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211 Ga. App. 835 (1994)
440 S.E.2d 723
CANNON
v.
THE STATE.
A93A2178.
Court of Appeals of Georgia.
Decided February 4, 1994.
Straughan & Straughan, William T. Straughan, for appellant.
James L. Wiggins, District Attorney, for appellee.
POPE, Chief Judge.
James Henry Cannon and two female companions were jointly indicted and tried for possession of cocaine with intent to distribute. The two companions were acquitted of all charges. Defendant Cannon was found guilty of the lesser included offense of possession of cocaine. He appeals from his conviction.
At trial, the evidence revealed that in the afternoon of Saturday, February 29, 1992, defendant received a warning for not having his seatbelt fastened as he drove a 1976 yellow Cadillac through a Pulaski County roadblock. The roadblock was set up to locate persons driving under the influence or transporting illegal drugs. In the early morning hours of March 1, defendant and two female passengers encountered another Pulaski County roadblock. When asked to produce his license and proof of insurance, defendant complied but explained that he had already driven through the roadblock once and received a ticket. The investigating officer walked to the back of the car and then requested permission to search it. Defendant consented to the search, replying "Ain't supposed to be nothing in it, sure you can search it." A matchbox containing three small packets of rock cocaine was found on the floorboard just under the right edge of the driver's seat. The officer testified the matchbox was visible from the driver's seat. A GBI agent who questioned defendant and the two passengers at the scene testified that all three denied any knowledge of the presence of the cocaine; however, the two passengers seemed nervous and fidgety when questioned about the cocaine.
Although the car driven by defendant was owned by his daughter, defendant was the primary user of the car. Defendant's daughter, *836 girl friend, and nephew occasionally drove the car; however, his daughter was out of town at the time of his arrest. His girl friend only drove the car if defendant did not need it. Defendant testified that his girl friend drove the car during the day on February 29 and that she must have placed the cocaine in the car in order to set him up because she was angry with him. Defendant's girl friend did not testify. There was no other testimony that anyone else had driven the car around the time of defendant's arrest.
Defendant argues the trial court erred in denying his motion for directed verdict because the State failed to establish he was in actual or constructive possession of the cocaine since other individuals had equal access to the car in which the cocaine was found. "The driver and owner of an automobile, in the absence of any circumstances to the contrary, is presumed to have possession and control of contraband found in the automobile, but this presumption is rebuttable by evidence of equal access." (Citation omitted.) Hendrix v. State, 199 Ga. App. 599, 600 (1) (405 SE2d 576) (1991). In this connection, "[t]he equal access rule, as it applies in the automobile context, is merely that evidence showing that a person or persons other than the owner or driver of the automobile had equal access to contraband found in the automobile may or will, depending upon the strength of the evidence, overcome the presumption that the contraband was in the exclusive possession of the owner or driver." (Citations and punctuation omitted.) Pitts v. State, 206 Ga. App. 635 (1) (426 SE2d 257) (1992). The trial court properly charged the jury on the equal access rule. "Whether the evidence of equal access is sufficient to rebut any inference of possession . . . is a question properly left to the jury." (Citation and punctuation omitted.) Davis v. State, 194 Ga. App. 482, 486 (4) (391 SE2d 124) (1990); see also Chambers v. State, 162 Ga. App. 722 (1) (293 SE2d 20) (1982); Moore v. State, 155 Ga. App. 149 (1) (270 SE2d 339) (1980).
The jury weighed the evidence and decided this question adversely to defendant. At the time the contraband was found, during the early morning hours of March 1, defendant had been the sole driver of the car since the afternoon of February 29. The matchbox was visible from and within reach of the driver's seat. The jury was authorized to determine it was not reasonable to believe defendant's girl friend, who drove the car the day before the arrest, had put a matchbox containing three packets of rock cocaine in defendant's car in order to set the defendant up in case he happened to be stopped by the police. See Moon v. State, 194 Ga. App. 777 (2) (392 SE2d 19) (1990); Davis, supra at 486 (4). Moreover, the conviction was not based solely on the presumption of possession, but upon all the evidence including defendant's apparent attempt to prevent the officers from detaining him at the second roadblock by virtue of explaining he *837 had already been through the roadblock and his statement to the investigating officer that there was not supposed to be anything in the car. See Moon, supra at 779 (2). We find a rational trier of fact could have found beyond a reasonable doubt that defendant was guilty of possession of cocaine under the standard of Jackson v. Virginia, 443 U. S. 307 (99 SC 2781, 61 LE2d 560) (1979). See Phelps v. State, 194 Ga. App. 493 (390 SE2d 899) (1990); Doe v. State, 189 Ga. App. 793 (377 SE2d 546) (1989). Accordingly, the trial court did not err in denying defendant's motion for directed verdict.
We further note that defendant's reliance on this court's decision in Whipple v. State, 207 Ga. App. 131 (427 SE2d 101) (1993), is misplaced. In Whipple, the defendant was only using his girl friend's mother's car to pick up his girl friend at school and there was clear evidence that several other people had access to the car equal to that of the defendant. Moreover, the contraband was found in the headrest of the passenger seat in which a passenger had been sitting.
Judgment affirmed. Birdsong, P. J., and Andrews, J., concur.
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790 F.2d 893
Adamsv.Armstrong World Industries, Inc.
84-4349
United States Court of Appeals,Ninth Circuit.
5/5/86
D.Idaho, 773 F.2d 248
DECISION AFTER CERTIFIED QUESTION REFUSED
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810 So.2d 641 (2001)
Helmut J. SIEBER et al.
v.
Jack L. CAMPBELL.
1991706.
Supreme Court of Alabama.
July 13, 2001.
*642 Stuart E. Smith of Bell, Richardson, Smith & Callahan, P.A., Huntsville, for appellants.
John R. Campbell of Higgs & Emerson, Huntsville, for appellee.
BROWN, Justice.
Helmut J. Sieber, a Canadian resident, and Canadian Agra International Corporation ("Canadian Agra"), a Canadian corporation, appeal from a judgment entered in favor of Jack L. Campbell as to claims arising out of the negotiation and performance of an employment contract. Sieber and Canadian Agra argue on appeal that the Madison Circuit Court erred by holding that they were subject to that court's personal jurisdiction under Rule 4.2, Ala. R. Civ. P., also known as this State's "longarm statute." We disagree, and we affirm the trial court's judgment.
Facts and Procedural History
Campbell was once employed by a company referred to in the record before us as the "Stressle-Straube Group" (hereinafter referred to as "Stressle-Straube"), a computer-software company principally owned by Christian H.W. Straube and based in Stuttgart, Germany. While at Stressle-Straube, Campbell became familiar with a software package described as a "geographic information system," or "GIS." Although Campbell left Stressle-Straube in 1993 to open a consulting business, his knowledge of Stressle-Straube's GIS package led to a continuing relationship with that company.
Stressle-Straube transferred ownership of its GIS package to Telemap Satellite Communications Corporation ("Telemap"), a company in which Stressle-Straube held an equitable interest as a beneficiary in a trust as to which Sieber served as the trustee. Sieber also served as a corporate officer for Telemap. Telemap was charged with developing a market for the GIS package in North America, but it needed someone to lead the effort. Mr. Stressle decided that Campbell was a good candidate for the job because of his knowledge of the North American GIS market, so in February 1994 he helped to arrange a meeting between Sieber and Campbell in Liechtenstein to discuss the matter.
In March 1994, Campbell traveled to Toronto, Canada, to further discuss with Sieber his possible employment with Telemap. Human-resource consultants from a prominent public accounting firm evaluated Campbell's background and capabilities. After the evaluation, Campbell joined Sieber for dinner to discuss terms of employment. The discussions continued the next day, concluding in a meeting at the headquarters of H.J. Sieber Group and Canadian Agra, both of which were entities that Sieber at least partially owned. Campbell and Sieber agreed to a contract providing Campbell with employment for at least one year at a salary of $120,000 per year. The contract described Campbell's position as "Vice-President Marketing." Campbell alleges that he signed the written contract only after Sieber orally provided a personal guarantee of Campbell's salary.
During the contract negotiations, Sieber and Campbell discussed the location of Campbell's base of operations. They initially *643 agreed that Campbell would locate in Canada. After the execution of the contract, however, Campbell suggested that Huntsville, Alabama, was a better location because of the area's research facilities. Sieber agreed and arranged the payment of Campbell's moving expenses.
According to the evidence, Campbell was hired to obtain licensing under the North American Free Trade Agreement for the marketing and distribution of Telemap's GIS software package. His performance under the contract entailed the development of a marketing plan under Sieber's supervision as a Telemap officer. The record also suggests, however, that Campbell was expected to serve, directly or indirectly, Canadian Agra, which had an unspecified interest in the development of a market for the GIS, and, on at least one occasion, he served in that capacity. We find no evidence in the record as to the details of this arrangement with Canadian Agra.
According to Sieber's deposition testimony, Sieber and Stressle-Straub became displeased with Campbell's performance. With Stressle-Straube's approval, Sieber authorized what was the last payment to Campbell, in December 1996. At that time, Campbell's employment had not yet been terminated. On May 19, 1997, Campbell and Sieber discussed a new contract for 1998. That contract increased Campbell's compensation and provided for payments not made under the previous contract, which, at that time, totalled $130,397.00. Campbell subsequently continued his employment with Sieber through June 1997. At that time, he still had not received any payment on the accruing delinquency. Consequently, he notified Sieber that his employment contract had been breached and that he would no longer perform under the 1998 contract. At that time, the record suggests, Telemap owed Campbell $243,259.24, which reflected the sum of the balance previously owed and the 1998 total salary combined with expenses incurred during the term of the new 1998 contract, plus interest.
Campbell filed this lawsuit on September 26, 1997, naming as defendants Telemap, Sieber, Canadian Agra, and two of Sieber's business holdings, including Raika Financial Corporation ("Raika"). Campbell's complaint alleged breach of contract; fraudulent assertion of a corporate existence; misrepresentation; suppression; and promissory estoppel. All the defendants, except for Telemap, timely moved to dismiss for lack of personal jurisdiction. The trial court denied the motion and ordered that the case proceed. During the discovery phase, Campbell obtained an order compelling Sieber to appear for deposition. Sieber initially refused to be deposed, despite this order, and the trial court entered a judgment against Telemap as a sanction. Sieber later complied with the order. As the case proceeded to pretrial conference, all of the defendants except for Sieber and Canadian Agra were dismissed pursuant to an agreement by the parties. The trial court conducted a bench trial on April 17, 2000, in which it heard oral testimony from Campbell. Sieber elected not to testify at trial and instead relied on his deposition testimony and supporting exhibits as evidence. The trial court entered a judgment against Sieber and Canadian Agra totalling $243,259.24, which was the same judgment entered against Telemap. Sieber and Canadian Agra appealed.
Discussion
The question raised in this appeal is whether the trial court properly exercised personal jurisdiction over Sieber and Canadian Agra, both of whom are nonresident defendants. The requirements for personal jurisdiction in this state *644 are set out in Rule 4.2(a)(2), Ala. R. Civ. P., which provides, in pertinent part:
"(2) Sufficient Contacts. A person has sufficient contacts with the state when that person, acting directly or by agent, is or may be legally responsible as a consequence of that person's
"(A) transacting any business in this state;
". . . .
"(D) causing tortious injury or damage in this state by an act or omission outside of this state if the person regularly does or solicits business, or engages in any other persistent course of conduct or derives substantial revenue from goods used or consumed or services rendered in this state;
". . . .
"(I) otherwise having some minimum contacts with this state and, under the circumstances, it is fair and reasonable to require the person to come to this state to defend an action. The minimum contacts referred to in this subdivision (I) shall be deemed sufficient, notwithstanding a failure to satisfy the requirement of subdivisions (A) (H) of this subsection (2), so long as the prosecution of the action against a person in this state is not inconsistent with the constitution of this state or the Constitution of the United States."
(Emphasis added.) Rule 4.2 extends the personal jurisdiction of Alabama courts to the limits of due process under the federal constitution and the Alabama constitution. Duke v. Young, 496 So.2d 37 (Ala.1986); Brooks v. Inlow, 453 So.2d 349 (Ala.1984); Alabama Waterproofing Co. v. Hanby, 431 So.2d 141, 144-146 (Ala.1983); DeSotacho, Inc. v. Valnit Indus., Inc., 350 So.2d 447 (Ala.1977). See also World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). A physical presence in Alabama is not a prerequisite to personal jurisdiction over a nonresident. Sudduth v. Howard, 646 So.2d 664, 667 (Ala.1994).
"`A relevant factor in a due process analysis is whether the defendant should have reasonably anticipated that he would be sued in the forum state. In [Dillon Equities v. Palmer & Cay, Inc., 501 So.2d 459, 462 (Ala.1986)], this Court, quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980), noted:
"`"`The foreseeability that is critical to due process analysis ... is that the defendant's conduct and connection with the forum state are such that he should reasonably anticipate being haled into court there. (Citations omitted.)'"'"
Sudduth, 646 So.2d at 667 (quoting Knowles v. Modglin, 553 So.2d 563, 565-66 (Ala.1989)) (emphasis added).
Campbell sued Sieber in Sieber's personal capacity as a officer of several of his corporate codefendants, alleging tort and contract claims. It appears from the record that Campbell's theory at trial was that many of Campbell's claims, especially those alleging fraudulent conduct, arose out of Sieber's own personal guarantee of Campbell's compensation. At trial, Campbell introduced substantial evidence to support this theory and his claim that his employment contract was breached. Campbell further proved at trial that Sieber, either as Campbell's employer or as the agent for Campbell's employer or as both employer and agent of the employer, personally located Campbell as the employee in Alabama and persistently dealt with Campbell while he was located as an employee in Alabama. That the location in Alabama was Campbell's idea is immaterial. Sieber himself located Campbell in Alabama to do the business of Sieber, Canadian Agra, or both, in Alabama.
*645 A corporate agent who personally participates, albeit in his or her capacity as such agent, in a tort is personally liable for the tort. Bethel v. Thorn, 757 So.2d 1154, 1158 (Ala.1999), and Ex parte Charles Bell Pontiac-Buick-Cadillac-GMC, 496 So.2d 774, 775 (Ala.1986). Likewise, corporate-agent status does not insulate the agent from the personal jurisdiction of a state court for the litigation of those torts, or any other claims pendent to that lawsuit. Calder v. Jones, 465 U.S. 783, 790, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984); accord Sudduth v. Howard, supra, 646 So.2d at 668. Substantial evidence in the case before us supports the conclusions apparently shared by the trial judge that "it is fair and reasonable to require [Sieber] to come to [Alabama] to defend [this] action" and that Sieber "should reasonably [have] anticipated being haled into court" to litigate Campbell's claims.
Conclusion
The judgment of the circuit court is affirmed.
AFFIRMED.
MOORE, C.J., and HOUSTON, SEE, LYONS, JOHNSTONE, HARWOOD, WOODALL, and STUART, JJ., concur.
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SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Fourth Judicial Department
67
TP 13-00209
PRESENT: CENTRA, J.P., FAHEY, LINDLEY, SCONIERS, AND WHALEN, JJ.
IN THE MATTER OF DEVAUGHN HOLMES, PETITIONER,
V MEMORANDUM AND ORDER
BRIAN FISCHER, COMMISSIONER, NEW YORK STATE
DEPARTMENT OF CORRECTIONS AND COMMUNITY
SUPERVISION, RESPONDENT.
DEVAUGHN HOLMES, PETITIONER PRO SE.
ERIC T. SCHNEIDERMAN, ATTORNEY GENERAL, ALBANY (PETER H. SCHIFF OF
COUNSEL), FOR RESPONDENT.
Proceeding pursuant to CPLR article 78 (transferred to the
Appellate Division of the Supreme Court in the Fourth Judicial
Department by order of the Supreme Court, Cayuga County [Thomas G.
Leone, A.J.], entered January 29, 2013) to annul a determination
finding after a tier III hearing that petitioner had violated various
inmate rules.
