. Super. 79 (1994)
645 A.2d 787
MORTGAGELINQ CORPORATION AND FEDERAL HOME LOAN MORTGAGE CORPORATION, PLAINTIFFS-APPELLANTS,
v.
COMMONWEALTH LAND TITLE INSURANCE COMPANY; EDWARD CAVALLARO; CONTINENTAL TITLE INSURANCE COMPANY; ELIZABETH KEHOE; LAWYERS TITLE INSURANCE CORPORATION; MARKLAND TITLE SERVICES, INC.; AND ROBERTA A. RANKIN, DEFENDANTS-RESPONDENTS.
Superior Court of New Jersey, Appellate Division.
Argued June 13, 1994.
Decided July 11, 1994.
*80 Before Judges MUIR, Jr., THOMAS, and LEVY.
J. Philip Kirchner argued the cause for appellants (Flaster, Greenberg, Mann & Wallenstein, attorneys; Jeffrey Adler, of Adler & O'Halloran, of counsel; Mr. Kirchner, on the brief).
Maureen S. Binetti argued the cause for respondent Lawyers Title Ins. Corp. (Wilentz, Goldman & Spitzer, attorneys; Robert Mahoney and Ms. Binetti, of counsel and on the brief).
Michael N. Onufrak argued the cause for respondent Commonwealth Land Title Ins. Co. (White and Williams, attorneys; Mr. Onufrak, on the joint brief).
Joshua Sarner argued the cause for respondent Continental Title Ins. Co. (Duane, Morris & Heckscher, attorneys; Steven M. Janove and Mr. Sarner, on the joint brief).
Marc S. Raspanti argued the cause for respondent Kehoe (Miller, Alfano & Raspanti, attorneys; Ann Weikers and Mr. Raspanti, admitted pro hac vice, on the joint brief).
John Wendell Beavers & Associates, attorneys for respondent Edward Cavallaro (John Wendell Beavers, on the joint brief).
Respondents Markland Title Services, Inc., and Roberta A. Rankin did not participate in the appeal.
PER CURIAM.
Plaintiffs appeal from an order, as modified, dismissing their complaints with prejudice on the ground the Entire Controversy Doctrine bars litigation of their claims against defendants in this state. The pertinent facts are set forth in the trial court's reported opinion. See Mortgagelinq Corp. v. Commonwealth Land Title Ins. Co., 262 N.J. Super. 178, 620 A.2d 456 (Law *81 Div. 1992). After review of the record, the applicable law, and the briefs of counsel, we affirm essentially for the reasons expressed by Judge Weinberg in that reported decision. We do so with brief comments.
Even though the result here extends the preclusive effect of the Entire Controversy Doctrine for failure to join a non-party to a judgment of a jurisdiction which apparently does not employ the doctrine for such failures, plaintiffs' choice and successful efforts to keep defendants out of the prior case, which entailed claims germane to these defendants, dictate against providing them with a New Jersey forum to litigate their claims. See Giudice v. Drew Chemical Corp., 210 N.J. Super. 32, 41, 509 A.2d 200 (App.Div.), certif. denied but remanded on other grounds, 104 N.J. 465, 517 A.2d 448, 449 (1986). Cf. Cogdell v. Hospital Center at Orange, 116 N.J. 7, 560 A.2d 1169 (1989).
"The doctrine [is] an integral and component part of this state's approach to the resolution of disputes or controversies...." Crispin v. Volkswagenwerk, A.G., 96 N.J. 336, 350, 476 A.2d 250 (1984) (Handler, J., concurring). "[C]onsiderations of fairness and justness extend to those potentially affected persons who should, because of their stake in a given proceeding, or by virtue of their potential liability, be joined in a single action and given the opportune forum to defend their interests." Id. at 353, 476 A.2d 250. The doctrine then is one of judicial fairness and should be invoked in that spirit. Id. at 353-54, 476 A.2d 250.
Plaintiffs have already secured a judgment against those who concocted and carried out the scheme that defrauded Mortgagelinq of significant funds. Those parties were, as defense counsel characterized them, the "real bad guys." Yet, their absence in this jury-demand case projects the defendants as totally liable for the financial calumny suffered by Mortgagelinq. (We note there is no dispute Federal Home Loan Mortgage Corporation has total recourse against Mortgagelinq on the subject mortgages purchased.) Plaintiffs, principally Mortgagelinq, elected to proceed in a bifurcated manner while totally aware of claims against the *82 defendants in this case. The prior forum was the opportune forum for these defendants. Under the circumstances and given our strong policy against such a selective litigating process, we conclude plaintiffs should be denied access to New Jersey courts as a forum to litigate claims they knew of and chose not to pursue in the prior litigation.
Affirmed.
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ACCEPTED
03-14-00637-CR
4428425
THIRD COURT OF APPEALS
AUSTIN, TEXAS
3/9/2015 4:49:20 PM
JEFFREY D. KYLE
CLERK
No. 03-14-00637-CR
In the FILED IN
3rd COURT OF APPEALS
COURT OF APPEALS AUSTIN, TEXAS
For the 3/9/2015 4:49:20 PM
THIRD SUPREME JUDICIAL DISTRICT JEFFREY D. KYLE
at Austin Clerk
______________________________________
On Appeal from the 403rd Judicial District Court of
Travis County, Texas
Cause Number D-1-DC-12-302227
______________________________________
CHRISTOPHER BRIAN ROBERTS, Appellant
v.
THE STATE OF TEXAS, Appellee
_____________________________________
APPELLANT’S MOTION FOR EXTENSION OF TIME
______________________________
TO THE HONORABLE JUSTICES OF THE THIRD COURT OF
APPEALS:
COMES NOW, Christopher Brian Roberts, Appellant herein, by and
through his attorney of record, Kristen Jernigan, and files this, his Motion for
Extension of Time. In support of said motion, Appellant would show the Court
the following:
1. Appellant’s brief is due in this case on March 9, 2015.
2. Appellant seeks an extension of sixty days in which to file his brief,
making his brief due on or before May 8, 2015.
3. In the past thirty days, the undersigned has filed briefs in the Third
Court of Appeals in the cases of: Joe Derek Carr v. The State of Texas, No.
03-14-00234-CR; Joe Derek Carr v. The State of Texas, No. 03-14-00235-CR; and
Fred Robert Schneider v. The State of Texas, No. 03-14-00189-CR. Additionally,
the undersigned filed a brief in the Tenth Court of Appeals in the case of Wesley
Theodore Burns v. The State of Texas, No. 10-14-00053-CR. Further, the
undersigned filed a Petition for Writ of Habeas Corpus in Cause Number
08-1623-K26, Ex parte Adam Adel Hayek. Finally, the undersigned has made
numerous court appearances and has undertaken the tasks associated with the
management of a solo attorney practice.
4. The undersigned has filed one previous motion for extension of time
in this case.
5. For the reasons set forth above, Appellant respectfully requests that he
be granted an extension of sixty days so that his brief in this case will now be due
on May 8, 2015.
PRAYER
WHEREFORE, PREMISES CONSIDERED, Appellant respectfully
requests that this Court grant his Motion for Extension of Time.
Respectfully submitted,
_______/s/__Kristen Jernigan______
KRISTEN JERNIGAN
State Bar Number 90001898
207 S. Austin Ave.
Georgetown, Texas 78626
(512) 904-0123
(512) 931-3650 (fax)
[email protected]
CERTIFICATE OF SERVICE
The undersigned hereby certifies that a true and correct copy of the
foregoing Appellant’s Motion for Extension of Time has been mailed to the Travis
County District Attorney’s Office, P.O. Box 1748, Austin, Texas, 78767, on March
9, 2015.
__/s/ Kristen Jernigan__________________
Kristen Jernigan
2
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14 Cal.4th 544 (1996)
THE PEOPLE, Plaintiff and Respondent,
v.
DAMIEN SCOTT et al., Defendants and Appellants.
Docket No. S048572.
Supreme Court of California.
December 19, 1996.
*545 COUNSEL
Gordon S. Brownell and Robert E. Boyce, under appointments by the Supreme Court, and Laura Schaefer for Defendants and Appellants.
Daniel E. Lungren, Attorney General, George Williamson, Chief Assistant Attorney General, Carol Wendelin Pollack, Assistant Attorney General, Linda C. Johnson and Sharon Wooden Richard, Deputy Attorneys General, for Plaintiff and Respondent.
OPINION
BROWN, J.
A jury convicted defendants Damien Scott and Derrick Brown of various crimes for their part in a drive-by shooting which resulted *546 in the death of one person and injury to several others. We must decide in this case whether the doctrine of transferred intent may be used to assign criminal liability to a defendant who kills an unintended victim when the defendant is also prosecuted for the attempted murder of an intended victim.
Under the classic formulation of California's common law doctrine of transferred intent, a defendant who shoots with the intent to kill a certain person and hits a bystander instead is subject to the same criminal liability that would have been imposed had "`the fatal blow reached the person for whom intended.'" (People v. Suesser (1904) 142 Cal. 354, 366 [75 P. 1093] (hereafter Suesser).) In such a factual setting, the defendant is deemed as culpable as if he had accomplished what he set out to do.
Here, it was established at trial that defendants fired an automatic weapon into a public park in an attempt to kill a certain individual, and fatally shot a bystander instead. The case presents the type of factual setting in which courts have uniformly approved reliance on the transferred intent doctrine as the basis of determining a defendant's criminal liability for the death of an unintended victim. Consistent with a line of decisions beginning with Suesser nearly a century ago, we conclude that the jury in this case was properly instructed on a transferred intent theory of liability for first degree murder.
Moreover, defendants' exposure to a murder conviction based on a transferred intent theory of liability was proper regardless of the fact they were also charged with attempted murder of the intended victim. Contrary to what its name implies, the transferred intent doctrine does not refer to any actual intent that is "used up" once it has been employed to convict a defendant of a specific intent crime against an intended victim. Rather, the doctrine of transferred intent connotes a policy. As applied here, the transferred intent doctrine is but another way of saying that a defendant who shoots with an intent to kill but misses and hits a bystander instead should be punished for a crime of the same seriousness as the one he tried to commit against his intended victim.
In this case, defendants shot at an intended victim, missed him, and killed another person instead. In doing so, defendants committed crimes against two persons. Defendants' criminal liability for causing the death of the unintended victim may be determined on a theory of transferred intent in accordance with the classic formulation of the doctrine under California common law. Their criminal liability for shooting at the intended victim with an intent to kill is that which the law assigns.
The Court of Appeal correctly concluded that the trial court's instruction to the jury on transferred intent as it related to the charge of murder was *547 proper. We affirm the judgment of the Court of Appeal affirming, with minor modification, the judgments of conviction.
I. BACKGROUND
In May 1991, Calvin Hughes became the target of a family vendetta. While Hughes and Elaine Scott were romantically involved, Hughes and his sister, Eugenia Griffin, shared Scott's apartment. After the bloom faded from the romance, relations between Hughes and Scott became increasingly acrimonious and one night Hughes and Scott got into a physical altercation. Defendant Damien Scott and codefendant Derrick Brown, Scott's adult sons, came to her aid and forced Hughes and Griffin out of the apartment.
A few days later, Hughes borrowed Griffin's car and, accompanied by his friend Gary Tripp, returned to Scott's place to retrieve his personal belongings. When Scott attempted to bar his entry, Hughes forced his way into the apartment and gathered his things. On his way out, he heard Scott threaten to page her sons.
Hughes and Tripp drove to Jesse Owens Park in South Los Angeles to meet Griffin. Nathan Kelley and his teenage son, Jack Gibson, had parked nearby. As Hughes stood beside Kelley's car, talking to him through the open window, three cars entered the park. Gunfire erupted. Defendant Scott and codefendant Brown, riding in the first car, sprayed the area with bullets. Hughes took cover behind the front bumper of Kelley's car. When there was a lull in the shooting, Hughes sprinted toward the park gym. A renewed hail of gunfire followed him. A bullet hit the heel of his shoe. The shooting stopped when Hughes took cover behind the gym. The gunmen left the park.
In the aftermath, the victims discovered both Kelley's and Griffin's vehicles had been riddled with bullets; Gary Tripp had been shot in the leg and buttocks; and Jack Gibson had been killed when a bullet struck him in the head.
In an amended multicount information, defendant Scott and codefendant Brown were jointly charged with the murder of Jack Gibson (Pen. Code, § 187, subd. (a); all further statutory references are to this code); attempted murder of Calvin Hughes and Gary Tripp (§§ 664, 187, subd. (a));[1] and assault with a firearm on Calvin Hughes, Nathan Kelley, Gary Tripp, and Eugenia Griffin. (§ 245, subd. (a)(2).) As to each count, the information *548 alleged defendants personally used a firearm within the meaning of section 12022.5, subdivision (a)(1). It was further alleged, as to the murder and attempted murder counts, that defendants were armed with a firearm within the meaning of section 12022, subdivision (a)(1).
At a second trial following mistrial due to a deadlocked jury, the prosecutor sought to establish that Jack Gibson was the unintended victim of defendants' premeditated and deliberate intent to kill Calvin Hughes. At the prosecution's request, the trial court instructed the jury on transferred intent using a modified version of CALJIC No. 8.65. The court stated as follows: "As it relates to the charge of murder, where one attempts to kill a certain person, but by mistake or inadvertence kills a different person, the crime, if any, so committed is the same as though the person originally intended to be killed, had been killed." The jury was also instructed on second degree express malice and implied malice murder.
The jury convicted both defendants of second degree murder, two counts of attempted murder, and two counts of assault with a firearm. It found true all of the firearm allegations. The jury acquitted defendants of two counts of assault with a firearm that had been charged in the alternative to the counts of attempted murder.
Defendants appealed their convictions and, in a published decision, the Court of Appeal modified and affirmed the judgments of conviction. In relevant part, the Court of Appeal rejected defendants' argument that a transferred intent instruction only applies when the prosecution elects to charge the defendant with first degree murder of the unintended victim, and not also with attempted murder of the intended victim.
We granted defendant Scott's petition for review.
The jury convicted defendants of second degree murder for fatally shooting the unintended victim. It cannot be determined from the verdicts, however, whether the jury relied on the transferred intent instruction to convict defendants of second degree murder on an express malice theory, or whether it reached that verdict through a finding of implied malice. Consequently, it is necessary to decide whether a transferred intent instruction was properly given in this case.
II. DISCUSSION
The common law doctrine of transferred intent was applied in England as early as the 16th century. (See The Queen v. Saunders & Archer (1576) 75 *549 Eng.Rep. 706, 708 ["And when death followed from his act, although it happened in another person than her whose death he directly meditated, yet it shall be murder in him...."].) The doctrine became part of the common law in many American jurisdictions, including that of California, and is typically invoked in the criminal law context when assigning criminal liability to a defendant who attempts to kill one person but accidentally kills another instead. (See 1 LaFave & Scott, Substantive Criminal Law (1986) § 3.12(d), p. 399; Perkins & Boyce, Criminal Law (3d ed. 1982) § 8, p. 921, fn. 1.) Under such circumstances, the accused is deemed as culpable, and society is harmed as much, as if the defendant had accomplished what he had initially intended, and justice is achieved by punishing the defendant for a crime of the same seriousness as the one he tried to commit against his intended victim. (Gladden v. State (1974) 273 Md. 383 [330 A.2d 176, 188]; People v. Czahara (1988) 203 Cal. App.3d 1468, 1474 [250 Cal. Rptr. 836] (hereafter Czahara) [doctrine of transferred intent used to reach what is uniformly regarded as just result]; see also Ritz, Felony Murder, Transferred Intent, and the Palsgraf Doctrine in the Criminal Law (1959) 16 Wash. & Lee L.Rev. 169, 171.) Under the classic formulation of the common law doctrine of transferred intent, the defendant's guilt is thus "exactly what it would have been had the blow fallen upon the intended victim instead of the bystander." (40 Am.Jur.2d, Homicide, § 11, p. 302; see also State v. Clark (1898) 147 Mo. 20 [47 S.W. 886, 888] [indictment should be drawn as though decedent was person at whom shot was fired]; see also 4 Blackstone, Commentaries 201.)
In California, the transferred intent doctrine was first addressed in Suesser, supra, 142 Cal. 354. The defendant in that case was convicted of first degree murder and sentenced to death for fatally shooting an individual under the erroneous belief he was firing at a different person named Allen, whom the defendant deliberately and with premeditation intended to kill. (Id. at p. 365.) On appeal, the defendant argued the trial court erred in refusing his request to instruct the jury that malice must exist towards the person actually killed, and that if the defendant shot the deceased erroneously believing him to be Allen, he was guilty of only second degree murder. The trial court instructed instead in accordance with the common law doctrine of transferred intent, explaining to the jury that the defendant was guilty of the same degree of murder as if he had killed Allen instead of the deceased. (Ibid.)
Persuaded by the reasoning of commentators and the weight of authority from other jurisdictions, Suesser held that the common law doctrine of transferred intent survived the enactment of California's murder statute. (Suesser, supra, 142 Cal. at pp. 366-367.) The opinion in Suesser does not expressly state the rationale behind the rule of transferred intent. One of the *550 out-of-state decisions cited by the Suesser court did so succinctly, however. In State v. Murray (1884) 11 Or. 413 [5 P. 55], the defendant was convicted of first degree murder for killing a bystander in an attempt on the life of another person. The Oregon Supreme Court affirmed the judgment because the defendant "exhibited the same malignity and recklessness in the one event he would have displayed in the other, and the consequences to society are just as fearful." (Id. at p. 60.)
Suesser, supra, 142 Cal. 354, and a number of other California decisions present the classic "bad aim" cases in which a defendant who attempts to kill one individual and inadvertently kills a bystander instead is convicted of murder on the theory of transferred intent. Courts in these cases have uniformly rejected the defendants' argument that their convictions were based on insufficient evidence of intent to kill. (See People v. Sutic (1953) 41 Cal.2d 483, 491-492 [261 P.2d 241] [first degree murder of child inadvertently killed in dispute over egg bill]; People v. Clayton (1967) 248 Cal. App.2d 345, 349 [56 Cal. Rptr. 413] [second degree murder of bystander killed in racially motivated attempt on life of pedestrian]; People v. Walker (1946) 76 Cal. App.2d 10, 14 [172 P.2d 380] [first degree murder of bystander killed inadvertently when pool hall argument escalated into violence].) (1) Here, the evidence adduced at trial indicates that defendants shot at an intended victim, missed him, and killed another person instead. Consistently with Suesser and its progeny, we conclude that in light of this evidence, the trial court properly instructed the jury according to CALJIC No. 8.65 that "[w]hen one attempts to kill a certain person, but by mistake or inadvertence kills a different person, the crime, if any, so committed is the same as though the person originally intended to be killed, had been killed."
Nor is application of the transferred intent doctrine under these circumstances foreclosed by the prosecutor having charged defendants with attempted murder of the intended victim. Contrary to what its name implies, the transferred intent doctrine does not refer to any actual intent that is capable of being "used up" once it is employed to convict a defendant of a specific intent crime against the intended victim.
Courts and commentators have long recognized that the notion of creating a whole crime by "transferring" a defendant's intent from the object of his assault to the victim of his criminal act is, as Dean Prosser aptly describes it, a "bare-faced" legal fiction. (Prosser, Transferred Intent (1967) 45 Tex. L.Rev. 650, 650; see Czahara, supra, 203 Cal. App.3d at p. 1474; see also Husak, Transferred Intent (1996) 10 Notre Dame J.L., Ethics & Pub. Pol'y 65, 83-86; Ritz, Felony Murder, Transferred Intent, and the Palsgraf Doctrine *551 in the Criminal Law, supra, 16 Wash. & Lee L.Rev. at p. 171; People v. Calderon (1991) 232 Cal. App.3d 930, 935 [283 Cal. Rptr. 833] (hereafter Calderon).) The legal fiction of transferring a defendant's intent helps illustrate why, as a theoretical matter, a defendant can be convicted of murder when she did not intend to kill the person actually killed. The transferred intent doctrine does not, however, denote an actual "transfer" of "intent" from the intended victim to the unintended victim. (Cf. Prosser, Transferred Intent, supra, at p. 653.) Rather, as applied here, it connotes a policy that a defendant who shoots at an intended victim with intent to kill but misses and hits a bystander instead should be subject to the same criminal liability that would have been imposed had he hit his intended mark. (Hall, General Principles of Criminal Law (2d ed. 1960) p. 145.) It is the policy underlying the doctrine, rather than its literal meaning, that compels the conclusion that a transferred intent instruction was properly given in this case.
Conversely, reliance on a transferred intent theory of liability for the first degree murder of the unintended victim did not prevent the prosecutor from also charging defendants with attempted murder of the intended victim. As previously recounted, defendants shot at an intended victim, missed him, and killed another individual instead. In their attempt to kill the intended victim, defendants committed crimes against two persons. They may be held accountable for the death of the unintended victim on a theory of transferred intent. Their criminal liability for attempting to kill the intended victim is that which the law assigns, here, in accordance with the attempted murder statute, sections 664 and 187, subdivision (a).
Defendant Scott argues that when an accused is charged with attempted murder of the intended victim, and transferred intent is used to assign a defendant's liability for the killing of an unintended victim, the defendant is being prosecuted as if he intended to kill two people rather than one. Defendant asserts that, under these circumstances, transferred intent should not be applied. He finds support for this proposition in People v. Birreuta (1984) 162 Cal. App.3d 454 [208 Cal. Rptr. 635] (hereafter Birreuta), where the court stated that a murderer who premeditates and deliberates two killings is more culpable, and should be punished more severely, than the murderer who intends to kill only one victim and inadvertently kills another. (Id. at pp. 460-461; see also Czahara, supra, 203 Cal. App.3d at p. 1474 [noting application of transferred intent resulted in defendant being punished in same manner as if he actually intended to kill both victims]; Calderon, supra, 232 Cal. App.3d at p. 937 [same].)
In Birreuta, supra, 162 Cal. App.3d 454, the defendant was convicted of two counts of first degree murder for fatally shooting both an intended and *552 an unintended victim. The court reversed the conviction that was based on the theory of transferred intent, holding that when the intended victim is killed, it is unnecessary to rely on the fiction of transferred intent. According to the court, the defendant's premeditation and deliberation can be directly and fully employed in prosecuting the first degree murder of the intended victim. (Id. at p. 460.)
The Birreuta court viewed killers who premeditatedly and deliberately kill two people as more culpable than those who only intend to kill one person and mistakenly kill another in the attempt. The court noted that when the transferred intent doctrine is applied to hold the latter accountable for the accidental killing as a first degree murder, this distinction in culpability disappears. (Birreuta, supra, 162 Cal. App.3d at p. 460.)
We observe that although application of the transferred intent doctrine in the classic bad aim cases has been consistent, in cases involving crimes relating to both intended and unintended victims, reliance on the doctrine to assign criminal liability has led to mixed results. Some courts simply apply the rule of Suesser without addressing the question whether the death of, or injury to, the intended as well as the unintended victim requires a different analysis. (See, e.g., People v. Leslie (1964) 224 Cal. App.2d 694, 704 [36 Cal. Rptr. 915] [second degree murder of unintended victim via transferred intent; assault with intent to commit murder of intended victim]; People v. Pivaroff (1934) 138 Cal. App. 625, 628 [33 P.2d 44] [first degree murder of unintended victim on transferred intent theory; assault with intent to commit murder on intended victim].) Other courts acknowledge the potential for analytical distinctions but reach conflicting resolutions. The court in People v. Carlson (1974) 37 Cal. App.3d 349 [112 Cal. Rptr. 321] stated, in dictum, that transferred intent "applies even though the original object of the assault is killed as well as the person whose death was the accidental or the unintended result of the intent to kill the former." (Id. at p. 357.) The court in Birreuta, supra, 162 Cal. App.3d 454, expressed a contrary view, holding the transferred intent doctrine did not apply when both intended and unintended victims are killed. (Id. at pp. 460-461; cf. Calderon, supra, 232 Cal. App.3d at pp. 936-937 [under reasoning of Birreuta, transferred intent inapplicable when single act alleged to be attempt on two lives]; Czahara, supra, 203 Cal. App.3d at p. 1474 [same].)
Because the facts of the case presented here do not involve the fatal shooting of both an intended and unintended victim, we have no occasion to determine whether Birreuta's reasoning or its conclusion is correct, and we decline to express a view on that decision. As previously discussed, the evidence at trial in this case was that defendants' attempt to kill one person *553 resulted in the killing of an innocent bystander. Under these circumstances, Suesser and its progeny have uniformly applied the common law doctrine of transferred intent to assign a defendant's criminal liability for the killing of the unintended victim. Consistent with the line of decisions beginning with Suesser nearly a century ago, because defendants shot at one person with an intent to kill, missed him, and killed a bystander instead, they may be held accountable for a crime of the same seriousness as the one they would have committed had they hit their intended target.
Defendant Scott raises two additional arguments. He contends first the trial court erred by instructing the jury the transferred intent doctrine applied to the charge of attempted murder of Gary Tripp. As the Court of Appeal correctly noted, however, the trial court did not give such an instruction. According to the transcript, when instructing the jury on count 1, the murder of Jack Gibson, the trial court first explained the elements of murder. The court then defined first and second degree murder. Following these explications of the law, the trial court instructed the jury on the transferred intent doctrine "[a]s it relates to the charges of murder...." The court then instructed the jury on the elements of attempted murder.
The record makes clear the trial court's transferred intent instruction was given in relation to the charge of murder in count 1. The jury could not have reasonably understood the instruction to have any application to the counts relating to attempted murder. Defendant Scott's claim is unsupported by the record and is therefore rejected.
Defendant Scott also contends the trial court erred in instructing the jury on the doctrine of transferred intent in connection with the counts charging assault with a firearm on Calvin Hughes, Nathan Kelley, Gary Tripp, and Eugenia Griffin. Defendant raises this argument for the first time in his opening brief.
California Rules of Court, rule 29(b)(1) provides that, as a matter of policy, this court generally will not consider "any issue that could have been but was not timely raised in the briefs filed in the Court of Appeal." In the Court of Appeal, defendant did not raise the issue whether a transferred intent instruction was properly given as it related to the assault charges. We therefore do not address his contention here. (Cf. People v. Bransford (1994) 8 Cal.4th 885, 893, fn. 10 [35 Cal. Rptr.2d 613, 884 P.2d 70]; People v. Cookson (1991) 54 Cal.3d 1091, 1100 [2 Cal. Rptr.2d 176, 820 P.2d 278].)
III. DISPOSITION
The judgment of the Court of Appeal affirming the judgments of conviction is affirmed.
George, C.J., Kennard, J., Baxter, J., Werdegar, J., and Chin, J., concurred.
*554 MOSK, J.
I concur in the judgment.
In my view, the time has come to reconsider one aspect of the law of murder, specifically, the antique common law rule variously referred to as "transferred malice" or, more usually if less accurately, "transferred intent."
Murder is the unlawful killing of a human being by another human being with malice aforethought. (Pen. Code, § 187, subd. (a); accord, e.g., 2 LaFave & Scott, Substantive Criminal Law (1986) § 7.1, p. 181 [speaking of Anglo-American law generally]; Perkins & Boyce, Criminal Law (3d ed. 1982) p. 57 [same].) Malice aforethought may be express consisting of the unlawful intent to kill or implied comprising any other mental state that may tolerably be identified as recklessness. (See Pen. Code, § 188; accord, e.g., 2 LaFave & Scott, Substantive Criminal Law, supra, § 7.1(a), pp. 181-184 [speaking of Anglo-American law generally]; Perkins & Boyce, Criminal Law, supra, pp. 57-78 [same].)
To quote Lord Hale, the "transferred intent" rule is to the following effect: "[I]f A. by malice forethought strikes at B. and missing him strikes C. whereof he dies, tho he never bore any malice to C. yet it is murder, and the law transfers the malice to the party slain...." (Hale, Historia Placitorum Coronae (1736) p. 466.)