It is hereby ORDERED that the determination so appealed from is
unanimously modified on the law and the petition is granted in part by
annulling those parts of the determination finding that petitioner
violated inmate rules 113.25 (7 NYCRR 270.2 [B] [14] [xv]) and 114.10
(7 NYCRR 270.2 [B] [15] [i]) and vacating the recommended loss of good
time and as modified the determination is confirmed without costs,
respondent is directed to expunge from petitioner’s institutional
record all references to the violation of those rules, and the matter
is remitted to respondent for further proceedings in accordance with
the following Memorandum: Petitioner commenced this CPLR article 78
proceeding seeking to annul the determination, following a tier III
disciplinary hearing, that he violated inmate rules 113.25 (7 NYCRR
270.2 [B] [14] [xv] [drug possession]), 114.10 (7 NYCRR 270.2 [B] [15]
[i] [smuggling]), 121.11 (7 NYCRR 270.2 [B] [22] [ii] [third-party
call]), and 121.14 (7 NYCRR 270.2 [B] [22] [v] [exchanging personal
identification numbers (PINs)]). We conclude that there is
substantial evidence to support the determination with respect to
inmate rules 121.11 and 121.14. Specifically, the misbehavior report,
together with the audiotapes of petitioner’s telephone conversations,
establish that petitioner made third-party calls and used the PINs of
other inmates (see Matter of Matthews v Fischer, 95 AD3d 1529, 1530;
see generally Matter of Foster v Coughlin, 76 NY2d 964, 966; People ex
rel. Vega v Smith, 66 NY2d 130, 140). Petitioner’s protestations of
innocence merely raised an issue of credibility for resolution by the
-2- 67
TP 13-00209
Hearing Officer (see Foster, 76 NY2d at 966).
Respondent correctly concedes, however, that the determination
with respect to inmate rules 113.25 and 114.10 is not supported by
substantial evidence (see generally Vega, 66 NY2d at 139), and we
therefore modify the determination accordingly. Inasmuch as the
record establishes that petitioner has served his administrative
penalty, we direct respondent to expunge from petitioner’s
institutional record all references to the violation of those inmate
rules (see Matter of Stewart v Fischer, 109 AD3d 1122, 1123, lv denied
___ NY3d ___ [Dec. 17, 2013]; see generally Matter of Edwards v
Fischer, 87 AD3d 1328, 1330). Although we need not remit the matter
to respondent for reconsideration of those parts of the penalty
already served by petitioner, we note that there was also a
recommended loss of good time, and the record does not reflect the
relationship between the violations and that recommendation (see
Matter of Monroe v Fischer, 87 AD3d 1300, 1301). We therefore further
modify the determination by vacating the recommended loss of good
time, and we remit the matter to respondent for reconsideration of
that recommendation (see id.).
We have considered petitioner’s remaining contentions and
conclude that they are without merit.
Entered: February 7, 2014 Frances E. Cafarell
Clerk of the Court
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In the United States Court of Federal Claims
OFFICE OF SPECIAL MASTERS
No. 15-1192V
Filed: May 25, 2016
UNPUBLISHED
****************************
VICTORIA THOMPSON, *
*
Petitioner, * Joint Stipulation on Damages;
v. * Tetanus-Diphtheria-acellular Pertussis
* (“Tdap”) Vaccination; Shoulder Injury
SECRETARY OF HEALTH * Related to Vaccine Administration
AND HUMAN SERVICES, * (“SIRVA”); Special Processing Unit
* (“SPU”)
Respondent. *
*
****************************
Maximillian Muller, Muller Brazil, LLP, Dresher, PA, for petitioner.
Douglas Ross, U.S. Department of Justice, Washington, DC, for respondent.
DECISION ON JOINT STIPULATION1
Dorsey, Chief Special Master:
On October 13, 2015, petitioner filed a petition for compensation under the
National Vaccine Injury Compensation Program, 42 U.S.C. §300aa-10, et seq.,2 (the
“Vaccine Act”). Petitioner alleges that she suffered a shoulder injury related to vaccine
administration (“SIRVA”) which was caused-in-fact by her November 3, 2014 Tetanus-
diphtheria-acellular pertussis (“Tdap”) vaccination. Stipulation, filed May 23, 2016, at ¶¶
2, 4; see also Petition at 1. Petitioner further alleges that she suffered the residual
effects of this injury for more than six months, and that she has received no prior
settlement or award as compensation for this injury. Petition at ¶¶ 20, 22; Stipulation at
¶¶ 4-5. “Respondent denies that the Tdap vaccine caused petitioner to suffer SIRVA, or
any other injury.” Stipulation at ¶ 6.
Nevertheless, on May 23, 2016, the parties filed the attached joint stipulation,
stating that a decision should be entered awarding compensation. The undersigned
1
Because this unpublished decision contains a reasoned explanation for the action in this case, the
undersigned intends to post it on the United States Court of Federal Claims' website, in accordance with
the E-Government Act of 2002. 44 U.S.C. § 3501 note (2012) (Federal Management and Promotion of
Electronic Government Services). In accordance with Vaccine Rule 18(b), petitioner has 14 days to
identify and move to redact medical or other information, the disclosure of which would constitute an
unwarranted invasion of privacy. If, upon review, the undersigned agrees that the identified material fits
within this definition, the undersigned will redact such material from public access.
2
National Childhood Vaccine Injury Act of 1986, Pub. L. No. 99-660, 100 Stat. 3755. Hereinafter, for
ease of citation, all “§” references to the Vaccine Act will be to the pertinent subparagraph of 42 U.S.C. §
300aa (2012).
finds the stipulation reasonable and adopts it as the decision of the Court in awarding
damages, on the terms set forth therein.
The parties stipulate that petitioner shall receive the following compensation:
A lump sum of $70,510.04 in the form of a check payable to petitioner.
Stipulation at ¶ 8. This amount represents compensation for all items of
damages that would be available under 42 U.S.C. § 300aa-15(a). Id.
The undersigned approves the requested amount for petitioner’s compensation.
In the absence of a motion for review filed pursuant to RCFC Appendix B, the clerk of
the court is directed to enter judgment in accordance with this decision.3
IT IS SO ORDERED.
s/Nora Beth Dorsey
Nora Beth Dorsey
Chief Special Master
3
Pursuant to Vaccine Rule 11(a), entry of judgment can be expedited by the parties’ joint filing of notice
renouncing the right to seek review.
2
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143 S.W.3d 81 (2004)
CENTERPOINT ENERGY, INC. f/k/a Reliant Energy, Incorporated and American Electric Power Company, Inc., Petitioners,
v.
PUBLIC UTILITY COMMISSION OF TEXAS, Respondent.
No. 03-0396.
Supreme Court of Texas.
Argued February 18, 2004.
Decided September 3, 2004.
*82 Marianne Carroll and Christopher Don Reeder, Carroll, Gross, Reeder & Drews, L.L.P., Kristen Pauling Doyle, Lloyd Gosselink Blevins Rochelle Baldwin & Townsend, Jonathan Day, Andrews & Kurth, L.L.P., Houston, Lino Mendiola, Phillip Glynn Oldham, Stephanie Anne Kroger, Karen Denise Whitt, Andrews & Kurth, Mayor, Day, Caldwell & Keeton, LLP, Austin, TX, for Party In Interest.
David C. Duggins, John F. Williams, Michael Dane McKaughan, Clark Thomas & Winters, P.C., Austin, TX, and Marc Lewis, Fort Wayne, IN, for other interested party.
Robert J. Hearon Jr., Ron H. Moss, Graves Dougherty Hearon & Moody, PC, Austin, TX, Harris S. Leven, and Scott E. Rozzell, Houston, TX, for Petitioner.
Thomas Lane Brocato, Office of Public Utility Counsel, Steven Baron, Karen Watson Kornell, Bryan L. Baker, Amalija J. Hodgins, Office of Attorney General, Greg Abbott, Attorney General of TX, Edward D. Burbach, Paul D. Carmona, Barry Ross McBee, and Marion Taylor-Drew, Office of Attorney General, Austin, for Respondent.
Alton J. Hall Jr., Epstein Becker Green Wickliff & Hall, P.C., Houston, TX, for Amicus Curiae City of Houston.
Justice OWEN delivered the opinion of the Court, in which Justice HECHT, Justice O'NEILL, Justice JEFFERSON and Justice WAINWRIGHT joined.
We deny the motion for rehearing. We withdraw our opinion of June 18, 2004 and substitute the following in its place.
In a regulated environment, electric utility companies made very large expenditures to build generation plants, some of which were nuclear power plants. Under regulation, those utilities and their shareholders were entitled to, and had, a reasonable opportunity to recover through rates not only their reasonable and prudent investments of capital in those plants, but also a reasonable, regulated return on those investments.[1] In 1999, the Texas Legislature decided that it was in the public interest to partially deregulate the electric power industry.[2] The Legislature recognized that in fundamentally changing the industry, it was altering the assumptions that had led utilities to invest large sums in power generation assets. The Legislature understood that the cost of these assets likely would be recovered in a regulated environment, but might well become uneconomic and thus unrecoverable in a competitive, deregulated electric power market. The Legislature called such uneconomic assets stranded costs.[3] The term "stranded costs" has a specific definition in the Public Utility Regulatory Act ("PURA" or "the Act"),[4] but generally speaking, it is the extent to which the book value of generation-related assets and purchased *83 power contracts exceeds their market value.[5]
The Legislature concluded that if generating plants became uneconomic as a result of legislatively mandated deregulation, it was in the public interest for utilities to be made whole by recovering their full investment in those generation plants, although the utilities would no longer receive a return on those investments.[6] The Legislature determined that utilities should not be required to forfeit their investments in generating plants with the advent of deregulation. The Legislature thus said in the PURA that if there are stranded costs, an electric utility "is allowed to recover all of its net, verifiable, nonmitigable stranded costs incurred in purchasing power and providing electric generation service."[7] The Legislature set forth a comprehensive scheme for estimating, finalizing, and recovering those costs.[8] Stranded cost recovery, if any, will occur over a period of years rather than in a lump sum.[9] No one disputes that the Legislature intended electric utilities to recover carrying costs on stranded costs to compensate for the financing costs incurred during the stranded cost recovery period. Nor does anyone dispute that prior to deregulation, carrying costs on investments in generation plants were included in rates. The only issue before us is the date from which carrying costs may be recovered once deregulation commenced: January 1, 2002, which was the first day of deregulation, or two or more years later, at the end of final true-up proceedings.
In a rulemaking proceeding, the Texas Public Utility Commission determined that carrying costs on a true-up balance must be calculated from the later date, the date of a true-up final order (sometime after January 10, 2004).[10] CenterPoint Energy, Inc. (formerly known as Reliant Energy, Inc.) and American Electric Power Company, Inc. ("AEP," a public utility holding company whose Texas operating company was formerly known as Central Power and Light Company) contend that this rule is invalid, arguing that carrying costs should be recovered from the date that regulated rates ended and competition commenced, which was January 1, 2002. The court of appeals rejected the generation companies' arguments and upheld Rule 25.263(l)(3).[11]
The court of appeals also rejected a related challenge to Rule 25.263(l)(3). In separate proceedings not before us, the Commission directed CenterPoint and AEP to reverse early efforts to mitigate potential stranded costs.[12] If it is ultimately determined in an appeal from those proceedings that the generation companies have stranded costs and the Commission *84 erred by reversing early mitigation efforts, the generation companies argue that Rule 25.263(l)(3) does not permit them to recover interest for the period of time that amounts associated with early mitigation efforts were incorrectly refunded to customers.[13] The court of appeals in this case held that "a utility's right to fully recover its stranded costs does not encompass a right to early mitigation."[14] The generation companies take issue with this determination, but advise us that the matter would be moot if this Court concludes that they are entitled to carrying costs on stranded costs from January 1, 2002.
We hold that Rule 25.263(l)(3) is inconsistent with the Legislature's intent, expressed in Chapter 39 of the PURA, that utilities fully recover their "net, verifiable, nonmitigable stranded costs incurred in purchasing power and providing electric generation service,"[15] that "exist on the last day of the freeze period [December 31, 2001]."[16] A two- or three-year gap in recovery of carrying costs would not permit generation companies full recovery of their stranded costs as the Legislature envisioned. However, the capacity auction true-up procedure set forth in the Act[17] may include a component for return of or on stranded costs in 2002 and 2003, a determination that cannot be made from the record in this rulemaking proceeding. The amount of stranded cost recovery, if any, through capacity auction true-ups will have to be considered in determining the amount of carrying costs on stranded costs from January 1, 2002 to ensure that there is no overrecovery of stranded costs.[18] We accordingly remand this issue to the Commission for further consideration of whether to address carrying costs in a rule or in contested case hearings applicable to each electric utility and its affiliates.
Because Rule 25.263(l)(3) is invalid and we are remanding this matter to the Commission, we do not address whether or under what circumstances generation companies might be entitled to interest on refunds of early mitigation credits if those refunds were to be reversed.
I
We first consider the standard of review. The Commission's order adopting Rule 25.263[19] reflects that the rule was promulgated under section 14.002 of the Act, which provides: "The Commission shall adopt and enforce rules reasonably required in the exercise of its powers and jurisdiction."[20] The order also cites sections 39.252 and 39.262 of the PURA, which the Commission said "address[ ] a utility's right to recover stranded costs" and "require the commission to conduct a true-up proceeding for each ... utility after the introduction of customer choice."[21]
Section 39.001 of the PURA has separate provisions governing review of the validity of a competition rule. Section *85 39.001 provides that "[j]udicial review of competition rules adopted by the commission shall be conducted under Chapter 2001, Government Code, except as otherwise provided by this chapter [39]."[22] Section 39.001 provides for a direct appeal to the Third Court of Appeals for "[j]udicial review of the validity of competition rules,"[23] and for expedited procedures in such an appeal.[24] The Commission's order does not contain a reference to section 39.001.
CenterPoint and AEP nevertheless filed a direct appeal in the Third Court of Appeals, and the court of appeals' opinion recites that the court had before it a direct appeal under subsections 39.001(e) and (f) of the Act.[25] No one has taken issue with the characterization of Rule 25.263 as a "competition rule" or the applicability of subsections 39.001(e) and (f). Regardless of whether those subsections apply, the validity of Rule 25.263(l)(3) is at issue, and under our case law,[26] the rule is invalid if, among other things, it violates a statutory provision. We turn to an analysis of Rule 25.263(l)(3) with these considerations in mind.
II
This is the fourth case in which we have addressed issues arising out of the partial deregulation of the electric power industry, including issues concerning stranded costs.[27] Stranded costs include regulatory assets,[28] which are essentially bookkeeping entries that reflect a charge that was to be included in a utility's future rates in a regulated environment.[29] Stranded costs also include the reasonable excess cost above the market value of assets such as generating plants, including nuclear power plants.[30] As we have previously explained, under the regulatory scheme that existed before 1999, an electric utility had an opportunity to recover prudent capital investments in generation assets and a reasonable return on those investments through rates.[31] The Act recognizes that, generally, there are financing or carrying costs associated with generation assets and that these carrying costs were historically recovered in rates.[32] Accordingly, under traditional rate regulation, ratepayers would pay carrying costs as a utility recovered its investment in generation assets over the useful life of those assets.
The Commission recognizes that if costs are stranded in a deregulated environment, a generation company is entitled to recover carrying costs on those stranded costs, which are recovered over time either through a competition transition charge or securitization. The dissent does not dispute that the Act implicitly, if not explicitly, assumes that there will be carrying *86 costs on stranded costs. The only issue is whether the Act contemplates roughly a two-year gap in recovery of carrying costs between the date regulation ceased (January 1, 2002) and the date of a final true-up order (2004 or perhaps beyond).
The Commission says such a gap is permissible. The Commission determined in Rule 25.263(l)(3) that carrying costs on stranded costs should be recovered by electric utilities only from the date of the final true-up order.[33] Carrying costs are to be calculated based on each utility's individual cost of capital established in that utility's unbundled cost of service (UCOS) proceeding.[34] Final true-up orders will be entered sometime after January 10, 2004, which is specified in section 39.262 as the date after which each transmission and distribution utility, its affiliated retail electric provider, and its affiliated power generation company must jointly file to finalize stranded costs.[35] We must decide whether the Commission's failure to permit the recovery of carrying costs for approximately a two-year period after regulated rates ended and customer choice began violates the Act.
In its order adopting Rule 25.263(l)(3), the Commission explained why it chose the date of a final true-up order as the date from which carrying costs should accrue by saying "a utility's true-up balance becomes due upon the issuance of a final order in that utility's true-up proceeding."[36] In its briefing on appeal, the Commission elaborated, contending that stranded costs did not come into existence on the first day of customer choice, but instead will come into existence only after a true-up proceeding is concluded. The court of appeals agreed with this rationale.[37] In post-submission briefing in this Court, the Commission contends that in addition to this logic, disallowing carrying costs from the date customer choice commenced (January 1, 2002) until the date of a final order sometime in 2004 or later is justified because otherwise generation companies may receive a double recovery. The Commission contends that the capacity auction true-ups that will be conducted under section 39.262(d) of the PURA[38] include a component that will allow generation companies to recover debt service on their book generation assets in addition to operating costs. Texas Industrial Energy Consumers (TIEC), an intervenor in the court of appeals and in this Court, likewise contends that because of the capacity auction true-up, generation companies would receive a double recovery if they are permitted to receive carrying costs from the date customer choice began.
The generation companies counter that the date as of which stranded costs are to be determined is December 31, 2001, as reflected throughout chapter 39. The generation companies also contend that under section 39.262(d), they are entitled to recover the amount the capacity auction true-up yields, without regard to whether they have stranded costs. Capacity auction *87 true-up proceeds and stranded cost recovery are entirely separate, the generation companies contend, and there would be no double recovery if carrying costs on stranded costs are permitted from January 1, 2002.
Because of the complexity of the issues, we think it helpful to outline our conclusions before examining the Act in greater detail. We conclude that the Commission's construction of chapter 39 was incorrect regarding the date as of which stranded costs are to be determined. Chapter 39 reflects that the amount of stranded costs, if any, is to be determined as of the day before competition began December 31, 2001 or earlier in some cases.[39] However, the Act recognizes that a determination of whether there were stranded assets as of December 31, 2001, and a meaningful valuation of those assets as of that date, could not be made until a deregulated market had a period of time to develop and then to stabilize. Because the Commission's rule is based on an incorrect construction of the Act in this regard, it is infirm.
That does not mean that generation companies are entitled to carrying costs on the entire positive balance of stranded costs, if any, from January 1, 2002. Based on the record before us, it appears that the design of the capacity auction true-up may have permitted generation companies to recover during 2002 and 2003 at least a portion of their fixed costs, including stranded costs, if any. That determination cannot be made from this record. Preventing an overrecovery of stranded costs requires a determination, on a company-by-company basis, of whether proceeds from a capacity auction true-up had a component for return on or of stranded costs and of the quantity of any such return. We accordingly remand this proceeding to the Commission for further consideration.
The dissent asserts that our holding "potentially" entitles utilities to "billions of dollars in interest."[40] As the dissent concedes, however, it is unknown at this point whether there will be any stranded costs at all and thus any carrying costs. If it is determined that stranded costs did exist on December 31, 2001, the amount of any such costs is likewise unknown, as is the extent to which stranded cost recovery has or will occur through a capacity auction true-up. This Court must give effect to legislative intent as expressed in the PURA. We must ensure that the Commission implements the statutory scheme set forth in Chapter 39 of the PURA without regard to speculation about how deregulation may or may not affect market values of generation assets and thus may or may not affect rates.
The pertinent sections of Chapter 39 and the record in this case are considered more thoroughly below.
III
The deregulation process has many components, some of which can be briefly summarized for purposes of this appeal. The Legislature determined that the production and sale of electricity should no longer be regulated in Texas, except for transmission and distribution services and the recovery of stranded costs.[41] The Legislature chose January 1, 2002 as the date on which customer choice would begin, with a few exceptions not relevant to the issues in *88 this case.[42] Correspondingly, December 31, 2001 was the date traditional regulation of wholesale rates would end.[43] The Legislature recognized that deregulation could not be accomplished overnight. Accordingly, beginning September 1, 1999, and continuing until January 1, 2002, the Legislature froze retail electric rates.[44] The Legislature also directed that by January 1, 2002, each electric utility must separate its business activities into a power generation company, a retail electric provider, and a transmission and distribution utility.[45] For a five-year period after the beginning of customer choice, from January 1, 2002 until January 1, 2007, retail electric providers are required to offer residential and small commercial customers rates that are six percent less than those in effect on January 1, 1999, with certain adjustments.[46] This is the "price to beat" in the retail market.[47]
Resolution of the issues raised by Rule 25.263 requires a more detailed focus, however, on provisions of chapter 39 that govern generation companies and stranded costs.
A
In enacting deregulation legislation, the Legislature had before it a 1998 report prepared by the Public Utility Commission that analyzed potential stranded costs.[48] The term "ECOM" was used in that report, meaning excess costs over market. That report identified a number of generation companies that, in a deregulated market, were projected to have unrecoverable or "stranded" costs, principally nuclear power plant investments. The Legislature required electric utilities identified in this 1998 report as having projected stranded costs to use "a number of tools ... to mitigate stranded costs" by "reduc[ing] the net book value of, otherwise referred to as `accelerat[ing]' the cost of recovery of, its stranded costs" before customer choice began on January 1, 2002.[49] For each of the three years preceding customer choice (1999, 2000, and 2001), electric utilities were required to file annual reports showing whether they had excess earnings from charging frozen rates,[50] and if so, to apply those excess earnings to reduce the book value of potentially stranded investments.[51] During the period leading up to customer choice, before utilities were unbundled, utilities also had the option of redirecting depreciation expense relating to transmission and distribution assets to generation assets as another tool for reducing the book value of potentially stranded assets.[52]
The Legislature recognized that these early mitigation efforts might not be sufficient to eliminate stranded costs. In the period leading up to customer choice on January 1, 2002, the Legislature gave electric utilities another option. At any time after September 1, 1999 (the start of the retail rate-freeze period), a utility was permitted to securitize 100 percent of its regulatory *89 assets [53] and up to 75 percent of its other estimated stranded costs.[54] This meant that a generation company could begin to recover stranded costs even before January 1, 2002, and before the final dollar amount of those stranded costs, if any, could be quantified.
The only explicit reference to carrying costs on stranded costs appears in a section of the Act regarding securitization.[55] The securitization provisions reflect that the Legislature implicitly, if not explicitly, assumed that carrying costs on stranded costs are to be borne by ratepayers over the entire life of the generating assets under either conventional financing methods or securitization.[56] Section 39.301 sets forth the purposes of allowing securitization. Securitization is intended to "lower the carrying costs of the assets relative to the costs that would be incurred using conventional utility financing methods."[57] The "costs that would be incurred using conventional utility financing methods" are the carrying costs on generation assets that customers would otherwise pay to the generation company. The Legislature commanded the Commission to "ensure that securitization provides tangible and quantifiable benefits to ratepayers, greater than would have been achieved absent the issuance of transition bonds."[58] In this same vein, the Legislature said "that the Commission could permit securitization only if it found that the total amount of revenues to be collected under the financing order is less than the revenue requirement that would be recovered over the remaining life of the stranded costs using conventional financing methods."[59] Securitization could occur under the statute, and did occur (at least for regulatory assets),[60] prior to January 1, 2002.[61] When securitization is used, carrying costs on stranded costs are recovered from the date of securitization forward.[62] There is no two-year gap in payment of carrying costs for 2002 and 2003.
In making the determination of whether securitization benefited ratepayers, the Legislature directed the Commission to look at the entire remaining life of stranded costs, beginning as early as September 2, 1999.[63] There is no suggestion that in making that calculation, the Commission could drop out the carrying costs for the two-year period between the onset of customer choice (January 1, 2002), and the date a final true-up order could be entered (2004 or beyond). If stranded costs never come into existence until 2004, as the Commission argues, then the Legislature's securitization scheme compared apples to oranges and allowed securitization to proceed using a much less stringent test from the ratepayers' perspective. That is not a reasonable construction of the Act.
*90 B
For estimated stranded costs that had not been mitigated or had not been or could not be securitized, the Legislature provided that those costs should be recovered through competition transition charges starting on the first day of competition, January 1, 2002. The Legislature directed in section 39.201 that between April 1, 2000 and January 1, 2002 the Commission was to determine any expected competition transition charge and make it effective on January 1, 2002.[64] The actual dollar amount of stranded costs could not be known at the time those charges were to be determined, so in section 39.201, the Legislature directed the Commission to calculate competition transition charges using the ECOM administrative model in the Commission's 1998 Report, but using updated, company-specific inputs and market-based natural gas forward prices, in addition to other specified updates.[65]
It is highly significant to the question before us today that the Legislature said in section 39.201 that the pertinent date for quantifying stranded costs was December 31, 2001, "the last day of the freeze period" and the last day before customer choice began on January 1, 2002.[66] In implementing competition transition charges, the Commission was directed to calculate "the amount of stranded costs as defined in Subchapter F that are reasonably predicted to exist on the last day of the freeze period [December 31, 2001]." Accordingly, the Commission was told that sometime between April 1, 2000 and January 1, 2002, it was to estimate "the amount of stranded costs as defined in Subchapter F that are reasonably projected to exist on the last day of the freeze period [December 31, 2001]" and to put nonbypassable rates in effect on January 1, 2002 to begin recovery of these amounts.[67] The Legislature did not tell the Commission to estimate the amount of stranded costs that were projected to exist as of a date in 2004, or at the end of a true-up proceeding, which would have been appropriate dates if the Commission's interpretation of the Act were correct. Instead, the Legislature directed the Commission to permit generation companies to begin recovery of stranded costs on January 1, 2002, through competition transition charges, if they were projected to have stranded costs as of December 31, 2001.
C
The Legislature's use of the words "remaining stranded costs" in section 39.201(l) is also significant.[68] That section provides that, "[t]wo years after customer choice is introduced [meaning two years after January 1, 2002]," the Commission is to determine in final true-up proceedings whether there are any "remaining stranded costs."[69] This indicates that the Legislature thought that stranded costs would have been in existence before the final true-up and only remaining stranded costs would be recovered going forward. If, as the Commission contends, stranded costs could not come into existence until after the true-up proceedings were concluded, then the Legislature would not have referred *91 to "remaining stranded costs" that are to be quantified during the final true-up. The Commission's position is contrary to the Legislature's directive that the 2001 "stranded cost estimate" must "be reviewed and, if necessary, adjusted to reflect a final, actual valuation in the true-up proceeding." The 2001 projection of what stranded costs would exist as of December 31, 2001 was to be reviewed and adjusted.
D
As it turned out, the calculations made by the Commission in 2001 using the ECOM model showed that no generation company was projected to have stranded costs as of December 31, 2001. Accordingly, no competition transition charges were implemented for any generation company. That fact seems to have obscured the Commission's view of the date as of which section 39.201 says stranded costs are to be measured. Rule 25.263(l)(3) is contrary to what the Legislature contemplated could happen under section 39.201. If stranded costs had been projected in 2001 to exist on December 31, 2001 for a generation company, then that company was entitled to begin collecting stranded costs.[70] Of course, the stranded costs would not have been collected in a lump sum. The Legislature gave the Commission factors to consider in deciding "the length of time over which stranded costs" may be recovered through competition transition charges.[71] No one, including the dissent, disputes that there would have been a component for recovering carrying costs in competition transition charges.
If company A had been projected in 2001 to have $5,000,000 in stranded costs, A would have begun recovering $5,000,000 plus carrying costs through a competition transition charge from January 1, 2002 over a number of years.[72] If the 2004 true-up confirmed that the 2001 projection was an accurate predictor of the amount of stranded costs, A would continue to receive the competition transition charge. The net result would be that A recovers carrying costs on stranded costs from January 1, 2002.
But, as has happened, assume that A was projected in 2001 to have no stranded costs and therefore did not receive a competition transition charge in 2002 and 2003. Further assume that in a 2004 true-up proceeding, it is determined that A has stranded costs of $5,000,000. The Commission says that A could begin recovering $5,000,000 plus carrying costs from 2004 over a period of years. The net result would be that A recovered carrying costs only from 2004.
We must ask, why would the Legislature, planning in 1999 for various contingencies, have intended for company A to recover two years of carrying costs if the 2001 projection turned out to be an accurate predictor of actual stranded costs, but not if the 2001 projection was not an accurate predictor of actual stranded costs? It is extremely unlikely this was the Legislature's intent, particularly when it is undisputed that if the 2001 projection overestimated rather than underestimated stranded costs, overrecovery dating back to January 1, 2002 would be reversed.[73] It seems more likely that the Legislature intended for its scheme to be symmetrical requiring adjustments for both overrecovery and underrecovery if the 2001 projection was not an accurate predictor rather than arbitrary allowing adjustments *92 only for overrecovery. The Act unquestionably provides that if the 2001 projection proved to have overestimated stranded costs when the true-up was conducted in 2004, then that overrecovery would be rectified through 1) a reduction in the competition transition charge, to the extent it had not been securitized, 2) a reversal, in whole or in part, of depreciation expense redirected under section 39.256, 3) a reduction in the transmission and distribution utility's rates, or 4) a combination of these measures.[74]
If the Commission and TIEC were correct that no stranded costs could come into existence until the end of a true-up proceeding, which would be sometime in 2004 or perhaps beyond, then a generation company that collected competition transition charges under section 39.201 would be required under the rationale of Rule 25.263(l) to refund all carrying costs collected as part of those charges between January 1, 2002 and a final true-up order. Nothing in chapter 39 suggests such a result. For example, suppose that the 2001 ECOM model calculations made pursuant to section 39.201 had projected that a generation company's stranded costs as of December 31, 2001 were $5,000,000, and that company began collecting competition transition charges over a fifteen-year period to recover that amount. Additionally assume that in 2004, the final true-up showed that the company's stranded costs were $5,000,000, and that $1,000,000 of those costs had been recovered through competition transition charges. Applying the Commission's reasoning, the generation company would have to refund the carrying cost component in the transition charges collected from 2002 until 2004. Indeed, applying the Commission's reasoning, the company would have to refund interest on the carrying costs to make up for the time value of the carrying costs that the company collected before 2004.
The Commission's contentions in this appeal regarding carrying costs are inconsistent with its own rule. Rule 25.263(g)(2)(A) recognizes that under the example in the paragraph above, a company that began collecting carrying costs in 2002 as part of a competition transition charge would keep those carrying costs if, in a 2004 true-up proceeding, it is found to have stranded costs. Rule 25.263(g)(2)(A) provides that in a final true-up, any generation-related invested capital recoverable through a competition transition charge, exclusive of carrying costs, projected to be collected through the date of the final order in the true-up proceeding, is to be deducted from the December 31, 2001 book value of generating assets.[75]
The Commission's rule creates an anomaly. Whether carrying charges can be collected from January 1, 2002 depends entirely on whether the 2001 ECOM model projected stranded costs. If the model did, then unquestionably, section 39.201 required the Commission to put into effect competition transition charges through which generation companies would begin recovering stranded costs and carrying costs on those stranded costs.[76] If the ECOM model projected no stranded costs, but in 2004, market valuations reveal that the 2001 ECOM projection was not a good predictor of actual stranded costs, then the Commission's rule does not permit carrying costs. Carrying cost recovery under the Commission's rule can turn entirely on the accuracy of the 2001 ECOM projections. *93 This is not a reasonable construction of sections 39.201 and 39.262.
E
Other parts of section 39.201 indicate that the Legislature considered December 31, 2001 to be the date as of which stranded costs would finally be calculated in a true-up proceeding. Subsection 39.201(l) says: "Two years after customer choice is introduced [which would be 2004], the stranded cost estimate under this section shall be reviewed and, if necessary, adjusted to reflect a final, actual valuation in the true-up proceeding under Section 39.262."[77] "[T]he stranded cost estimate" in subsection (l) refers back to the estimate performed under subsection (h) that was to apply the ECOM model with updated inputs in order to calculate "the amount of stranded costs as defined in Subchapter F that are reasonably projected to exist on the last day of the freeze period" as required by subsection (g).[78] If stranded costs did not and could not exist as of December 31, 2001, as the Commission and TIEC contend, then why did the Legislature direct that the estimate of stranded costs as of December 31, 2001 be adjusted? If the Legislature had meant to substitute a calculation of stranded costs as of a date in 2004, it would have said so. It did not. Even for final true-up purposes, section 39.201 refers back to stranded costs projected to exist as of December 31, 2001.[79]
Section 39.262 sets forth in greater detail how the final true-up proceedings are to be conducted in 2004. Section 39.262(c) refers to "finaliz[ing]" "the estimated stranded costs used to develop the competition transition charge in the proceeding held under Section 39.201."[80] Here again, the Legislature is directing that the 2001 estimates used to calculate stranded costs "projected to exist on the last day of the freeze period [December 31, 2001]" be finalized.[81] The Legislature is directing that a final determination be made of the stranded costs that existed on the last day of the freeze period. It did not direct the Commission to determine stranded costs that exist "on the first day a final true-up order is issued."
F
The reference in section 39.201(g) to the definition of stranded costs in Subchapter F leads to another reference to the December 31, 2001 date. Stranded costs are defined in Subchapter F as follows:
"Stranded cost" means the positive excess of the net book value of generation assets over the market value of the assets, taking into account all of the electric utility's generation assets, any above market purchased power costs, and any deferred debit related to a utility's discontinuance of the application of Statement of Financial Accounting Standards No. 71 ("Accounting for the Effects of Certain Types of Regulation") for generation-related assets if required by the provisions of this chapter. For purposes of Section 39.262 [regarding true-up proceedings], book value shall be established as of December 31, 2001, or the date a market value is established *94 through a market valuation method under Section 39.262(h), whichever is earlier, and shall include stranded costs incurred under Section 39.263.[82]
The Legislature defined stranded costs by using December 31, 2001, the day before customer choice was to begin, as the benchmark for book value, or an earlier date if assets were sold or exchanged.[83]
The Commission and TIEC point out that the definition of stranded costs in section 39.251(7) has two components, book value as of December 31, 2001, and market value, which may not be determined for some companies until 2004 or beyond. This, they say, is justification for concluding that stranded costs do not come into existence, and therefore the company has no right to carrying costs, until the date of a final order in a true-up proceeding. This reasoning has several flaws. The first is the wording of the Act itself.