The "transferred intent" rule, of course, does not literally "transfer" malice aforethought or anything else from an intended victim to an unintended victim. It is nothing more, and nothing less, than a "legal fiction, used to reach what is regarded with virtual unanimity as a just result" in Lord Hale's paradigm. (People v. Czahara (1988) 203 Cal. App.3d 1468, 1474 [250 Cal. Rptr. 836]; see, e.g., Husak, Transferred Intent (1996) 10 Notre Dame J.L. Ethics & Pub. Pol'y 65, 65-69, 83-89; 1 LaFave & Scott, Substantive Criminal Law, supra, § 3.12(d), p. 399; Perkins & Boyce, Criminal Law, supra, at p. 921; Prosser, Transferred Intent (1967) 45 Tex. L.Rev. 650, 650; Ritz, Felony Murder, Transferred Intent, and the Palsgraf Doctrine in the Criminal Law (1959) 16 Wash. & Lee L.Rev. 169, 169.)
I would not abrogate the "transferred intent" rule simply because it is a legal fiction. The law is filled with devices of this sort. It could hardly operate if they were all absent.
The "transferred intent" rule, however, is a peculiarly mischievous legal fiction. (Dressler, Understanding Criminal Law (2d ed. 1995) § 10.04, p. *555 109; Perkins & Boyce, Criminal Law, supra, at pp. 924-926; see Husak, Transferred Intent, supra, 10 Notre Dame J.L. Ethics & Pub. Pol'y at pp. 65-91.) In spite of the long labors of courts and commentators, to this very day "there is no agreement about [its] general rationale.... [It] is nothing more than the name attached to an unexplained mystery." (Husak, Transferred Intent, supra, 10 Notre Dame J.L. Ethics & Pub. Pol'y at p. 67; see 1 LaFave & Scott, Substantive Criminal Law, supra, § 3.12(d), p. 401; Perkins & Boyce, Criminal Law, supra, at p. 921; Ritz, Felony Murder, Transferred Intent, and the Palsgraf Doctrine in the Criminal Law, supra, 16 Wash. & Lee L.Rev. at pp. 169, 183.) Without such a rationale, its invocation outside the simple facts of Lord Hale's paradigm would almost necessarily be arbitrary and capricious. (See Husak, Transferred Intent, supra, 10 Notre Dame J.L. Ethics & Pub. Pol'y. at pp. 75-83.) It does not entail "careful thought" rather, it "operates as a substitute" therefor. (Id. at p. 87; see Ritz, Felony Murder, Transferred Intent, and the Palsgraf Doctrine in the Criminal Law, supra, 16 Wash. & Lee L.Rev. at p. 183 [implying that the "fiction of transferred intent" is "ridiculous"].)
Moreover, the "transferred intent" rule is an altogether unnecessary legal fiction. (E.g., Dressler, Understanding Criminal Law, supra, at p. 109; 1 LaFave & Scott, Substantive Criminal Law, supra, § 3.12(d), pp. 399-400; Perkins & Boyce, Criminal Law, supra, at pp. 924-925.) It is based on the assumption that, in its absence, the perpetrator could escape liability for murder if he unlawfully killed not his intended victim but rather some unintended victim. That assumption, in turn, is based on yet another, namely, that malice aforethought exists in the perpetrator only in relation to an intended victim. (See, e.g., Husak, Transferred Intent, supra, 10 Notre Dame J.L. Ethics & Pub. Pol'y at pp. 71-75.) It does not. (See, e.g., Dressler, Understanding Criminal Law, supra, at p. 109; 1 LaFave & Scott, Substantive Criminal Law, supra, § 3.12(d), p. 400; Perkins & Boyce, Criminal Law, supra, at pp. 924-925; Prosser, Transferred Intent, supra, 45 Tex. L.Rev. at pp. 653, 661.)
It is plain that implied malice aforethought does not exist in the perpetrator only in relation to an intended victim. Recklessness need not be cognizant of the identity of a victim or even of his existence. Recall the "classic example" of the "person who fires a bullet through a window, not knowing or caring whether anyone is behind" the pane. (People v. Roberts (1992) 2 Cal.4th 271, 317 [6 Cal. Rptr.2d 276, 826 P.2d 274].)
It is also plain that express malice aforethought does not exist in the perpetrator only in relation to an intended victim. True, an unlawful intent to kill almost always happens to be directed at an intended victim. The reports *556 demonstrate that such an intent is rarely possessed as to everyone in general or no one in particular. But there is no requirement of an unlawful intent to kill an intended victim. The law speaks in terms of an unlawful intent to kill a person, not the person intended to be killed. (See Pen. Code, § 188 [providing that malice aforethought is "express when there is manifested a deliberate intention unlawfully to take away the life of a fellow creature"]; accord, e.g., Dressler, Understanding Criminal Law, supra, at p. 109 [speaking of Anglo-American law generally: "The social harm of murder is the `killing of a human being by another human being.' The requisite intent, therefore, is the intent to kill a, not a specific, human being." (Italics in original.)]; Perkins & Boyce, Criminal Law, supra, at pp. 924-925 [same]; Prosser, Transferred Intent, supra, 45 Tex. L.Rev. at p. 653 [same]; but see People v. Roberts, supra, 2 Cal.4th at p. 320 [appearing to assume otherwise in dictum].) Certainly, so far as liability for murder is concerned, one cannot reasonably distinguish between A, who unlawfully kills B unlawfully intending to kill B, and X, who unlawfully kills Y unlawfully intending to kill Z. Both A and X harbor the same blameworthy mental state, an unlawful intent to kill. Both A and X cause the same blameworthy result, an unlawful killing. That through some combination of luck and skill A proves to be "successful" in his attack on B and X proves to be "unsuccessful" in his attack on Y is of no consequence for purposes here.[1]
For the reasons stated above, I would abrogate the "transferred intent" rule.
NOTES
[1] The information did not allege that the attempted murders were willful, deliberate, and premeditated for sentence enhancement purposes. (See People v. Bright (1996) 12 Cal.4th 652, 669 [49 Cal. Rptr.2d 732, 909 P.2d 1354].)
[1] That malice aforethought does not exist only in relation to an intended victim does not mean that liability for murder extends to all unintended victims or even to any unintended victim. Proximate cause is required for each. (See, e.g., People v. Roberts, supra, 2 Cal.4th at pp. 315-320; cf. Model Pen. Code, § 2.03, subd. (2)(a) [providing that, "[w]hen purposely or knowingly causing a particular result is an element of an offense, the element is not established if the actual result is not within the purpose or the contemplation of the actor unless" "the actual result differs from that designed or contemplated, as the case may be, only in the respect that a different person ... is injured or affected"]; id., § 2.03, subd. (3)(a) [providing that, "[w]hen recklessly ... causing a particular result is an element of an offense, the element is not established if the actual result is not within the risk of which the actor is aware ... unless" "the actual result differs from the probable result only in the respect that a different person ... is injured or affected"].)
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Order Michigan Supreme Court
Lansing, Michigan
January 31, 2017 Stephen J. Markman,
Chief Justice
Robert P. Young, Jr.
Brian K. Zahra
153387(28) Bridget M. McCormack
David F. Viviano
Richard H. Bernstein
Joan L. Larsen,
MICHELE PRICE a/k/a MICHELE BURKE, Justices
Plaintiff-Appellee,
v SC: 153387
COA: 329004
Wayne CC: 15-002017-NH
ELENI CALLIS, D.D.S.,
Defendant-Appellant,
and
JERRY A. ARONOFF, D.D.S.,
Defendant.
_________________________________________/
On order of the Court, the motion for reconsideration of this Court’s October 5,
2016 order is considered, and it is DENIED, because it does not appear that the order was
entered erroneously.
I, Larry S. Royster, Clerk of the Michigan Supreme Court, certify that the
foregoing is a true and complete copy of the order entered at the direction of the Court.
January 31, 2017
a0123
Clerk
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68 Ill. App.3d 687 (1979)
386 N.E.2d 165
THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee,
v.
JOHN ARTHUR ROBINSON, Defendant-Appellant.
No. 14974.
Illinois Appellate Court Fourth District.
Opinion filed February 16, 1979.
Ronald L. Carpel, of Carpel & Bourey, of Decatur, for appellant.
*688 Patrick M. Walsh, State's Attorney, of Decatur (Thomas W. Gendry, Assistant State's Attorney, of counsel), for the People.
Judgment affirmed.
Mr. JUSTICE MILLS delivered the opinion of the court:
This case involves the robbery of a pool "hustler" by his victim, whose defense is that he's merely retaking his own property obtained from him by illegal gambling.
Can he get away with it?
Not in Illinois.
Two wrongs do not make a right.
The jury conviction for armed robbery and the 10- to 30-year sentence are affirmed.
The testimony is long and at times somewhat confusing. But from it the jury could easily have concluded exactly what the defendant said happened and what the uncontroverted portions of the evidence reflected. It seems that Tony Perry and a friend, Emil Glocar (also known as Eddie Kovac), were passing through Decatur on their way to Kentucky. While in Decatur on September 22, 1977, Perry was playing pool at the Hotel Orlando pool hall with one Mike Wilder and betting on the games. Perry had won approximately $150 from Wilder during the three or four hours that they had been playing. At about 8 that evening defendant Robinson placed a $200 bet with Glocar or Perry. It seems clear that defendant Robinson was backing any bets on Wilder in the games against Perry. It also seems that any money that was won by Wilder would be shared equally between defendant Robinson and Wilder. Although Perry admitted that he and Glocar shared expenses on their trip and had been friends for three or four years, he denied that they were partners in any pool betting scheme.
The games went on for two days and defendant testified that he lost approximately $1,000 during that period. On the evening of the second day, defendant was told by his brother that he was being hustled. So he went to the pool hall, bet an additional $200 with Perry, lost the remaining games to Perry, and then demanded his money back. Perry shrugged it off and told defendant he would pay for the time on the pool table. Perry then went over to the bartender, and he and Glocar each collected $400. After they had picked up their money, defendant Robinson pulled a gun and demanded his $200 back. Perry counted out $200 and then put it on the bar. Someone picked it up, gave it to the defendant, and Robinson left the hotel. Perry admitted that at the time the defendant demanded the $200 back, he had much more money than that on him, but that the defendant had only asked for the $200.
The fulcrum of the case is a unique question which we apparently grapple with for the first time in Illinois. It pivots on the ownership of the *689 money taken. This issue can be synthesized into: Whether the retaking of gambling losses by force constitutes robbery.
The defendant has consistently conceded that his conduct was wrong, but argues that although he should have been charged with a violation of the Criminal Code, armed robbery was inappropriate because he was merely retaking his own property.
The Illinois cases which have discussed the property interest of the victim of a robbery have required the State to prove only that the victim had an interest which was superior to that of the defendant. (People v. Kelly (1975), 25 Ill. App.3d 753, 324 N.E.2d 82; People v. Aughinbaugh (1970), 131 Ill. App.2d 581, 266 N.E.2d 530.) Those cases, however, do not involve the retrieval of one's own property, but rather the failure on the part of the State to establish the actual ownership of the property, i.e., robbing a store clerk.
Since this is a case of first impression in Illinois, defendant directs us to the positions of other States which have been asked to rule on the question. Some 11 States have held that the retaking of gambling losses by force cannot be categorized as robbery (1) because the felonious intent is lacking, or (2) because the gambler does not take title to the property. Although the cases cited turn on one of these two points, there is really no distinction since the two are inextricably linked.
The State urges the minority view as being the better approach, and points to Maryland which has held that the retaking of gambling debts by force constitutes robbery. In Cates v. State (1974), 21 Md. App. 363, 320 A.2d 75, the court said that mere possession in the victim is adequate and that title is immaterial. The reasoning and philosophy behind this interpretation is interesting and we consider it appropriate to explore it in more depth.
The defendant in Cates engaged in a "crap game" with an Air Force sergeant and lost. As the winner said, "I gamble well. * * * It is not a matter of how good you shoot dice. It is how you place your bets * * *." Two days later, the defendant resorted to self-help with a pistol. The Maryland court quoted extensively from 2 Wharton's Criminal Law and Procedure §§ 551, 563 (Anderson ed. 1957), and then opined:
"We agree with Wharton's premise in § 551 that one cannot be guilty of robbery in forcibly taking his own property, but the conclusion stated does not follow that premise. Since one is entitled to use necessary force to take his own property, why should his act be punishable as an unlawful assault? No authority is given for the statement that because gambling is illegal, title to money won at gambling does not pass to the winner. Title to contraband, and to the money paid for the purchase of it, passes hundreds of times every day. The concluding statement in § 551 *690 that it is immaterial that the defendant does not retake the identical money which was won from him is completely at odds with the statement that the loser, never having parted with title, still holds title.
We prefer Wharton's contrary statement, in § 563, that the capacity of the victim is immaterial, and that it is essential only that he have possession, without regard to whether he has title, and even though that possession resulted from stealing the property.
The phrase claim of right and the phrase honestly believes himself to be entitled, when applied to an intentional taking of property, must be given a limited and not a broad interpretation. They must be taken to require a legally recognizable right which can be successfully asserted in our courts. The intent to steal, the element of larceny which makes it and robbery specific intent crimes, must be evaluated objectively and not subjectively, and within the framework of rights and obligations given and imposed by the law." 21 Md. 363, 369, 320 A.2d 79.
"A number of our sister States have adopted the view that one may resort to `self-help' in order to recoup gambling losses, and some States go so far as to hold that a creditor may by force of arms recover from his debtor that owed to the creditor without transgressing the criminal law. We do not share those points of view. Imagine a situation, for example, where a finance company or bank is allowed to obtain payment from their debtor, not by judicial process, but by simply meeting the debtor on his payday when he exits his place of employment, and by the use of a weapon collecting the amount due from the debtor. We have no hesitancy in stating that in all probability debtors would commence carrying guns in order to resist their creditors. If we were persuaded by the reasoning employed in some of the other States then it is conceivable that those persons who engage in illegal gambling would also carry weapons so that they could recover their losses. Needless to say such occurrences could easily lead to the revival of the `Wild West', with an Eastern flavor and turn our streets into `shoot-outs at the OK Corral.' [With apologies to Wyatt Earp.]
The Court of Appeals of Maryland has never held that a creditor or a party to an illegal transaction may take property from the possession of another merely because he believes or claims that he has a right to do so. Disputed rights between individuals must be resolved by agreement or by the courts; not by stealth or force.
The rulings of courts of other states are classified not as binding, but as persuasive authority. If the reasoning which supports them fails to persuade, they are no authority at all." 21 Md. 363, 371-72, 320 A.2d 75, 80-81.
*691 1 We are in accord with the philosophy so well articulated by the Maryland court and have no desire to substitute in Illinois the "rule of the gun" for the "rule of reason." To our view, it simply makes common sense.
Furthermore, the Criminal Code of Illinois is quite specific in its definition of an owner. In section 15-2 of the Criminal Code of 1961 (Ill. Rev. Stat. 1977, ch. 38, par. 15-2), we find the following:
"Part C. Offenses Directed Against Property
Article 15. Definitions.
* * *
§ 15-2. Owner.] As used in this Part C, `owner' means a person, other than the offender, who has possession of or any other interest in the property involved, even though such interest or possession is unlawful, and without whose consent the offender has no authority to exert control over the property." (Emphasis added.)
We note that the armed robbery statute is section 18-2 of article 15 which is a sub-category within the same Part C. (Ill. Rev. Stat. 1977, ch. 38, par. 18-2.) Ergo, it seems inescapable that such definition of "owner" applies to the offense of armed robbery here.
Turning to another inquiry, it is argued on appeal that the trial court erred in refusing to instruct the jury that assault and aggravated assault are lesser included offenses of armed robbery. But defendant cites to us no authority whatever either domestic or foreign which supports his thesis. There are numerous cases in which lesser aggravated battery convictions have been swallowed up in the greater armed robbery convictions, but defendant has cited none that tell us that assault or aggravated assault are included within armed robbery.
The key to his argument is the word "elements." For, as our supreme court has stated:
"[T]o permit conviction for a lesser offense on an indictment charging only a greater offense, all the elements of the lesser must be included within the greater." (People v. King (1966), 34 Ill.2d 199, 200, 215 N.E.2d 223, 224.)
We do not conceive of all the elements of assault and aggravated assault as being within the orbit of those necessary for armed robbery. Proof of a reasonable apprehension of receiving a battery is required for conviction of aggravated assault, but no such element is included within the greater offense of armed robbery. Doubtless such element may be inherently present in many armed robberies, but it is not an element required to be specifically proved.
2 Next, Robinson says the trial court committed reversible error by refusing to allow impeachment of the victim (Perry) as to charges filed against him and regarding the promise of leniency by the State. The State *692 concedes that the defendant was entitled to have the jury informed of any promises of leniency that may have been made to the prosecuting witness in an attempt to impeach his credibility but asserts that under People v. Nester (1976), 40 Ill. App.3d 735, 353 N.E.2d 23, the error is harmless. Since the complaining witness' testimony regarding the armed robbery was corroborated not only by his traveling companion, but by Gibbins (the bartender), Wilder, and the defendant Robinson himself, the State is correct in categorizing the error as harmless.
Robinson also contends that the court erred in disallowing his affirmative defense of justifiable use of force in defense of property. The statute reads:
"A person is justified in the use of force against another when and to the extent that he reasonably believes that such conduct is necessary to prevent or terminate such other's trespass on or other tortious or criminal interference with either real property (other than a dwelling) or personal property, lawfully in his possession or in the possession of another who is a member of his immediate family or household or of a person whose property he has a legal duty to protect." (Emphasis added.) Ill. Rev. Stat. 1975, ch. 38, par. 7-3.
3, 4 This affirmative defense is clearly available only when the defendant is lawfully in possession of the property. Here, the victim was in possession and the defense is simply inapplicable.
The defendant sets forth numerous reasons why his prior arson conviction and misdemanor conviction for theft under $150 should not have been admitted for impeachment purposes. The best argument he asserts, however, is that the prior convictions had no probative value since the defendant in his testimony admitted that he took property from the person of another by the use of force while armed with a dangerous weapon.
5 We view the defendant's testimony, however, as sufficiently contradictory to permit the use of prior convictions. The contradictory testimony consists of questions concerning who the defendant was gambling with, how much he was losing at the time the last game started, and whether or not the defendant threatened to harm Perry (the victim) if he did not give the money to him. Since the trial judge had previously correctly ruled against the defendant on his theory of the case, his affirmative defense, and his jury instructions on lesser included offenses, the defendant's testimony was tantamount to an admission of the crime as charged. Therefore, although the impeachment evidence served no probative value, it cannot be considered reversible error.
Finally, Robinson says the trial court abused its discretion in sentencing him to 10 to 30 years. His argument in support of abuse of *693 discretion in sentencing centers around the facts that the complaining witness Perry was engaged in gambling, that defendant considered the money taken to be his own, that defendant did not take all of the victim's money but rather only that which he felt he was entitled to, and that the defendant thought he was being "hustled."
In imposing sentence, the trial judge put considerable effort into reviewing the defendant's past criminal conduct. He noted the mitigating circumstances that the defendant may have been provoked by a pool "hustler," but noted that the law frowns on self-help, and commented on the dangers of a loaded weapon in a public place. He also had before him defendant's prior convictions for arson and misdemeanor theft. Furthermore, the defendant was initially to be sentenced on January 6, 1978, but he failed to appear for sentencing. His bond was then forfeited and the date of sentencing was subsequently reset.
6 There is no doctrine in criminal law that is more catholic than that the trial court has wide discretion in deciding the sentence to be imposed in a particular case. The defendant has not set forth a clear showing of abuse of discretion and without such a showing, a reviewing court cannot disturb the sentence. People v. Hines (1976), 44 Ill. App.3d 204, 357 N.E.2d 884.
Affirmed.
REARDON, P.J., and GREEN, J., concur.
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415 F.Supp. 23 (1976)
Charlotte Rae SANFORD, Plaintiff,
v.
HOWARD UNIVERSITY and Dean Jay Chunn, Defendants.
Civ. A. No. 75-1034.
United States District Court, District of Columbia.
February 26, 1976.
*24 William J. Rodgers, Washington, D. C., for plaintiff.
Dorsey Edward Lane, Madelyn Carol Squire Gibson, Washington, D. C., for defendants.
GESELL, District Judge.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Plaintiff, who claims to be an American Indian, seeks damages, injunctive relief and attorney's fees against defendant Howard University arising out of her suspension from its School of Social Work where she was enrolled as a graduate student. She alleges that she was the victim of racial discrimination by the University, a predominantly black institution.
The issues are now before the Court on the merits following extensive discovery and a bench trial.[1] The Court has jurisdiction as provided by 28 U.S.C. §§ 1343 and 1331 because of 42 U.S.C. § 1981 and the federal questions raised.
Plaintiff recites a long series of difficulties with representatives of Howard commencing *25 shortly after her enrollment which she contends demonstrate arbitrary and unfair treatment that was continuously motivated by racial prejudice and culminated in her suspension by the faculty on June 23, 1975, without a hearing, based on false or distorted charges.
Plaintiff enrolled at Howard as a candidate for a master's degree in social work in the fall of 1974, majoring in policy. She was a mature student; age 28, divorced, with a child to support. She had had considerable experience in various child care and other programs designed to aid the disadvantaged. The Howard University School of Social Work has around 150 students, principally black. She was the only student claiming to be an American Indian which she represented herself to be from the outset. A very substantial scholarship was provided which covered her tuition and some living expenses. Plaintiff selected Howard because her fiance lived in the area, because she desired on-the-job training and community experience which was available at and through the institution, and because she wished to be near the Congress in order to further her various lobbying efforts for child care.
Howard School of Social Work presents a full range of courses relevant to its discipline. It has an active, fully staffed and conscientious faculty which at the times in question was vigorously concerned with maintaining high standards to assure the effectiveness of its graduates. Students have easy, continuous access to faculty and advisors. The School's emphasis and primary concerns were, of course, oriented toward blacks, consistent with the origins and long-recognized mission of the university. Plaintiff knew this when she enrolled.
One aspect of the master's program requires special note in the light of the evidence. The School has a well-established academic policy requiring a student to be enrolled in and successfully complete a practicum course each semester at the same time the student is completing class assignments. Practical field experience is deemed essential because the School believes its courses are enriched if the student contemporaneously has responsibility in practical social work in the community. To this end, a student is assigned a practicum in a particular agency or governmental office under immediate supervision of a qualified person not on the School's staff. The assignments are worked out with the student's concurrence where possible. A Director of Practicum keeps track of student attendance and accomplishment, and the practicum courses are graded for each semester. Procedures for adjusting practicum assignments have been adopted to assist students who may find an assignment uncongenial or unsuited to the student's interests. However, consistent enrollment in practicum is required. Indeed, in April, 1975, the faculty by formal action decided that failure of practicum by any student would automatically result in dropping the student from the school.
It is against this background that the events leading to her suspension can be examined in more detail. Recollections differ as to detail. Plaintiff's accounts of the events vary, which, among other things, casts some doubt on the weight to be given her testimony in several particulars. Some faculty members also have faulty recollections, including the Dean, but the Court finds his testimony on the essential points worthy of belief.
Plaintiff was dissatisfied with her practicum assignments from the outset and throughout her stay at Howard. While she passed her practicum at the Department of Human Resources of the District of Columbia Government in the first semester, she constantly deprecated her involvement, strenuously criticized the program and its staff and kept a marginal participation mainly because her scholarship grant depended on it. She believed the practicum was not a meaningful educational experience. She felt her work was menial and unproductive, and constantly complained to various faculty members demanding a change.
Plaintiff was encouraged to develop her own practicum and made some kind of an informal arrangement with the Reporters' *26 Committee for Freedom of the Press. She urged this arrangement be approved; it was considered casually by the faculty but never approved.
The summer semester began May 26 and ended in July. Classes started June 1. Instead of continuing with the Department of Human Resources, plaintiff went to the Reporters' Committee at $4.50 per hour believing, mistakenly, that approval would be forthcoming. It was about this time that Mark Battle, the faculty liaison representative, made plaintiff aware that the Reporters' Committee had not yet been approved as a practicum and that plaintiff was expected to be in practicum. Plaintiff, much disturbed, went to see Eva Stewart, the Director of Practicum. Stewart told her that Stewart did not know she was out of practicum and not going to the Department of Human Resources. Plaintiff then went to the Dean who saw her immediately. The Dean told her she must go back to the Department of Human Resources and referred her back to Eva Stewart. Plaintiff pushed for permission to go to the Reporters' Committee. She was excused for a week, told again that the Reporters' Committee would not be approved, and informed that an assignment at Delegate Fauntroy's local District of Columbia office was the only policy placement for her. The administration of the School made it absolutely clear there was no other course available for her. She initially agreed to this practicum but after a visit to that office rejected it and never even made a genuine effort to take advantage of a large number of varied opportunities there that were suggested. She would have received experienced guidance from Delegate Fauntroy's well-qualified assistant who was anxious to help her, but her reaction was entirely negative. She showed contempt for the Delegate and for the black people around him, and rejected on First Amendment grounds the first assignment suggested by the office which was to attend a governmental meeting as his representative. Although none of her tasks required her to compromise her political beliefs, she met no one at the office halfway and walked out. Various conferences, telephone calls and meetings ensued with different faculty people in which she voiced her complaints; during this time she was not in an approved practicum.
By this time some three weeks of the summer semester had elapsed and the practicum assignment for that semester was not being fulfilled. The Dean had some telephone contact with plaintiff but she broke appointments. She was asked to see the Dean on Friday, June 20, but rejected the appointment, stating she had to consult her attorney. The Dean agreed to see her on Monday, June 23. A faculty meeting was called for that day to consider her case. All members of the faculty were present, together with her immediate supervisor, Delegate Fauntroy's assistant. When plaintiff arrived for the appointment with her fiance, who was a law student, the Dean told her that plans had changed and asked her to wait while the faculty meeting went forward. Following the meeting, plaintiff was advised that she had been suspended for failure to pursue practicum and because during the spring semester she had submitted a single paper in duplicate to satisfy two courses without permission of the professors involved.[2] She was not told of these charges in advance and did not attend the faculty meeting. The decision of the faculty was unanimous. The Dean's letter to her dated June 23, 1975 (P.Ex. 11) reads as follows:
I am writing in follow up to our conference earlier today on June 23, 1975 that included your advisor, Professor Mary W. Day.
As you were informed, the decision of the faculty involved in your educational program is that you receive an academic suspension from the Howard University School of Social Work effective immediately. I concur in and support that decision as Dean of the School.
*27 It should be clearly understood by you that the above decision was made on academic grounds in that you have failed to fulfill the requirements of your practicum assignment in leaving the Department of Human Resources without approval of your agency liaison faculty person, your faculty advisory, and/or the Director of Practicum. Further, you have refused to accept in a responsible manner another practicum assignment made to you by faculty. As a result of this, you have now been out of practicum for approximately four weeks.
The faculty reached out to assist you; however, you did not make appropriate use of their assistance. Further, my attempts to be of assistance to you were refused in that you broke appointments with me on June 16, 1975 and June 20, 1975.
As we informed you in our conference earlier today, your academic suspension will be for one academic year. You may reapply to the School for the Fall 1976 term if you so desire; however, you must go through the full admissions process.
We wish you success in your subsequent endeavor.
The minutes of the faculty meeting are in more detail (P.Ex. 12).
At the time the faculty acted there were charges being circulated to the media that Howard students were being forced to work for Delegate Fauntroy on political matters against their will, national networks were inquiring and congressional interest had been awakened. Inquiries were being made at the Howard University public relations office. Plaintiff had had some contact with the press.
The wisdom of Howard's timing of its decisive action is open to question. It may well be that the University felt forced to act because of public relations issues arising outside its walls. Plaintiff had over the weeks been a constant complainer and her resistance to any practicum was an established fact. The issues were essentially academic and since her failure of practicum was by June 23 inevitable it is clear that plaintiff was not going to receive her master's degree. On this record the Court concludes that the suspension was for academic reasons.