Section 39.251(7) recognizes that stranded costs may be finally determined even before January 1, 2002, the date that competition began, and certainly before 2004.[84] The definition of stranded costs provides that if, under section 39.262(h), a company sells or exchanges assets to establish market value before December 31, 2001, then for purposes of a true-up proceeding (section 39.262), book value shall be established on that earlier date of sale or exchange.[85] Accordingly, any "positive excess of the net book value of generation assets over the market value of the assets"[86] could be known even before January 1, 2002. How can it be said that such stranded costs did not come into existence until 2004 or beyond?
Similarly, a company may have been projected to have no stranded costs when the Commission performed the ECOM model calculation in 2001 required by section 39.201. That company may sell or exchange assets sometime in 2002 or 2003. Stranded costs can be finally quantified once that sale or exchange occurs. Yet the Commission says that these stranded costs could not come into existence until 2004 and that the generation company is not entitled to accrue any carrying charges on these stranded costs until the date the Commission issues a final order in a true-up proceeding. Here again, the statutory language does not support such a result.
G
TIEC and, to some extent, the Commission argue that because of fluctuations in market prices from December 31, 2001 until the date of final orders in true-up proceedings in 2004, stranded costs could come in and out of existence. Therefore, they say, it is reasonable to choose a date in 2004 rather than December 31, 2001. This contention ignores the fact that no gain could be realized from upswings in the market value of generation assets unless those assets were sold or exchanged. Interim market swings therefore have nothing to do with the stranded cost equation (net book value of generation assets over the market value of the assets)[87] unless generation assets are sold or exchanged. If they are sold or exchanged, then, as discussed above, the amount of stranded costs is determinable on the date *95 of sale or exchange, and there is no justification for deferring the accrual of stranded costs until sometime in 2004 or beyond, at the end of a true-up proceeding.
There is no cause for concern that rises in gas prices during the interim between January 1, 2002 and December 31, 2003 would translate into excess profits for power companies, even if their nuclear power plants operated profitably. As will be discussed in more detail in section IV below, the return that a power company could earn during 2002 and 2003 was predetermined in 2001. If that predetermined margin is exceeded, then the excess will be refunded by the power company pursuant to the capacity auction true-up under section 39.262(d)(2).[88]
H
This Court did not resolve the issue now before us in In re TXU.[89] That case concerned the Commission's reversal of early mitigation efforts. A majority of the Court held that mandamus relief was unavailable and did not reach the merits of the controversy. The dissent in that case would have reached the merits of whether the Commission had the statutory authority to reverse early mitigation efforts before a final true-up. At one juncture, the dissent said, "[t]he Legislature has required early mitigation of stranded costs not because those costs actually exist now but because it has been estimated that they will exist after the 2004 true-up and waiting until then to begin recovery threatens competition."[90] Read in context, the dissent was explaining that "the unquestioned fact is that stranded costs cannot be determined with any accuracy until one knows what the retail price of electricity is in a competitive market, and no such market exists."[91] Neither the Court nor the dissent purported to decide whether the Commission could require a two or more year gap in recovery of carrying costs on stranded costs.
I
Importantly, neither the Commission nor TIEC has offered any rationale to explain why the Legislature chose to use the book value of generation assets on December 31, 2001 (or even earlier) in calculating stranded costs if it intended for stranded costs to come into existence only after a final true-up proceeding in 2004 or beyond. But conversely, there is a compelling reason to determine the amount of stranded costs that existed as of December 31, 2001 and yet use the market value in 2002, 2003, or 2004 of the stranded assets. That compelling reason is that the Legislature knew with certainty that there would be no valid market indicators on December 31, 2001, the day before customer choice began, or for up to two years thereafter.
The fact that the Legislature permits the actual market value of assets in 2002, 2003, or 2004,[92] or 2004 projections of the value of nuclear assets,[93] to be used to calculate the value of stranded costs that existed as of December 31, 2001 is entirely consistent with the rationale underlying the capacity auction true-up proceeding,[94] to which we now turn.
IV
It is no coincidence that the capacity *96 auction true-up proceeding[95] covers roughly the same period of time between the start of customer choice, January 1, 2002, and the date on which generation companies could first file to finalize stranded costs in a true-up proceeding, which was January 11, 2004.[96] By definition, stranded costs include generation assets' excess book value over market.[97] The Legislature recognized that on the first day of deregulation, January 1, 2002, there was no way to validly quantify stranded costs, if any, because a market for electricity, both wholesale and retail, would need time to develop, and there would be interim distortions and fluctuations, perhaps severe ones. The Legislature was also concerned that distortions and fluctuations in the market price of power during the first two years of deregulation could harm consumers and generation companies alike. The Legislature accordingly designed the capacity auction true-up proceeding because of the likelihood that no stable market would exist until up to two years after the first day of deregulation.
There are two objectives accomplished by the capacity auction true-up proceeding that are pertinent to this appeal. The first is that a generation company is limited to a set margin that it will receive for sales of power, no matter how high or how low gas prices and fuel costs might be during 2002 and 2003. The second is that a generation company is permitted to earn a return on its generation assets during this period. What cannot be determined from this record is how much of that return is a return of or on stranded costs.
Section 39.153 requires a generation company to auction entitlements to at least 15 percent of its total power generation capacity, commencing at least 60 days before the beginning of customer choice.[98] This auction obligation continues until the earlier of 60 months (five years) after the beginning of customer choice or the date the Commission determines that 40 percent or more of the electric power consumed by residential and small commercial customers within the affiliated transmission and distribution company's service area before the onset of customer choice is provided by nonaffiliated retail electric providers.[99]
At the end of the first two years that this auction obligation is in effect (essentially 2002 and 2003), as part of the true-up proceeding in section 39.262,[100] a determination will be made of the difference between the price of power obtained through the capacity auctions and the power cost projections that were employed in the 2001 ECOM model for the years 2002 and 2003 to estimate stranded costs under section 39.201 (which determined whether there would be competition transition charges).[101] This essentially guarantees consumers and power companies that the power company will receive no more and no less than a margin predetermined by the Commission in 2001 when the ECOM model was run in compliance with section 39.201. The former electric utility's fuel balance determined under section 39.202(c) (which is not at issue in this appeal) is netted with this margin.[102] If the sum of these two items shows that the power company *97 has overrecovered, the transmission and distribution utility is credited. [103] If it shows the power company has underrecovered, the transmission and distribution utility is billed.[104]
The court of appeals held that the Commission erred by requiring in Rule 25.263 that any amount owed to the power company resulting from the calculation under subsection 39.262(d) be netted against any "negative" stranded cost calculation.[105] No one has appealed that ruling. The generation companies contend, however, that the court of appeals' holding forecloses any comparison of the capacity auction true-up to the stranded cost calculation. The Commission and TIEC counter that the margin guaranteed by the capacity auction true-up was intended by the Legislature to be the only means of recovering any part of stranded costs between January 1, 2002 and the date of a final order in a true-up proceeding. The correct construction of the Act lies between these two polar positions.
In the rulemaking proceeding that led to the adoption of Rule 25.263, the power companies, TIEC, and others disputed how the capacity auction true-up determination should be made. The same order that decided that carrying costs on stranded costs should be recoverable only from the date of a final true-up order also decided how the capacity auction true-up would be calculated.[106] The Commission essentially accepted the power companies' position regarding the calculation of the capacity auction true-up.[107] The Commission determined that actually re-running the ECOM model was not required by section 39.262(d) of the PURA, but instead, that it was appropriate to use "aggregated capacity auction revenues, actual fuel costs, and sales amounts [which] are compared to data from the ECOM model."[108]
It is not clear from the Commission's order in this rulemaking proceeding precisely what is calculated by the capacity auction true-up, but filings by the power companies as part of the process do shed some light on the matter. Reliant Energy, Inc., now known as CenterPoint, said in written public comments (part of the record in this case) that the capacity auction true-up calculation resulted in a "margin predicted to be available to contribute to fixed costs and therefore to reduce stranded costs." Reliant explained in greater detail:
For purposes of the true-up, the ECOM model has two main components: the price of power and the price of fuel. The difference between those components is the margin predicted to be available to contribute to fixed costs and therefore to reduce stranded costs. Assume, for example, that the ECOM price of power is $43/mwh, and the ECOM price of gas is $33/mwh. The margin that is available to reduce stranded costs in this example is $10/mwh.
The capacity auction will also yield a price of power and a price of fuel. The purpose of the PURA § 39.262(d)(2) true-up is to ensure that the [power generation company] ultimately receives the same margin from the capacity auction process as the ECOM model predicted. The [power generation company] may recover part of, all of, or more than that ECOM margin through the *98 bid premiums. In addition, the [power generation company] will experience some gain or loss on fuel when the capacity auction strike prices are compared to the [power generation company's] actual costs. The remainder (or overcollection) of the margin should be recovered from (or paid back to) ratepayers in the true-up proceeding. Thus, at the time of the true-up, the [power generation company] can be made whole by the following formula:
(ECOM market revenues ECOM fuel costs) ((capacity auction price x total busbar sales) actual fuel costs)
Maintaining the assumption that the margin between the ECOM price of power and the ECOM price of gas is $10/mwh, the [power generation company] should retain that margin in the capacity auction true-up, assuming sales remain the same. For example, suppose the capacity auction price is composed of a $2/mwh bid premium and a $33/mwh fuel cost, for a total capacity auction price of $35/mwh. Assuming that the actual fuel cost is $33/mwh, the [power generation company] would recover from the entitlement holder all of its fuel costs and $2/mwh to apply against stranded costs. But to retain the net margin of $10/mwh in the ECOM model, the [power generation company] should be allowed to recover $8/mwh from ratepayers.
This method could work to the benefit of ratepayers as well. For example, assume that the capacity auction price was $42/mwh and the price of gas was $30/mwh. In that instance, the [power generation company] would overrecover its expected margin by $2/mwh and would owe that amount to ratepayers.
The Commission adopted a formula for calculating the capacity auction true-up amount that is substantially the same as that proposed by Reliant, except that the Commission limited the true-up to the years 2002 and 2003, omitting any calculation for the months in 2004 before a final true-up order is issued for each power company. No one challenges Rule 25.263 with regard to the capacity auction true-up calculation.
The capacity auction true-up calculation will be company-specific, based on a margin developed in each company's unbundled cost of service (UCOS) proceeding.[109] This information appears to be confidential because of competition concerns. It is not part of our record and is not available on the Commission's website.
What can be gleaned from the record in this proceeding is that some portion of the margin that results from the capacity auction true-up may contain a component that allows a return of or on stranded costs. The court of appeals held that if a power company is entitled to bill the transmission and distribution utility for the amount that netting the final fuel balance and capacity auction true-up yields, then that amount cannot be netted against a stranded cost calculation that results in a negative number.[110] The court of appeals' determination has not been challenged in this Court and is final. However, that determination does not foreclose the Commission from taking into account any return of or on stranded costs that the margin from the capacity auction true-up contains in determining the appropriate carrying costs on stranded costs. Section 39.262, which addresses true-up proceedings, provides at the outset that "[a]n electric utility ... may not be permitted to overrecover stranded costs through the *99 procedures established by this section or through the application of the measures provided by the other sections of this chapter."[111] In setting a competition transition charge or allowing securitization of stranded costs at the conclusion of a final true-up proceeding, the Commission can ensure that there is no overrecovery of stranded costs or carrying costs on stranded costs if the capacity auction true-up margin has already provided a return of or on part of those stranded costs.[112]
TIEC is incorrect when it contends that the margin yielded in the ECOM model worksheets for each company with regard to the capacity auction true-up was intended by the Legislature to be the only means of recovering carrying costs on stranded costs until 2004. Sections 39.201 and 39.262(d) contemplate that a company may recover both competition transition charges from January 1, 2002, as well as the margin contemplated in the capacity auction true-up.[113] As recognized by the court of appeals, "the [L]egislature chose not to include [the capacity auction true-up amount] in its definition of stranded costs or to incorporate it into the methods it prescribes for calculating stranded costs."[114] But there may be some overlap of recovery of carrying costs on stranded costs under these sections. The extent to which carrying costs on stranded costs have been recovered in the margin provided by the capacity auction true-up for 2002 and 2003 remains to be determined.
* * * * * *
For the reasons considered above, we hold that Rule 25.263(l)(3) is invalid, and we remand this proceeding to the Commission for further consideration.
Justice BRISTER filed a dissenting opinion, in which Chief Justice PHILLIPS, Justice SCHNEIDER and Justice SMITH joined.
Justice BRISTER, joined by Chief Justice PHILLIPS, Justice SCHNEIDER and Justice SMITH, dissenting.
As a part of electricity-market deregulation, the Legislature allowed existing utility companies to recover stranded costs but no more. The Legislature said nothing about interest. Nevertheless, the Court holds utilities are potentially entitled to billions[1] of dollars in interest (to be collected from consumers through higher prices) because any other rule is "inconsistent" with the statute.[2] I do not see how an order refusing to grant interest is inconsistent with a statute that says nothing about interest; thus, I respectfully dissent.
In preparation for the third and final stage of the transition to competition in the electric industry, the Legislature directed the Public Utility Commission to establish procedures for a "true-up proceeding" to be conducted in 2004.[3] The Commission conducted hearings and drafted a rule.[4] Petitioners CenterPoint Energy and American Electric Power Company challenged several aspects of the rule in the Third Court of Appeals, which invalidated some parts of the rule and affirmed *100 others.[5] Only the utilities appeal, and only on one point the validity of a rule providing for interest on stranded costs after the 2004 true-up proceedings, but not before.
Stranded costs represent the costs of building and operating an electric power plant that would have been recoverable under regulation, but are unlikely to be recoverable in a competitive market.[6] The statute provides that a utility "is allowed to recover all of its net, verifiable, nonmitigable stranded costs."[7] If the Commission finds a utility has stranded costs at the true-up proceedings in 2004, the utility's transmission and distribution affiliate (the remaining regulated entity) may recover them over a period of years through rates assessed to all consumers.[8]
The statute does not say whether interest should run on stranded costs until they are recovered, and if so from when. The Commission concedes a utility would not recover "all" of its stranded costs if interest does not run from the true-up forward.[9] The utilities, of course, heartily agree.
But the utilities argue the Commission violated the statute by not providing for additional interest from January 1, 2002 (when competition started) until the true-up. For several reasons, I disagree.
First, the deregulation statute never mentions interest. I find it difficult to say the Commission violated the statute by failing to do something the statute never mentions.
Second, the sole provision of the statute on which the utilities rely is stated in permissive rather than mandatory terms:
An electric utility is allowed to recover all of its net, verifiable, nonmitigable stranded costs incurred in purchasing power and providing electric generation service.[10]
The focus of this section (entitled "Right to Recover Stranded Costs") is not on making sure the Commission gives utilities their due, but on making sure customers do not avoid stranded cost recovery by switching to a new provider[11] or new onsite generation.[12]
Third, the statute allows for recovery only of stranded costs that are "verified" and "nonmitigable." The Legislature provided that stranded costs were to be mitigated (so far as possible) before the true-up proceedings, and verified during them.[13] Before 2004, stranded costs could not be verified, and still had to be mitigated. Thus, during 2002 and 2003, they were neither "verified" nor "nonmitigable."
Fourth, even if the statute is ambiguous regarding interest, the Commission's interpretation is entitled to "great weight" as long as it is reasonable and does not conflict with the statute's language.[14] As the statute does not require interest, the Commission's *101 interpretation is both reasonable and non-conflicting.
There are several reasons the Legislature may have chosen not to make consumers pay interest on the utilities' stranded costs between 2002 and 2004. In the first place, the statute provided a number of tools for utilities to mitigate stranded costs beginning in 1999, several years before competition began in 2002.[15] Any interest the utilities might have lost on stranded costs during 2002 and 2003 must be balanced against their opportunity to earn a return on stranded costs recovered in 1999, 2000, and 2001 almost two-and-one-half years before even the utilities claim stranded costs came into existence. Presumably, a utility's decision on when and how to mitigate stranded costs was based on what would bring the best return on its investments; it is hard to see why ratepayers should pay interest as an additional return on an investment option they chose not to make.