Plaintiff urges that all that occurred was simply seized on as a pretext to get rid of her and to carry out a deep-seated racial prejudice held by the Dean and other faculty against plaintiff because of her Indian heritage. Even if it be assumed that plaintiff's remote Indian blood (1/16th) and subjective identification with this aspect of her background entitled her to be treated as a member of this disadvantaged minority in our culture, there is no competent proof that her difficulties at the school were caused by race prejudice on the part of the faculty and thus the essential core of her complaint must fail for want of proof.
Because race prejudice is often an elusive and subtle thing not readily susceptible of concrete proof, the matters on which plaintiff principally relies to establish such prejudice have been closely examined and are summarized immediately below.
(1) Early in the fall an informal group was discussing Thanksgiving in a cafeteria. When the thought was expressed that the Indians had nothing to do with the holiday, plaintiff responded that the Indians supplied corn which saved the early colonists. Robert Siblo, the man responsible for plaintiff's work at the Department of Human Resources, was present at the discussion, and when plaintiff went to his office immediately afterwards, Siblo said, "I didn't know squaws had green eyes." This reference to plaintiff's mixed Indian and Scotch-Irish blood was taken by her as a racial epithet whether or not it was so intended. She reported Siblo to faculty members, who were in agreement she had been abused. The Dean ordered an investigation and was belatedly told Siblo denied calling plaintiff a squaw. Plaintiff feels the matter was treated too casually, as perhaps it was. Nothing definitive was done. Siblo worked for the District of Columbia Government, not Howard. No one else was present when the remark was made. Siblo later treated plaintiff fairly in grading and commenting *28 on her work. It is impossible to accept the argument that failure of the Dean and Battle to act immediately and more firmly after this episode reflects racial discrimination.
(2) In a class of Professor Ruth Boyd discussing deviance, the professor mentioned a tendency of Indians to use alcohol excessively, and friction developed between plaintiff and the professor. Plaintiff felt that in class discussion she was mocked, embarrassed and unfairly singled out for questioning on this and other occasions because of her Indian identification. In plaintiff's mind Professor Boyd was unduly critical of all races except blacks. She also felt Professor Boyd's examination marking was unfair because Professor Boyd, who was new on the campus, failed to tell her students the weight she would give each question on an exam. While plaintiff was courteous and respectful in class, she had sharp personality conflicts with Professor Boyd, although she called the Professor by her first name and had frank talks with her about her oversensitivity on racial matters. The proof failed to show race prejudice.
(3) Another professor refused to pass her paper until she rewrote a section that commended some attitudes expressed by a white social worker who was contrasted with a black social worker in a hypothetical clinical situation. While this incident may indicate the professor's view that all white social workers are incompetent or racist, it does not support plaintiff's position that she was subject to discrimination at Howard.
(4) Plaintiff sought advanced standing. She was denied this status because she did not have a Bachelor in Social Work Degree. The University required such a degree for advanced standing without exception. Race was not a factor.
(5) Plaintiff, somewhat belatedly, sought credit for work done at college in order to graduate with fewer hours of credit at Howard. A white professor refused to recognize her research competence unless she took an exam. She disagreed and didn't take an exam. Her college grade in research was poor. This had nothing to do with her race. A brilliant, exceptionally qualified black student was given course credit without an examination. This differentiation was entirely on the basis of academic merit uninfluenced by race.
(6) Some students, mostly black, were excused from practicum. Each of these instances is recorded. The excuses in most instances reflected highly special circumstances. Most excuses were temporary. None constituted a waiver of the requirement. Plaintiff wished to be excused. She claims discrimination. These instances are not probative of discrimination. The statistical comparisons urged by plaintiff's counsel are unsound. No pattern of black favoritism emerges. Moreover, plaintiff did receive some excused time.
These matters, taken as a group, simply do not support a claim that plaintiff was suspended in whole or in part because of her Indian derivation.
Nothing in the foregoing is intended to minimize the validity of plaintiff's legal theory. Although the facts do not support a claim of race prejudice, Howard cannot subject any non-black student to any type of racial discrimination. See Scott v. Eversole Mortuary, 522 F.2d 1110 (9th Cir. 1975) (American Indian); Spiess v. C. Itoh & Co., 408 F.Supp. 916, 44 U.S.L.W. 2379 (S.D.Tex. 1976); Hollander v. Sears, Roebuck & Co., 392 F.Supp. 90 (D.Conn.1975); WRMA Broadcasting Co., Inc. v. Hawthorne, 365 F.Supp. 577 (M.D.Ala.1973); but see McDonald v. Sante Fe Trail Transportation Co., 513 F.2d 90 (5th Cir. 1975), cert. granted, 423 U.S. 923, 96 S.Ct. 264, 46 L.Ed.2d 248, 44 U.S.L.W. 3263 (1975). Whenever a student is found qualified and admitted to the University, a term of the student contract must be implied to guarantee that student that grades, assignments and educational progress will not be tainted by any invidious discrimination based on race.
Although the University's counsel would have the Court affirmatively recognize the right of the institution to favor blacks over other minorities and races, there is nothing in the record to suggest that the faculty of *29 the School of Social Work proceeded on such a premise. Plaintiff is a highly emotional person, easy to take offense, assertive and herself contemptuous of many blacks. Nonetheless, the several members of the faculty, both black and white, who were made aware of her complaints showed extraordinary patience and concern in dealing with her. There was some shifting of responsibility and lack of follow-up which contributed to her frustrations, but, in the end, the Dean became directly involved, he met with her and had several telephone conversations. She broke appointments, sought legal advice and the situation deteriorated.
The absence of proof that racial discrimination motivated Howard's actions of which plaintiff complains does not resolve all issues tendered. Plaintiff contends that her suspension violated her rights under the Fifth Amendment because she was denied a due process hearing. Assuming that her various meetings with faculty members and the Dean do not satisfy this requirement, it becomes necessary to consider whether Howard's actions may be deemed sufficiently governmental to bring due process considerations into play.
Howard University's intimate association with the Federal Government is well known. Howard holds a federal charter. Its funds come primarily from Congress through annual appropriations. For fiscal 1976, it seeks about $84,000,000 which would constitute 58 percent of its budget. In 1975, 57.32 percent of its budget was appropriated by Congress and 62.67 percent was so appropriated in 1974. The Office of Management and Budget monitors these funds and the Department of Health, Education and Welfare reviews Howard's progress toward educational objectives which Howard sets through its own administrative processes. In other aspects of Howard's affairs, the Federal Government also lends a helping hand.
On the other hand, no proof was presented demonstrating any governmental involvement in the academic or disciplinary activities of the School of Social Work relating to the events of this case. To the contrary, there is ample evidence that the school has a concerned, independent and active faculty which, under the guidance of the Dean, has, without governmental direction, developed impressive standards and assiduously sought to improve and implement them. The faculty has functioned as a unit and its members have been available and open to students. There is an atmosphere of inquiry, innovation and dedication reflected by the record, all in the tradition of academic freedom associated with great private universities.
A showing of general governmental involvement in a private educational institution is not enough to convert essentially private activity into governmental activity for purposes of a due process claim, and Howard's essentially private status must be recognized. It is not to be treated as a state university. Williams v. Howard University, 528 F.2d 658 at 660 (D.C.Cir. 1976), quoting from Spark v. Catholic University, 167 U.S.App.D.C. 56, 510 F.2d 1277, 1282 (1975), and Greenya v. George Washington University, 167 U.S.App.D.C. 379, 512 F.2d 556 (1975); Willis v. Cheek, Civil Action No. 75-0389 (D.D.C. April 30, 1975); Greene v. Howard University, 271 F.Supp. 609 (D.D.C.1967), rev'd on other grounds, 134 U.S.App.D.C. 81, 412 F.2d 1128 (1969); Irwin v. United States, 74 App.D.C. 296, 122 F.2d 73 (1941), rev'd on other grounds, 316 U.S. 23, 62 S.Ct. 899, 86 L.Ed. 1241 (1942); Maiatico Const. Co. v. United States, 65 App.D.C. 62, 79 F.2d 418, cert. denied, 296 U.S. 649, 56 S.Ct. 309, 80 L.Ed. 462 (1935).
But the inquiry does not end at this juncture. There is need to examine further the particular challenged action to determine whether a sufficient nexus has been shown between the governmental involvement and the challenged activity to warrant the conclusion that such activity is itself governmental. Ripon Society v. National Republican Party, 525 F.2d 567, 575 (D.C.Cir. 1975); see also id. at 599 (opinion of Judge Tamm joined by Judge Robb, concurring in the result). Also clearly in point is the holding of another circuit in an opinion *30 by Judge Stevens, now Mr. Justice Stevens, where it was stated: "[T]he State's support of I.I.T. is sufficiently significant to require a finding of state action if that support has furthered the specific policies or conduct under attack. . . . The State has lent significant support to I.I.T.; it is not, however, alleged to have lent any support to any act of discrimination." Cohen v. Illinois Institute of Technology, 524 F.2d 818, 825-26 (7th Cir. 1975). Similarly, in Weise v. Syracuse University, 522 F.2d 397, 405 (2d Cir. 1975), the Court noted: "[T]he essential point [is] that the [government] must be involved not simply with some activity of the institution alleged to have inflicted injury upon a plaintiff but with the activity that caused the injury." See also Wahba v. New York University, 492 F.2d 96 (2d Cir.), cert. denied, 419 U.S. 874, 95 S.Ct. 135, 42 L.Ed.2d 113 (1974); Grafton v. Brooklyn Law School, 478 F.2d 1137 (2d Cir. 1973); Braden v. University of Pittsburgh, 477 F.2d 1 (3d Cir. 1973), on remand, 392 F.Supp. 118 (W.D.Pa.1975); Powe v. Miles, 407 F.2d 73 (2d Cir. 1968); 89 Harv.L.Rev. 139, 150-51 (1975).
The policies and conduct here under attack were not shown to have been influenced or supported by the Federal Government in any respect. Thus the Court concludes no hearing prior to suspension was constitutionally required.
Plaintiff failed to prove her cause of action by a preponderance of the evidence and judgment shall be entered for defendants with no costs to either side.
SO ORDERED.
NOTES
[1] A temporary restraining order was granted and a preliminary injunction denied following an initial hearing.
[2] Plaintiff disputes this, and the Court finds it unnecessary to resolve the issue. Her official record still reflects that she passed both courses.
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IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,
AT AUSTIN
NO. 3-91-507-CV
DENNIS D. FLYNN AND PATIENCE S. FLYNN,
APPELLANTS
vs.
PMI MORTGAGE INSURANCE CO.,
APPELLEE
FROM THE DISTRICT COURT OF BELL COUNTY, 169TH JUDICIAL DISTRICT
NO. 133,399-C, HONORABLE STANTON B. PEMBERTON, JUDGE
PER CURIAM
This is an appeal from a default judgment. Appellee PMI Mortgage Insurance Co.
(PMI) instituted a deficiency suit against appellants Dennis D. Flynn and Patience S. Flynn. The
deficiency remained after PMI's assignor, Southwest Savings Association (Southwest), foreclosed
a deed of trust lien against real property the Flynns owned. PMI took a default judgment against
the Flynns after they failed to file timely an answer or other response. No record was made of
the hearing. The Flynns filed a motion for new trial and to set aside default judgment, and a
motion to set aside the deemed admissions. The trial court overruled the Flynns' motion for new
trial. A record of this hearing was made. (1) No findings of fact or conclusions of law were requested or filed. In a single point of error the Flynns assert the trial
court erred in denying their motion to set aside the default judgment and for new trial. We will
affirm the trial court's judgment.
STANDARD OF REVIEW
In reviewing the trial court's decision, we should reverse the judgment and order
a new trial only if the record reveals that the trial court clearly abused its discretion in overruling
the Flynns' motion for new trial. Strackbein v. Prewitt, 671 S.W.2d 37, 38 (Tex. 1984). When
applying the abuse of discretion standard, the reviewing court's inquiry should focus on whether
the trial court acted without reference to any guiding rules and principles. Another way of stating
the test is whether the act was arbitrary or unreasonable. The mere fact that a trial court may
decide a matter within its discretionary authority differently from what a reviewing court would
decide in similar circumstances does not demonstrate that an abuse of discretion has occurred.
Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985), cert. denied, 476
U.S. 1159 (1986). A mere error of judgment is not an abuse of discretion. Loftin v. Martin, 776
S.W.2d 145, 146 (Tex. 1989). Additionally, in reviewing the judgment of the trial court when
there are no findings of fact and conclusions of law requested or filed, this Court must uphold the
judgment on any legal theory that finds support in the evidence. Strackbein, 671 S.W.2d at 38.
A default judgment should be set aside and a new trial ordered in any case in which
the defendant's failure to answer before judgment was not intentional, or the result of conscious
indifference on his part, but was due to a mistake or accident; provided the motion for a new trial
sets up a meritorious defense and is filed at a time when the granting thereof will occasion no
delay or otherwise work an injury to the plaintiff. Bank One, Texas, N.A. v. Moody, 35 Tex.
Sup. Ct. J. 616, 617 (April 15, 1992) (citing Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d
124, 126 (Tex. 1939)).
THE EVIDENCE
Where factual allegations in a movant's affidavit are not controverted, a trial court
must determine a conscious-indifference question in the same manner as a claim of a meritorious defense. It is sufficient that the movant's motion and affidavits set forth facts which, if true,
would negate intentional or consciously indifferent conduct. Strackbein, 671 S.W.2d at 38-39.
Only a very slight excuse is needed. See Craddock, 133 S.W.2d at 125 (discussing Dowell v.
Winters, 20 Tex. 793 (1858)).
Factual Allegations.
Attached to each citation served on the Flynns was a copy of the petition and of
plaintiff's first request for admissions. (2) We will recite the relevant uncontroverted factual
allegations set forth in the Flynns' affidavits in support of their motion for new trial.
1. Dennis Flynn's Affidavit.
In his affidavit, Dennis Flynn states that, upon being served, he immediately
consulted a Virginia attorney, and delivered to him the citations. During Dennis Flynn's
consultation, the Virginia attorney telephoned James O. Cure, (3) an attorney in Temple, Texas, who
had previously represented Dennis Flynn. Dennis learned that Cure would require a $1000
retainer to take the case. After the Virginia attorney completed the telephone conversation with
Cure, Dennis instructed the Virginia attorney to retain Cure to file an answer in a timely manner.
Dennis advised the Virginia attorney that he had to sell some stocks in order to raise the retainer.
Dennis left the attorney's office assuming that the matter would be taken care of and that an
answer would be filed for both him and his wife in a timely manner.
2. Patience Flynn's Affidavit.
Patience Flynn's affidavit recites that she gave her copy of the citation and
attachments that were served on her to her husband and requested that he consult the Virginia
attorney about the matter. She did not accompany her husband to the attorney's office. When
Dennis returned from the attorney's office, he advised her that the attorney was going to retain
Cure to file an answer in a timely manner. Patience assumed the matter would be taken care of
and that an answer would be filed for her and her husband in a timely manner.
The default judgment was signed before Dennis paid the $1000 retainer to the
Virginia attorney and before an answer was filed. In their affidavits, the Flynns state that they
have no legal training and virtually no understanding of court procedure. Neither understood that
the retainer was required to be paid before any action would be taken.
DISCUSSION
A. Existence of Attorney-Client Relationship.
We take as true the factual allegations that (1) Dennis Flynn instructed the Virginia
attorney to retain Cure to timely file an answer; and (2) the Flynns assumed the matter would be
taken care of properly. While they do not expressly say so, the Flynns' belief that the Virginia
attorney would handle the matter implies their belief that an attorney-client relationship existed
between them and the attorney.
The threshold question is whether there is sufficient evident to support the
conclusion that an attorney-client relationship existed between the Flynns and the Virginia attorney
when Dennis Flynn left the attorney's office after the initial meeting. (4) The relationship of attorney
and client is one of principal and agent and may be implied from the conduct of the parties. Texas
Employers Ins. Ass'n v. Wermske, 349 S.W.2d 90, 93 (Tex. 1961); Duval County Ranch Co. v.
Alamo Lumber Co., 663 S.W.2d 627, 633 (Tex. App. 1983, writ ref'd n.r.e.). The creation of
an agency relationship depends upon a meeting of the minds in establishing the agency. The
consent of both the principal and the agent is necessary and may be implied. The principal must
intend that the agent act for him; the agent must intend to accept the authority and act on it. The
intention of the parties must find expression in the words or conduct between them. Grissom v.
Watson, 704 S.W.2d 325, 326 (Tex. 1986).
The factual allegations supporting the existence of an attorney-client relationship
are that: (1) Flynn consulted the Virginia attorney about the PMI lawsuit; (2) Dennis Flynn
delivered the citations and attachments to the Virginia attorney; and (3) Dennis instructed the
Virginia attorney to retain Cure to file timely an answer. The Flynns state that the Virginia
attorney did not forward the petitions to Cure. From this factual allegation, we presume Dennis
Flynn left the court documents with the Virginia attorney. In addition to these express factual
allegations, the Flynns inferentially allege that the Virginia attorney did not tell Dennis at their
initial meeting that he would not represent them, or that neither he nor Cure would act until the
retainer was received. (5) Otherwise, there is no basis for the Flynns' statement that they believed
the answer would be filed in a timely manner. These facts, if true, are sufficient to support the
existence of an attorney-client relationship between the Flynns and the Virginia attorney, the
representation encompassing, at the least, retaining Cure to file a timely answer.
B. The Actions of Both the Flynns and Their Attorney are Considered
When Determining Whether the Failure to Answer was Intentional or
Due to Conscious Indifference.
When parties rely on their agent or representative to file an answer, they must show
that the failure to answer was not intentional or the result of conscious indifference of either the
parties or their representative. Estate of Pollack v. McMurrey, No. D-1325, slip op. at 3 (Tex.,
May 6, 1992); Grissom, 704 S.W.2d at 327 (citing Harris v. Lebow, 363 S.W.2d 184, 186 (Tex.
Civ. App. 1962, writ ref'd n.r.e.); Carey Crutcher v. Mid-Coast Diesel Servs., 725 S.W.2d 500,
502 (Tex. App. 1987, no writ). An attorney's omissions and commissions are regarded as the
acts of the clients whom he represents. Texas Employers Ins. Ass'n., 349 S.W.2d at 93.
1. Answer Due Date.
The Flynns were served with citation on June 11, 1991. The citation recites that
the answer is due "at or before 10 o'clock A.M. of the Monday next after the expiration of 20
days after the date of service." Therefore, the answer had to be filed by July 8, 1991. The
Flynns do not allege that they, or the Virginia attorney, did not know the answer due-date,
misconstrued the date, or forgot about the matter. See Texas Iron & Metal Co. Inc. v. Utility
Supply Co., 493 S.W.2d 545, 546 (Tex. Civ. App. 1973, writ ref'd n.r.e.) (failure to timely
answer because defendant's agent misconstrued language in citation specifying answer due-date
held accident or mistake); Jackson v. Mares, 802 S.W.2d 48, 51 (Tex. App. 1990, writ denied)
(evidence attorney forgot about citations does not establish that failure to answer was intentional
or the result of conscious indifference). In the absence of an allegation to the contrary, we
conclude that the Flynns and the Virginia attorney knew that the answer had to be filed by July 8,
1991.
2. Knowledge Cure Required Retainer to Take the Case.
In his affidavit Dennis states that while he was at the Virginia attorney's office, he
learned that Cure required a $1000 dollar retainer to "take the case." The Flynns did not deliver
a retainer to the Virginia attorney until after the default judgment was signed on August 9, 1991,
fifty-nine days after they had been served with citation. Although Dennis told the Virginia
attorney that he would have to sell some stocks to raise the retainer, he does not state that he
actually made any effort to do so. Dennis fails to state what efforts, if any, he expended to raise
the retainer before entry of the default judgment.
3. Failure to Timely File Answer Was Due to Conscious
Indifference, Not Accident or Mistake.
The Flynns state they did not know that they had to pay the retainer before any
action would be taken. However, the Flynns' affidavits do not allege that the Virginia attorney
did not know that the retainer had to be paid before any action would be taken. Furthermore, an
attorney's duty to answer generally attaches when he learns a client has been served and the client
requests the attorney to file an answer or to see that an answer is filed. See Estate of Pollack, No.
D-1325, slip op. at 4. Dennis Flynn's affidavit establishes that the Virginia attorney knew the
Flynns had been served and that Dennis Flynn requested the attorney retain Cure to timely file
an answer. From the factual allegations contained in the Flynns' affidavits, it appears the Virginia
attorney simply refrained from acting to retain Cure until he received the retainer. This is not an
accident or mistake within the meaning of Craddock. See Graham v. Truck Equip. Co. of
Amarillo, 413 S.W.2d 778, 779 (Tex. App. 1967, no writ) (Craddock rule not satisfied when
attorney refrained from having answer filed until defendant paid attorney a portion of his fee).
On this record we cannot say that the trial court abused its discretion when it denied
the motion for new trial. The Flynns have not set forth facts which, if true, show their failure to
answer was not due to conscious indifference, but was due to accident or mistake. Because
appellants have not satisfied the first requirement of the Craddock rule, we need not address
whether they have satisfied its remaining requirements. Appellants' second point of error is
overruled and the trial court's judgment is affirmed.
[Before Chief Justice Carroll, Justices Aboussie and B. A. Smith;
Chief Justice Carroll not participating]
Affirmed
Filed: May 13, 1992
[Do Not Publish]
1. No evidence was introduced at the hearing on the motion for new trial. The only
evidence in support of the motion for new trial is the Flynns' affidavits with attachments.
2. The Flynns point out that neither of them was served with an original request for
admissions. Both copies of the requests for admissions served were directed to Patience
Flynn. The Flynns allege that Dennis never received a request for admissions directed to him
in his name. The cover sheet of the request recites that the "admissions" shall be served upon
the counsel of record and filed with the court or said admissions shall be deemed admitted.
The Flynns argue that the cover sheet should instruct that it is the "answers" to admissions
that shall be served and filed. The cover sheet also instructs that "you are required to supplement
your answers to interrogatories."
The Flynns failed to answer, or object to, the request for admissions. Therefore,
each matter of which an admission was requested is deemed admitted. Tex. R. Civ. P. Ann. 169
(Supp. 1992). The Flynns filed a motion to set aside the deemed admissions, which the trial court
did not rule on. To preserve a complaint for appellate review, it is necessary for the complaining
party to obtain a ruling. Tex. R. App. P. Ann. 52 (Pamph. 1992). Additionally, the Flynns have
failed to bring forward a point of error alleging that the trial court erred by not setting aside the
deemed admissions. Tex. R. App. P. Ann. 74(d) (Pamph. 1992). The Flynns' sole point of error
attacks the trial court's denial of the motion for new trial. The Flynns have waived any error
regarding the requests for admissions. Regardless, we do not rely on the deemed admissions in
our disposition of this appeal.
3. Cure is representing the Flynns on appeal.
4. Otherwise, their failure to employ an attorney and make sure that he understands he
is to see that an answer is timely filed, unless they expect to represent themselves, may
constitute inexcusable negligence. See Brothers Dep't. Store, Inc. v. Berenzweig, 333 S.W.2d
445, 447 (Tex. Civ. App. 1960, writ ref'd n.r.e.).
5. Dennis paid the Virginia attorney the retainer after default judgment was taken. Cure
then filed an answer. The record is silent regarding whether the Virginia attorney kept any
of the retainer or was otherwise paid fees by the Flynns.
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511 F.2d 1393
Fitzpatrickv.Secretary, Health, Education & Welfare
74-1828
UNITED STATES COURT OF APPEALS Third Circuit
2/26/75
1
D.N.J.
AFFIRMED
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BLD-295 NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
No. 18-1880
____________
JOHN E. REARDON; JUDITH A. REARDON; JOHN J. REARDON,
Appellants
v.
NOEL HILLMAN; JAY SANCHEZ; DESIREE RAMSEY; RYAN MERRIGAN
________________________________________
On Appeal from the United States District Court
for the District of New Jersey
(D.C. Civil No. 3-18-cv-01296)
District Judge: Honorable Brian R. Martinotti
_________________________________________
Submitted for Possible Dismissal Due to a Jurisdictional Defect, and on Appellees’
Motion for Summary Action Pursuant to Third Circuit LAR 27.4 and I.O.P. 10.6
August 23, 2018
Before: RESTREPO, BIBAS, and NYGAARD, Circuit Judges
(Opinion filed: August 28, 2018)
___________
OPINION *
___________
PER CURIAM
*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
Appellant, John E. Reardon, submitted a pro se complaint in the United States
District Court for the District of New Jersey on behalf of himself, and Judith A. and John
J. Reardon, against District Court Judge Noel Hillman and three employees of the District
Court’s Clerk’s Office (“Clerk’s Office employees”). The Reardons alleged, inter alia,
that District Judge Hillman and the Clerk’s Office employees violated certain of their
constitutional rights by refusing to grant their various motions for default judgment filed
in two other civil actions they are litigating in the District of New Jersey. The District
Court concluded that the complaint was barred by judicial immunity. Accordingly, it
dismissed the action against District Judge Hillman with prejudice and dismissed the
complaint without prejudice as to the Clerk’s Office employees. John E. Reardon
appeals. 1
We have jurisdiction under 28 U.S.C. § 1291, and conclude that the District Court
did not err in dismissing Reardon’s complaint. 2 The Supreme Court has long recognized
that judges are immune from suit for monetary damages arising from their judicial acts.
1
John E. Reardon has filed a notice of appeal on behalf of himself and on behalf of John
J. Reardon and Judith A. Reardon. However, a person who is not a licensed attorney may
only represent himself in this Court. See 28 U.S.C. § 1654; see also Becker v.
Montgomery, 532 U.S. 757, 760, 768 (2001) (appeal may proceed so long as appellant
promptly supplies signature). John E. Reardon does not appear to be a licensed attorney,
and John J. Reardon and Judith A. Reardon never personally signed the notice of appeal
as directed by the Clerk’s Office. Accordingly, the appeal will proceed as to John E.
Reardon only.
2
Although the District Court originally dismissed the complaint against the Clerk’s
Office employees without prejudice, Reardon has, through his later submissions,
indicated his intent to stand on the complaint as filed. Therefore, the appeal will not be
dismissed for lack of jurisdiction. See Borelli v. City of Reading, 532 F.2d 950, 951-52
(3d Cir. 1976). Moreover, the District Court entered a subsequent order dismissing the
entirety of the complaint with prejudice.
2
See Mireles v. Waco, 502 U.S. 9, 9 (1991); Forrester v. White, 484 U.S. 219, 225-27
(1988); Stump v. Sparkman, 435 U.S. 349, 355-56 (1978). Judicial immunity applies
unless the judge’s actions either were nonjudicial or were taken in the complete absence
of jurisdiction. See Gallas v. Supreme Court of Pa., 211 F.3d 760, 768-69 (3d Cir. 2000)
(citing Mireles, 502 U.S. at 11-12). Likewise, a Court Clerk or judicial officer enjoys
absolute quasi-judicial immunity when he or she performs a “judicial act,” such as entry
of a default judgment. See Lundahl v. Zimmer, 296 F.3d 936, 939 (10th Cir. 2002).
The District Court correctly concluded that absolute judicial immunity applies in
this case insofar as Reardon claims his injuries stem directly from the failure of District
Judge Hillman and the Clerk’s Office employees to direct the entry of default judgment
in his favor. These actions (or, perhaps more appropriately, refusals) were not taken in
the complete absence of jurisdiction but were in furtherance of their official, judicial
duties, and thus may not serve as the bases for an award of civil damages. As a result, the
District Court appropriately dismissed the complaint. See Gallas, 211 F.3d at 770.
Accordingly, because this appeal presents no substantial issue, we will grant appellees’
motion and summarily affirm the District Court’s order of dismissal. See Third Circuit
LAR 27.4 and I.O.P. 10.6.
3
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49 So.3d 175 (2010)
TENNESSEE HEALTH MANAGEMENT, INC.
v.
Carol J. Rousseau JOHNSON, as personal representative of the estate of Dolores J. Rousseau, deceased.
1080762.
Supreme Court of Alabama.
April 9, 2010.
*176 Stephen A. Rowe and Aaron G. McLeod of Adams & Reese LLP, Birmingham, for appellant.
Ralph W. Hornsby, Jr., and Jennifer L. McKown of Hornsby, Watson, Hornsby, Blackwell & McKown, Huntsville, for appellee.
LYONS, Justice.
Tennessee Health Management, Inc. ("THM"), is a defendant in an action pending in the Madison Circuit Court. It appeals from an order denying its motion to compel arbitration of the plaintiff's claims. We reverse and remand.
I. Facts and Procedural History
Dolores J. Rousseau ("Dolores")[1] was admitted to Millennium Nursing and Rehabilitation Center ("Millennium") in Huntsville on January 26, 2008, following hip-replacement surgery. Millennium is operated by THM. On January 25, 2008, Dolores's daughter Barbara Rousseau ("Barbara") signed numerous forms on Dolores's behalf required by Millennium for Dolores's admission to the facility. Barbara signed the admission forms in the various capacities of the patient's representative, the patient or a responsible party, the resident's representative, the resident/family, the family or legal representative, the legal representative, or the responsible family member. There is no evidence indicating that Dolores ever objected to Barbara's signing the various admission forms on her behalf or that Dolores was mentally incompetent when she was admitted to Millennium. Dolores was discharged from Millennium six days later, on February 1, 2008.
The financial agreement Barbara signed contained the following definitions:
"1. `Resident' means the individual who is or will be residing in the facility and includes where applicable a legal representative appointed to act on behalf of the resident. (Examples: conservator, legal guardian, person with power of attorney).
"2. `Facility' means Millennium Nursing & Rehab Center.
"3. `Resident Representative' means the individual, who along with the resident, should receive notices and other communications concerning the resident.
"4. `Responsible Party' is any individual or organization who personally assumes financial responsibility for the resident's financial obligations under this agreement. . . ."
The financial agreement specified the daily rate Millennium would charge for Dolores's stay, listed items and services not covered by the daily rate, identified Dolores as a "private pay resident" covered by Medicare, and explained Dolores's financial obligations to Millennium. Barbara signed the financial agreement above a line on which was printed the term "Legal representative."
Barbara also signed an "Agreement to Alternative Dispute Resolution" ("the ADR agreement"). The ADR agreement, in addition to requiring binding arbitration, also provided:
"1. Parties to the Agreement: The parties to this Agreement are Millennium Nursing & Rehab Center, inclusive *177 of its employees and/or affiliates, which will be collectively referred to as the `FACILITY,' and Dolores Rousseau, their [sic] health care decision maker or surrogate, or any representative of that individual identified below, who will be collectively referred to as the `RESIDENT.' The parties agree that the undersigned individuals have the legal authority to bind their respective parties.
"2. Voluntary Nature of this Agreement: RESIDENT and FACILITY agree that this Agreement is entered into on a voluntarily [sic] basis. The RESIDENT understands that they have a choice of long-term care providers and that other nursing facilities may or may not use arbitration and/or mediation to resolve disputes. By signing below, the RESIDENT agrees that the FACILITY is not requiring them [sic] to sign this Agreement and understands that they [sic] may be admitted to the FACILITY without entering into this Agreement.. . .
". . . .
"5. Not a Condition of Admission: RESIDENT'S signing this Agreement (agreeing to submit disputes to ADR) is not a condition of admission to the FACILITY; and the decision to sign this Agreement is solely within the discretion of RESIDENT.
"6. Opportunity to Seek Counsel: The signature below of RESIDENT indicates that the FACILITY has advised RESIDENT, their [sic] health care decision maker, and/or family members they may seek legal counsel prior to signing, entering into and/or being bound by this Agreement. RESIDENT is encouraged to ask questions or seek legal counsel if they [sic] do not understand any of the provisions of this Agreement.
". . . .
"16. Binding Effect: It is the intention of the RESIDENT and the FACILITY that this Agreement shall inure to the benefit of and bind the FACILITY, its affiliated entities, management companies, administrators, owners, officers, shareholders, members, representatives, governors, directors, medical directors, employees, trustees, successors, assigns, agents, attorneys and insurers; and shall inure to the benefit of and bind the RESIDENT, his/her agents, attorneys, direct and third party beneficiaries, insurers, heirs, trustees and representatives, including the personal representative, administrator, or executor of his/her estate, and his/her spouse and children."
(Capitalization in original.) The ADR agreement contained alternative signature lines for the resident; the conservator/guardian, durable power of attorney for health care, or other legal representative, if any; health-care decision-maker; or family member responsible for the resident. Barbara signed her name to the ADR agreement on the signature line provided for the family member responsible for the resident.
On May 23, 2008, Dolores, acting through Barbara as her next friend, sued THM and related entities. The complaint alleges that while Dolores was a resident of Millennium, she suffered dehydration, a urinary-tract infection, an abdominal blockage, and other bodily injuries, as well as mental anguish and emotional distress. Dolores stated claims alleging negligence, wantonness, and breach of contract.
THM moved to compel arbitration. In support of the motion, it submitted the ADR agreement and an affidavit from Lisa Rose, the executive director of Millennium, who stated that on January 25, 2008, Barbara signed the ADR agreement on behalf of Dolores as the "Family Member Responsible *178 for RESIDENT" and that the ADR agreement was one of the documents executed in conjunction with admitting Dolores to Millennium. Rose also stated that Dolores's stay at Millennium involved interstate commerce in that Millennium is located in Huntsville and THM is a corporate resident of Tennessee.
Dolores opposed the motion to compel arbitration. Barbara submitted an affidavit to the trial court in opposition in which she stated:
"My mother, Dolores Rousseau, was admitted to and was a patient of Huntsville Hospital following a hip replacement surgery. My mom was not ambulatory and her doctors had indicated that upon her discharge from Huntsville Hospital she needed twenty-four (24) hour nursing and medical care due to self-care deficits. The employees at Huntsville Hospital made arrangements for my mother to be transferred to Millennium Nursing and Rehabilitation Center. Upon arrival, I was greeted by an employee who presented me with admission documents, including an arbitration agreement. At that time, I did not have a power of attorney over my mother, nor did I have any legal basis for signing my mother's name, or obligating her contractually. The admission paperwork was never presented to my mother. I signed my own name to this agreement, and I signed in my own personal capacity. My mother never was given an opportunity to sign the admission documents, nor did she sign them. My mother never gave me any instructions to sign on her behalf. I signed in my own individual capacity, and not pursuant to any instructions or other legal authority. My mother was not present when the admission documents and the arbitration agreement were presented to me."
The trial court denied THM's motion to compel arbitration on February 12, 2009. THM appealed.
On July 2, 2009, THM notified this Court of Dolores's death on June 7, 2008. It then filed a motion for leave to file a motion pursuant to Rule 60(b), Ala. R. Civ. P., with the trial court. In support of that motion, THM stated that it had not been made aware of Dolores's death for approximately one year after it occurred and that it had discovered new evidence regarding Barbara's authority to bind Dolores to arbitration. It is undisputed that no suggestion of death was filed and that Dolores's estate was not substituted as the plaintiff instead of Dolores. THM argued that because it had discovered new evidence, because its motion to compel arbitration was decided in favor of a party who had died, and because there had been no substitution of the decedent's estate as appellee instead of Dolores before the appeal was taken, this Court should stay the appeal to allow THM to move for relief from the trial court's order in light of the newly discovered evidence and to allow the proper party to be substituted as the plaintiff. This Court granted THM's motion for leave to file a Rule 60(b) motion with the trial court and granted the trial court leave to rule on the motion. THM also moved to supplement the record; that motion was granted as well.
On July 23, 2009, Carol J. Rousseau Johnson, as personal representative of the estate of Dolores J. Rousseau, deceased ("Carol"), filed an amended complaint against THM. The amended complaint alleged essentially the same facts and stated the same claims as did the initial complaint. The amended complaint adds the allegation that Dolores was injured so severely during her stay at Millennium that those injuries resulted in her death on June 7, 2008.
*179 THM renewed its motion to compel arbitration, which it supported not only with the ADR agreement and Rose's affidavit, but also with the other documents Barbara had signed in the course of admitting Dolores to Millennium. THM also filed a Rule 60(b)(6) motion for relief from the order denying its motion to compel arbitration. Carol did not file any response to the renewed motion to compel arbitration or to the Rule 60(b) motion. After a hearing, the trial court denied THM's Rule 60(b)(6) motion on September 22, 2009. When the trial court submitted a return to this Court, we then resumed jurisdiction over the case.
II. Standard of Review
"`This Court reviews de novo the denial of a motion to compel arbitration. Parkway Dodge, Inc. v. Yarbrough, 779 So.2d 1205 (Ala.2000). A motion to compel arbitration is analogous to a motion for a summary judgment. TranSouth Fin. Corp. v. Bell, 739 So.2d 1110, 1114 (Ala.1999). The party seeking to compel arbitration has the burden of proving the existence of a contract calling for arbitration and proving that the contract evidences a transaction affecting interstate commerce. Id. "[A]fter a motion to compel arbitration has been made and supported, the burden is on the non-movant to present evidence that the supposed arbitration agreement is not valid or does not apply to the dispute in question." Jim Burke Automotive, Inc. v. Beavers, 674 So.2d 1260, 1265 n. 1 (Ala.1995) (opinion on application for rehearing).'"
Elizabeth Homes, L.L.C. v. Gantt, 882 So.2d 313, 315 (Ala.2003) (quoting Fleetwood Enters., Inc. v. Bruno, 784 So.2d 277, 280 (Ala.2000)).
III. Analysis
THM argues that Barbara had the apparent authority to sign the ADR agreement for Dolores because, they argue, Barbara represented herself on the admission documents as someone who had the legal authority to bind Dolores and because Dolores did not object when Barbara signed the admission documents on her behalf. The ADR agreement recites that the parties to the agreement are the "Facility," defined as Millennium, "inclusive of its employees and/or affiliates," and the "Resident," defined as Dolores "or any representative of that individual identified below." The ADR agreement further states that the parties "agree that the undersigned individuals have the legal authority to bind their respective parties." Barbara signed the ADR agreement in the block provided for the signature of the family member responsible for the resident. Barbara had also signed another document, the financial agreement, as Dolores's legal representative.
THM relies on this Court's decision in Carraway v. Beverly Enterprises Alabama, Inc., 978 So.2d 27 (Ala.2007). In Carraway, Richard Carraway signed a number of documents when he admitted his sister, Shirley Carraway, to a nursing home. One of the documents was an arbitration agreement, which Richard signed as his sister's authorized representative. After Shirley died, Richard filed a wrongful-death action against the nursing home. The trial court granted the nursing home's motion to compel arbitration, and Richard appealed, arguing that no valid arbitration agreement existed because Shirley never signed the agreement. This Court disagreed, holding that Shirley's estate was bound by the arbitration agreement signed by Richard. We stated:
"Just as Richard signed all the other documents relating to Shirley's admission into the nursing home on Shirley's behalf, Richard signed the arbitration *180 agreement on Shirley's behalf expressly as an `authorized representative.' Apparent authority `is implied where the principal passively permits the agent to appear to a third person to have the authority to act on [her] behalf.' Treadwell Ford, Inc. v. Courtesy Auto Brokers, Inc., 426 So.2d 859, 861 (Ala.Civ. App.1983). `It is not essential that the right of control be exercised so long as that right actually exists.' Wood Chevrolet Co. v. Bank of the Southeast, 352 So.2d 1350, 1352 (Ala. 1977). There is no evidence indicating that Shirley had any objection to Richard's acting on her behalf in admitting Shirley to the nursing home. . . . The arbitration agreement did not call for the signature of a legal representative; instead, it provided that `a person duly authorized by the Resident' could sign the agreement on the resident's behalf."
978 So.2d at 30-31.
The facts in this case concerning the execution of the ADR agreement are similar. Barbara signed all the documents admitting Dolores to Millennium, including the ADR agreement, in various representative capacities. The ADR agreement specifically defined the party to be bound by the agreement as Dolores or "any representative of that individual." Furthermore, it states that the parties agreed that the individuals who signed the agreement have the legal authority to bind their respective parties. Because Dolores enjoyed the ease of checking into Millennium without the requirement that she sign anything, under circumstances in which no reasonable person could consider the admission possible without the intervention of an agent to act on Dolores's behalf, she thereby passively permitted Barbara to appear to THM to have the authority to act on her behalf, and Barbara's apparent authority is, therefore, implied. See Carraway, 978 So.2d at 30 ("Apparent authority `is implied where the principal passively permits the agent to appear to a third person to have the authority to act on [her] behalf.'" (quoting Treadwell Ford, Inc. v. Courtesy Auto Brokers, Inc., 426 So.2d 859, 861 (Ala.Civ.App.1983))).
Carol relies upon the fact that Dolores did not instruct Barbara to sign the admission documents on her behalf. Notwithstanding the absence of evidence indicating that Dolores instructed Barbara to sign the admission documents on her behalf, there is no evidence indicating that upon entering Millennium or any time after her admission Dolores ever signed any document obligating herself to pay for the services, that she ever objected to Barbara's having signed the admission documents, or that she understood that Millennium was treating her without charge, dispensing with the necessity for an agreement. Instead, Dolores remained at Millennium for six days, accepting the benefits of the services rendered without objection or question. As was the case in Carraway, "[t]here is no evidence indicating that [Dolores] had any objection to [Barbara]'s acting on her behalf in admitting [Dolores] to the nursing home." 978 So.2d at 31.
Carol also argues that Dolores is not bound by the ADR agreement because she did not sign it and she was not present when Barbara signed it. Barbara's claims, if any, may be subject to arbitration, Carol argues, but as a nonsignatory to the agreement, Dolores could not be forced to arbitrate her claims. Carol relies upon Noland Health Services, Inc. v. Wright, 971 So.2d 681 (Ala.2007). In Noland, a plurality of this Court held that a daughter-in-law's signature as the responsible party on a nursing-home arbitration agreement was ineffective to bind the resident to the agreement. Noland is distinguishable from this case, however, because the nursing-home *181 resident in Noland was mentally incompetent and could not authorize anyone to act on her behalf and because the daughter-in-law did not sign any document in the capacity of her mother-in-law's legal representative.
Carol also argues that Barbara did not have a power of attorney over Dolores or any other legal authority to contractually bind Dolores to the ADR agreement. In Carraway, Shirley executed a power of attorney a few weeks after she was admitted to the nursing home that gave Richard further authority to act on her behalf. The Court found that her execution of the power of attorney was further evidence suggesting that Shirley approved of her brother's acting on her behalf when he signed the admission documents. 978 So.2d at 31. The arbitration agreement in Carraway did not call for the signature of a legal representative; likewise, the ADR agreement Barbara executed did not require the signature of Dolores's legal representative. The absence of a power of attorney in this case is not fatal to our conclusion that Barbara had the apparent authority to bind Dolores at the time Barbara signed the admission documents in view of the evidence indicating that Dolores passively permitted Barbara to act on her behalf.
Under these circumstances, THM proved the existence of a valid contract calling for arbitration and proved that the contract evidenced a transaction affecting interstate commerce. The trial court erred in denying the motion to compel arbitration. Because we reverse on that basis, we need not address the other arguments relied on by THM.
IV. Conclusion
THM has satisfied its burden of showing the existence of a valid arbitration agreement. We conclude that the trial court erred in denying THM's motion to compel arbitration in accordance with the ADR agreement. We therefore reverse the trial court's order denying the motion to compel arbitration and remand the case for further proceedings consistent with this opinion.
REVERSED AND REMANDED.
COBB, C.J., and STUART, SMITH, BOLIN, PARKER, MURDOCK, and SHAW, JJ., concur.
WOODALL, J., dissents.
NOTES
[1] Dolores was the original plaintiff in this action. After her death, her daughter Carol J. Rousseau Johnson, the personal representative of her estate, was substituted as the plaintiff. The final order entered by the trial court on September 22, 2009, bore the correct style of the case; we have used the same style as did the trial court, which bears the name of the substituted plaintiff. The plaintiff's name was also spelled alternatively in the record Delores.
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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 01-40869
Summary Calendar
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
IGNACIO TORRES-LOPEZ, also known as Ruben Gonzalez-Lopez,
Defendant-Appellant.
_________________________________________
Appeal from the United States District Court
for the Southern District of Texas
USDC No. M-01-CR-202-1
_________________________________________
December 6, 2001
Before POLITZ, SMITH, and BARKSDALE, Circuit Judges.
PER CURIAM:*
The Federal Public Defender has moved for leave to withdraw as counsel for
the defendant, Ignacio Torres-Lopez, and has filed a brief as required by Anders v.
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be
published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
California.1 Torres has received a copy of counsel’s motion and brief and has filed
a response.
Our independent review of the record, Torres’ response to counsel’s motion,
and controlling jurisprudence discloses no nonfrivolous issue for appeal.
Accordingly, counsel’s motion for leave to withdraw is GRANTED, counsel is
excused from further responsibilities herein, and the appeal is DISMISSED. 2
1
386 U.S. 738 (1967).
2 th
5 Cir. R. 42.2.
2
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879 F.2d 30
28 Fed. R. Evid. Serv. 380
UNITED STATES of America, Appellee,v.Alexander BORTNOVSKY, a/k/a "Sasha," and Leonid Braz,Defendants-Appellants.
Nos. 650, 651, Dockets 88-1410, 88-1411.
United States Court of Appeals,Second Circuit.
Argued Jan. 9, 1989.Decided June 27, 1989.
1
Elizabeth Glazer, New York City, Asst. U.S. Atty. for the S.D.N.Y. (Benito Romano, U.S. Atty., Kerry Martin Bartlett, Asst. U.S. Atty., of counsel), for appellee.
2
Julia Pamela Heit, New York City, Heit & Grant, for defendant-appellant, Alexander Bortnovsky.
3
Michael H. Soroka, Garden City, N.Y., for defendant-appellant, Leonid Braz.
4
Before VAN GRAAFEILAND and MINER, Circuit Judges, and LASKER, District Judge.*
LASKER, District Judge:
5
Alexander Bortnovsky and Leonid Braz appeal from their judgments of conviction entered on September 15, 1988 for conspiracy to conduct the affairs of an enterprise through a pattern of racketeering in violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. Sec. 1962(d) (count one); participation in the affairs of an enterprise through a pattern of racketeering in violation of Sec. 1962(c) of RICO (count two); and mail fraud in violation of 18 U.S.C. Sec. 1341 (count nine). The defendants challenge the conduct of the government during trial, the admissibility of certain evidence, the legal sufficiency of the convictions arising under the mail fraud statute and RICO, and the legality of their sentences. The decision below is affirmed in all respects but one: the case is remanded for the limited purpose of correcting the sentences.
I. BACKGROUND
6
In the summer of 1988, defendants Bortnovsky and Braz were tried for conspiracy to participate and actual participation in the affairs of an enterprise through a pattern of racketeering ("the RICO counts") and for a single count of mail fraud.1 Prior to trial, count three, charging the defendants with conspiracy to defraud the federal government by filing false claims with the Federal Emergency Management Administration ("FEMA"), and counts four through eight, each of which involved an allegation of mail fraud, were dismissed as barred by the statute of limitations. United States v. Bortnovsky, 683 F.Supp. 449 (S.D.N.Y.1988).
7
In connection with their ownership of two clothing stores, Braz and Bortnovsky were alleged to have engaged in a number of schemes to defraud the agencies that insured their businesses; these schemes constituted the RICO predicate acts. In answer to special interrogatories, the jury found both defendants to have participated in the arson of one of their stores on August 25, 1981 (predicate act one) and mail fraud for the subsequent filing with the New York Property Insurance Underwriters Association ("NYPIUA") of a claim for over $100,000 for losses resulting from the fire (predicate act two). In addition, the jury found the government to have proven Braz's participation in yet another predicate act, namely mail fraud for filing a claim with the Federal Crime Insurance Program ("FCIP") for coats alleged to have been stolen during a burglary of one of the stores (predicate act three). Neither Braz nor Bortnovsky were found to have engaged in a scheme to stage burglaries of their stores and thereafter file fictitious claims (predicate act four).
8
Braz's post-trial motion for a new trial, based on the court's exclusion of a document supporting Braz's contention that he had received the coats whose alleged theft was the basis of his FCIP claim, was denied. Bortnovsky and Braz were respectively sentenced to concurrent terms of six and eight years' imprisonment on all counts; each also was sentenced to two years of probation following release from custody and ordered to pay $5,225 in restitution.
9
On appeal, the defendants contend that: 1) the government knowingly introduced and relied on perjured testimony, 2) the court improperly excluded from evidence an exculpatory report,2 3) the government's proof was insufficient as a matter of law to establish that the defendants had committed mail fraud, 4) the government failed to prove a pattern of racketeering necessary for the RICO counts, and 5) the sentences were invalid as a matter of law in several respects, some of which the government concedes.
II. DISCUSSION
A. GOVERNMENT'S USE OF PERJURED TESTIMONY
10
At trial, the government elicited the opinion of Fire Marshal George W. Powell that the fire of August 25, 1981, the basis of predicate act one, had been intentionally set. He testified that he reached this conclusion because he smelled gasoline on the clothes of Angel Guzman, who died in the fire and whose remains were found during the excavation. The defendants maintain that this testimony was false, that the government knew it to be such, and that, accordingly, the conviction must be reversed and a new trial granted. They premise their argument that Powell's testimony was "palpably false" on his failure to state in reports of his investigation of the fire or in earlier testimony that he had smelled gasoline on Guzman's clothing. This argument lacks merit.
11
Powell's earlier silence provides an insufficient basis upon which to find that the later testimony was false. At most, Powell's testimony differed from, but did not contradict, what he said earlier. However, even if this testimony had conflicted directly with that given previously, the difference alone would not constitute perjury.
12
Presentation of a witness who recants or contradicts his prior testimony is not to be confused with ... perjury. It was for the jury to decide whether or not to credit the witness.
13
United States v. Holladay, 566 F.2d 1018, 1019 (5th Cir.) (per curiam), cert. denied, 439 U.S. 831, 99 S.Ct. 108, 58 L.Ed.2d 125 (1978). See also United States v. Hemmer, 729 F.2d 10, 17 (1st Cir.) (inconsistencies between witness's statements before grand jury and at trial do not warrant inference that government knowingly used false testimony), cert. denied, 467 U.S. 1218, 104 S.Ct. 2666, 81 L.Ed.2d 371 (1984); United States ex rel. Burnett v. Illinois, 619 F.2d 668, 674 (7th Cir.) ("Contradictory testimony does not constitute perjury.") (footnote omitted), cert. denied, 449 U.S. 880, 101 S.Ct. 229, 66 L.Ed.2d 104 (1980). Nor does the fact that Powell's testimony conflicted with that of the defendants' expert at an earlier trial support an inference of perjury.3 Cf. United States v. Miranne, 688 F.2d 980, 989 (5th Cir.1982) (differing testimony of two government witnesses presented at most a credibility question for the jury), cert. denied, 459 U.S. 1109, 103 S.Ct. 736, 74 L.Ed.2d 959 (1983); United States v. Brown, 634 F.2d 819, 827 (5th Cir.1981) (proof that "testimony is challenged by another witness or is inconsistent with prior statements" is insufficient to establish due process violation). Powell's failure to report the smell of gasoline on Guzman's clothing earlier was at most a point for the defense counsel to place before the jury for its resolution.
14
Moreover, even if Powell's prior silence were to establish that his testimony was perjured, the defendants could not prevail because there is no evidence that the government knew or should have known the testimony to be false.4 United States v. Holladay, 566 F.2d at 1019 (affirming conviction where there was no evidence that prosecution knew or believed testimony to be false); United States v. Miranne, 688 F.2d at 989 (reversal not warranted where there was no evidence that government had "actual or constructive knowledge of the alleged perjury").
B. EXCLUSION OF EXHIBIT G
15
The indictment alleged as the third predicate act that Braz's insurance claim of February, 1980 for the theft of sheepskin coats from the store was fraudulent because the coats were not delivered until September, 1980. In response to evidence introduced by the government in support of its argument, Braz sought to introduce defendant's exhibit G, the report of the insurance adjuster. The report stated in relevant part: "We questioned a Mr. David Belsky of the firm Damer Sheepskin Fashions [the supplier] who advised that the goods were delivered to the assured on January 19, 1980, but to date they had not been paid for by the assured." The district court held that the document was not admissible under either Fed.R.Evid. 803(6) as a business record, Fed.R.Evid. 803(8) as a public record, or Fed.R.Evid. 803(24) or 804(b)(5), which provide generally for admission of documents not covered by other exceptions "but having equivalent circumstantial guarantees of trustworthiness." We conclude that this exclusion was not, as Braz argues, an abuse of discretion.5 See United States v. Salvador, 820 F.2d 558, 561 (2d Cir.), cert. denied, --- U.S. ----, 108 S.Ct. 458, 98 L.Ed.2d 398 (1987). Nor was the decision denying Braz's Rule 33 motion--for a new trial based on the document's exclusion or, in the alternative, for a hearing as to its reliability--reversible error.
16
Although Braz speaks of the entire document, the real issue is the admissibility not of exhibit G itself, but of the statement of Belsky it contains. Therefore, to prevail on his argument, Braz must establish not only that the report falls within an exception to the hearsay rule, but also that Belsky's statement is covered by such an exception. Braz has failed to do the latter.
17
Although the adjuster's report might otherwise qualify as a business record within the meaning of Rule 803(6), Belsky's statement does not satisfy the rule's requirements because there was no showing that he had a duty to report the information he was quoted as having given. See United States v. Meyers, 847 F.2d 1408, 1412 (9th Cir.1988) (holding exhibit summarizing surveillance activity was admissible because there was no evidence report "improperly incorporated the statements of third persons under no business duty to report"); United States v. Snyder, 787 F.2d 1429, 1434 (10th Cir.) (affirming exclusion of report because it contained statements of those with no business duty to report), cert. denied, 479 U.S. 836, 107 S.Ct. 134, 93 L.Ed.2d 78 (1986); United States v. Pazsint, 703 F.2d 420, 424 (9th Cir.1983) (holding tapes of emergency calls were erroneously admitted because the callers were under no business duty to report); Clark v. City of Los Angeles, 650 F.2d 1033, 1037 (9th Cir.1981) (hearsay statements within business records are admissible only if the person providing the information had a "duty of accuracy"), cert. denied, 456 U.S. 927, 102 S.Ct. 1974, 72 L.Ed.2d 443 (1982); United States v. Yates, 553 F.2d 518, 521 (6th Cir.1977) (finding part of letter not within business record exception because it contained statement outside the scope of business). Cf. Johnson v. Lutz, 253 N.Y. 124, 127-28, 170 N.E. 517 (1930) (police officer's accident report, although prepared in ordinary course of business, was inadmissible because it contained statement of bystander who had no duty to report information).
18
The admissibility of Belsky's statement within the exception for reports of public agencies or the catch-all exceptions depends on its "trustworthiness." Judge Mukasey did not abuse his discretion when ruling that there was insufficient evidence of the statement's reliability to provide the requisite circumstantial guarantees of trustworthiness.6 Not only did Belsky have no duty to report the date on which the goods were delivered, there was no evidence that, as an accountant, he would have had personal knowledge of the date on which the coats were delivered. In addition, the statement was supported only by the testimony of Braz and contradicted by the evidence of the government.
19
Finally, the post-trial decision denying Braz's motion for a new trial because of the exclusion of the statement or a hearing as to the document's reliability was not reversible error. In support of that motion, Braz submitted the results of a polygraph examination that supported his testimony that the coats were delivered before the robbery. In response the government submitted an affidavit of Belsky dated August 8, 1988 in which he stated that he did not recall making the statement at issue nor did he think it likely that he made such a statement because, as an outside accountant, he "was usually not in a position to know when merchandise was delivered by [the supplier]."