Second, calculations of stranded costs for 2002 and 2004 are both estimates based on formulas mandated by statute.[16] The Court presumes that an estimate of $5 million in stranded costs in 2004 would "confirm" whether the earlier estimate was a "good predictor" or not. But both estimates were based on current data (gas prices, electricity prices, stock prices, interest rates, and so on) that could vary on a daily basis. A $5 million estimate of stranded costs in 2004 does not mean the estimate of stranded costs should have been the same for 2002, any more than rain today means yesterday's forecast of a 50% chance of showers was too low. By requiring interest backward from 2004, the Court overrides the formula the Legislature mandated for calculating rates in 2002 and 2003.[17]
CenterPoint argues interest must be paid on stranded costs from 2002 because they came into existence when competition began. But the concept of "stranded costs" is entirely a regulatory accounting construct it is impossible to say when such a concept comes into "being" in any existential sense. Of course, if the cost of building a nuclear power plant cannot be recovered in a competitive market, the loss suffered by investors is certainly real. But that loss cannot be known until the last kilowatt is sold, and no one suggests waiting until then.
Accordingly, the stranded costs that will be paid to utilities are those created by the statute, and should be paid when and to the extent the statute provides. The Legislature recognized that any estimate of stranded costs might vary widely and continue to do so for many years. Nevertheless, the Legislature provided for a final determination of stranded costs during the *102 2004 true-up proceedings. The figures assessed then will be final, even if subsequent decades show they were too high or too low. As the Legislature designated one date for when stranded costs are determined, the Commission might reasonably have decided interest should only run from then.
CenterPoint argues that stranded costs should be treated like a jury verdict though the amount of damages is not calculated until the jury does so, prejudgment interest nevertheless runs from the original occurrence. In the first place, we are not at liberty to decide the question before us on equitable principles, as we originally did with respect to prejudgment interest.[18] We play a more limited role when reviewing a statute and an administrative rule than we do when developing common-law remedies.
Moreover, with stranded costs, a more apt analogy would be a system in which a jury returns a different verdict every day for a period of years, each one very different from the verdict the day before, and each one correct. In such a system, it would be difficult to say what principal amount should be used to calculate interest. There would also be substantial costs involved in calculating stranded costs so often.
Instead, the Legislature provided for a single definitive determination at the 2004 true-up proceedings, a somewhat arbitrary date that no party challenges, and that (depending on circumstances yet to occur) may operate to the benefit or detriment of utilities or consumers. Given the statute's clear designation of when stranded costs are finally determined, and its silence regarding interest, the Commission's rule is both reasonable and consistent with the statute, and thus entitled to our deference.
In a government of separated powers, it is not our role to decide whether paying interest to utilities during 2002 and 2003 would be wise, or fair, or what we would do in similar circumstances. We can decide only whether the Commission violated the deregulation statute by providing for interest from the 2004 true-up forward. Because the statute is silent on the matter, I would hold it did not.
NOTES
[1] See generally City of Corpus Christi v. Pub. Util. Comm'n, 51 S.W.3d 231, 238 (Tex.2001).
[2] See generally Chapter 39 of the Texas Public Utility Regulatory Act, TEX. UTIL.CODE §§ 39.001-.910.
[3] Id. § 39.001(b).
[4] Id. § 39.251(7).
[5] Id. § 39.001(b)(2); see also City of Corpus Christi, 51 S.W.3d at 237-38.
[6] TEX. UTIL.CODE § 39.001(b)(2); see also City of Corpus Christi, 51 S.W.3d at 238.
[7] TEX. UTIL.CODE § 39.252(a).
[8] Id. §§ 39.201, .251-.254, .256-.265, .301-.313.
[9] Id. §§ 39.201(k), .262(c).
[10] 16 TEX. ADMIN. CODE § 25.263(l)(3).
[11] 101 S.W.3d 129, 146-47.
[12] See Tex. Pub. Util. Comm'n, Application of Reliant Energy for Approval of Unbundled Cost of Service Rate Pursuant to PURA § 39.201 and Public Utility Commission Substantive Rule § 25.344, Docket No. 22355 (Oct. 4, 2001) (order), available at http://interchange.puc.state.tx.us (accessed June 17, 2004); Tex. Pub. Util. Comm'n, Application of Central Power & Light Company for Approval of Unbundled Cost of Service Rate Pursuant to PURA § 39.201 and Public Utility Commission Substantive Rule § 25.344, Docket No. 22352 (Oct. 5, 2001) (order), available at http://interchange.puc.state.tx.us (accessed June 17, 2004).
[13] 101 S.W.3d at 147.
[14] Id.
[15] TEX. UTIL.CODE § 39.252(a).
[16] Id. § 39.201(g); see also id. §§ 39.251(7), .201(l).
[17] Id. § 39.262(d).
[18] Id. § 39.262(a) (utilities may not be permitted to overrecover stranded costs).
[19] 26 Tex. Reg. 10498, 10520 (2001) (citing TEX. UTIL.CODE § 14.002); see also 26 TEX. REG. 4359, 4360 (2001) (proposed June 15, 2001) (stating in the Notice of Proposed Rulemaking that Rule 25.263 was proposed under TEX. UTIL.CODE §§ 14.002, 39.252, and 39.262).
[20] TEX. UTIL.CODE § 14.002.
[21] 26 Tex. Reg. 10498, 10520 (2001) (citing TEX. UTIL.CODE §§ 39.252, .262).
[22] TEX. UTIL.CODE § 39.001(e).
[23] Id.
[24] Id. § 39.001(f).
[25] 101 S.W.3d at 132.
[26] See Pub. Util. Comm'n v. City Pub. Serv. Bd. of San Antonio, 53 S.W.3d 310, 315-16 (Tex.2001); see also Office of Pub. Util. Counsel v. Pub. Util. Comm'n, 104 S.W.3d 225, 232 (Tex.App.-Austin 2003, no pet.).
[27] The prior decisions are City of Corpus Christi v. Public Utility Commission, 51 S.W.3d 231 (Tex.2001), TXU Electric Co. v. Public Utility Commission, 51 S.W.3d 275 (Tex.2001), and In re TXU Electric Co., 67 S.W.3d 130 (Tex.2001).
[28] TEX. UTIL.CODE § 39.302(5).
[29] City of Corpus Christi, 51 S.W.3d at 238.
[30] TEX. UTIL.CODE § 39.001(b)(2).
[31] City of Corpus Christi, 51 S.W.3d at 238.
[32] TEX. UTIL.CODE § 39.301.
[33] The rule says:
The TDU [transmission and distribution utility] shall be allowed to recover, or shall be liable for, carrying costs on the true-up balance. Carrying costs shall be calculated using the utility's cost of capital established in the utility's UCOS [unbundled cost of service] proceeding, and shall be calculated for the period of time from the date of the true-up final order until fully recovered.
16 TEX. ADMIN. CODE § 25.263(l)(3).
[34] Id.
[35] TEX. UTIL.CODE § 39.262(c).
[36] 26 Tex. Reg. 10498, 10519 (2001).
[37] 101 S.W.3d at 146-47.
[38] TEX. UTIL.CODE § 39.262(d).
[39] Id. §§ 39.201, .251(7), .262(c), .262(h).
[40] 143 S.W.3d at 99 (Brister, J., dissenting).
[41] TEX. UTIL.CODE § 39.001(a).
[42] Id. §§ 39.101(a), .102.
[43] Id. § 39.001(b).
[44] Id. § 39.052.
[45] Id. § 39.051(b).
[46] Id. § 39.202.
[47] Id. § 39.202(a).
[48] See, e.g., id. §§ 39.254, .262(i) (referring to the REPORT TO THE TEXAS SENATE INTERIM COMMITTEE ON ELECTRIC UTILITY RESTRUCTURING, POTENTIALLY STRANDABLE INVESTMENT (ECOM) REPORT: 1998 UPDATE (Apr.1998)).
[49] Id. § 39.254.
[50] Id. § 39.257.
[51] Id. § 39.254.
[52] Id. § 39.256.
[53] "Regulatory assets" are defined in section 39.302(5) of the Utilities Code. See generally City of Corpus Christi v. Pub. Util. Comm'n, 51 S.W.3d 231 (Tex.2001); TXU Elec. Co. v. Pub. Util. Comm'n, 51 S.W.3d 275 (Tex.2001).
[54] TEX. UTIL.CODE §§ 39.201(i), .301-.303.
[55] Id. § 39.301.
[56] Id. §§ 39.301, .303(a).
[57] Id. § 39.301.
[58] Id.
[59] Id. § 39.303(a).
[60] See generally TXU Elec. Co. v. Pub. Util. Comm'n, 51 S.W.3d 275, 277 (Tex.2001); City of Corpus Christi v. Pub. Util. Comm'n, 51 S.W.3d 231, 235-36 (Tex.2001).
[61] TEX. UTIL.CODE § 39.201(i)(1).
[62] Id. §§ 39.301, .302(4), .302(7), .303.
[63] Id. §§ 39.201(i), .301; see also generally TXU Elec. Co., 51 S.W.3d at 281-84.
[64] TEX. UTIL.CODE § 39.201(a), (c), (d).
[65] Id. § 39.201(h) (referring to Utility Code section 39.262(i)).
[66] Id. § 39.201(g). The freeze period is defined in TEX. UTIL.CODE § 39.052(a) as September 1, 1999 until January 1, 2002.
[67] Id. § 39.201(d), (g).
[68] Id. § 39.201(l).
[69] Id.
[70] Id. § 39.201(d).
[71] Id. § 39.201(k).
[72] Id. § 39.201(a)-(k).
[73] Id. § 39.201(l).
[74] Id. §§ 39.201(l), .262(g).
[75] 16 Tex. Admin. Code § 25.263(g)(2)(A).
[76] TEX. UTIL.CODE § 39.201(a), (b), (d), (f), (g), (h), (k).
[77] Id. § 39.201(l).
[78] Id. § 39.201(g), (h), (l) (emphasis added).
[79] Id.
[80] Id. § 39.262(c); see also id. § 39.262(h) (describing the methods of quantifying stranded costs "for the purpose of finalizing the stranded cost estimate used to establish the competition transition charge under Section 39.201").
[81] Id. § 39.201(g).
[82] Id. § 39.251(7).
[83] Id.; see also id. § 39.262(h) (outlining the methods for quantifying stranded costs to finalize the stranded cost estimate used to establish the competition transition charge).
[84] Id. § 39.251(7).
[85] Id. §§ 39.251(7), .262(h).
[86] Id. § 39.251(7).
[87] Id.
[88] Id. § 39.262(d)(2).
[89] 67 S.W.3d 130 (Tex.2001).
[90] Id. at 166 (Hecht, J., dissenting).
[91] Id. at 165-66 (Hecht, J., dissenting).
[92] See TEX. UTIL.CODE § 39.262(h).
[93] See id. § 39.262(i).
[94] Id. §§ 39.153, .262(d).
[95] Id.
[96] Id. § 39.262(c).
[97] Id. § 39.251(7).
[98] Id. § 39.153(a).
[99] Id. § 39.153(b).
[100] Id. § 39.262(d).
[101] 16 TEX. ADMIN. CODE § 25.263; see also 26 Tex. Reg. 10498, XXXXX-XXX, 10524 (2001).
[102] TEX. UTIL.CODE § 39.262(d).
[103] Id.
[104] Id.
[105] 101 S.W.2d at 138-41.
[106] 26 Tex. Reg. 10498 (2001).
[107] Id. at 10501.
[108] Id.
[109] 16 Tex. Admin. Code § 25.263(i)(1).
[110] 101 S.W.3d at 138-41.
[111] TEX. UTIL.CODE § 39.262(a).
[112] Id. §§ 39.201(l), .252, .262(c).
[113] Id. §§ 39.201, .262(a), (d).
[114] 101 S.W.3d at 140.
[1] CenterPoint asserts in its petition for review that it alone would lose $1 billion in interest on stranded costs between 2002 and the true-up proceeding in 2004.
[2] 143 S.W.3d at 84.
[3] TEX. UTIL.CODE § 39.262(c).
[4] 16 TEX. ADMIN. CODE § 25.263.
[5] 101 S.W.3d 129, 149-50.
[6] See TEX. UTIL.CODE § 39.251(7); In re TXU Elec. Co., 67 S.W.3d 130, 132 (Tex.2001) (Phillips, C.J., concurring).
[7] TEX. UTIL.CODE § 39.252(a).
[8] See id. § 39.262(c).
[9] 16 TEX. ADMIN. CODE § 25.263(l)(3).
[10] TEX. UTIL.CODE § 39.252(a) (emphasis added).
[11] Id. § 39.252(c).
[12] Id. § 39.252(b).
[13] See generally id. § 39.254-.262.
[14] State v. Pub.Util. Comm'n of Tex., 883 S.W.2d 190, 196 (Tex.1994); see also Osterberg v. Peca, 12 S.W.3d 31, 51 (Tex.2000) (giving "great weight" to Texas Ethics Commission's interpretation).
[15] See TEX. UTIL.CODE §§ 39.201(i)(1) (allowing securitization of up to 75% of stranded costs), 39.254 (requiring earnings in excess of the allowed rate of return to be applied to stranded costs), 39.256(a) (allowing redirection of transmission asset depreciation); see generally § 39.254 (requiring utilities to use mitigation tools).
[16] See id. §§ 39.201(h), 39.262(i). Neither calculation would be an estimate to the extent the underlying stranded costs (power-generation assets, primarily nuclear power plants) were sold, see id. § 39.262(h)(1), but there is no indication in our record that such plants have changed hands.
[17] See id. 39.201(h). The statute provided for adjustment of rates at the 2004 true-up to provide recovery of stranded costs, but did not require reimbursement of interest if the 2001 estimates were lower or higher. Id. § 39.262(g) ("If the commission determines that the nonbypassable delivery rates are not sufficient, the commission may extend the original collection period for the [CTC] charge or, if necessary, increase the charge.").
[18] See Cavnar v. Quality Control Parking, Inc., 696 S.W.2d 549, 552 (Tex.1985), superseded by TEX. FIN.CODE § 304.102.
|
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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
D.F., )
)
Appellant, )
)
v. ) Case No. 2D17-1774
)
STATE OF FLORIDA, )
)
Appellee. )
)
Opinion filed October 5, 2018.
Appeal from the Circuit Court for
Hillsborough County; Robert A.
Bauman, Judge.
Howard L. Dimmig, II, Public Defender,
and Judith Ellis, Assistant Public
Defender, Bartow, for Appellant.
Pamela Jo Bondi, Attorney General,
Tallahassee, and David Campbell,
Assistant Attorney General, Tampa, for
Appellee.
PER CURIAM.
Affirmed.
LaROSE, C.J., and KHOUZAM and ROTHSTEIN-YOUAKIM, JJ., Concur.
|
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|
In the United States Court of Federal Claims
OFFICE OF SPECIAL MASTERS
No. 16-1156V
Filed: October 5, 2016
UNPUBLISHED
****************************
ROBIN FLICK, *
*
Petitioner, * Ruling on Entitlement; Concession;
v. * Influenza “(FLU”); Shoulder Injury
* Related to Vaccine Administration
SECRETARY OF HEALTH * (“SIRVA”);
AND HUMAN SERVICES, * Special Processing Unit (“SPU”)
*
Respondent. *
*
****************************
Michael McLaren, Black McLaren, et al., PC, Memphis, TN, for petitioner.
Darryl Wishard, U.S. Department of Justice, Washington, DC, for respondent.
RULING ON ENTITLEMENT1
Dorsey, Chief Special Master:
On September 16, 2016, petitioner filed a petition for compensation under the
National Vaccine Injury Compensation Program, 42 U.S.C. §300aa-10, et seq.,2 (the
“Vaccine Act”). Petitioner alleges that he suffered a shoulder injury related to vaccine
administration (“SIRVA”) following an influenza (“flu”) vaccine administered on
November 9, 2015. Petition at 1. The case was assigned to the Special Processing
Unit of the Office of Special Masters.
On October 5, 2016, respondent filed her Rule 4(c) report in which she concedes
that petitioner is entitled to compensation in this case. Respondent’s Rule 4(c) Report
at 1. Specifically, respondent concluded that petitioner’s alleged injury is consistent with
a SIRVA, and it was caused-in-fact by the flu vaccine he received on November 9,
2015. Id. at 4. Respondent further agrees that petitioner has satisfied all legal
prerequisites for compensation under the Vaccine Act. Id. at 4-5.
1
Because this unpublished ruling contains a reasoned explanation for the action in this case, the
undersigned intends to post it on the United States Court of Federal Claims' website, in accordance with
the E-Government Act of 2002. 44 U.S.C. § 3501 note (2012) (Federal Management and Promotion of
Electronic Government Services). In accordance with Vaccine Rule 18(b), petitioner has 14 days to
identify and move to redact medical or other information, the disclosure of which would constitute an
unwarranted invasion of privacy. If, upon review, the undersigned agrees that the identified material fits
within this definition, the undersigned will redact such material from public access.