20
The district court properly held that Belsky's affidavit indicated that the statement in exhibit G lacked the reliability to be admissible as an exception to the hearsay rule, because Belsky did not have personal knowledge of the facts reported. Moreover, Judge Mukasey's ruling that the polygraph results did not raise a question as to the propriety of that determination or necessitate a hearing was proper. This court, although not directly addressing the question, has intimated that the results of polygraph tests are inadmissible. See Republic Nat'l Bank of New York v. Eastern Airlines, 639 F.Supp. 1410, 1419 (S.D.N.Y.1986) (granting motion for summary judgment where polygraph results were only evidence that might raise genuine issue of material fact because "such results are generally inadmissible in federal court"), aff'd, 815 F.2d 232 (2d Cir.1987); United States v. Hart, 344 F.Supp. 522, 524 (E.D.N.Y.1971) (admitting on defendant's behalf polygraph test of government witness taken by government because government initiation of test suggested government thought test reliable and excluding results of polygraph examination initiated by defendant). See also Brown v. Darcy, 783 F.2d 1389, 1394-95 & n. 11 (9th Cir.1986) (collecting cases holding that lie detector test results inadmissible); Barrels of Fun, Inc. v. State Farm Fire & Casualty Co., 739 F.2d 1028, 1031 (5th Cir.1984) (same); Dowd v. Calabrese, 585 F.Supp. 430, 431 n. 6 (D.D.C.1984) (same).
21
Finally, the exclusion of Belsky's statement, even if error was harmless. The fraudulent claim for the losses sustained during the burglary underlay only one of the three predicate acts in which the jury found Braz participated.
C. MAIL FRAUD
22
The defendants' convictions for mail fraud as well as for participation in a RICO enterprise were premised on a letter of May 23, 1983 to Bortnovsky from Kenneth Sapperstein of Sapperstein, Hochberg & Haberman,7 the adjusting firm retained by DGSM Clothing, Inc. ("DGSM")8 to assist in evaluating its claim for damage incurred in the fire of August 25, 1981.9 In the letter, Sapperstein advised Bortnovsky that he understood no conclusion had been reached on the fire claim of August 26, 1981 and wrote:
23
As a formality I wish to advise you that the insurance policy contract mandates certain necessary steps which must be completed prior to two years from the date of the loss. If these steps and any others your attorney may deem necessary are not taken before this time, you will lose all rights. This refers especially to having your attorney file suit before the two year period.
24
To establish that this mailing violated 18 U.S.C. Sec. 1341,10 the mail fraud statute, the government must prove: 1) that the defendants "caused" the mailing, namely that they must have acted "with knowledge that the use of the mails will follow in the ordinary course of business, or where such use can reasonably be foreseen, even though not actually intended," Pereira v. United States, 347 U.S. 1, 8-9, 74 S.Ct. 358, 362-363, 98 L.Ed. 435 (1954), and 2) that the mailing was for the purpose of executing the scheme or, in other words, "incident to an essential part of the scheme," id. at 8, 74 S.Ct. at 362.
25
Defendants contend that the government's proof satisfied neither of these elements and that accordingly the convictions for counts two and nine must be reversed.11 Specifically, defendants contend that they cannot be found to have "caused" the mailing because it was sent by a third party--the agent of the defendants no less--and not foreseeable. Moreover, Braz argues that, because he neither initiated nor received any of the correspondence concerning the claim, he cannot be found to have "caused" the mailing. Finally, both defendants contend that the letter was not incident to an essential part of the scheme, because it concerned a civil suit rather than the insurance claim. As discussed below, only the argument as to the foreseeability of the mailing gives us pause; however, even that argument is unpersuasive in light of the expansive reading given Sec. 1341 by the courts.
1. Causation
26
First, it is not significant for purposes of the mail fraud statute that a third-party, rather than the defendant, wrote and sent the letter at issue, providing, as we find below was true in this case, the defendants could reasonably have foreseen that the third-party would use the mail in the ordinary course of business as a result of defendants' act. See United States v. Draiman, 784 F.2d 248, 251 (7th Cir.1986); United States v. Contenti, 735 F.2d 628, 631 (1st Cir.1984); United States v. Martino, 648 F.2d 367, 394 (5th Cir.1981), cert. denied, 456 U.S. 949, 102 S.Ct. 2020, 72 L.Ed.2d 474 (1982); United States v. Reed, 639 F.2d 896, 906 (2d Cir.1981); United States v. Ledesma, 632 F.2d 670, 676 (7th Cir.), cert. denied, 449 U.S. 998, 101 S.Ct. 539, 66 L.Ed.2d 296 (1980); United States v. Moss, 591 F.2d 428, 436 (8th Cir.1979). See also United States v. Fermin Castillo, 829 F.2d 1194, 1198 (1st Cir.1987) (applying mail fraud standard to wire fraud); United States v. Muni, 668 F.2d 87, 89 (2d Cir.1981) (same).
27
Second, defendants' argument that the May 23rd letter falls outside the reach of the statute because it was mailed by defendants' agent to a defendant is not persuasive. The question is whether the defendant reasonably foresaw that the mails would be used, not by whom or to whom the mailing was made, as is evident by the cases holding that correspondence between many combinations of senders and receivers constitutes mail fraud.12 For example, the courts have found the following to be within the reach of Sec. 1341: mailings from the victim of the fraud to the defendant, United States v. Toney, 598 F.2d 1349, 1355 (5th Cir.1979), cert. denied, 444 U.S. 1033, 100 S.Ct. 706, 62 L.Ed.2d 670 (1980), from the attorney for the insurance company to the company and its accountant, United States v. Draiman, 784 F.2d 248, 253 (7th Cir.1986), from the defendant's insurance agent to an insurance company, United States v. Moss, 591 F.2d 428, 436 (8th Cir.1979), and from a merchant defrauded by the defendant's scheme to a company essential to process the transaction, Schmuck v. United States, --- U.S. ----, ---- - ----, 109 S.Ct. 1443, 1444-45, 103 L.Ed.2d 734 (1989);13 United States v. Muni, 668 F.2d 87, 89-90 (2d Cir.1981). To the extent the defendants suggest that a mailing from their agent to a defendant is qualitatively different--because a mailing to oneself should not constitute "a mailing" within the meaning of Sec. 1341--the argument is belied by those cases holding that a mailing from an agent of an insurance company to the company or vice versa constitutes a mailing. See, e.g., United States v. Waterman, 704 F.2d 1014, 1018 (8th Cir.1983); United States v. Ledesma, 632 F.2d 670, 676-77 (7th Cir.), cert. denied, 449 U.S. 998, 101 S.Ct. 539, 66 L.Ed.2d 296 (1980); United States v. Calvert, 523 F.2d 895, 903 (8th Cir.1975), cert. denied, 424 U.S. 911, 96 S.Ct. 1106, 47 L.Ed.2d 314 (1976).
28
Third, Braz's conviction for mail fraud is not invalid even though he neither initiated nor received the May 23rd letter nor committed any act related to the scheme after the fire. Braz was alleged and found to have conspired with Bortnovsky to defraud the NYPIUA of over $100,000 through submissions of the claim for fire damage. Accordingly, he can be charged with and convicted for mailings, like the letter of May 23, 1983, that further the scheme, despite his lack of direct involvement.14 See United States v. Dick, 744 F.2d 546, 552 (7th Cir.1984); United States v. Wormick, 709 F.2d 454, 461-62 (7th Cir.1983); United States v. Muni, 668 F.2d 87, 89 (2d Cir.1981); United States v. Martino, 648 F.2d 367, 394 (5th Cir.1981), cert. denied, 456 U.S. 949, 102 S.Ct. 2020, 72 L.Ed.2d 474 (1982); United States v. Toney, 598 F.2d 1349, 1355 (5th Cir.1979), cert. denied, 444 U.S. 1033, 100 S.Ct. 706, 62 L.Ed.2d 670 (1980).
29
Fourth, it is true that the May 23rd letter was sent nearly two years after the insurance claim was filed and eighteen months after the last correspondence between the adjusters. However, this alone does not make the mailing too remote to be reasonably foreseeable. Not only have mailings made after a similar passage of time been held to have been caused by the defendant, United States v. Elkin, 731 F.2d 1005, 1008 (2d Cir.), cert. denied, 469 U.S. 822, 105 S.Ct. 97, 83 L.Ed.2d 43 (1984), the defendants have cited no cases in which the length of time from the defendant's act to the mailing was considered significant.
30
The defendants' fifth and final challenge to the finding that they "caused" the May 23rd mailing gives us pause: The defendants argue that the May 23rd letter was not part of the ordinary claims process and thus not "reasonably foreseeable." United States v. Muni, 668 F.2d 87, 89-90 (2d Cir.1981) (act is "caused not simply when it was a physical consequence of the person's conduct but when, in addition, the actor either knew the consequence would occur or its occurrence was reasonably foreseeable"). While sympathetic to the argument that there should be a limit to the scope of the mailings that are "reasonably foreseeable," we cannot in light of the facts of this case, in themselves and as compared to those of other cases, find that the letter of May 23rd was not reasonably foreseeable as that phrase has come to be understood.
31
The courts, when construing the mail fraud statute in the context of schemes to defraud an insurance company, have consistently held that defendants "caused" mailings that are part of the ordinary claims process. See, e.g., United States v. Castile, 795 F.2d 1273, 1278 (6th Cir.1986) (finding mailings concerning investigation of claim, insured's interest in the property, and rejecting claim were caused by defendant); United States v. Draiman, 784 F.2d 248, 252-53 (7th Cir.1986) (finding foreseeable mailings of proofs of loss to client insurance companies, confirming extension of time to revise proof of loss, setting time for defendant's deposition, and advising that the claim was insufficient); United States v. Contenti, 735 F.2d 628, 632 (1st Cir.1984) (finding defendant caused mailing of proof of loss, mailing acknowledging its receipt, and mailing of letters arranging for sworn testimony and transmitting claim); United States v. Moss, 591 F.2d 428, 436 (8th Cir.1979) (mailing from insurance agent to company indicating defendant's acceptance of policy was foreseeable because defendant was aware that agent was "seeking insurance from out-of-town insurance companies and that the mails were being used to assist the search").
32
It is true that, unlike the mailings involved in these cases and the four mailings between the insurance adjusters seeking information relating to the claim that were proven as part of predicate act four, the May 23rd letter does not seek information, clarification, or testimony necessary for the insurance processing. However, it is not so qualitatively different as not to be reasonably foreseeable as part of the claim processing. First, one could reasonably foresee, upon filing an insurance claim, that an adjuster would periodically, as Sapperstein did in the May 23rd letter, apprise the claimant of the status of the claim and of any further, necessary action. Moreover, it is particularly reasonable to anticipate that such a mailing might result from the claim, where, as was true in this case, the adjuster was paid a percentage of the sum for which the case ultimately settled. In addition, Sapperstein's testimony that he followed normal practice when writing the letter of May 23rd and that he has written several such letters lends some support to the argument that the mailing was reasonably foreseeable.
33
Finally, the defendants have not argued persuasively that this mailing was less foreseeable than others held to be reasonably foreseeable. In Draiman, for example, the court held that the defendant had caused the mailings of his proof of loss by the lawyer for the insurance company to the two client insurance companies and their accountant. Although the defendant in Draiman might have foreseen that the attorney would mail his proof of loss, it is unlikely that he anticipated counsel would mail the proof of loss to three individuals, resulting in three counts of mail fraud. Similarly, in this case, while Bortnovsky and Braz may very well not have anticipated that the adjuster would send the particular letter at issue, they undoubtedly could expect that the mails would be used to further and monitor their claim. Cf. Draiman, 784 F.2d at 251 ("That Draiman ... [did not] even [know] of the particular mailings does not mean that he has slipped by Pereira.").
34
In reaching this conclusion, we are not unaware of the strong arguments to the contrary, particularly the distinctions that can be made between the letter of May 23rd and others more clearly integral to the claims process. Nonetheless, the element of causation of Sec. 1341 has been so liberally construed as to suggest that it requires only that the use of the mail itself, rather than a particular mailing, be reasonably foreseeable.15 For example, when rejecting the defendant's challenge to his mail fraud convictions in United States v. Bucey, 691 F.Supp. 1077, 1088-89 (N.D.Ill.1988), the court stated:
35
A defendant need not actually intend, agree to or even know of a specific mailing to "cause" mail to be sent as long as he or she "does an act with knowledge that the use of mails will follow in the ordinary course of business, or where such can reasonably be foreseen."
36
(quoting Pereira v. United States, 347 U.S. 1, 8-9, 74 S.Ct. 358, 362-63, 98 L.Ed. 435 (1954)). By focusing on the foreseeability of the use of the mails when rejecting the defendant's argument that he did not "cause" the mailings at issue, the court in United States v. Martino, 648 F.2d 367 (5th Cir.1981), cert. denied, 456 U.S. 949, 102 S.Ct. 2020, 72 L.Ed.2d 474 (1982), also suggested that the question was not whether the defendant foresaw a particular mailing.
37
[I]t is well settled that one "causes" the use of the mails when he does some act in which it is reasonably foreseeable that the mails will be used. Because [the defendant] was in the insurance business, it cannot seriously be contended that he was unaware that the mail would probably be used in processing a claim.
38
Id. at 405. Cf. United States v. Fermin Castillo, 829 F.2d 1194, 1198 (1st Cir.1987) (stating in challenge to wire fraud conviction that "[a]s long as some use of the instrumentality in the course of the endeavor was reasonably to be anticipated, the causation requirement is met") (citations omitted); United States v. Carpenter, 791 F.2d 1024, 1035 (2d Cir.1986) (stating that to establish that defendant "caused" mailing it was sufficient that defendant knew use of mail was reasonably foreseeable consequence of scheme), aff'd, 484 U.S. 19, 108 S.Ct. 316, 98 L.Ed.2d 275 (1987); United States v. Ledesma, 632 F.2d 670, 676-77 (7th Cir.1980) (emphasizing in discussion of cases supporting affirmance of mail fraud conviction foreseeability of use of mail), cert. denied, 449 U.S. 998, 101 S.Ct. 539, 66 L.Ed.2d 296 (1980).
39
Moreover, it is of some significance that Congress has not, in light of the expansive reading of Sec. 1341 by the courts, acted to narrow its scope. In fact, to the extent that Congress has amended the mail fraud statute in the recent past, it has done so to ensure a broader construction than that of the Supreme Court. Section 1346, adopted in 1988, ensures that mail fraud encompasses "scheme[s] ... to deprive another of the intangible right of honest services" and thereby overrules McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987), in which the Court held that Sec. 1341 was intended only to prevent schemes to obtain property or services. See 134 Cong.Rec. H 11251 (daily ed. Oct. 21, 1988) (statement of Rep. John Conyers). See also United States v. Berg, 710 F.Supp. 438 (E.D.N.Y. 1989) (recounting history of Sec. 1346).
40
In sum, in light of the reasonable foreseeability of the letter of May 23rd, the courts' liberal construction of Sec. 1341's causation requirement, and Congress' failure to act in any way other than to expand the scope of the mail fraud statute, we conclude that the defendants "caused" the mailing of the letter of May 23rd.
2. Furtherance of the Scheme
41
Despite defendants' argument to the contrary, there is no serious question that the letter of May 23rd was "incident to an essential part of the scheme" to recover from NYPIUA the losses caused by the fire. The letter alerted Bortnovsky that his claim had not yet been settled and of the need to act promptly to preserve his right under the terms of the policy to recover the sum sought through a civil cause of action. It was thus incidental to the scheme to recover the insurance benefit payments, because it advised the defendants of another route by which they might recover the funds from the NYPIUA, the normal claims processing having proven unsuccessful.
42
In this respect, the mailing is virtually indistinguishable from one of the mailings found to satisfy Sec. 1341's "in furtherance" requirement in United States v. Draiman, 784 F.2d 248, 253 (7th Cir.1986). There the court rejected the defendant's argument that letters from the attorney for the insurance company, stating that the proofs of loss and supporting documentation were insufficient, conflicted with, rather than furthered, the scheme to defraud the insurance company. The court stated, in words fully applicable to the case at hand, that the defendant "was continuing to try to collect, and these letters helped give him another chance." Id. Sapperstein's letter similarly gave Braz and Bortnovsky another chance. This letter is not qualitatively different from that of Draiman simply because the "other chance" in this case required the defendants to pursue a new avenue of recovery. Cf. United States v. Lane, 474 U.S. 438, 452-53, 106 S.Ct. 725, 733-34, 88 L.Ed.2d 814 (1986) (holding mailings concerning partial payments were in furtherance of the scheme because jury could find scheme was "not completed until receipt of the last payment ... which finally settled [the] claim").
43
Moreover, mailings, such as the letter of May 23rd, sent as part of the business of processing a claim or transaction have generally been held to be "incident to an essential part of the scheme." Most recently, in Schmuck v. United States, --- U.S. ----, 109 S.Ct. 1443, 103 L.Ed.2d 734 (1989), the defendant purchased used cars, rolled back their odometers, and then sold the cars to retail dealers at inflated prices. The Court found that the retailer's mailing of title registration forms was essential to the scheme, because it enabled title to pass and thus sustained the dealer's trust of the defendant necessary for the scheme. Id. at ---- - ----, 109 S.Ct. at 1444-1445. See also United States v. Contenti, 735 F.2d 628, 632 (1st Cir.1984) (mailings of notice of loss, acknowledging receipt of loss, and other mailings part of routine to process claim were in furtherance of scheme to defraud); United States v. Muni, 668 F.2d 87, 90 (2d Cir.1981) (interstate communications for credit card authorization numbers were for the purpose of executing a scheme to defraud a bank because the calls were part of the merchant's routine business and the absence of authorization numbers was likely to create suspicion); United States v. Moss, 591 F.2d 428, 436-37 (8th Cir.1979) (letter of insurance company confirming approval of defendant's acceptance of policy and agent's mailing of amendment to company were incident to essential part of scheme because they facilitated processing of insurance policy). In the case at hand, it could be expected, as part of the claim process, that Sapperstein would advise his client of the status of his claim. Just as the mailing to obtain title in Schmuck furthered the scheme by maintaining the defendant's relationship with the retailer, so the letter of May 23rd furthered the scheme to defraud the NYPIUA by encouraging the defendants to pursue their claim.
44
The letter of May 23rd is distinguishable from those in United States v. Dick, 744 F.2d 546, 552 (7th Cir.1984), which were held to be too remotely connected to the scheme to support the mail fraud conviction. In Dick, the defendants conspired to defraud the Small Business Association and two bonding companies for the work of a subcontractor. The court found that the letters to the general contractor describing the subcontractor's progress were not in furtherance of the scheme, because the general contractor presumably did not care who performed the work or at what price. In this case, the defendants cannot be said not to have cared whether the claim was settled or how it might be pursued.
45
Moreover, it is also distinguishable from the mailing in United States v. Tackett, 646 F.2d 1240, 1244 (8th Cir.1981), that was held to be insufficiently related to the scheme alleged to be encompassed by Sec. 1341. In Tackett, the court found that the mailing of an agreement by the defendant to a business associate embodying their agreement to form a partnership to purchase property was not related to the scheme because the defendant received no further payments from the associate nor did he attempt to contact him again. Thus, the court concluded that the defendant's scheme had reached fruition because his failure to act subsequently indicated that he had "finished milking [the associate]." Id. In the case at hand, however, after receiving Sapperstein's letter, the defendants filed a civil suit. Accordingly, the reasoning of Tackett is inapplicable to this case.
46
Finally, the letter of May 23rd was not likely to spark or enhance the probability of detection and thus fall outside the scope of Sec. 1341 as was true of the items mailed in United States v. Maze, 414 U.S. 395, 403, 94 S.Ct. 645, 650, 38 L.Ed.2d 603 (1974); United States v. Pietri Giraldi, 864 F.2d 222, 224-26 (1st Cir.1988); United States v. Castile, 795 F.2d 1273, 1278-81 (6th Cir.1986); United States v. Otto, 742 F.2d 104, 109 (3d Cir.1984), cert. denied, 469 U.S. 1196, 105 S.Ct. 978, 83 L.Ed.2d 980 (1985); and United States v. LaFerriere, 546 F.2d 182, 187 (5th Cir.1977). Nor was it mailed after the defendants had reaped the fruits of the scheme so that it could no longer further the scheme. United States v. Maze, 414 U.S. at 402, 94 S.Ct. at 649; United States v. Ledesma, 632 F.2d 670, 677-78 (7th Cir.), cert. denied, 449 U.S. 998, 101 S.Ct. 539, 66 L.Ed.2d 296 (1980); Garrick-Aug Assoc. Store Leasing, Inc. v. Hirschfeld, 652 F.Supp. 905, 907 (S.D.N.Y.1986).
D. RICO
47
At the time of argument, the Court of Appeals, sitting en banc, had heard but not yet decided two cases--Beauford v. Helmsley, 865 F.2d 1386 (2d Cir.1989) (en banc), and United States v. Indelicato, 865 F.2d 1370 (2d Cir.1989) (en banc)--challenging the court's holding in United States v. Ianniello, 808 F.2d 184, 191-92 (2d Cir.1986), cert. denied, 483 U.S. 1006, 107 S.Ct. 3229, 97 L.Ed.2d 736 (1987), and its progeny that a RICO enterprise could not be established without proof that the enterprise was ongoing and involved more than a single scheme with no demonstrable ending point. See Beauford v. Helmsley, 843 F.2d 103, 110 (2d Cir.1988); Creative Bath Products, Inc. v. Connecticut Gen. Life Ins. Co., 837 F.2d 561, 564 (2d Cir.1988); Albany Ins. Co. v. Esses, 831 F.2d 41, 44 (2d Cir.1987); Beck v. Manufacturers Hanover Trust Co., 820 F.2d 46, 51 (2d Cir.1987), cert. denied, --- U.S. ----, 108 S.Ct. 698, 98 L.Ed.2d 650 (1988). Relying on that line of cases, the defendants contend that the government had failed to establish such a pattern and that the RICO convictions must, therefore, be reversed.
48
The argument, although respectable at the time it was made, no longer has force in light of the recent en banc decisions. In Indelicato, this court held that continuity and relatedness were, contrary to Ianniello and its progeny, "essentially characteristics of activity rather than of enterprise." 865 F.2d at 1382. The court specifically stated that it saw no "basis in RICO or its legislative history for the proposition that a RICO violation cannot be established without proof of more than one scheme, episode, or transaction, or without proof that the scheme pursuant to which the racketeering acts were performed is a scheme with no apparent termination date." Id. at 1383. Accordingly, the defendants' RICO convictions stand.16
E. SENTENCING
49
Bortnovsky and Braz claim that their terms of imprisonment for mail fraud, probation, and restitution do not conform with the terms of applicable statutes. Braz also contends that the district court abused its discretion when it imposed a longer sentence on him after this trial than after the first.
50
The government concedes that Bortnovsky and Braz's sentences for mail fraud exceeded the term permitted by law. In addition, the probationary term for both defendants does not conform to 18 U.S.C. Sec. 3651 (repealed effective Nov. 1, 1986), which requires that, where a probationary term follows incarceration, the term of incarceration may not exceed six months. Accordingly, the case is remanded to the district court to correct the terms of the sentences for mail fraud and to review the periods of probation.
51
The defendants, each of whom was ordered to pay restitution of $5,225, a sum representing half the amount Braz claimed as losses sustained in the burglary of February 1, 1980, also contend that the sentence of restitution is invalid because the Victim and Witness Protection Act ("the Act") pursuant to which it was imposed, 18 U.S.C. Secs. 3663-64, applies only to crimes committed after January 1, 1983. The government answers that, because the defendants' conviction for participation in a RICO enterprise included an act occurring after January 1, 1983, the defendants can be sentenced to pay restitution for any of the acts underlying the RICO conviction. This court has not previously addressed the question and the circuits which have are divided.
52
At least three circuits have held that restitution may be ordered only for acts committed after January 1, 1983. United States v. Corn, 836 F.2d 889, 895-96 (5th Cir.1988); United States v. Oldaker, 823 F.2d 778, 781-82 (4th Cir.1987); United States v. Martin, 788 F.2d 184, 188-89 (3d Cir.1986). These courts have reasoned that:
53
[W]hile a scheme to defraud furthered by separate mailings may properly be viewed as one unitary offense, the losses which resulted therefrom must be separately identified as those which occurred before and those which occurred after January 1, 1983 for purposes of restitution under the ... Act.
54
Martin, 788 F.2d at 189 (footnote omitted). In addition, the fifth circuit concluded that, because the Act increased the possible punishment faced by a defendant by permitting an order of restitution that was not a condition of probation, the Act's application "to acts committed before its effective date raises a problem under the clause of the Constitution forbidding Congress to pass 'ex post facto Law[s]'." Corn, 836 F.2d at 895-96 (footnote omitted).
55
Three other circuits have reached the opposite conclusion, finding that restitution may be ordered for any act committed as part of a conspiracy if at least one offense occurred after the Act's effective date. United States v. Angelica, 859 F.2d 1390, 1392-93 (9th Cir.1988); United States v. Purther, 823 F.2d 965, 968 (6th Cir.1987); United States v. Barnette, 800 F.2d 1558, 1570-71 (11th Cir.1986) (per curiam), cert. denied, 480 U.S. 935, 107 S.Ct. 1578, 94 L.Ed.2d 769 (1987). Purther emphasized that the Act refers to the victim of an "offense" and concluded the offense may be a mail fraud scheme, which can include acts committed before January 1, 1983. The court held that the date of the victim's loss was relevant for determining its value, but not as to whether it could be the subject of an order of restitution.
56
We are persuaded by the decisions in Angelica, Purther, and Barnette. The Act provides for restitution as a part of sentencing for an offense. In this case, the offenses for which the defendants were sentenced include conspiracy to conduct the affairs of an enterprise through a pattern of racketeering and actual participation in a racketeering enterprise. Because the conspiracy and enterprise extended into 1983, any loss sustained as a result of one of the predicate acts underlying the RICO offenses seems to us to fall within the scope of the Act. A contrary ruling would improperly treat the predicate acts, rather than the RICO counts, as the offenses for which the defendants were being sentenced.
57
The defendants also challenge the order of restitution on the ground that no findings of fact were made at sentencing in support of the award of restitution. Defendants contend that there was no showing that they caused FCIP damage of $10,450: "That Braz may have submitted an invoice to show $10,450 worth of sheepskin coats were in his store on February 1, 1980 does not mean that he claimed all of those goods were stolen."17 However, we find that the government's proof that the federal government paid the defendants' claim is sufficient proof of the loss. Moreover, as the government notes, there is a serious question whether the defendants, by raising this argument for the first time on appeal, have waived it.
58
Finally, Braz's argument that the trial court abused its discretion by lengthening his sentence (from that given after the first trial) based on its finding of perjury, but without a hearing, is not persuasive in light of United States v. Grayson, 438 U.S. 41, 98 S.Ct. 2610, 57 L.Ed.2d 582 (1978). In Grayson, the Court held that a trial judge could include as a factor in sentencing his or her conclusion that a defendant's testimony was perjured. In so holding, the Court rejected an argument, virtually indistinguishable from the one presented by Braz, that consideration of the perjury in sentencing would deprive the defendant of due process, because the enhanced sentence would in effect constitute punishment for perjury without the protection of an indictment, trial, and conviction and would chill the defendant's exercise of his or her right to testify. Moreover, the sentence was reinstated, although the statements of facts in neither the decision of the Supreme Court nor the court of appeals, United States v. Grayson, 550 F.2d 103, 107 (3d Cir.1976), indicate that a hearing addressing the finding of perjury was held or required.
59
We do not agree with Braz's argument that a district court's consideration at sentencing of perjury committed during trial requires the same due process protection as does consideration of a disputed item in a presentence report. A presentence report, unlike evidence introduced at trial, often includes hearsay as to which the defendant may have the right to demand a hearing. United States v. Romano, 825 F.2d 725, 728-30 (2d Cir.1987) (holding that defendant must be given an opportunity to dispute accuracy of information contained in a presentence report, but due process does not require that the defendant be allowed to do so at a hearing). However, a sentencing judge's determination that the defendant committed perjury while on the stand is premised on personal observation that satisfies the indicia of reliability required by the Federal Rules of Evidence and that is subject to the court's observation and the defendant's control. Accordingly, we find that the district court did not err in declining to hold an evidentiary hearing concerning its finding that Braz, in testifying, had committed perjury.
60
* * *
61
In sum, the case is remanded for the limited purpose of correcting the defendants' sentences for mail fraud and the terms of probation. In all other respects, the decision below is affirmed.
*
Hon. Morris E. Lasker, United States District Court for the Southern District of New York, sitting by designation
1
This is not the first time that Bortnovsky and Braz were tried on these charges. Their earlier convictions for these three counts, as well as for conspiracy to defraud the United States by filing fraudulent claims with the Federal Emergency Management Administration and five additional mail fraud counts, were reversed because the district court's denial of the defendants' motion for a bill of particulars was held to be an abuse of discretion. United States v. Bortnovsky, 820 F.2d 572 (2d Cir.1987) (per curiam). On January 19, 1988, a subsequent indictment was dismissed because the defendants had not been retried in compliance with the 70 day limit set by the Speedy Trial Act
2
Only Braz made this argument; Bortnovsky was not alleged to have participated in the scheme to which this was relevant
3
Defendants suggest that Powell's testimony was concocted to contradict that of their expert at the earlier trial, who opined that the fire had a natural cause. At that trial, the government relied on the testimony of one of the defendants' former employees to establish that the fire had been intentionally set
4
The alleged misconduct in this case is not "of [such] an extraordinary" nature within the meaning of Sanders v. Sullivan, 863 F.2d 218, 226 (2d Cir.1988), as to compel a finding of a due process violation absent a showing of prosecutorial misconduct. In Sanders, a witness for the government had recanted his testimony
5
Braz also argues in passing that the exclusion was error because exhibit G was an admission of a party opponent. This argument does not merit discussion, because there is no basis upon which to conclude that Belsky was a party opponent
6
United States v. Southland Corp., 760 F.2d 1366, 1375-77 (2d Cir.), cert. denied, 474 U.S. 825, 106 S.Ct. 82, 88 L.Ed.2d 67 (1985), cited by the defendants, is not to the contrary. Although the court in that case affirmed the admission of a "cryptic" note made by an unavailable witness, the note in that case, unlike the exhibit at issue in the case at hand, was admitted not for the truth of the matter therein, but only for the state of mind of its author
7
The mailing of this letter is the only act alleged to have occurred within the five year statute of limitations for participation in a RICO enterprise
8
The defendants were part owners of DGSM Clothing, Inc., which had acquired the defendants' second store
9
This letter was one of five proved at trial as evidence of defendants' scheme to defraud the NYPIUA (predicate act two): three of the four other letters were sent by the adjusting firm hired by NYPIUA to the Sapperstein firm requesting information on the claim, seeking information about the store's inventory, and advising it that they would be contacted by an accounting firm; the remaining letter was sent by the Sapperstein firm in response to the request of NYPIUA's adjuster for information
10
Section 1341 provides in relevant part:
Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises ... for the purpose of executing such scheme or artifice or attempting to do so, places in any post office or authorized depository for mail matter, any matter or thing whatever to be sent or delivered by the Postal Service, ... or knowingly causes to be delivered by mail according to the direction thereon ... any such matter or thing, shall be fined not more than $1,000 or imprisoned not more than five years, or both.
11
Defendants incorrectly argue that count one must also be reversed if the conviction for mail fraud is reversed. The statute of limitations for conspiracy to participate in a RICO enterprise is measured not from the time of the last predicate act, as is true with allegations of participation in a racketeering enterprise, but from the time "the objectives of the conspiracy have been accomplished or abandoned." Bankers Trust Co. v. Rhoades, 859 F.2d 1096, 1102 (2d Cir.1988), cert. denied, --- U.S. ----, 109 S.Ct. 1642, 1643, 104 L.Ed.2d 158 (1989) (citing United States v. Persico, 832 F.2d 705, 713-14 (2d Cir.1987), cert. denied, --- U.S. ----, 108 S.Ct. 1995, 100 L.Ed.2d 227 (1988))
12
Neither party has cited and we have not found any case involving a mailing from an agent of a defendant to that defendant
13
By affirming the mail fraud conviction, the Court in Schmuck implicitly found this mailing to be reasonably foreseeable
14
In light of this holding, it is not necessary to address in the RICO section of this opinion Braz's argument that the statute of limitations bars his RICO convictions because he did not participate in any way in the mailing of the May 23rd letter
15
As was true in Muni, 668 F.2d at 90 n. 7, we need not decide whether the question of foreseeability should be so broadly construed
16
Although this point has not been briefed, there can be little doubt that the pattern of racketeering proven in this case satisfies the standards of Indelicato. The court in Indelicato emphasized that the pattern of racketeering necessary to sustain a RICO conviction could be established with proof of similarities between the predicate acts, with respect to the victim, methodology or goal, among others, and some threat of continuing activity. 865 F.2d at 1382-83. In the case at hand, each predicate act involved efforts by the defendants to recover on false insurance claims, whether it be for fire or theft, and their repeated activity suggested that the racketeering acts would continue
17
Brief of Defendant-Appellant Leonid Braz at 35 (Nov. 16, 1988)
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205 F.Supp.2d 835 (2002)
BOARD OF TRUSTEES SABIS INTERNATIONAL SCHOOL, Plaintiff,
v.
Betty D. MONTGOMERY, et al., Defendants.
No. 02-CV-411.
United States District Court, S.D. Ohio, Eastern Division.
June 14, 2002.
*836 *837 *838 *839 James R. Greene, III, James R. Greene III & Associates, Dayton, OH, for Plaintiff.
David Sherman Timms, Ohio Attorney General, Roger Francis Carroll, Ohio Attorney General, Columbus, OH, Carl Joseph Stich, Jr., White Getgey & Meyer, Michael Wesley Hawkins, Dinsmore & Shohl, Cincinnati, OH, for Defendants.
OPINION AND ORDER
MARBLEY, District Judge.
I. INTRODUCTION
This matter is before the Court on the Plaintiff's Motion for a Preliminary Injunction. Beginning on May 22, 2002, and ending on May 24, 2002, the Court held a hearing on the Plaintiff's motion. By agreement of the parties, the hearing was merged with a trial on the merits. Also pending is the Defendant's Motion to Dismiss, in which the Defendant challenges, inter alia, this Court's jurisdiction over this matter.
Based on the following analysis, the Court GRANTS the Defendant's Motion to Dismiss the Plaintiff's claims, and DENIES the Plaintiff's Motion for an Injunction.
II. FACTS AND PROCEDURAL HISTORY
A. Factual History
In June 1997, the Ohio General Assembly enacted legislation, currently codified as Ohio Revised Code Chapter 3314, that allowed for the creation of community schools.[1] Pursuant to Ohio Rev.Code § 3314.01(B):
A community school created under this chapter is a public school, independent of any school district, and is part of the state's program of education. A community school may sue and be sued, acquire facilities as needed, contract for any services necessary for the operation of the school, and enter into contracts with a sponsor pursuant to this chapter. The governing authority of a community school may carry out any act and ensure the performance of any function that is in compliance with the [Ohio law], and the contract entered into under this chapter establishing the school.
To create a new start-up school, a group of individuals must present a proposal to one of six public entities, which, if it accepts the proposal, will become the sponsor of the school. OHIO REV.CODE § 3314.02(C). The sponsor then enters into a contract with the school's governing authority. Ohio Rev.Code § 3314.03 requires a provision in the contract between the sponsor and the governing authority that establishes procedures for resolving disputes or differences of opinion between the sponsor and the governing authority. OHIO REV.CODE § 3314.03(18). According to the Defendant, Dr. Susan Zelman, the Ohio Superintendent of Public Instruction, currently, ninety-two community schools operate in Ohio. The State Board of Education sponsors seventy-four of these schools.
Pursuant to Ohio Rev.Code § 3314.03, the State Board of Education entered into a contract ("Sponsorship Contract") with the Plaintiff, the Board of Trustees of the SABIS® International School of Cincinnati ("the Board"), whereby the State Board of Education agreed to sponsor the community school established by the Board, the governing authority of the school. The *840 State Board of Education drafted the contract. The Sponsorship Contract was signed by Defendant Zelman on behalf of the State Board of Education, and by Defendant Carol Kerlakian, the former Board Chair, along with Susan Moore and Tracey Lowe, on behalf of the governing authority of the SABIS International School. Pursuant to the statutory requirement that the Sponsorship Contract set forth the manner in which disputes between the sponsor and the governing authority will be resolved, the Sponsorship Contract contains the following provision:
Any dispute involving [SABIS] and the SPONSOR regarding this contract, shall be resolved in the following manner:
The parties shall mutually agree upon a fair and impartial arbitrator in an effort to resolve the dispute and reach an amicable agreement. If the parties are unable to agree upon an arbitrator, the Superintendent of Public Instruction shall appoint one;
If an agreement cannot be reached within sixty (60) days from the date the arbitrator is appointed, the arbitrator shall render a decision that shall be binding upon both parties and such decision shall be final and nonappealable.
In addition to the Sponsorship Contract, the Board entered into a separate contract ("Service Provider Agreement") with Cincinnati Education Management, LLC ("CEM," "Management Company," or "Service Provider"),[2] whereby CEM agreed to manage the day-to-day operations of the community school. The Service Provider Agreement was signed by Defendant Carol Kerlakian on behalf of SABIS, in her capacity as the Chair of the Board, and by Udo Schulz on behalf of CEM, in his capacity as its manager. The Plaintiff states that Ms. Kerlakian negotiated and signed all other contractual agreements between the Board and CEM and its affiliates. In particular, Ms. Kerlakian signed a $600,000 promissory note on behalf of the Board, and signed a lease agreement, pursuant to which the Board paid the Management Company approximately $98,000 per month for use of the school building.
In September of 1999, the Board consisted of three membersMs. Kerlakian, a Caucasian woman, Susan Moore, also Caucasian, and Tracey Lowe, an African-American woman. In or around October of 1999, Ms. Moore left her position on the Board to become Sabis' director. Ms. Moore was replaced by Andrea Carter, an African American. Subsequently, the Board grew to include five members, all of whom were African American other than Ms. Kerlakian.
In or around August 2001, Ms. Kerlakian was removed from her position on the Board by the remaining Board members. The Plaintiff contends that this removal was due to certain alleged conflicts of interests that affected Ms. Kerlakian's decision to contract with CEM, and her subsequent relationship with the Management Company. Specifically, Ms. Kerlakian's uncle founded the SABIS Corporation, and another relative is currently the President of the corporation. The Plaintiff claims that Ms. Kerlakian could not serve on the board in an objective capacity, as she explicitly told members of the Board that she could not do anything to hurt members of her family, including those who worked for the Management Company.
On December 6, 2001, the Board terminated the Service Provider Agreement with CEM, effective upon the close of the 2001-2002 school year. As a result of that termination, the working relationship between CEM and the Board has disintegrated to the point that the Board determined *841 that it could no longer perform its role as the governing authority of the school.
On January 17, 2001, Mr. Steve Burigana, the Executive Director of the Office of Community Schools, visited the SABIS International School. Mr. Burigana testified that he was interested in visiting the school in an effort to help resolve the issues between the Board and the Management Company so that the school might continue to operate in its current form. During his visit to the school, Mr. Burigana met, separately, with teachers, parents, representatives from the Management Company, and the Board. According to Mr. Burigana, the parents and teachers with whom he met expressed concern over their understanding that the school is to close at the end of the current school year. He also stated that, based on his meeting with the representatives from the Management Company, Mr. Burigana got the impression that the problems between CEM and the Board arose from disagreements over how to draw the line between the Board's involvement with the school, and the Board's micro-management of the school.
During his meeting with the Board, the Board members stated that there was no possibility of mediating their problems with the Management Company. They declared that they wanted to terminate their relationship with CEM and the SABIS Corporation, and find a new method of operating the school. They also indicated that they were having difficulties obtaining important financial information from the Management Company.[3] Mr. Burigana indicated that he would attempt to obtain the necessary financial information from the Management Company on behalf of the Board. Ultimately, however, Mr. Burigana was unable to get that information from CEM.[4]
B. Procedural History
On April 25, 2002, the Plaintiff filed a Complaint with this Court. The Complaint names as defendants Betty D. Montgomery, the Attorney General of Ohio, Susan Zelman, the Ohio Superintendent of Public Instruction, James Petro, the State Auditor, and Carol Kerlakian, the former Chair of the Plaintiff Board. On April 26, 2002, the Plaintiff filed a motion seeking to amend its Complaint to specify that the action is brought against the Defendants in their official and individual capacities. The Complaint alleges the following claims against the Defendants: (1) violation of 42 U.S.C. § 1983 based on an infringement of the Plaintiff's rights to equal protection and due process under the Fourteenth Amendment to the United States Constitution; (2) violation of 42 U.S.C. § 1981; (3) violation of Ohio's Pattern of Corrupt Activities Act, Ohio Rev.Code § 2923.32; and (4) fraud or fraudulent inducement and misrepresentation.[5] These claims were *842 based, in part, on the fact that, despite the inclusion of a binding arbitration provision in the Sponsorship Contract, the state now claims that it cannot be subject to binding arbitration because it cannot waive its sovereign immunity. More generally, the claims are based on the failure of Defendants Petro, Montgomery, and Zelman to take certain action to protect the Plaintiff from the allegedly harmful Service Provider Agreement entered into by the Board, and signed by Defendant Kerlakian on its behalf. The Plaintiff seeks: (1) an injunction that (a) requires Defendants Montgomery, Petro, and Zelman to cease all unlawful activity, (b) declares the arbitration provision in the Sponsorship Contract valid and binding, (c) requires Defendant Montgomery to enforce Ohio Rev.Code §§ 3314.11, 3314.12, and 3314.03(A)(18), and (d) requires Defendant Petro to audit the community school and provide all audit information to the Plaintiff; (2) an injunction preventing Defendants Petro, Montgomery, and Zelman from violating their statutory duties arising out of the Sponsorship Contract; (3) an injunction prohibiting Defendants Petro, Montgomery, and Zelman from continuing to deprive the Plaintiff of its rights to equal protection of the law and due process of law; and (4) an injunction ordering that any and all contracts arising out of Defendant Kerlakian's conflicts of interest be dissolved.
On April 25, 2002, the Plaintiff also filed a Motion for a Temporary Restraining Order and Preliminary Injunction, seeking to enjoin the Defendants from interfering with the Plaintiff's efforts to reconstitute the community school. That day, pursuant to Local Rule 65.1, a conference was held on the Plaintiff's Motion for a Temporary Restraining Order. After listening to the parties' arguments at that conference, the Court denied the Plaintiff's Motion. The Court also set the Plaintiff's Motion for a Preliminary Injunction for hearing on May 22, 2002. The parties agreed that the hearing on the motion would be merged with a trial on the merits.
At the 65.1 conference, the Defendants raised the question of whether this Court has jurisdiction to hear this matter. Thus, the Court requested that the parties file briefs addressing that issue prior to the hearing set for May 22, 2002. The Court also granted the parties permission to file other dispositive motions prior to the hearing. On May 3, 2002, the Plaintiff filed a Motion in Support of this Court's Jurisdiction, and Defendants Petro, Montgomery, and Zelman filed Motions to Dismiss, seeking to dismiss this case for lack of jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1).[6] In the alternative, Defendants Petro, Montgomery, and Zelman argued that the case should be dismissed pursuant to Fed. R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted. In addition, Defendant Petro sought summary judgment pursuant to Fed.R.Civ.P. 56. Defendant Kerlakian also filed a Motion to Dismiss pursuant to Fed.R.Civ.P. 12(b)(6).
The Court held the trial on this matter beginning on May 22, 2002, and ending on May 24, 2002. Prior to the start of trial, the Plaintiff VOLUNTARILY DISMISSED Defendant Petro from this action. Mr. Petro was dismissed in light of a letter delivered to the Board from the State Auditor's office, which indicated that the State had attempted to complete an audit of the SABIS International School, but was unable to do so because certain relevant financial information was missing. The letter also indicated that the Board's failure to provide the necessary information *843 to the Auditor's office within ninety days of the date of the letter would result in legal action.
After the close of the Plaintiff's evidence, the remaining Defendants renewed their motions to dismiss the Plaintiff's claims against them. Defendant Montgomery also made a motion pursuant to Fed.R.Civ.P. 52(c) for a judgment on partial findings. In addition, Defendant Zelman moved for an involuntary dismissal pursuant to Fed.R.Civ.P. 41(b). Subsequently, the Court DISMISSED Defendant Kerlakian as a party, based on the Court's determination that the Plaintiff sought no relief from her. The Court also DISMISSED Defendant Montgomery as a party, based on the Court's conclusion that the Plaintiff failed to present any evidence to support a finding that Attorney General Montgomery was in any way liable to the Plaintiff Board of Trustees. Thus, Ms. Zelman is the only Defendant against whom claims are currently pending.
III. STANDARD OF REVIEW
A. Rule 12(b)(1)
Before determining whether a plaintiff has stated a claim upon which relief may be granted, the Court must first decide whether it has subject matter jurisdiction. City of Heath, Ohio v. Ashland Oil, Inc., 834 F.Supp. 971, 975 (S.D.Ohio 1993) (citing Moir v. Greater Cleveland Reg'l Transit Auth., 895 F.2d 266, 269 (6th Cir.1990)).
"[W]here subject matter jurisdiction is challenged under Rule 12(b)(1), ... the plaintiff has the burden of proving jurisdiction in order to survive the motion." Rogers v. Stratton Indus., 798 F.2d 913, 915 (6th Cir.1986). In the context of a Rule 12(b)(1) motion, "[a] court may dismiss a complaint only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984). A Rule 12(b)(1) motion to dismiss will be granted only if, taking as true all facts alleged by the plaintiff, the court is without subject matter jurisdiction to hear the claim.
B. Rule 12(b)(6)
In considering a Rule 12(b)(6) motion to dismiss, this Court is limited to evaluating whether a plaintiff's complaint sets forth allegations sufficient to make out the elements of a cause of action. Windsor v. The Tennessean, 719 F.2d 155, 158 (6th Cir.1983). Under limited circumstances, however, a court may rely on documents outside the pleadings, if those documents "simply [fill] in the contours and details of the plaintiff's complaint, and [add] nothing new," without converting the motion to dismiss into a motion for summary judgment. Yeary v. Goodwill Indus.-Knoxville, Inc., 107 F.3d 443, 445 (6th Cir.1997).
A complaint should not be dismissed under Rule 12(b)(6) "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Lillard v. Shelby County Bd. of Educ., 76 F.3d 716, 724 (6th Cir.1996). This Court must "construe the complaint liberally in the plaintiff's favor and accept as true all factual allegations and permissible inferences therein." Lillard, 76 F.3d at 724 (quoting Gazette v. City of Pontiac, 41 F.3d 1061, 1064 (6th Cir.1994)). While the complaint need not specify every detail of a plaintiff's claim, it must give the defendant "fair notice of what the plaintiff's claim is and the grounds upon which it rests." Gazette, 41 F.3d at 1064. While liberal, this standard of review does require more than the bare assertion of legal conclusions. In re DeLorean *844 Motor Co., 991 F.2d 1236, 1240 (6th Cir.1993) (citation omitted). A complaint must contain either direct or inferential allegations with respect to all the material elements necessary to sustain a recovery under some viable legal theory. Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434, 437 (6th Cir.1988).
IV. ANALYSIS
A. Court's Jurisdiction
Defendant Zelman contends that this Court lacks jurisdiction over the Plaintiff's claims brought against her in her official capacity because such jurisdiction is barred by the Eleventh Amendment to the United State Constitution.[7]
The Eleventh Amendment to the United States Constitution states that "[t]he Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State." U.S. CONST. amend. XI. Although the text of the amendment seems to prohibit only suits against states brought by citizens of other states, it has long been held that "an unconsenting State is immune from suits brought in federal courts by her own citizens as well as by citizens of another State." Edelman v. Jordan, 415 U.S. 651, 663, 94 S.Ct. 1347, 39 L.Ed.2d 662 (1974) (citations omitted). Courts have also recognized that the Eleventh Amendment bars suits against not only the state itself, but also suits against state officers when the state is the real party in interest, such as when the action is one to recover money damages that will be paid out of the state's treasury. Id. (citing Ford Motor Co. v. Department of Treasury, 323 U.S. 459, 464, 65 S.Ct. 347, 89 L.Ed. 389 (1945)).
The Eleventh Amendment does not, however, present an absolute bar to suits against states and state officers in federal court. In particular, the Eleventh Amendment will not bar a suit against the state or its officers when: (1) application of Ex Parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908), and its progeny is appropriate; (2) the state has consented to be sued; or (3) Congress has properly abrogated the states' immunity. Nelson v. Miller, 170 F.3d 641, 646 (6th Cir.1999). The Plaintiff argues that the Eleventh Amendment does not bar its suit against Defendant Zelman either because Ex Parte Young applies or because the state consented to be sued when it drafted the Sponsorship Contract with the binding arbitration clause.
1. Ex Parte Young
In Young, the Supreme Court held that an individual may bring suit against state officers in federal court when the individual seeks prospective injunctive relief to prevent the officers' violation of federal law. Edelman, 415 U.S. at 664, 94 S.Ct. 1347 (distinguishing a suit seeking retroactive relief from suits that fall within the Young exception to Eleventh Amendment immunity). Here, the Plaintiff seeks *845 only prospective injunctive relief. Thus, under this well-established rule of law, this Court has jurisdiction to hear the Plaintiff's claims brought against Defendant Zelman for her alleged violation of federal law.
Young, however, does not extend to actions brought against state officers for their alleged violations of state law.[8] To the contrary, the Eleventh Amendment prohibits federal courts from enjoining state officials from acting in violation of state law. Freeman v. Michigan Dept. of State, 808 F.2d 1174, 1179 (6th Cir.1987) (citing Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 106, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984)). Thus, for this Court to have jurisdiction over the Plaintiff's state law claims brought against Defendant Zelman, the Court must be able to conclude that another exception to Eleventh Amendment immunity applies under these circumstances. Specifically, the Plaintiff has argued that Eleventh Amendment immunity does not bar its claims based on state law because the State consented to be sued in federal court.
Therefore, in light of Ex Parte Young, the Court determines that it has jurisdiction to hear the Plaintiff's federal claims, and next considers whether it has jurisdiction to hear the Plaintiff's state law claims because the State consented to be sued in federal court.
2. Consent
The Plaintiff claims that the State consented to be sued in federal court when it drafted the Sponsorship Contract to include a binding arbitration clause.[9]
A state may waive its Eleventh Amendment immunity by making a "clear declaration" of its intent to do so. College Sav. Bank v. Florida Prepaid Postsecondary Educ. Expense Bd., 527 U.S. 666, 676, 119 S.Ct. 2219, 144 L.Ed.2d 605 (1999) (citing Great Northern Life Ins. Co. v. Read, 322 U.S. 47, 54, 64 S.Ct. 873, 88 L.Ed. 1121 (1944)). The state's consent to suit must be "unequivocally expressed." Pennhurst State Sch. and Hosp., 465 U.S. at 99, 104 S.Ct. 900 (citing Edelman, 415 U.S. at 673, 94 S.Ct. 1347). In other words, a waiver of Eleventh Amendment immunity will be found where indicated by express language, or where the text of a state statute so overwhelmingly indicates the intent to waive sovereign immunity that the language leaves no room for any other reasonable construction. Allinder v. State of Ohio, 808 F.2d 1180, 1184 (6th Cir.1987) (citations omitted). "Thus, a State does not consent to suit in federal court merely by consenting to suit in the courts of its own creation.... Nor does it consent to suit in federal court merely by stating its intention to `sue and be sued,' ... or even by authorizing suits against it `in any court of competent jurisdiction.'" College Sav. Bank, 527 U.S. at 676, 119 S.Ct. 2219 (citations omitted).
Recently, the Supreme Court held that a State waives its Eleventh Amendment immunity when it removes a suit to federal *846 court in which it is named as a defendant. Lapides v. Bd. of Regents of the Univ. Sys. of Georgia, ___ U.S. ___, 122 S.Ct. 1640, 152 L.Ed.2d 806 (2002). The Court reiterated the holding of College Sav. Bank, and distinguished waivers by litigation conduct, which constitute "clear declarations" of a State's intent to waive Eleventh Amendment immunity, from the constructive waivers rejected in College Sav. Bank. In drawing this distinction, the Court reasoned:
[A]n interpretation of the Eleventh Amendment that finds waiver in the litigation context rests upon the Amendment's presumed recognition of the judicial need to avoid inconsistency, anomaly, and unfairness, and not upon a State's actual preference or desire, which might, after all, favor selective use of `immunity' to achieve litigation advantages.
Id. at 1644 (citing Wisconsin Dept. of Corr. v. Schacht, 524 U.S. 381, 393, 118 S.Ct. 2047, 141 L.Ed.2d 364 (1998) (Kennedy, J., concurring)).
This Court finds that the State's insertion of a binding arbitration clause into the Sponsorship Contract waives the State's Eleventh Amendment immunity, and constitutes consent to be sued in federal court. Similar to the act of removal, which is litigation conduct, the insertion of the binding arbitration clause into the contract constitutes pre-litigation conduct, or action undertaken in anticipation of future disputes that might result in litigation. As the Supreme Court stated with respect to certain litigation conduct, an interpretation of the Eleventh Amendment that would allow the State to engage in the pre-litigation act of drafting a binding arbitration clause into a contract without waiving sovereign immunity would rest upon the State's mere "preference or desire." Such an interpretation of the Eleventh Amendment would allow the State selectively to hide behind the cloak of sovereign immunity when doing so would serve its litigation objectives. In other words, an interpretation of the Eleventh Amendment that allows the State selectively to waive sovereign immunity encourages forum shopping by the State, and fails to produce consistent and fair results, which is precisely the opposite of what the Supreme Court mandated in Lapides. Therefore, the Court concludes that the State's pre-litigation act of inserting a binding arbitration provision into the contract constitutes a waiver of the State's Eleventh Amendment immunity.
Furthermore, if the State takes the position that, generally, it cannot be subject to binding arbitration because of its sovereign immunity, then, logically, the State's drafting of a clause that subjects the State to binding arbitration represents a clear declaration of its intent to waive its immunity. How else could the State draft a clause that, under normal circumstances, could not be binding upon it? Under well-established contractual principles, ambiguous terms of a contract are construed against the drafter. Diversified Energy, Inc. v. Tennessee Valley Authority, 223 F.3d 328, 339 (6th Cir.2000) (citing Hills Materials Co. v. Rice, 982 F.2d 514, 516-17 (Fed.Cir.1992)). Here, the State drafted the contract. Thus, any ambiguity that might arise from the insertion of the binding arbitration provision must be construed against the State. The Court cannot simply conclude that, by drafting the binding arbitration clause, the State intended to leave open the issue of how conflicts between the contracting parties would be resolved. For the State to have done so would have been to have violated Ohio law. See OHIO REV.CODE § 3314.03(18) (requiring that all sponsorship contracts include a provision setting forth procedures for resolving disputes between *847 the sponsor and the governing authority of the school). Rather, the Court must presume that by drafting the arbitration provision, the State intended to be bound thereby.
Accordingly, the Court finds that it has jurisdiction to hear the Plaintiff's state law claims brought against Defendant Zelman because the State consented to be sued in federal court when it inserted a binding arbitration provision into the Sponsorship Contract. The Court DENIES Defendant Zelman's Motion to Dismiss the Plaintiff's state law claims for lack of jurisdiction.
B. 42 U.S.C. § 1983
The Plaintiff has brought claims against Defendant Zelman pursuant to 42 U.S.C. § 1983. Section 1983 reads, in relevant part:
Every person who, under color of any statute, 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, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress....