2
National Childhood Vaccine Injury Act of 1986, Pub. L. No. 99-660, 100 Stat. 3755. Hereinafter, for
ease of citation, all “§” references to the Vaccine Act will be to the pertinent subparagraph of 42 U.S.C. §
300aa (2012).
In view of respondent’s concession and the evidence before me, the
undersigned finds that petitioner is entitled to compensation.
IT IS SO ORDERED.
s/Nora Beth Dorsey
Nora Beth Dorsey
Chief Special Master
2
|
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|
908 F.2d 795
30 Fed. R. Evid. Serv. 1209
UNITED STATES of America, Plaintiff-Appellee,v.William R. METALLO, Defendant-Appellant.
No. 88-3767.
United States Court of Appeals,Eleventh Circuit.
Aug. 9, 1990.Rehearing and Rehearing En Banc DeniedOct. 5, 1990.
J. Robert Cooper, Atlanta, Ga., for defendant-appellant.
Bruce Hinshelwood, Asst. U.S. Atty., Orlando, Fla., for plaintiff-appellee.
Appeal from the United States District Court for the Middle District of Florida.
Before TJOFLAT, Chief Judge, JOHNSON and ANDERSON, Circuit Judges.
TJOFLAT, Chief Judge:
1
William R. Metallo appeals from a judgment of conviction entered, on jury verdicts, by the United States District Court for the Middle District of Florida. Metallo also appeals the sentences imposed by the district court. We affirm the district court with respect to both convictions and sentences.
I.
2
On April 13, 1988, a federal grand jury in Orlando, Florida, returned a six-count indictment against William R. Metallo (Metallo) and his son, William B. Metallo, charging them with: (1) conspiring with each other and with other persons to commit credit card fraud, in violation of 18 U.S.C. Sec. 1029(b)(2) (1988) (count one); (2) credit card fraud, in violation of 18 U.S.C. Sec. 1029(a)(2) (count two); and (3) mail fraud, in violation of 18 U.S.C. Sec. 1341 (counts three through six). The two cases were severed, and Metallo's case proceeded to trial.
3
At trial, the Government presented evidence tending to prove the following facts. On April 5, 1984, Piedmont Airlines issued three Universal Air Travel Plan (UATP) credit cards1 to Metallo, Joan Jackson (Metallo's girlfriend), and William B. Metallo. The cards were billed to the account of American Enterprise Publishing, Inc. (AEPI) of Apopka, Florida, a corporation that listed Metallo as president, William B. Metallo as vice president, and Joan Jackson as secretary. Metallo was the sole stockholder. Throughout the following year, the Metallos and Jackson used the cards to lease a car in Florida and for trips to such places as San Francisco, New York, Rome, Tel Aviv, the Bahamas, Jamaica, Hawaii, New Orleans, and a ski resort in Vermont. On May 30, 1985, the Metallos were heading for Paris and London, with tickets charged to the UATP account, when they were arrested at the Orlando International Airport. By this time, the AEPI account had an overdue balance of some $122,000, and two of the three cards had already been confiscated upon attempted use. Piedmont had never received any payment for any of the charges.
4
Before issuing the cards, Piedmont had requested a credit report on AEPI from Dun & Bradstreet, a credit-reporting service. According to the report, an AEPI representative informed a Dun & Bradstreet telephone interviewer that the corporation showed an upward trend in sales and profits and annual sales figures of more than a half-million dollars.2 The AEPI representative's statement was false, however; during the relevant period, AEPI had little or no income, few assets of any kind, and no investors.
5
On July 1, 1988, the jury returned a verdict of guilty on all six counts. On September 25, 1988, the district court conducted a sentencing hearing and sentenced Metallo to five years incarceration on count one, ten years incarceration on count two (concurrent to the term imposed on count one), and five years incarceration, execution suspended, on each of the remaining counts (concurrent to one another but consecutive to counts one and two). Because the conduct that gave rise to the convictions occurred before November 1, 1987, the district court sentenced Metallo under the law that obtained at the time of his offenses and not under the guidelines promulgated by the United States Sentencing Commission pursuant to the Sentencing Reform Act of 1984, see 18 U.S.C. Sec. 3551 et seq.; 28 U.S.C. Sec. 991 et seq.
6
In this appeal, Metallo asserts essentially five grounds of error:
7
(1) The evidence was not sufficient to support his conviction;
8
(2) the district court erred in admitting irrelevant and highly prejudicial evidence and in admitting hearsay evidence that fell under no exception to the hearsay rule;
9
(3) the district court erred in charging the jury that a corporation can be a co-conspirator;
10
(4) the district court erred in denying Metallo's motion to continue the sentencing hearing; and
11
(5) the district court erred in not sentencing Metallo under the sentencing guidelines.
12
We address each assertion in turn.
II.
A.
13
Metallo claims that the evidence adduced at his trial was insufficient to support his convictions. We have considered the evidence in the light most favorable to the Government, see Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680 (1942), and conclude that there was substantial evidence to support the verdicts on all counts.
14
Evidence in the case indicated that Metallo applied for, obtained, and repeatedly used a UATP credit card just after he had declared bankruptcy. The credit card was billed to AEPI, which was shown to have minimal assets, and the Dun & Bradstreet report suggested that Metallo had hugely exaggerated the corporation's financial success in order to obtain the credit card.3 No payments were made on the account, although correspondence found in Metallo's residence demonstrated his awareness that charges exceeded $122,000. From this evidence alone, a jury could determine that Metallo had committed credit card fraud by obtaining and using a UATP account from Piedmont Airlines with no intention to pay. When we consider the evidence concerning the conduct of the two other AEPI officers, who also held UATP cards on the same account--Joan Jackson, who leased a car on the UATP card, frequently traveled with Metallo, and charged airline tickets for him; and William B. Metallo, who worked and traveled with his father and frequently charged trips to the UATP account--the jury's determination that Metallo had conspired with others to commit credit card fraud is also supported.
15
Finally, according to Metallo, his convictions for mail fraud were not supported by sufficient evidence of his having used the United States mails to carry out his fraudulent scheme.4 We disagree. To establish use of the mails, direct evidence is not required; rather, "[p]roof of mailing can be established by circumstantial evidence." United States v. Massey, 827 F.2d 995 (5th Cir.1987). A Piedmont Airlines official testified that it was the airline's routine practice to send business correspondence by United States mail. This evidence was sufficient to support the jury's determination that Metallo used the mail in furtherance of his fraud. See United States v. Bowman, 783 F.2d 1192, 1197 (5th Cir.1986) (circumstantial evidence of bank's customary practice "more than adequate to support the jury's determination that the mailing in fact took place"); United States v. Ledesma, 632 F.2d 670, 675 (7th Cir.) (" 'testimony as to office practice is sufficient proof of mailing' " (quoting United States v. Joyce, 499 F.2d 9, 15 (7th Cir.), cert. denied, 419 U.S. 1031, 95 S.Ct. 512, 42 L.Ed.2d 306 (1974))), cert. denied, 449 U.S. 998, 101 S.Ct. 539, 66 L.Ed.2d 296 (1980).
B.
16
Metallo claims that the district court erred in admitting into evidence (1) records and testimony pertaining to his April 1984 bankruptcy filing and (2) the financial report prepared by Dun & Bradstreet. We note at the outset that a trial court enjoys considerable discretion in determining the admissibility of evidence and will be reversed only on a clear showing of abuse of discretion. United States v. Martin, 794 F.2d 1531, 1532 (11th Cir.1986).
17
Courts have long held that evidence of financial difficulties is admissible in fraud prosecutions to demonstrate knowledge, motive, intent, design, and absence of mistake. See, e.g., United States v. Whaley, 786 F.2d 1229, 1233 (4th Cir.1986); United States v. Pichnarcik, 427 F.2d 1290, 1291 (9th Cir.1970). The evidence relating to Metallo's petition for bankruptcy, filed at approximately the same time that Metallo caused his corporation to apply for UATP credit cards, was probative of Metallo's knowledge, absence of mistake, and intent in obtaining and using the cards with no intention to pay Piedmont for the items charged. We cannot say that the trial court abused its discretion in admitting that evidence.
18
Metallo next argues that the district court erred in admitting the Dun & Bradstreet report as an exception to the hearsay rule, see Fed.R.Evid. 802. The business-records exception, however, provides that a record, "if kept in the course of a regularly conducted business activity," and if "it was the practice of that business activity to make the ... record," is admissible unless circumstances "indicate lack of trustworthiness." Fed.R.Evid. 803(6). For a record to be admitted under Rule 803(6), " 'the person who actually prepared the documents need not have testified so long as other circumstantial evidence and testimony suggest their trustworthiness.' " United States v. Parker, 749 F.2d 628, 633 (11th Cir.1984) (quoting Itel Capital Corp. v. Cups Coal Co., 707 F.2d 1253, 1259 (11th Cir.1983)). The district court permitted defense counsel to voir dire the witness, Dun & Bradstreet records custodian Frederick Sutter, before ruling on the hearsay objection. Sutter, who had not personally prepared the report, explained entries on the report and testified about Dun & Bradstreet's standard procedure for compiling such reports. After argument by both counsel, the district court stated that the key word used by the Government in response to the hearsay objection was "trustworthiness" and that the court would exercise its broad discretion to admit the report under the business-records exception to the hearsay rule.
19
Sutter's testimony supported the district court's finding that the document was trustworthy. The court's decision to admit the report was not an abuse of the court's considerable discretion in that area. See United States v. Jones, 554 F.2d 251, 252 (5th Cir.)5 (under business-records exception, trial courts have "wide discretion in determining whether the document offered has the inherent probability of trustworthiness"), cert. denied, 434 U.S. 866, 98 S.Ct. 202, 54 L.Ed.2d 142 (1977).
C.
20
Metallo's third claim is that the district court erred in instructing the jury that a corporation may be a co-conspirator. Metallo made timely objection to the instruction solely on the ground that it impermissibly expanded the indictment and thereby permitted his conviction for an uncharged offense. Count one of the indictment, however, charged that (William R.) Metallo had conspired with William B. Metallo "and with other persons known to the Grand Jury." Metallo was thus put on notice at the outset that the Government might present evidence of Metallo's involvement with persons other than his son in support of its conspiracy theory. Metallo did not object to the inference that a corporation was a "person" with whom a natural person might conspire, nor did he request any additional instruction to the effect that, if the jury found that the corporation was merely Metallo's alter ego, it could not find him guilty of conspiring solely with that corporation.6 We hold, therefore, that the district court did not err in giving the instruction over the only objection raised, to wit, that it impermissibly expanded the indictment.
D.
21
Metallo's fourth claim is that the district court erred in denying his motion for a continuance of sentencing, in violation of Fed.R.Crim.P. 32(c) and Title 18 U.S.C. Sec. 3552(d) (1988), thereby denying him the right to due process in sentencing. As currently written, both the statute and the rule demand that the sentencing court provide the defendant (and defense counsel) with a copy of the presentence investigation report (PSI), prepared for the court by a United States probation officer, at least ten days before sentencing. See 18 U.S.C. Sec. 3552(d); Fed.R.Crim.P. 32(c)(3)(A). It is undisputed that Metallo did not receive the report until three days before sentencing.
22
Section 3552(d) does not govern Metallo's case, however, because the section applies only to offenses committed after November 1, 1987, see Sentencing Reform Act of 1984, Pub.L. No. 98-473, Sec. 235, 98 Stat. 2031, amended by Sentencing Reform Amendments Act of 1985, Pub.L. No. 99-217, Sec. 4, 99 Stat. 1728 (1984 Act codified as amended at 18 U.S.C. Sec. 3551 et seq.; 28 U.S.C. Sec. 991 et seq.); see also Berganzo-Romero v. United States, 732 F.Supp. 275, 277-78 (D.P.R.1985). The statute and the version of Rule 32(c) governing offenses committed before November 1, 1987, read as follows:
23
(c) Presentence Investigation.
24
(1) When made. The probation service of the court shall make a presentence investigation and report to the court before the imposition of sentence [with certain exceptions not relevant here]....
25
....
26
(3) Disclosure.
27
(A) At a reasonable time before imposing sentence the court shall permit the defendant and his counsel to read the report of the presentence investigation.... The court shall afford the defendant and his counsel an opportunity to comment on the report and, in the discretion of the court, to introduce testimony or other information relating to any alleged factual inaccuracy contained in it.
28
18 U.S.C. Sec. 3562 (1982 & Supp.1984) (final emphasis added), repealed by Sentencing Reform Act of 1984, Pub.L. No. 98-473, Sec. 212(a)(2), 98 Stat. 1987.
29
The record of the sentencing hearing below indicates that Metallo and his counsel were well aware of the contents of the PSI before they actually received it. The record further indicates that Metallo and defense counsel had discussed the PSI, were well-prepared to counter the information contained therein and to submit new information, and were afforded an opportunity by the court to do so. We conclude that Metallo's receipt of the PSI three days prior to sentencing afforded a reasonable time to read the PSI and to prepare for sentencing; we hold, therefore, that the district court did not err in denying Metallo's motion for continuance.
E.
30
Metallo claims finally that the district court should have sentenced him under the sentencing guidelines promulgated by the United States Sentencing Commission pursuant to the Sentencing Reform Act of 1984, see 18 U.S.C. Sec. 3551 et seq.; 28 U.S.C. Sec. 991 et seq. This contention is foreclosed for the reason stated above: Metallo's offenses occurred before November 1, 1987, the effective date of the Sentencing Reform Act, see supra part D; and the November 1 implementation date applies only to crimes committed on or after that date, regardless of the date of conviction or sentencing. See United States v. Burgess, 858 F.2d 1512, 1513-14 (11th Cir.1988); United States v. Haines, 855 F.2d 199, 200 (5th Cir.1988) (Congress expressly limited applicability of guidelines to offenses committed after November 1, 1987). Thus the district court did not err in refusing to apply the guidelines when imposing Metallo's sentence.
III.
31
For the foregoing reasons, the judgment of conviction and the sentence imposed by the district court are
32
AFFIRMED.
1
The Universal Air Travel Plan credit card allows the holder to charge hotel accommodations, hotel meals, and car rental, as well as air transportation on any domestic and most international airlines, and to draw a limited amount of cash from the issuing airline
2
Both William B. Metallo and Joan Jackson testified that they were not the painters of the rosy financial picture given to the Dun & Bradstreet interviewer
3
We address Metallo's challenge to the admission of the Dun & Bradstreet report into evidence in part B below
4
Metallo was charged, in counts three through six, with four violations of 18 U.S.C. Sec. 1341 (1988), which provides:
Whoever, having devised or intending to devise any scheme or artifice to defraud, ... 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 takes or receives therefrom, any such matter or thing, or knowingly causes to be delivered by mail according to the direction thereon, or at the place at which it is directed to be delivered by the person to whom it is addressed, any such matter or thing, shall be fined not more than $1,000 or imprisoned not more than five (5) years, or both.
5
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.1981) (en banc), this court adopted as binding precedent all decisions of the former Fifth Circuit handed down prior to October 1, 1981
6
This court held, in United States v. Hartley, 678 F.2d 961, 972 (11th Cir.1982), cert. denied, 459 U.S. 1170, 1183, 103 S.Ct. 815, 834, 74 L.Ed.2d 1014 (1983), that a corporation may be found criminally liable for conspiring solely with its own officers, agents, and employees. The Government cites Hartley for the converse proposition that a natural person may be found criminally liable for conspiring with his own corporation. We do not reach this issue, however, since the only ground for objecting to the district court's instruction was that it impermissibly broadened the scope of the indictment
|
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 12-6743
UNITED STATES OF AMERICA,
Plaintiff – Appellee,
v.
LARRY ROSCOE GUNNELL, JR.,
Defendant - Appellant.
Appeal from the United States District Court for the Eastern
District of Virginia, at Richmond. James R. Spencer, District
Judge. (3:99-cr-00022-JRS-1)
Submitted: September 25, 2012 Decided: November 6, 2012
Before WILKINSON, NIEMEYER, and AGEE, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Larry Roscoe Gunnell, Jr., Appellant Pro Se. Norval George
Metcalf, Assistant United States Attorney, Richmond, Virginia,
for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Larry Roscoe Gunnell, Jr., appeals the district
court’s order denying his motions for correction of clerical
error under Fed. R. Crim. P. 36 and for reconsideration. We
have reviewed the record and find no reversible error.
Accordingly, we affirm for the reasons stated by the district
court. United States v. Gunnell, No. 3:99-cr-00022-JRS-1 (E.D.