42 U.S.C. § 1983. To succeed on a claim for a violation of § 1983, the plaintiff must show that (1) a person (2) acting under color of law (3) deprived him of his rights secured by the United States Constitution or its laws. Berger v. City of Mayfield Heights, 265 F.3d 399, 405 (6th Cir.2001). A state official, sued in her official capacity for prospective injunctive relief, is a person acting under color of law for purposes of § 1983. Wolfel v. Morris, 972 F.2d 712, 719 (6th Cir.1992) (citing Will v. Michigan Dep't of State Police, 491 U.S. 58, 73-74, 109 S.Ct. 2304, 105 L.Ed.2d 45 (1989)). Thus, the Court need only determine whether Ms. Zelman deprived the Plaintiff of its rights secured by the United States Constitution or its laws.
1. Equal Protection
"The Equal Protection Clause of the Fourteenth Amendment commands that no State shall `deny to any person within its jurisdiction the equal protection of the laws,' which is essentially a direction that all persons similarly situated should be treated alike." City of Cleburne v. Cleburne Living Center, 473 U.S. 432, 105 S.Ct. 3249, 87 L.Ed.2d 313 (1985) (quoting Plyler v. Doe, 457 U.S. 202, 102 S.Ct. 2382, 72 L.Ed.2d 786 (1982)). To assure that similarly situated people are treated alike, government classifications based on race, alienage, or national origin are subject to strict scrutiny, and may be sustained only if they are narrowly tailored to serve a compelling government interest. Id. at 440, 105 S.Ct. 3249.
The Plaintiff Board contends that Ms. Zelman and her office discriminated against it on the basis of race. The Board members claim that when Ms. Kerlakian, a Caucasian woman, was the Board chair, the State provided significant assistance to the Board. They claim, however, that when Ms. Kerlakian was removed from the Board, and the Board became exclusively African American, the Board was unable to communicate with, or obtain assistance from, the State. In particular, the Board claims that it wanted the State's assistance regarding the promissory note and the lease agreement entered into with the Management Company, but that it was unable to get any such assistance. The Board also claims that the State treated non-minority boards from other schools differently. The Board relies on the deposition of Matthew DeTemple, the Chief Counsel for the State Board of Education, during which he allegedly testified that, despite the State's current claim that it *848 cannot be subject to binding arbitration with the Board because it cannot waive sovereign immunity, the State has engaged in binding arbitration with other school boards.[10]
The Court finds that the Plaintiff has failed to demonstrate that Defendant Zelman violated the Board's Fourteenth Amendment right to Equal Protection. First, while the Plaintiff presented some evidence that the State was more involved with the Board when Ms. Kerlakian was the Board chair, the State also provided a logical explanation for its decreased involvement. Specifically, Mr. Burigana testified that the State Board of Education, as a Sponsor, typically provides more assistance to governing authorities when they are beginning to run a community school. That is, the Sponsor's role is to enable the school to exist by providing oversight and technical support at the beginning, and then stepping back to allow the governing authority to run the school with flexibility and creativity. The Plaintiff failed to present any evidence to contradict Mr. Burigana's testimony. Thus, the State provided a logical, non-discriminatory reason for its diminished involvement after Ms. Kerlakian had been removed from the Board, which was uncontroverted by the Plaintiff.[11]
Second, the Plaintiff presented no evidence that either Ms. Zelman or anyone from her office violated any governmental duties by refusing to intervene in the school's financial agreements with the Management Company. The Board entered into two independent contractsone with the State, and one with CEM. The Board did not, and could not, thereby impose a duty on State officers to assist with the service provider contract. Thus, in light of the fact that it is the Sponsor's role to enable the school to exist and function on its own, the Plaintiff has not demonstrated that the Defendant discriminated against the Board on the basis of race by failing to provide the Board assistance with respect to the financial agreements entered into with the Management Company.
Third, the Board's attempt to bolster its claim of discriminatory treatment by its reliance on Mr. DeTemple's deposition testimony must fail because the Board's recapitulation of that testimony is fatally inaccurate. Mr. DeTemple testified that he was aware that a binding arbitration clause was included in the Sponsorship Agreement, and that three predominantly African American community schools, including SABIS, had made demands for binding arbitration. At no point, however, did Mr. DeTemple indicate that the State Board of Education had treated this Board differently than non-minority entities by engaging in binding arbitration with non-minority school boards, but denying such an opportunity to the Plaintiff. A careful review of the deposition transcript reveals the following relevant testimony:
Q [by Plaintiff's Counsel]: Do you have an understanding of the Collective Bargaining Act?
A [by Mr. DeTemple]: I do.
*849 Q: Do you have an understanding that they have an arbitration agreement?
A: I understand that certain public entities that are subject to Chapter 4117 can have a binding arbitration clause in their Collective Bargaining Agreement.
Q: And that exists with the State of Ohio?
A: I don't know whether that would apply to the State of Ohio.
Q: All right. Do you understand that the State of Ohio can use 4117 with state employees that have unions?
A: I understand, yes, that, to an extent. My experience was representing Boards of Education so my familiarity with Chapter 4117 is as it applies to Public Boards of Education.
Q: Doesn't change your understanding that there are arbitration clauses that exist with state entities under 4117, correct?
. . . . .
A: I don't have personal knowledge of whether there are arbitration clauses that would apply to like a bargaining unit withbetween an exclusive representative and the State of Ohio. I do know that there are Collective Bargaining Agreements between school boards and exclusive representatives that contain binding arbitration clauses.
Q: Similar to the one we have?
A: Yes, similar to the one in the contract. Yes.
Q: And in that situation, has there been binding arbitration?
A: You're asking about my experience with school boards?
Q: No, just saying has there been binding arbitration, to your knowledge?
A: Well, to my knowledge, based on my work with school boards, yes, I am aware that there were binding arbitrations involving school boards in Ohio.
Q: And would it be a fair and accurate statement that the governing authority is, in effect, the school board for the charter school?
A: It's certainly analogous to that, yes.
Mr. DeTemple's testimony does not indicate that the State Board of Education has engaged in binding arbitration with school boards as the Plaintiff would have the Court believe. To the contrary, the discussion regarding binding arbitration deals with Mr. DeTemple's representation of public school boards, and their dealings with collective bargaining agreements pursuant to Ohio Revised Code Chapter 4117, Public Employees' Collective Bargaining. Mr. DeTemple did not testify that in his experience as counsel for the State Board of Ohio that this entity has engaged in binding arbitration with school boards pursuant to a provision similar to the binding arbitration provision in the Sponsorship Contract. At no point during his deposition did Mr. DeTemple indicate that he had ever participated in binding arbitration while serving as counsel for the State Board of Ohio. Thus, the Plaintiff's assertion that Mr. DeTemple's deposition provides support for its claim that it is treated differently from similarly situated non-minority governing authorities or school boards must fail.
The Plaintiff has failed to demonstrate that the Defendant treated similarly situated school boards differently than she treated the Plaintiff. Therefore, the Court GRANTS the Defendant's Motion to Dismiss the Plaintiff's claim brought pursuant to 42 U.S.C. § 1983 for violation of its Fourteenth Amendment right to equal protection, and DENIES the Plaintiff's Motion for an Injunction on that basis.
2. Due Process
The Plaintiff alleges that it has been denied of its "due process rights as it pertains to [its] property rights in contract, legal interest and duties to the School and providing an educational opportunity *850 to students who primarily are African American citizens."
The Due Process Clause of the Fourteenth Amendment provides that "no State shall ... deprive any person of life, liberty, or property, without due process of law." U.S. CONST. amend. XIV. For a procedural due process claim under the Fourteenth Amendment to succeed, a plaintiff must establish the existence of a liberty or property interest of which he was deprived by the defendant. Bd. of Curators of Univ. of Missouri v. Horowitz, 435 U.S. 78, 82, 98 S.Ct. 948, 55 L.Ed.2d 124 (1978). For a constitutionally protected property interest to exist, "a person clearly must have more than an abstract need or desire for it. He must have more than a unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to it." Bd. of Regents of State Colleges v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972).
The Plaintiff claims, first, that Defendant Zelman denied it of its right to due process by depriving it of its property right in contract. Specifically, the Board alleges that Defendant Zelman, through her failure to assist the Board, deprived it of its property right in the Sponsorship Agreement. The Court finds that this claim must fail. "Property interests protected by the Constitution stem from an independent source, such as state law, and are not created by the Constitution itself." Sharp v. Lindsey, 285 F.3d 479, 487 (6th Cir.2002) (citing Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 537, 105 S.Ct. 1487, 84 L.Ed.2d 494 (1985)). A contract may serve as the independent source that protects property interests. Leary v. Daeschner, 228 F.3d 729, 741-42 (6th Cir. 2000) (concluding that a collective bargaining agreement created a property interest for teachers in their continued employment in their positions); see Sharp, 285 F.3d at 487 (finding that a principal had a protected property interest in his position as a principal by virtue of his employment contract). While a contract may create a property interest, one does not have a property interest, per se, in a contract. Thus, the Plaintiff's assertion that it was improperly denied its property right in contract must fail, as the Plaintiff has no such property right.
Second, the Plaintiff claims that it was denied its Fourteenth Amendment right to due process because Defendant Zelman deprived it of its legal interest in providing an education for African American students. The Court finds that this claim also must fail. Ohio students have a property interest in their education. Goss v. Lopez, 419 U.S. 565, 573-74, 95 S.Ct. 729, 42 L.Ed.2d 725 (1975) (holding that Ohio statutes that provide for free public education for all Ohio residents between the ages of five and twenty-one and that dictate compulsory attendance policies indicate that Ohio residents have a right to education that cannot be infringed without due process). That property interest, however, belongs to the students, not to the board of trustees that establishes and governs a community school. Thus, while a student of the community school may have a due process claim based on the deprivation of his property interest in his education, the Plaintiff Board cannot assert a claim based on the alleged denial of the students' property interest.
Third, the Plaintiff claims that it has been deprived of its property interest in its position as the Board, which arises by virtue of the Sponsorship Contract. As stated above, a contract may serve as the independent source that protects property interests. Leary, 228 F.3d at 741-42. In Leary, for example, the court found that the collective bargaining agreement created a property interest in continued employment by virtue of a provision that *851 provided that teachers could not be transferred except upon a showing of good cause and extenuating circumstances. Leary, 228 F.3d at 742. The court compared that provision in the collective bargaining agreement to other contractual provisions that were found to create a property interest in continued employment, most of which stated that the employee could be dismissed only for cause. Id. (citing Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 538-39, 105 S.Ct. 1487, 84 L.Ed.2d 494 (1985), Johnston-Taylor v. Gannon, 907 F.2d 1577, 1581 (6th Cir.1990), and Ramsey v. Bd. of Educ., 844 F.2d 1268, 1272 (6th Cir.1988)).
Like the contracts in Leary and the cases cited therein, the Sponsorship Contract contains a provision that indicates that the Sponsor may choose to terminate the contract prior to its expiration date of June 30, 2004 only upon a showing of good cause. Specifically, the provision states that the State Board of Education may choose to terminate the contract for any of the following reasons:
1. The GOVERNING AUTHORITY'S failure to meet student performance requirements stated in this contract;
2. The GOVERNING AUTHORITY'S failure to meet generally accepted standards of fiscal management;
3. The GOVERNING AUTHORITY has violated any provisions of this contract or applicable state or federal law; or
4. Other good cause.
Based on this provision, the Court finds that the Plaintiff Board, as the governing authority of the community school, has a property interest in continuing in its position as such. The Court now turns to the question of whether Defendant Zelman deprived the Plaintiff of this property interest without due process of law.
The Plaintiff claims that Defendant Zelman deprived it of its property interest in continuing to operate as the governing authority of the community school by virtue of her "failure to properly, [sic] monitor, audit and report on [her] findings to Plaintiff." The Court understands the Plaintiff's Complaint to allege that, by virtue of Defendant Zelman's alleged failure to monitor, audit, and report her findings regarding CEM's management of the school to the Plaintiff Board, the Plaintiff has lost its ability to act as a functioning governing authority of the school. Ms. Zelman asserts that she could not have deprived the Plaintiff of its property interest because she has no statutory obligation to "monitor, audit, or report on [her] findings."
The Court finds that Defendant Zelman did not deprive the Plaintiff of its property interest in continuing as the governing authority of the community school. First, Ms. Zelman is correct that she is under no statutory or contractual duty to monitor, audit, and report on the school's Service Provider to the Board of Trustees. Although the Plaintiff has relied on Ohio Rev.Code §§ 3314.08, 3314.11, and 3314.12 as establishing such a duty, neither these provisions, nor any other provision in Chapter 3314 of the Ohio Revised Code, require the superintendent of public instruction to monitor, audit, or report on a community school's service provider. Ohio Rev.Code § 3314.08, which deals with annual enrollment reports by school districts and community schools, and the calculation of payments to community schools, imposes no reporting requirement on the super-intendent of public instruction. To the contrary, that provision requires school districts and governing authorities of community schools to report information to the state. Ohio Rev.Code § 3314.11 imposes no reporting or monitoring requirement on the state superintendent. Rather, that provision calls for the creation of a state office of school options which is to provide *852 advice and services to community schools. Finally, Ohio Rev.Code § 3314.12 imposes no duty on the superintendent of public instruction to monitor or report on a school's service provider. That provision simply requires the legislative office of education to create an annual composite of community schools that is to contain basic information about all community schools in the state, and is to be presented to the speaker of the house, the president of the senate, and the governor, not to the community schools themselves.
Second, and more significantly, the Board simply has not been deprived of its interest in continuing to operate as the School's governing authority by virtue of anything that Ms. Zelman did or did not do. To the contrary, by the Board's own admission, the difficulties that it has had functioning as the governing authority of the school arise from the Board's own voluntary termination of the Service Provider Agreement. Ms. Zelman played no role in the Board's decision to terminate that contract. Furthermore, neither Ms. Zelman nor anyone from her office encouraged the Board to enter into the Service Provider Agreement in the first place. The Board made that decision independently, as it is permitted to do under Ohio law, and it cannot now fault the State.
Therefore, the Court GRANTS the Defendant's Motion to Dismiss the Plaintiff's claim brought pursuant to 42 U.S.C. § 1983 for violation of its Fourteenth Amendment right to due process, and DENIES the Plaintiff's Motion for an Injunction on that basis.
C. 42 U.S.C. § 1981
Section 1981 provides:
(a) All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other. (b) For purposes of this section, the term "make and enforce contracts" includes the making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship.
42 U.S.C. § 1981. The elements of a prima facie case under § 1981 are the same as those for a claim brought under Title VII. Johnson v. University of Cincinnati, 215 F.3d 561, n. 5 (6th Cir.2000) (citing St. Mary's Honor Ctr. v. Hicks, 509 U.S. 502, 113 S.Ct. 2742, 125 L.Ed.2d 407 (1993)). Adapting the elements of a Title VII case to this context, the plaintiff must demonstrate: (1) that it is a member of a protected class; (2) that it attempted to contract, or sought the benefit of law enjoyed by white citizens; (3) that it was qualified to do so; and (4) that the contract or benefit was still available after the plaintiff was turned away. Reese v. City of Southfield, 162 F.3d 1162, 1998 WL 552841 at *5 (6th Cir.1998) (citing Chauhan v. M. Alfieri Co., Inc., 897 F.2d 123, 127 (3d Cir.1990)).
The Plaintiff alleges that Defendant Zelman violated 42 U.S.C. § 1981. In particular, the Board claims that Defendant Zelman's agent, Steve Burigana, the Executive Director of the Office of Community Schools, violated § 1981 by interfering with the Plaintiff's Service Provider Agreement by attempting to force a modification of that contract, rather than allowing the Plaintiff to continue with the dissolution of the contract. Specifically, the Board points to Mr. Burigana's attendance at the January 17, 2002 meeting at the school, and a letter that he wrote encouraging the Board to mediate its problems *853 with the Management Company. Furthermore, as discussed above with respect to the Equal Protection claim, the Plaintiff has attempted to augment its claim by alleging that Mr. DeTemple testified that Defendant Zelman refused to adhere to the binding arbitration provision of their contract, though she adheres to such provisions with respect to other school boards.
The Court concludes that the Plaintiff has failed to prove the necessary elements for a successful § 1981 claim. While the Plaintiff is a member of a protected class, as all Board members are African-American, the Plaintiff has failed to demonstrate that it attempted to contract with the Defendant, but was denied a contract, or that it sought the benefit of law enjoyed by white citizens but was denied that benefit. First, the Plaintiff attempted to contract with the State, and it successfully did so. In addition, the Plaintiff sought to enforce its right to terminate a contract, and the State did not prevent it from doing so. While the Plaintiff alleges that Mr. Burigana interfered with this right, in point of fact, Mr. Burigana did not even begin working for the State in the Office of Community Schools until after the Board had already effectively terminated its Service Provider Agreement. The fact that Mr. Burigana subsequently encouraged the Board to enter into mediation is irrelevant.
Second, the Plaintiff has failed to allege that any benefits of law that it was denied are benefits enjoyed by white citizens. Assuming, arguendo, that Ms. Zelman, through her agent, Mr. Burigana, attempted to interfere with the Plaintiff's right to terminate its contract, the Plaintiff has presented no evidence that Ms. Zelman does not act similarly with respect to community schools run by, or attended by, white citizens. That is, other than making bare allegations of race discrimination, the Board has presented no evidence that either Ms. Zelman or Mr. Burigana do not encourage all governing authorities to mediate with their service providers rather than terminating their service provider contracts. Thus, while the Plaintiff alleges that it is denied a benefit of law, the Board has failed to demonstrate that it has been denied a benefit of law that is enjoyed by white citizens.
Third, with respect to the Plaintiff's argument that Mr. DeTemple conceded that white citizens enjoy the benefit of binding arbitration provisions while the Plaintiff was denied that benefit, for the reasons stated above with respect to the Plaintiff's equal protection claim, that argument must fail.
Therefore, the Court GRANTS Defendant Zelman's Motion to Dismiss the Plaintiff's claim brought pursuant to 42 U.S.C. § 1981, and DENIES the Plaintiff's Motion for an Injunction pursuant to this claim.
D. Other federal claims
In the second paragraph of its Complaint, the Plaintiff states that this case is "a suit in equity authorized by 42 U.S.C. §§ 1983-1988 and 2000d." Other than this brief statement, the Plaintiff no where else elaborates on the assertion that this claim is brought pursuant to 42 U.S.C. §§ 1985-1987[12] and 2000d. After the Court's careful *854 review of the Complaint and the evidence presented during trial, the basis for that assertion remains unclear. In response to the Defendant's motion to dismiss those claims, the Plaintiff failed to provide a basis upon which this Court might find that the Complaint sets forth facts that support a claim under those provisions of federal law. Furthermore, the Plaintiff failed to elaborate on the basis for these claims during the trial of this matter.
Therefore, the Court GRANTS the Defendant's Motion to Dismiss the Plaintiff's claims brought pursuant to 42 U.S.C. §§ 1985-1987 and 2000d, and DENIES the Plaintiff's Motion for an Injunction pursuant to those claims.
E. Ohio Pattern of Corrupt Activities Act
The Plaintiff has alleged a claim against Ms. Zelman for violation of the Ohio Pattern of Corrupt Activities Act ("PCA"), Ohio Rev.Code § 2923.31, et seq., which is patterned after the Federal Racketeering Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961, et seq. Ohio courts have found that the elements for a PCA violation are the same as those for a RICO claim. See Universal Coach, Inc. v. New York City Transit Auth., Inc., 90 Ohio App.3d 284, 629 N.E.2d 28, 32 (1993). Thus, a properly pleaded PCA claim must allege: "(1) conduct of the defendant which involves the commission of two or more of specifically prohibited state or federal criminal offenses; (2) the prohibited criminal conduct of the defendant constitutes a pattern of corrupt activity; and (3) the defendant has participated in the affairs of an enterprise or has acquired and maintained an interest in or control of an enterprise." Id. (citing Sedima S.P.R.L. v. Imrex Co., 473 U.S. 479, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985)). Under the PCA, a "pattern of corrupt activity" consists of "two or more incidents of corrupt activity, whether or not there has been a prior conviction, that are related to the affairs of the same enterprise, are not isolated, and are not so closely related to each other and connected in time and place that they constitute a single event." OHIO REV.CODE § 2923.31(E). The PCA defines an "enterprise" as "any individual, sole proprietorship, partnership, limited partnership, corporation ... or other legal entity, or any organization, association, or group of persons associated in fact although not a legal entity. `Enterprise' includes illicit as well as licit enterprises." OHIO REV.CODE § 2923.31(C).
The Court finds that the Plaintiff has failed to demonstrate that Defendant Zelman violated the PCA. First, the Board has failed to prove that Ms. Zelman committed two or more predicate criminal acts. While the Board alleges that Ms. Zelman committed common law fraud, the Plaintiff has failed to allege any criminal conduct on the part of the Defendant. In addition, assuming, arguendo, that Ms. Zelman did commit some criminal act, the Plaintiff has neither demonstrated that this criminal activity was committed as part of a pattern of corrupt activity, nor has the Plaintiff shown that the allegedly criminal actions were taken in connection to any particular enterprise.
Therefore, the Court GRANTS the Defendant's Motion to Dismiss the Plaintiff's claim brought pursuant to the Ohio Pattern of Corrupt Practices Act, OHIO REV. CODE § 2323.31, and DENIES the Plaintiff's Motion for an Injunction based on the Defendant's alleged violation of this statute.
F. Fraud or Fraudulent Inducement and Misrepresentation
Under Ohio law, a claim of common law fraud requires a plaintiff to plead: "`(a) a representation or, where there is a duty to disclose, concealment of a fact, (b) *855 which is material to the transaction at hand, (c) made falsely, with knowledge of its falsity, or with such utter disregard and recklessness as to whether it is true or false that knowledge may be inferred, (d) with the intent of misleading another into relying upon it, (e) justifiable reliance upon the representation or concealment, and (f) a resulting injury proximately caused by the reliance.'" Cohen v. Lamko, Inc., 10 Ohio St.3d 167, 462 N.E.2d 407, 409 (1984) (quoting Friedland v. Lipman, 68 Ohio App.2d 255, 429 N.E.2d 456 (1980)).
The Plaintiff claims that Defendant Zelman committed fraud by inserting the binding arbitration provision into the Sponsorship Contract when she knew that the State could not be bound by such a provision. The Plaintiff alleges that such a fraudulent act was material to the transaction at hand because the Board was induced to enter into the Sponsorship Contract with the State based, in part, on that provision. In particular, the Board claims that the binding arbitration provision was appealing because it indicated that any disputes between the governing authority and the sponsor would be resolved relatively efficiently and cost-effectively. The Board also alleges that, in light of the fact that it was the State that drafted the Sponsorship Contract, it was justified in relying on that provision when it signed the contract. Finally, the Board alleges that it has suffered two fundamental injuries: (1) the Board's inability to function as a governing authority based on the disintegration of its relationship with the Management Company; and (2) the threat of litigation against the Board by the State if the Board is unable to obtain certain financial data from the Management Company necessary to complete the State's audit. Thus, the Board contends that the Defendant's fraudulent act caused the injuries suffered because the arbitration clause induced the Board to contract with the State, but then the Defendant violated her other contractual duties by failing to prevent the harms suffered.
The Court finds that the Plaintiff's claim brought against Ms. Zelman for fraud or fraudulent inducement must fail. The Court recognizes that Ms. Zelman, or a representative from her office, inserted the binding arbitration provision into the contract, presumably with the knowledge that the State could not be bound by such a provision. The Court also presumes that the State must have recognized why such a dispute resolution provision would be appealing to a governing authority. Indeed, many individuals logically prefer the efficiency and cost-effectiveness of arbitration to what can often become expensive and protracted litigation. Nonetheless, the Court finds that two key factors prevent the Plaintiff from succeeding on this claim.
First, the Plaintiff has failed to demonstrate that the binding arbitration clause was, in fact, a motivating factor for the Board's decision to contract with the State as the community school sponsor. While Plaintiff's counsel argued that the Board found the clause to be appealing for the reasons discussed above, no Board member testified that the arbitration provision actually played any role in their decision to contract with the State. The Court does not doubt that the arbitration clause added to the appeal of the contract, but the Court also finds that other factors impacted the Board's decision to contract with the State. In light of the length of the Sponsorship Agreement, and the numerous facets of the relationship between the governing authority and the sponsor set forth therein, the Court is hard pressed to believe that the Board would not have contracted with the State even in the absence of a binding arbitration provision.
Second, the Plaintiff has failed to demonstrate that the Defendant's fraudulent act proximately caused an injury that can *856 be redressed by this Court. In fact, neither of the injuries alleged by the Plaintiff relates in any way to the Defendant's allegedly fraudulent act. The fact that the Board is no longer able to function as the governing authority arises from the Board's dispute with the Management Company, not from anything that Ms. Zelman did or failed to do. Ms. Zelman neither participated in the Board's decision to contract with the Management Company (nor in the decision to terminate that contract), nor was she under any duty to do so. Likewise, the fact that the Board may have legal action instituted against it by the State arises from the Board's inability to communicate with the Management Company, not from anything that Ms. Zelman did or failed to do. Neither Ms. Zelman nor any other State official is legally obligated to assist the Board in obtaining financial information about its own school from the Management Company with whom the Board entered into an independent contract. Furthermore, both of these harms arise completely independently from the State's insertion of the binding arbitration clause in the Sponsorship Agreement. Thus, while the Plaintiff has alleged certain injuries, the Plaintiff has failed to establish a nexus between those injuries and the Defendant's fraudulent act.
Therefore, the Court GRANTS the Defendant's Motion to Dismiss the Plaintiff's claims of fraud, fraudulent inducement, and misrepresentation, and DENIES the Plaintiff's Motion for an Injunction based on this claim.
V. CONCLUSION
Based on the foregoing analysis, the Court GRANTS the Defendant's Motion to Dismiss the Plaintiff's claims against her, and DENIES the Plaintiff's Motion for an Injunction.
IT IS SO ORDERED.
NOTES
[1] Community schools are often referred to as "charter schools" in other states.
[2] CEM is a subsidiary of the SABIS Corporation, the corporate body that designed the curriculum of the SABIS International School, and for whom the school is named. For the sake of clarity, the Court shall refer to the management company as CEM, rather than SABIS, though the names were used interchangeably during trial.
[3] Pursuant to the Service Provider Agreement, the management company retained control of all of the school's financial records.
[4] Apparently, Mr. Burigana did receive a summary of the SABIS International School budget from the Management Company. He did not forward that information to the Board because he determined that the summary did not include the detailed transactional information that the Board needed.
[5] Although the Court has deduced that these are the claims asserted based on the text of the Plaintiff's Complaint, the Complaint actually sets forth the following claims: (1) engaging in a pattern of corrupt activity in violation of Ohio Rev.Code § 2923.32; (2) fraud and misrepresentation; (3) violation of the Fourteenth Amendment Equal Protection clause; and (4) fraudulent inducement and violation of 42 U.S.C. § 1983. The Plaintiff also passingly mentions 42 U.S.C. §§ 1984-1988 and 2000(d), but fails to specify the basis upon which claims brought pursuant to those provisions might be pursued.
[6] The Defendants individually filed their motions, but each motion set forth essentially the same arguments.
[7] Defendant Zelman also asserts that the Plaintiff's state law claims brought against her in her individual capacity must be dismissed because an official sued in her individual capacity cannot be subject to an injunction ordering her to act in a particular way as a state officer. See Kentucky v. Graham, 473 U.S. 159, 165-66, 105 S.Ct. 3099, 87 L.Ed.2d 114 (discussing the distinctions between personal capacity and official capacity lawsuits). The Plaintiff has not attempted to dispute this statement of law. The Court notes that despite the Plaintiff's claim that it is pursuing this lawsuit against the Defendant in both her official and individual capacities, the only relief sought is injunctive relief that would affect the Defendant in her official capacity. Therefore, the Plaintiff's state law claims brought against Defendant Zelman in her individual capacity are DISMISSED.