Va. Dec. 16, 2011 & Mar. 30, 2012). 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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507 N.W.2d 681 (1993)
2 Neb. App. 186
STATE of Nebraska, Appellee,
v.
Stanley DEUTSCH, Appellant.
No. A-93-137.
Court of Appeals of Nebraska.
November 2, 1993.
Bernard J. Ach, Friend, for appellant.
*682 Don Stenberg, Atty. Gen., and Kenneth W. Payne, Lincoln, for appellee.
CONNOLLY, IRWIN, and WRIGHT, JJ.
WRIGHT, Judge.
Stanley Deutsch appeals his sentence for attempted sexual assault of a child.
STANDARD OF REVIEW
The filing of a motion for new trial in a court which functions as an intermediate court of appeals does not stop the running of the time within which to perfect an appeal from the reviewing court. Hueftle v. Northeast Tech. Community College, 242 Neb. 685, 496 N.W.2d 506 (1993).
FACTS
Stanley Deutsch was charged in county court with attempted sexual assault of a child, a Class I misdemeanor, in violation of Neb.Rev.Stat. §§ 28-201(1)(b) and 28-320.01 (Reissue 1989). At arraignment, Deutsch pleaded no contest in return for dismissal of an attempted first degree sexual assault charge which was pending in Saline County District Court. The county court found a factual basis for the charge and found that the plea was knowingly, intelligently, and voluntarily made. The court ordered a presentence investigation.
A sentencing hearing was held April 14, 1992, and Deutsch filed a motion to recuse, which was overruled. He was sentenced to serve 1 year in an institution under the jurisdiction of the Department of Correctional Services. On April 14, Deutsch filed a notice of appeal in the county court, but he did not file assignments of error with the district court until June 30. He asserted that the county court erred in considering evidence not included in the presentence report. The court was alleged to have reviewed letters from the victim's parents which were sent directly to the court and not included in the presentence report. Deutsch also assigned as error the refusal of the county court judge to recuse himself from sentencing and the excessiveness of the sentence.
On December 15, the district court affirmed the county court's sentence. On December 24, Deutsch filed in the district court a motion for new trial, which was denied on January 29, 1993. Deutsch then appealed to this court on February 18.
ANALYSIS
We do not reach the merits of Deutsch's appeal because we do not have jurisdiction. Deutsch's sentence was affirmed by the district court on December 15, 1992. Pursuant to Neb.Rev.Stat. § 25-1912 (Cum.Supp.1992), his appeal to this court must have been filed within 30 days unless tolled by a timely filed motion for new trial. The time for filing an appeal was not tolled by Deutsch's filing of a motion for new trial in the district court.
A motion for a new trial is restricted to a trial court, and where the district court acts in the capacity of an appellate court, such a motion is not a proper pleading and it does not stop the running of time for perfecting an appeal. This is true whether that court is hearing appeals from the county court or from some other lower tribunal.
Interstate Printing Co. v. Department of Revenue, 236 Neb. 110, 112-13, 459 N.W.2d 519, 522 (1990).
In Hueftle v. Northeast Tech. Community College, supra, the Supreme Court noted that it is improper to move for a new trial in a court which reviews the decision of a lower court and therefore functions as an intermediate court of appeals and not as a trial court. The filing of a motion for new trial in a court which functions as an intermediate court of appeals does not stop the running of the time for filing the appeal.
Since Deutsch failed to file an appeal within 30 days of the district court's order affirming the sentence imposed by the county court, we are without jurisdiction to consider his appeal. We dismiss this appeal for lack of jurisdiction.
APPEAL DISMISSED.
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STATE OF MICHIGAN
COURT OF APPEALS
STEPHANIE KATHLEEN KAEB, FOR PUBLICATION
March 12, 2015
Plaintiff-Appellee, 9:10 a.m.
v No. 319574
Ottawa Circuit Court
DARIN LEE KAEB, LC No. 09-066151-DM
Defendant-Appellant.
Before: M. J. KELLY, P.J., and MURPHY and HOEKSTRA, JJ.
M. J. KELLY, P.J.
In this appeal arising out of a parenting time dispute, defendant, Darin Lee Kaeb, appeals
by right the trial court’s orders sanctioning him for filing a frivolous motion to modify the
conditions placed on him in a parenting time order; the trial court ordered him to pay the attorney
fees incurred by plaintiff, Stephanie Kathleen Kaeb, in defending the motion. Because we
conclude the trial court erred when it determined that Darin Kaeb’s motion was frivolous, we
reverse the trial court’s decision and vacate the orders compelling Darin Kaeb to pay Stephanie
Kaeb’s attorney fees.
I. BASIC FACTS
Darin and Stephanie Kaeb married in July 1997. Three children were born to them
during the marriage.
In December 2009, Stephanie Kaeb sued for divorce and, in July 2010, the trial court
entered a consent judgment of divorce. The consent judgment granted joint legal and physical
custody to the parties, but provided that the children would reside primarily with Stephanie Kaeb
during the school year. The judgment gave Darin Kaeb extensive parenting time during the
school year and equal parenting time during summers.
In March 2011, Stephanie Kaeb petitioned for a review of custody on the basis of a
change in circumstances. Although she discussed a variety of changes, her primary allegations
were that that Darin Kaeb had serious alcohol and gambling problems and might have mental
health issues, which impaired his ability to provide proper care and custody to the children.
-1-
The trial court entered a stipulated order changing custody in September 2011. The order
gave Stephanie Kaeb sole legal and physical custody of the children and provided Darin Kaeb
with very limited supervised parenting time. The order further provided that Darin Kaeb “shall
complete his alcohol treatment and therapy, comply with all aftercare treatment
recommendations, and shall abstain from the use of alcohol.”
The trial court entered a new order in February 2012. The order provided Stephanie
Kaeb with sole legal and physical custody and gave Darin Kaeb limited supervised parenting
time. The order also required Darin Kaeb to “continue alcohol treatment and therapy” and stated
that he could petition for modification after “three months of compliance with the . . . schedule
and requirements.”
In July 2012, Darin Kaeb moved for a change in custody and unsupervised parenting
time. He stated that, since the court entered its earlier orders regarding custody, he had complied
with the court’s requirements and had completed various programs to treat his issues with anger
and alcohol, which amounted to a change in circumstances that warranted revisiting custody and
parenting time. The trial court did not hold an evidentiary hearing, but eventually entered an
interim order allowing Darin Kaeb to have unsupervised parenting time on specified days and
providing that he must “continue with AA and counseling . . . .”
In May 2013, the trial court held what it characterized as a “review hearing on matters of
parenting time.” Darin and Stephanie Kaeb both testified at the hearing and described the
circumstances surrounding their current parenting time schedule. Darin Kaeb also testified that
he was complying with the court’s orders to remain sober, attend AA, and continue with
counselling.
At the conclusion of the hearing, the trial court found that the evidence showed that Darin
Kaeb had been complying with the court’s requirements. But it recognized that it could not
“determine whether someone whose been alcohol dependent or alcohol abusive has been cured
of that problem.” Instead, the court stated, “maintaining sobriety is something that’s proven over
the course of time.” To that end, the trial court required Darin Kaeb “to continue counselling
with Dr. Ellens, and to attend AA regularly” as conditions on his exercise of parenting time,
which it expanded. Darin Kaeb’s lawyer thereafter expressed concern that it would be unfair to
require his client to show a change of circumstances every few months in order to permit further
expansion. For that reason, he asked the trial court if it could set a review at fixed intervals. The
trial court disagreed that automatic review would be a good use of judicial resources and stated
that any further “adjustments [to parenting time] will have to be [by] motion.”
In June 2013, the trial court entered an order consistent with its decision from the bench.
It provided that Darin Kaeb must “maintain sobriety, shall continue to counsel with Dr. Brent
Ellens, [and] shall continue to attend AA regularly.”
In August 2013, Darin Kaeb moved to amend the trial court’s order of June 2013; he
asked the trial court to remove the requirement that he continue to counsel with Ellens and
continue to attend AA meetings. In support of his motion, he attached a report by Dr. Michael
Makedonsky.
-2-
Makedonsky reported that he interviewed Darin Kaeb and performed psychological
testing on him. He opined that Darin Kaeb was not suffering from any mental illness. He also
stated that Darin Kaeb said he had not gambled or had alcohol since September 2011 and was
“very motivated and very committed to staying alcohol free.” On the basis of his interview and
testing, Makedonsky stated that there was no clinical need for Darin Kaeb to continue with AA
meetings: “It is the professional opinion of this examiner that his past use of alcohol was caused
by marital conflicts and the divorce process at the time.” He further opined that Darin Kaeb was
“mentally and emotionally stable,” did not pose “any risk of violence,” and exhibited “adequate
parenting skills.”
Darin Kaeb also presented a letter from Ellens discharging him from counselling. In the
letter, Ellens informed him that he was free to continue counselling or return if he wished, but
that he believed Kaeb had “made sufficient progress in developing the ability to manage [his]
frustration and stress” that he could “proceed and manage [his] life without further counselling.”
Stephanie Kaeb argued in response that there were no grounds for amending the order
because Darin Kaeb failed to show that there was a sufficient change in the circumstances to
warrant review.
The trial court held a hearing on the motion in September 2013. At the hearing, Ellens
testified that he counselled Darin Kaeb during the period of his court ordered group counselling
and later during private sessions. He said he sent Kaeb a letter discharging him from counselling
in June 2013. Ellens admitted on cross-examination that he sent the letter at Darin Kaeb’s
request.
Makedonsky also testified concerning his evaluation of Darin Kaeb, which he conducted
over the course of a few days ending in July 2013. Makedonsky listed the various inventories
and tests that he performed and described the purpose for their use. The results showed that he
was cooperating with the testing. Makedonsky agreed that Darin Kaeb had abused alcohol in the
past, but stated that he did not believe that he was an alcoholic and did not believe that he needed
to attend AA meetings; there was, he explained, no “clinical reason for it . . . .”
After the close of proofs, the trial court noted the contentious history of the case and
described some of the problematic behaviors that led to the limitations on Darin Kaeb’s
parenting time. The court expressed concern that Darin Kaeb insisted on deciding for himself
whether he should attend AA meetings and counselling—as could be seen from his effort to
obtain a letter and report demonstrating that there was no clinical need for him to attend either,
which he sought just after the court entered its previous order continuing those conditions. The
court, however, disagreed that the letter and report constituted evidence of a change in
circumstances sufficient to justify the parenting time order: “There is no evidence here that
there’s been any change in circumstances since May 31, and certainly since June 20 when the
current order was entered, and no argument that there’s been any change in circumstances, only
an argument that the Court was incorrect in ordering it—ordering continued counselling and AA
attendance in the first place.” It determined that the motion was without “legal basis” and,
accordingly, frivolous. For that reason, it ordered Darin Kaeb to pay Stephanie Kaeb’s costs and
reasonable attorney fees as a sanction. Notwithstanding this determination, the court stated that
-3-
it would “cancel those two requirements” of its own accord. It did so because Darin Kaeb was
plainly determined not to participate and would not benefit from them.
The trial court entered an order removing the requirement that Darin Kaeb attend AA and
counselling in November 2013. In that same month, the trial court ordered Darin Kaeb to pay
$2,227.50 in costs and attorney fees to Stephanie Kaeb. In December 2013, the trial court
amended the order to require Darin Kaeb to pay $2,090.00 in costs and attorney fees.
Darin Kaeb now appeals in this Court.
II. SANCTIONS FOR A FRIVOLOUS MOTION
A. STANDARDS OF REVIEW
On appeal, Darin Kaeb argues the trial court erred when it determined that his motion to
remove the requirement that he attend AA and counselling was frivolous. He maintains that the
trial court improperly determined that the change of circumstances threshold applied to his
motion and, even if it did, erred when it determined that there was no evidence to support the
motion. This Court reviews de novo whether the trial court properly interpreted and applied the
relevant statutes and court rules to the facts. Brecht v Hendry, 297 Mich App 732, 736; 825
NW2d 110 (2012). This Court, however, reviews for clear error the trial court’s factual findings
underlying its application of a court rule. Johnson Family Ltd Partnership v White Pine
Wireless, LLC, 281 Mich App 364, 387; 761 NW2d 353 (2008). To the extent that a trial court
has discretion to impose a particular sanction, this Court reviews the trial court’s decision for an
abuse of discretion. Smith v Khouri, 481 Mich 519, 526; 751 NW2d 472 (2008).
B. THE LAW
In this case, the trial court found that Darin Kaeb’s motion to remove the requirements
that he attend AA and counselling was frivolous because he made the motion without a legal
basis for doing so—specifically, because he failed to show any change in circumstances to
support the motion. The trial court did not cite the authority on which it relied, but it is evident
that the trial court’s determination did not involve a claim or defense in a civil action. See MCR
2.114(F); MCL 600.2591(1) (providing for sanctions related to the prosecution or defense of a
civil action); MCR 2.625(A)(2). Accordingly, it appears that the trial court ordered sanctions
under MCR 2.114(E).
1. MCR 2.114(E)
Whenever an attorney or party signs a motion, that person’s signature constitutes
“certification” that he or she has “read the document” and, “to the best of his or her knowledge,
information, and belief formed after reasonable inquiry, the document is well grounded in fact
and is warranted by existing law or a good-faith argument for the extension, modification, or
reversal of existing law” and that the motion was not made for “any improper purpose, such as to
harass or to cause unnecessary delay or needless increase in the cost of litigation.” MCR
2.114(D)(1) to (3). If a party brings a motion that has been signed in violation of MCR
2.114(D), the trial court must “impose upon the person who signed it, a represented party, or
both, an appropriate sanction . . . .” MCR 2.114(E). The trial court may not assess punitive
-4-
damages, but may order the person who signed it or a represented party to pay “the other party or
parties the amount of reasonable expenses incurred because of the filing . . . .” MCR 2.114(E).
Because MCR 2.114(E) only requires the trial court to impose an appropriate sanction, which
may include an order to pay reasonable attorney fees, the trial court has the discretion to tailor its
sanction to the circumstances. See FMB-First Michigan Bank v Bailey, 232 Mich App 711, 726-
727; 591 NW2d 676 (1998).
On appeal, Stephanie Kaeb argues that the record evidence showed that Darin Kaeb
brought the motion at issue for an improper purpose. The evidence that he filed “repetitive and
baseless” motions leading up to the motion to modify the parenting time order, she maintains, is
evidence from which the trial court “could conclude” that Darin Kaeb filed the motion to harass
or cause unnecessary delay or needlessly increase the costs of litigation in violation of MCR
2.114(D)(3). The trial court did not, however, find that Darin Kaeb’s motion was frivolous
because he brought it for an improper purpose. Rather, it found that his motion was frivolous
because there was “no evidence here that there’s been any change in circumstances” since the
entry of the last orders and, therefore, the motion was “without a legal basis”. This finding
implicates MCR 2.114(D)(2) rather than MCR 2.114(D)(3). Therefore, we shall limit our review
accordingly.1
In order to assess whether Darin Kaeb’s motion was “well grounded in fact” and
“warranted by existing law” under MCR 2.114(D)(2), we must first address whether and how
MCL 722.27(1) applies to the motion involved here.
2. PROPER CAUSE AND CHANGE OF CIRCUMSTANCES
Once a “custody dispute” comes before the trial court, it may take various actions “for the
best interests of the child.” MCL 722.27(1). The trial court may award custody to “1 or more of
the parties involved,” “provide for payment of support for the child,” and may provide for
“reasonable parenting time of the child by the parties involved . . . by general or specific terms
and conditions.” MCL 722.27(1)(a) and (b). A trial court may also modify or amend “its
previous judgments or orders” but only for “proper cause shown or because of change of
circumstances.” MCL 722.27(1)(c). The trial court may not modify or amend a previous
judgment or order or issue a new order “so as to change the established custodial environment of
a child unless there is presented clear and convincing evidence that it is in the best interest of the
child.” Id.
The Legislature limited a trial court’s ability to modify or amend its orders in a custody
case in order to erect a barrier to the removal of children from established custodial
environments and to minimize disruptive changes to custody arrangements. See Vodvarka v
Grasmeyer, 259 Mich App 499, 509; 675 NW2d 847 (2003). Because the limitations were
intended to serve as obstacles to revisiting judgments and orders, in the context of an order
affecting custody, the Court in Vodvarka determined that proper cause must be something more
1
We express no opinion as to whether the proffered evidence would be sufficient to support such
a finding.