[8] It is worth noting that, even though the Court has jurisdiction over the Plaintiff's federal claims brought against Defendant Zelman based on Young, that is an insufficient basis for finding that the Court also has jurisdiction over the Plaintiff's state law claims because the judge-made doctrine of pendent jurisdiction does not override the strictures of the Eleventh Amendment. Freeman v. Michigan Dept. of State, 808 F.2d 1174, 1180 (6th Cir.1987) (citation omitted); see Edwards v. Commonwealth of Kentucky Revenue Cabinet, Div. of Compliance and Taxpayer Assistance, 22 Fed. Appx. 392, 393, 2001 WL 1299263, at *1 (6th Cir.2001) (stating that "neither supplemental jurisdiction nor any other basis for jurisdiction overrides Eleventh Amendment immunity") (citation omitted).
[9] The State of Ohio has expressly consented to be sued in Ohio's Court of Common Claims. OHIO REV.CODE § 2743.02(A)(1).
[10] Mr. DeTemple stated that a school board is analogous to the Plaintiff Board of Trustees.
[11] It is worth noting that the Court has presumed that the State, in fact, became less involved with the Board after Ms. Kerlakian was removed from her position. No one with first hand knowledge regarding the kind and degree of assistance actually provided to the Board by the State testified to that fact. Rather, various Board members based their testimony regarding the State's diminished involvement on what was reported to them by Ms. Kerlakian regarding her contact with the State. Ms. Kerlakian, however, did not testify that she actually had as much contact with the state as was alleged by the other Board members.
[12] Sections one and two of 42 U.S.C. § 1984 were declared unconstitutional in Civil Rights Cases, In re, 109 U.S. 3, 3 S.Ct. 18, 27 L.Ed. 835 (1883). Sections three and four of that statute were repealed on June 25, 1948. Therefore, the Court presumes that the Plaintiff did not intend to include a claim based upon that statute as a part of the Complaint. In addition, while the Plaintiff did not elaborate upon the claim based on 42 U.S.C. § 1988, the Court presumes that the Plaintiff intended only to reserve the right to seek attorney's fees should the Plaintiff succeed on the merits of the claim brought pursuant to 42 U.S.C. §§ 1981 or 1983.
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United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 02-2405
___________
United States of America, *
*
Plaintiff-Appellee, * Appeal from the United States
* District Court for the District of
v. * South Dakota.
*
Tyrell Vincent Thin Elk, *
*
Defendant-Appellant. *
___________
Submitted: Dec. 10, 2002
Filed: March 3, 2003
___________
Before WOLLMAN, GIBSON, and MELLOY, Circuit Judges.
___________
MELLOY, Circuit Judge.
Tyrell Vincent Thin Elk ("Thin Elk") drove while intoxicated and caused a
head-on collision with another vehicle seriously injuring seventy-six year old Russell
Koehler and his seventy-four year old wife, Doris Koehler. Mrs. Koehler eventually
died from her injuries. Thin Elk pled guilty to assault resulting in serious bodily
injury regarding the injuries to Mr. Koehler and involuntary manslaughter regarding
the death of Mrs. Koehler. The district court1 assessed the severity of injury to Mr.
Koehler as a "permanent or life threatening bodily injury" that called for a six level
increase under U.S.S.G. § 2A2.2(b)(3)(C). To reach this six level increase, the
district court relied on psychological injury to Mr. Koehler in combination with his
physical injuries. In addition, the district court departed upwardly pursuant to
U.S.S.G. § 5K2.3, relying on Mr. Koehler's extreme psychological injury. Thin Elk
appeals his sentence claiming that the district court impermissibly double-counted
Mr. Koehler's psychological injuries by considering them under both U.S.S.G. §
5K2.3 and 2A2.2(b)(3)(C). We affirm.
I.
Thin Elk is an enrolled member of the Rosebud Sioux Tribe. He has an
extensive criminal history. On July 8, 2001, Rosebud Sioux Tribal law enforcement
officers arrested him on a variety of warrants and charges. On August 21, 2001, the
day prior to his release from jail, he told a detention officer that the first thing he was
going to do upon release was get "wasted." He was released on August 22, 2001.
On August 23, 2001, with a blood alcohol level of .257, traveling at a speed of
approximately 95 miles per hour, and over the objections and pleading of a female
passenger, Thin Elk pulled out to pass another vehicle. He proceeded to drive down
the center of the road, not returning to his own lane. In doing so, he crashed his
vehicle head-on into the vehicle of Mr. and Mrs. Koehler. The Koehlers were
initially treated at the Indian Health Service Hospital in Rosebud, South Dakota, and
were later taken via air ambulance to the Sioux Valley Hospital in Sioux Falls, South
Dakota.
1
The Honorable Charles B. Kornman, United States District Judge for the
District of South Dakota
2
Mr. Koehler was treated for a mild pulmonary contusion, a fractured left
humerus, and a fractured left femur. Mrs. Koehler was treated for bilateral pulmonary
contusions, a right ankle fracture, a puncture wound to her left knee, questionable
myocardial infarction, and closed head injury. The Koehlers remained hospitalized
for about two weeks in Sioux Falls before being transported to an assisted living
facility near their home in Las Vegas, Nevada. Mrs. Koehler developed acute
gastrointestinal bleeding and a diaphragmatic rupture with herniation of the stomach
into the chest. She was admitted to intensive care at the Desert Springs Hospital in
Las Vegas where she remained weak and continued to decline. She died on
November 2, 2001, as a result of the injuries and complications she suffered from the
accident. The Koehlers had been married fifty-three years.
Mr. Koehler was in good health and was active prior to the accident. He
walked five to seven miles per day. He was on medication for the beginning stages
of dementia. As a result of the accident, he requires ongoing home health care at a
cost of about $3,000 per month, his mobility is limited, his dementia has progressed
dramatically, and he is on medication for depression. Medical testimony described
Mr. Koehler's dementia as having advanced by ten years and as being caused fifty
percent by age and fifty percent by the accident. Mr. Koehler continues to suffer
severe pancreatitis and memory loss which are related to the accident. He has stated
that he no longer wants to live. The Koehler family has been billed approximately
$2.5 million for medical expenses as a result of the accident.
Following Thin Elk's plea of guilty, the court ordered a presentence
investigation report ("PSR"). Paragraph 25 of the PSR called for a four level increase
under U.S.S.G. § 2A2.2(b)(3)(B), characterizing the injuries to Mr. Koehler as
"Serious Bodily Injuries." The government objected, urging instead that the court
characterize Mr. Koehler's injuries as "Permanent or Life Threatening Bodily
Injuries" and impose a six level increase under U.S.S.G. § 2A2.2(b)(3)(C). The
government also moved for an upward departure under U.S.S.G. § 5K2.3 for extreme
3
psychological injury.
At the sentencing hearing, the district court sustained the government's
objection and imposed the six level increase stating, "the psychological injury in
combination with the physical injury here to the victim should be considered and
taken into account in determining what is the appropriate enhancement, and I find that
the victim here, Mr. Koehler, did sustain permanent and life threatening bodily injury,
and that he continues to suffer from that." Sentencing Transcript at 33-34. In
addition, the district court granted the government's motion for an upward departure
under U.S.S.G. § 5K2.3 based on the severity of Mr. Koehler's psychological injuries
and based on the fact that Thin Elk knowingly risked the harm that, in fact, occurred
to his victims. The district court stated:
It's also clear to me that the injury was knowingly risked by this
defendant. Driving 95 miles an hour while incredibly intoxicated, on the
wrong side of the road, passing where he shouldn't have been, and
ignoring the pleas of his passenger to slow down or to let her drive in
which he said, "Shut the f[___] up," clearly indicates that he knowingly
risked what happened here. He does not now – is not now able to recall
that, but that doesn't make any difference.
And, so, Mr. Koehler's psychological injury here is much more serious
than that otherwise suffered by a similar victim, even those in which the
six-level enhancement has already been applied.
Sentencing Transcript at 35. The district court cited numerous factors that influenced
its decision to depart upward:
He and his wife were married for 53 years. He was age 76. A person
who is already starting down the road of dementia or Alzheimer's
disease is, of course, severely impacted by injuries of this type. Even
people of advanced age who are not approaching problems with
Alzheimer's are severely impacted by injuries and by the process of
4
going through treatment as to all those matters. The confusion of being
in the hospital and being in some other type facility [sic]. And, of
course, the anesthesia that is required in dealing with these things is a
well-known factor, as well, in impacting people who are involved in
these type[s] of very serious accidents. It's also clear based on the
testimony that I heard today from the son of the victims that the victim,
Mr. Koehler, is suffering from severe depression, [and that he] no longer
wants to live.
Sentencing Transcript at 35-36.
It is undisputed that the district court considered the psychological injury to
Mr. Koehler for both the increase and the upward departure. The district court even
noted, "Now, I totally realize that this, to some extent, appears to be double counting,
the Court having already ordered the six-level increase. But I find that this case is
sufficient to justify both the six-level increase an[d] upward departure." Sentencing
Transcript at 36.
As a means to quantify an appropriate value for the upward departure, the
district court moved horizontally across the guideline table rather than vertically
down the table. It imposed the sentence as though Thin Elk had a criminal history
category of IV rather than his actual criminal history category of II. In response to
questions from Thin Elk's counsel, the court clarified that the upward departure was,
in fact, based on extreme psychological injury under U.S.S.G § 5K2.3 and that the
reference to Thin Elk's criminal history level was merely a guide or tool for
calculating an appropriate departure value. See Sentencing Transcript at 38-39. With
the increase and upward departure, the district court sentenced Thin Elk to 69 months
on the assault count and 69 months on the involuntary manslaughter count, to be
served concurrently, followed by three years of supervised release. Thin Elk appeals
the upward departure alleging that it comprised impermissible double counting of Mr.
Koehler's psychological injury. He does not appeal the manner in which the district
court calculated the departure.
5
II.
We review the district court's construction of the sentencing guidelines de novo
and its factual findings for clear error. United States v. Rohwedder, 243 F.3d 423,
425 (8th Cir. 2001). The de novo standard extends to our review of the permissibility
of double counting. Id. at 426-27; United States v. Kenney, 283 F.3d 934, 936 (8th
Cir. 2002). We review the district court's election to depart from the guidelines for
abuse of discretion "because the decision to depart embodies the traditional exercise
of discretion by the sentencing court." Commentary to U.S.S.G. § 5K2.0 (citing
Koon v. United States, 518 U.S. 81 (1996)). The abuse of discretion standard extends
to our review of the district court's determination as to "whether a given factor is
present to a degree not adequately considered by the Sentencing Commission."
United States v. Lewis, 235 F.3d 394, 396 (8th Cir. 2000).
18 U.S.C. § 3553(b) permits a sentencing court to impose a sentence outside
the applicable Guideline range if the court finds "that there exists an aggravating or
mitigating circumstance of a kind, or to a degree, not adequately taken into
consideration by the Sentencing Commission in formulating the guidelines that
should result in a sentence different from that described." Id. The Sentencing
Commission enumerated some of the factors that it believed were not adequately
accounted for in the formulation of the Guidelines and might merit consideration as
aggravating or mitigating circumstances. U.S.S.G. § 5K2.0 (explaining the rationale
behind the factors listed in U.S.S.G. § 5K2.1-21). Extreme psychological injury is one
of these specifically enumerated factors. U.S.S.G. § 5K2.3.2
2
U.S.S.G. § 5K2.3 provides:
If a victim or victims suffered psychological injury much more serious
than that normally resulting from commission of the offense, the court
may increase the sentence above the authorized guideline range. The
extent of the increase ordinarily should depend on the severity of the
6
U.S.S.G. § 5K2.03 is a "Grounds for Departure" policy statement that
introduces the specifically enumerated factors and explains their application. This
general policy statement endorses the double counting of a factor for an upward
departure where that factor is taken into account elsewhere in the Guidelines, ". . .
e.g., as a specific offense characteristic or other adjustment[,]" but where, "in light of
unusual circumstances, the weight attached to that factor under the guidelines is
inadequate or excessive." Id. This court has previously relied on the general policy
statement of § 5K2.0 to find double counting permissible in the context of departures.
United States v. Hipenbecker, 115 F.3d 581, 584 (8th Cir. 1997) ("because § 5K2.0
psychological injury and the extent to which the injury was intended or
knowingly risked.
Normally, psychological injury would be sufficiently severe to warrant
application of this adjustment only when there is a substantial
impairment of the intellectual, psychological, emotional, or behavioral
functioning of a victim, when the impairment is likely to be of an
extended or continuous duration, and when the impairment manifests
itself by physical or psychological symptoms or changes in behavior
patterns. The court should consider the extent to which such harm was
likely, given the nature of the defendant's conduct.
3
U.S.S.G. § 5K2.0 provides:
Under 18 U.S.C. § 3553(b), the sentencing court may impose a sentence
outside the range established by the applicable guidelines, if the court
finds "that there exists an aggravating or mitigating circumstance of a
kind or to a degree not adequately taken into consideration by the
Sentencing Commission in formulating the guidelines that should result
in a sentence different from that described." . . . Similarly the court may
depart from the guidelines, even though the reason for departure is taken
into consideration in determining the guideline range (e.g., as a specific
offence characteristic or other adjustment) if the court determines that,
in light of unusual circumstances, the weight attached to that factor
under the guidelines is inadequate or excessive. Id.
7
contemplates the simultaneous consideration of factors that may be considered
elsewhere in the computation of a defendant's sentencing guideline range, the
Commission must have contemplated double counting when it created § 5K2.0.").
This court's conclusion in Hipenbecker is consistent with the Supreme Court's
thorough discussion of departures in Koon v. United States, 518 U.S. 81, 95-96
(1996). In Koon, the Court noted that the consideration of some factors, such as race,
sex, national origin, religion, etc., is forbidden, while the use of other factors is
encouraged or discouraged (e.g., those factors set forth as bases for departure in §
5K2.1-21). Ultimately, the Court set forth instructions for dealing with various
factors that might arise:
If the special factor is a forbidden factor, the sentencing court cannot use
it as a basis for departure. If the special factor is an encouraged factor,
the court is authorized to depart if the applicable Guideline does not
already take it into account. If the special factor is a discouraged factor,
or an encouraged factor already taken into account by the applicable
Guidelines, the court should depart only if the factor is present to an
exceptional degree or in some other way makes the case different from
the ordinary case where the factor is present.
Id. See also, United States v. Evans, 272 U.S. 1069, 1089 (8th Cir. 2001) ("under
Koon [], conduct can be considered both in the crime and in the upward departure.
The key question is whether the factor is present to an exceptional degree or
something else make the case different from the ordinary case where the factor is
present.") (internal citations omitted).
The case at hand presents the third scenario described in Koon. The relevant
special factor, namely, extreme psychological injury under U.S.S.G. § 5K2.3, is an
"encouraged factor." This encouraged factor is taken into account elsewhere within
the Guidelines, specifically in the definition of "Permanent or Life Threatening
Bodily Injury." Under U.S.S.G. § 2A2.2(b)(3)(C), a "Permanent or Life Threatening
8
Bodily Injury" is an "injury involving a substantial risk of death; loss or substantial
impairment of the function of a bodily member, organ, or mental faculty that is likely
to be permanent. . . ." U.S.S.G. § 1B1.1 n.1(g) (adopted by reference in U.S.S.G. §
2A2.2(b)(3)(C) n.1) (emphasis added). Because the relevant special factor in the
present case is an encouraged factor already taken into consideration elsewhere in the
Guidelines, an upward departure is permissible only if "the factor is present to an
exceptional degree or in some other way makes the case different from the ordinary
case where the factor is present." Koon, 518 U.S. at 96.
Our review of the record leads us to conclude that the district court did not
commit clear error in its factual determinations concerning Mr. Koehler's mental
condition or abuse its discretion when it determined that Mr. Koehler's psychological
injury was present to an exceptional degree. The district court recognized the issue
of double counting and properly set forth detailed findings concerning the causes and
severity of Mr. Koehler's depression (which caused him to state that he no longer
wished to live): the loss of a spouse of fifty-three years, the extensive treatment
required by the physical injuries to a seventy-six year old victim, confusion regarding
hospitalization and moves between hospitals and assisted living facilities, and the
impact of the anesthesia attendant to the treatment for physical injuries. The district
court also explained the substantial impairment of Mr. Koehler's mental function due
to the aggravation of his dementia and set forth specific findings concerning "the
extent to which the injury was knowingly intended or risked." U.S.S.G. § 5K2.3.
Finally, we find no abuse of discretion in the district court's holding that the six
level enhancement for the specific offence characteristic of "Permanent or Life
Threatening Bodily Injury" under § 2A2.2(b)(3)(C) failed to adequately account for
Mr. Koehler's psychological injury. The district court expressly noted that the six
level enhancement was based in part on physical injuries and only in part on his
psychological injuries. Accordingly, we find no abuse of discretion in the district
court's determination that psychologic injury was present to an exceptional degree
9
and that § 2A2.2(b)(3)(C) alone failed to adequately take into consideration Mr.
Koehler's injuries.
Finding no error in the district court's interpretation of the guidelines, and no
abuse of discretion in the district court's election to depart upwardly, we affirm.
A true copy.
Attest.
U.S. COURT OF APPEALS FOR THE EIGHTH CIRCUIT
10
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Fourth Court of Appeals
San Antonio, Texas
January 14, 2014
No. 04-13-00457-CR
Mark Wayne Evans,
Appellant
v.
The State of Texas,
Appellee
Trial Court Case No. 2012-1167-C2
ORDER
The Court has reviewed the record and briefs in this appeal and has determined that oral
argument will not significantly aid it in determining the legal and factual issues presented in the
appeal. See TEX. R. APP. P. 39.8. Therefore, all requests for oral argument are denied, and the
cause is advanced for ON BRIEFS submission on February 4, 2014, to the following panel: Justice
Barnard, Justice Martinez, and Justice Alvarez. All parties will be notified of the Court’s decision
in this appeal in accordance with TEX. R. APP. P. 48.
Either party may file a motion requesting the Court to reconsider its determination that oral
argument will not significantly aid the Court in determining the legal and factual issues presented
in the appeal. See TEX. R. APP. P. 39.8. Such a motion should be filed within ten (10) days from
the date of this order.
It is so ORDERED on January 14, 2014.
______________________________
Marialyn Barnard, Justice
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the said
court on this January 14, 2014.
______________________________
Keith E. Hottle, Clerk
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379 F.2d 750
Harriette BANNISTER, Charles J. Crosby and W. C. Neal, Appellants,v.UNITED STATES of America, Appellee.
No. 23351.
United States Court of Appeals Fifth Circuit.
June 28, 1967.
Rehearing Denied August 18, 1967.
Albert Datz, Jacksonville, Fla., for appellants, Crosby & Bannister.
Ernest D. Jackson, Sr., Samuel S. Jacobson, Jacksonville, Fla., for appellant, Neal.
James W. Matthews, Edward A. Kaufman, Asst. U. S. Attys., William A. Meadows, Jr., U. S. Atty., Miami, Fla., for appellee.
Before MARIS,* BROWN and THORNBERRY, Circuit Judges.
JOHN R. BROWN, Circuit Judge:
1
The appellants Bannister, Crosby and Neal were convicted by a jury under an indictment charging two counts of mail fraud, 18 U.S.C.A. § 1341, and one count of conspiracy to violate the mail fraud statute, 18 U.S.C.A. § 371.1 Of the several errors asserted on this appeal, only two warrant comment — whether the evidence established that there had been use of the mails within the meaning of § 1341, and whether the District Court erred in refusing to allow Crosby or his counsel access to Crosby's pre-sentence report. We find no error and affirm.
2
The substance of the offenses charged in the indictment was the use of the mails in a scheme to defraud insurance companies of proceeds under life insurance policies by false and fraudulent representations. Crosby and Neal were, during the period in question, employees of Sowell Funeral Home located in Jacksonville, Florida. The evidence we summarize briefly in the light of what the jury was entitled to infer. The fraudulent scheme consisted of either submitting or inducing the submission of applications for life insurance on various named persons unrelated to appellants and in whom the appellants otherwise had no insurable interest. Premium payments on these policies were made by Crosby and Neal, apparently from funds in the Sowell Funeral Home accounts. On at least two occasions, proofs of death and insurance claim forms were knowingly submitted on deceased persons who were known not to be the persons named in the insurance policies. On another occasion, the application for insurance, prepared from information provided by Crosby, contained misrepresentations regarding the age and physical condition of the prospective insured. Bannister, a student at Edward Waters College in Jacksonville and frequent visitor to the funeral home, was named as the beneficiary in this policy and submitted the signed proofs of death to the insurer to claim the policy proceeds. Although designated in the application and policy as the niece of the insured, the testimony other than that of Bannister herself contradicted such relationship. The beneficiaries named in the policies would, after the claim for proceeds had been filed, assign the proceeds to the funeral home. The evidence, although refuted by appellants who took the stand in their own behalf, is clearly sufficient to support the jury finding that Bannister, Crosby and Neal were all active participants in the fraudulent scheme.
3
The appellants contend that the statutory requirement that there be a use of the mails "in execution of" the scheme has not been satisfied in this case. The mailings alleged in the indictments in support of the two substantive offenses included the application for an insurance policy on the life of Irene Sanders, and the claim and proofs of death signed by Bannister following Irene Sanders' death. The record shows that all negotiations and discussions relating to the application for insurance were conducted at the funeral home between the appellants and the local agent of the Insurer.2 The completed application was delivered by hand to him at that time, as were all subsequent premium payments on the Sanders' policy. After the death of Irene Sanders, the claim and proofs of death were also delivered by hand to the agent. The mailings involved therefore were confined to the interoffice communications requesting approval of the application and payment of the claim between the Jacksonville agency and the home office in New York. On these facts appellants urge that no use of the mails attributable to them occurred in connection with these items. The appellants disclaim any knowledge or anticipation that such mailings were necessary to acquire either the policy or its proceeds, and urge alternatively that such interoffice mailings are not within the contemplation or proscription of § 1341.
4
It is now, and has been for years, clear that the mailing element of the offense is satisfied if the use of the mails is an incident to a material element of the scheme, Pereira v. United States, 1954, 347 U.S. 1, 74 S.Ct. 358, 98 L.Ed. 435, and if the scheme reasonably contemplated a use of the mails, Adams v. United States, 5 Cir., 1963, 312 F.2d 137; Glenn v. United States, 5 Cir., 1962, 303 F.2d 536. In Pereira the Court held that "[w]here one does an act with knowledge that the use of the mails will follow in the ordinary course of business, or where such use can reasonably be foreseen, even though not actually intended, then he `causes' the mails to be used." 347 U.S. at 8-9, 74 S.Ct. at 363. This Court was confronted with a problem similar to the one here in Adams v. United States, supra, involving a fraudulent credit card scheme:
5
"The fraudulent scheme was possible only because Gulf distributors extended credit, but extension of credit presupposed that the distributors would use the mails to forward the slips to Gulf for ultimate presentation to the card-holders. Appellant's scheme reasonably contemplated the utilization of a commercial practice which, taken in its entirety, embraced the use of the mails; * * *." [Emphasis added.]
6
312 F.2d at 140.
7
And so it is here. The mailings in Adams are substantially analogous to the interoffice communications here involved. The appellants knew they were dealing with a local agent of a specified life insurance company. The claim, proof of death and related forms all expressly recited that they were prepared for submission to the home office of the Insurer in New York.3 From this evidence, the jury could conclude that the parties reasonably contemplated that use of the mails would be required as an integral part of the scheme.
8
The appellants' alternative assertion, that the mailings occurred subsequent to any misrepresentations they may have made to the Insurer and therefore were not incident to the execution of any essential part of the scheme but rather after the scheme had been fully executed, Kann v. United States, 1944, 323 U.S. 88, 65 S.Ct. 148, 89 L.Ed. 88, 157 A.L.R. 406; Parr v. United States, 1960, 363 U.S. 370, 80 S.Ct. 1171, 4 L.Ed.2d 1277, is patently without merit. This merely cleared the first hurdle in the inception of the scheme. The fulfillment of the fraud — acquisition of the proceeds — yet remained.
9
Appellants concede that each mailing in execution of an alleged scheme constitutes a separate offense under the statute, Milam v. United States, 5 Cir., 1963, 322 F.2d 104, even though the mailings may all relate to one contemplated fraud. Since we find that the convictions and sentences on the substantive mail fraud counts (see note 1, supra) are valid, we need not consider the validity of the concurrent sentences imposed on the conspiracy count.4 United States v. Tenenbaum, 7 Cir., 1964, 327 F.2d 210.
10
Crosby asserts that the District Court erred in refusing to allow either Crosby or his counsel to examine his presentence report. He argues that the severity of his sentence in contrast to those of his co-defendants indicates that the contents of the presentence report were strongly adverse to him, and that he should have had some opportunity to inspect the reports unfavorable to him and, if possible, refute them. This has been a recurring problem in both state and federal courts, and the practice of allowing the defendant to examine his presentence report varies widely.5 The recently amended Federal Rules of Criminal Procedure which became effective subsequent to the sentencing and appeal here involved contain a newly added provision which gives formal recognition to the existence of the power of the courts to make presentence reports available to the defendant or his counsel, F.R.Crim.P. 32(c) (2),6 and the likelihood that this discretionary power might be employed more frequently than in the past.7
11
But we find no abuse of discretion by the District Court here in refusing to allow Crosby access to the report. Of course our affirmance does not preclude Crosby from seeking a resentence in the District Court under F.R.Crim.P. 358 in which event he might persuade the Court to exercise the discretionary authority under new Rule 32 to allow him to see the report and offer any comments or explanations he might have.
12
None of the other contentions raised by the appellants merit comment.
13
Affirmed.
Notes:
*
Of the Third Circuit, sitting by designation
1
Bannister was sentenced on each of the counts to five years probation, the sentences to run concurrently. Neal received a sentence of 18 months, 6 months imprisonment with the remainder suspended, and five years probation on each of the counts, concurrent. Crosby received consecutive five year sentences on the two substantive mail fraud counts, and five years on the conspiracy count to run concurrently with the sentence imposed on the second substantive count
2
Manhattan Life Insurance Company, with home offices in New York
3
The "Proofs of Death" form signed by Bannister carries the heading "Submitted to the Manhattan Life Insurance Company of New York, 120 West 57th Street, New York 19, N.Y.," and further directs that the "Company reserves the right to require or to obtain further information should it be deemed necessary." [Emphasis added.] Neal, a some-time insurance agent, can hardly deny knowledge of the required home-office approval.
4
The substantive mail fraud counts must be distinguished from a charge of conspiracy which, being an agreement, calls for proof of an intended use of the mails. Abbott v. United States, 5 Cir., 1956, 239 F.2d 310, 314; Guardalibini v. United States, 5 Cir., 1942, 128 F.2d 984
5
See Advisory Committee's Note, 39 F.R.D. 69, 193-194
6
Rule 32
"(c) Presentence Investigation.
"(2) Report. * * * The court before imposing sentence may disclose to the defendant or his counsel all or part of the material contained in the report of the presentence investigation and afford an opportunity to the defendant or his counsel to comment thereon. Any material disclosed to the defendant or his counsel shall also be disclosed to the attorney for the government."
39
F.R.D. 69, 192
7
See Advisory Committee Notes, 39 F.R.D. 69, 194:
"Practice in the federal courts is mixed, with a substantial minority of judges permitting disclosure while most deny it. * * * [T]he amendment goes no further than to make it clear that courts may disclose all or part of the presentence report to the defendant or to his counsel. It is hoped that courts will make increasing use of their discretion to disclose so that defendants generally may be given full opportunity to rebut or explain facts in presentence reports which will be material factors in determining sentences."
8
This rule, too, was significantly amended. See Advisory Committee Note, 39 F.R.D. 69, 196-97
Rule 35. "Correction or Reduction of Sentence. * * * The court may reduce a sentence within 120 days after the sentence is imposed, or within 120 days after receipt by the court of a mandate issued upon affirmance of the judgment or dismissal of the appeal, * * *."
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896 F.2d 550
Allenv.Warden, Wade Correctional*
NO. 89-4353
United States Court of Appeals,Fifth Circuit.
JAN 30, 1990
1
Appeal From: W.D.La.
2
AFFIRMED.
*
Fed.R.App.P. 34(a); 5th Cir.R. 34.2
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