-5-
than “any appropriate ground for legal action”; it must be understood to mean “one or more
appropriate grounds that have or could have a significant effect on the child’s life to the extent
that a reevaluation of the child’s custodial situation should be undertaken.” Id. at 511 (quotation
marks omitted). Consistent with the obligation to avoid changes that might disrupt the child’s
custodial environment, the Court in Vodvarka similarly held that a change in circumstances
cannot refer to a child’s normal life changes; rather, a change in circumstance means that, “since
the entry of the last custody order, the conditions surrounding custody of the child, which have or
could have a significant effect on the child’s well-being, have materially changed.” Id. at 513.
Since the decision in Vodvarka, this Court has recognized that the definitions applied by
that court to “proper cause” and “change of circumstances” should not be applied to orders
amending or modifying parenting time. Shade v Wright, 291 Mich App 17, 28; 805 NW2d 1
(2010). Vodvarka should not be so extended, the Court in Shade explained, because a change in
parenting time did not implicate the same concerns as a change in custody:
The Vodvarka definitions of “proper cause” and “change of
circumstances” are inapplicable to this case, in part, because the rationale for
imposing more stringent constructions on the terms “proper cause” and “change
of circumstances” with respect to custody determinations is far less applicable
with respect to parenting time determinations. With respect to child custody
disputes, “[t]he goal of MCL 722.27 is to minimize unwarranted and disruptive
changes of custody orders, except under the most compelling circumstances.”
Corporan v Henton, 282 Mich App 599, 603, 766 NW2d 903 (2009). “Providing
a stable environment for children that is free of unwarranted custody changes . . .
is a paramount purpose of the Child Custody Act . . . .” Vodvarka, 259 Mich App
at 511. Therefore, in the context of a child custody dispute, the purpose of the
proper cause or change of circumstances requirement is “to ‘erect a barrier against
removal of a child from an established custodial environment and to minimize
unwarranted and disruptive changes of custody orders.’ ” Id. at 509, quoting Heid
v AAASulewski (After Remand), 209 Mich App 587, 593-594, 532 NW2d 205
(1995).
Such concerns do not exist, however, when a modification of parenting
time does not alter the established custodial environment because determinations
regarding child custody and parenting time serve different purposes. Whereas the
primary concern in child custody determinations is the stability of the child’s
environment and avoidance of unwarranted and disruptive custody changes, the
focus of parenting time is to foster a strong relationship between the child and the
child’s parents. See MCL 722.27a. [Shade, 291 Mich App at 28-29.]
The Court in Shade declined to precisely define what proper cause or change of
circumstances would be sufficient to warrant a change in parenting time, but nevertheless
determined that the types of normal life-changes experienced by the child in its case were
sufficient to warrant modification of the parenting time, even though those changes would be
insufficient to establish grounds for a change in custody under the definitions applied in
Vodvarka. Id. at 31.
-6-
The Legislature authorized trial courts in custody disputes to provide for reasonable
parenting time “for the best interests of the child.” MCL 722.27(1); see also MCL 722.27a(1)
(“Parenting time shall be granted in accordance with the best interests of the child.”). The court
may provide for parenting time through “general or specific terms” and may subject the
parenting time to “conditions” when it is in the child’s best interests. MCL 722.27(1)(b); see
also MCL 722.27a(8) (stating that a parenting time order may contain any reasonable terms or
conditions). Consequently, the trial court had the authority to order Darin Kaeb to attend AA
meetings and participate in counselling as conditions on his exercise of parenting time, if the
court determined that those restrictions were in the children’s best interests.
After complying with the trial court’s requirements for some time, Darin Kaeb filed a
motion asking the trial court to remove the conditions that it had imposed on his parenting time.
See MCL 722.27(1)(b).2 As such, before the trial court could grant his request, he had to
demonstrate that there was “proper cause” or a “change of circumstances” that warranted the
requested relief. MCL 722.27(1)(c). But, as the Court in Shade aptly noted, what constitutes
proper cause or a change of circumstances under MCL 722.27(1)(c) will vary depending on the
nature of the requested amendment or modification. If the request involves a change that alters
an established custodial environment, then the more stringent framework from Vodvarka will
apply. Shade, 291 Mich App at 27. If, however, the request involves a change to the duration or
frequency of parenting time, the less stringent standard discussed in Shade will apply. See id. at
29-31 (discussing the need for flexibility in parenting time schedules because the child’s needs
will change with age and with the level of the child’s involvement in activities). Here, the
requested modification did not involve either a change in custody or a change in the duration or
frequency of parenting time—it involved a request to remove a condition on the exercise of
parenting time. Consequently, neither Shade nor Vodvarka is directly on point.
Because the imposition, revocation, or modification of a condition on the exercise of
parenting time will generally not affect an established custodial environment or alter the
frequency or duration of parenting time,3 we are persuaded that a lesser, more flexible,
understanding of “proper cause” or “change in circumstances” should apply to a request to
modify or amend a condition on parenting time. As in Shade, it is evident that even normal
changes to the lives of the parties affected by a parenting time order may so alter the
circumstances attending the initial imposition of a condition that a trial court would be justified
in revisiting the propriety of the condition. Shade, 291 Mich App at 29-31. A condition that was
in the child’s best interests when the child was in elementary school might not be in the child’s
best interests after he or she reaches high school. Even ordinary changes in the parties’ behavior,
2
Because the trial court imposed the requirements at issue as a term or condition of Darin
Kaeb’s parenting time, we need not determine whether MCL 722.27(1)(c) applies to every order
involving custody, child support, or parenting time even if the requested change would not alter
custody, child support, parenting time, or a condition on parenting time.
3
We do not, however, foreclose the possibility that the imposition, revocation, or modification of
a condition on parenting time might be so significant that it amounts to a change in custody or
parenting time.
-7-
status, or living conditions might justify a trial court in finding that a previously imposed
condition is no longer in the child’s best interests. Similarly, we conclude that “proper cause”
should be construed according to its ordinary understanding when applied to a request to change
a condition on parenting time; that is, a party establishes proper cause to revisit the condition if
he or she demonstrates that there is an appropriate ground for taking legal action. See Vodvarka,
259 Mich App at 510-511 (recognizing that “proper cause” ordinarily means any appropriate
ground for taking legal action, but declining to give the phrase its ordinary meaning when
applied to the context of a request to alter an established custodial environment because that
would not serve the purpose of erecting a barrier to unwarranted changes to custody). Consistent
with a trial court’s authority to adopt, revise, or revoke a condition whenever it is in the best
interests of the child to do so, see MCL 722.27(1); MCL 722.27a(1) and (8), we hold that a party
requesting a change to an existing condition on the exercise of parenting time must demonstrate
proper cause or a change in circumstances that would justify a trial court’s determination that the
condition in its current form no longer serves the child’s best interests. MCL 722.27(1)(c).
C. APPLYING THE LAW
In this case, Darin Kaeb moved to amend the parenting time order at issue by removing
the conditions on his exercise of parenting time. Specifically, he argued that the requirements
that he attend AA meetings and continue to counsel with Ellens were no longer necessary. He
supported his motion with a letter from Ellens and a report by Makedonsky. In his letter, Ellens
opined that Darin Kaeb had demonstrated sufficient progress in his ability to handle his
frustration and stress that he no longer needed to attend regular counselling sessions.
Makedonsky similarly reported that he subjected Darin Kaeb to various tests and determined that
there was no clinical reason to justify Darin Kaeb’s continued participation in AA meetings.
Both Ellens and Makedonsky testified consistent with these submissions at the hearing on the
motion to modify the parenting time order. Nevertheless, the trial court found that Darin Kaeb’s
motion to remove the conditions was frivolous because he did not attempt to show that there had
been a change in circumstances since the inclusion of the conditions in the last order, as required
under MCL 722.27(1)(c).
On this record, we conclude the trial court clearly erred when it found that Darin Kaeb’s
motion was submitted in violation of MCR 2.114(D)(2). Even assuming that Ellens’ letter and
Makedonsky’s report did not establish a change in circumstances since the trial court last
considered whether it was in the children’s best interests to include the conditions on the
parenting time order, those documents were sufficient to establish “proper cause” for the trial
court to reconsider whether the conditions remained in the children’s best interests. MCL
722.27(1)(c); MCL 722.27a(1). Ellens offered his opinion that the counselling sessions were no
longer necessary to address the concerns that initially brought Darin Kaeb to him. Likewise,
Makedonsky offered his expert opinion that there was no clinical reason to require Darin Kaeb to
attend AA meetings. Although the trial court was free to reject the opinions and conclude that it
was in the children’s best interests to continue to impose those conditions, that alone did not
warrant finding that the motion was frivolous. See Kitchen v Kitchen, 465 Mich 654, 663; 641
NW2d 245 (2002) (“[M]erely because [a] court concludes that a legal position asserted by a
party should be rejected does not mean that the party was acting frivolously in advocating its
position.”). A reasonable trial court would be justified in revisiting whether the conditions
remained in the children’s best interests on the basis of these expert opinions. Indeed, although it
-8-
stated that it was not doing so for the reasons proffered by Darin Kaeb in his motion, after the
close of proofs, the trial court found on the whole record that it was appropriate to remove the
conditions at issue. Consequently, it cannot be said that Darin Kaeb’s motion was not “well
grounded in fact” and “warranted by existing law.” MCR 2.114(D)(2).
The trial court clearly erred when it found that Darin Kaeb’s motion was frivolous under
MCR 2.114(D)(2). Johnson Family Ltd Partnership, 281 Mich App at 387. Therefore, it erred
when it ordered him to pay Stephanie Kaeb’s costs and reasonable attorney fees associated with
the motion under MCR 2.114(E).
III. REMAND TO DIFFERENT JUDGE
Darin Kaeb also argues on appeal that this Court should assign this case to a different
judge on remand because it is evident from the record that the judge harbored animosity against
him and would likely be unable to put aside its view of him. We have carefully reviewed the
record and have found no evidence that the trial court harbors a bias against Darin Kaeb or that it
would be unable to put aside previously expressed views or findings. See Bayati v Bayati, 264
Mich App 595, 602-603; 691 NW2d 812 (2004). Accordingly, we decline to assign this case to a
different judge on remand.
IV. CONCLUSION
The trial court clearly erred when it found that Darin Kaeb filed his motion to remove the
conditions on his ability to exercise parenting time in violation of MCR 2.114(D)(2). The record
shows that he properly supported his motion with documentary evidence and that the evidence
established a proper cause for revisiting the conditions. See MCL 722.27(1)(c). Consequently,
the trial court erred when it ordered Darin Kaeb to pay the costs and attorney fees that Stephanie
Kaeb incurred to defend the motion as a sanction under MCR 2.114(E). For this reason, we
reverse the trial court’s decision to order sanctions, vacate the orders requiring Darin Kaeb to pay
costs and fees to Stephanie Kaeb, and remand for further proceedings.
Reversed, vacated, and remanded for further proceedings consistent with this opinion.
We do not retain jurisdiction.
/s/ Michael J. Kelly
/s/ Joel P. Hoekstra
-9-
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IN THE COURT OF CRIMINAL APPEALS
OF TEXAS
WR-50,361-03
EX PARTE CHARLES ANTHONY NEALY
ON APPLICATION FOR WRIT OF HABEAS CORPUS
IN CAUSE NO. F97-52818-H FROM THE
CRIMINAL DISTRICT COURT NO. 1 OF DALLAS COUNTY
Per Curiam.
ORDER
This is a subsequent application for writ of habeas corpus filed pursuant to Texas
Code of Criminal Procedure, Article 11.071, Section 5. We remanded to the convicting court
to resolve applicant's claim that the prosecutor suborned perjured testimony.
Applicant was convicted of capital murder on September 2, 1998. After review this
Court affirmed the conviction and sentence of death. Nealy v. State, No. 73,267
(Tex.Crim.App. September 13, 2000). On July 7, 2000, applicant filed his initial application
for writ of habeas corpus pursuant to Article 11.071. We denied relief. Ex parte Nealy, No.
WR-50,361-01 (Tex.Crim.App. October 24, 2001). Applicant's date for execution was set
for November 16, 2006. On November 9, 2006, he filed this subsequent application alleging
he was actually innocent based on a new recantation by his cousin who had testified at trial
and that the prosecutor had suborned perjured testimony. We determined that the claim of
prosecutorial misconduct had met the requirements of Article 11.071, Section 5, for
consideration of subsequent claims. We dismissed his claim of actual innocence and
remanded the claim of prosecutorial misconduct to the convicting court for resolution. The
convicting court took evidence, received proposed findings of fact from the parties, and made
findings of fact. The case has been returned to this Court for review.
We have reviewed the record and hold that the findings of the convicting court are
supported by the record and we adopt them as our own. The convicting court found that
"Memphis' allegations of prosecutorial misconduct and false trial testimony are untrue and
were fabricated to affect a stay of execution in this case." Applicant also tried to raise a
claim which was not before the convicting court, that Reginald Mitchell had an undisclosed
deal with prosecutors. To the extent that claim is before this Court it is dismissed as an abuse
of the writ, having been adversely decided against applicant in his initial application.
Applicant and his family attempted to pressure Memphis Nealy, applicant's cousin,
to recant his trial identification testimony. This plan was discovered by the Dallas County
District Attorney's office and they made contact with Memphis Nealy. Memphis, at first,
asserted that he had testified truthfully at trial but a few days later, on the record before the
convicting court, he stated that a prosecutor had coerced him into testifying and that he had
testified to what he had been told by the prosecutor. On remand the convicting court
determined that Memphis had attempted to recant but had not changed his testimony in any
material way from the testimony he gave to the jury on direct and cross examination. The
court also found Memphis' testimony to be "not worthy of belief."
Applicant's subsequent application for writ of habeas corpus is denied, the stay
previously entered is terminated.
IT IS SO ORDERED THIS THE 7TH DAY OF FEBRUARY, 2007.
Do Not Publish
|
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313 F.Supp. 710 (1970)
UNITED STATES of America
v.
Leon DAVIS.
Crim. No. 12626.
United States District Court, D. Connecticut.
June 1, 1970.
Richard P. Crane, Jr., Asst. U. S. Atty., New Haven, Conn., for the United States.
Howard A. Jacobs, and M. Mitchell Morse, of Jacobs, Jacobs, Grudberg & Clifford, New Haven, Conn., for defendant.
TIMBERS, Chief Judge.
Defendant has been charged in a two count indictment, returned in this District on October 28, 1969, with violations of the National Firearms Act[1] in that he received and possessed a firearm not registered to him, in violation of 26 U.S.C. § 5861(d) (Supp. IV, 1965-68), and he received and possessed a firearm not identified by a serial number, in violation of 26 U.S.C. § 5861(i) (Supp. IV, 1965-68).
*711 Defendant moves to dismiss the indictment on the grounds (1) that the registration requirements of the Act are unconstitutional in that they violate his privilege against self-incrimination, and (2) that the registration and identification requirements of the Act are not applicable because he did not possess a firearm, defined as a "destructive device", within the meaning of the Act.
For the reasons stated below, the Court denies defendant's motion to dismiss on both grounds.
FACTS
For the purpose of the instant motion, the following facts, as they appear in the papers before the Court, are taken as true.
Defendant was arrested on October 21, 1969, at 9 P.M., in a common hallway on the premises at 150 Newhall Street, New Haven. At the time of arrest, defendant had in his possession four empty bottles, a number of cloth strips and a two gallon can of gasoline.
After being advised of his rights and after signing a waiver, he gave a statement to members of the Detective Division of the New Haven Police Department admitting that it was his intention, with others, to use the materials in his possession at the time of arrest to make "fire bombs" and "Molotov cocktails" in order "to bomb Olin Mathieson, Inc. and some warehouses."
CLAIM THAT REGISTRATION REQUIREMENTS OF ACT ARE UNCONSTITUTIONAL
Defendant moves to dismiss on the ground that the registration requirements of the Act violate his privilege against self-incrimination under the Fifth and Fourteenth Amendments. He in effect asserts that, to avoid prosecution under Section 5861(d) for receipt or possession of a firearm not registered to him and prosecution under Section 5861(i) for receipt or possession of a firearm not identified by a serial number, he must comply with the registration provisions of the Act which require him to divulge incriminating information.
In support of his position, defendant relies upon Haynes v. United States, 390 U.S. 85 (1968). At issue there was the validity of Section 5851 of the Act (prior to the 1968 amendment[2]) which provided that it was unlawful for any person to receive or possess a firearm which had been unlawfully made or transferred and that it was unlawful for any person to possess a firearm not registered as required by Section 5841. Defendant in Haynes was charged with possession of a firearm not registered under Section 5841. The Court held that the offense under Section 5851 of possession of a firearm not registered as required by Section 5841 did not differ in any significant respect from the offense under Section 5841 of failure to register possession of a firearm. The Court held that registering would have compelled defendant to provide incriminating information, largely because the registration requirement was aimed principally at those who had obtained possession of firearms without complying with the other requirements of the Act, and who therefore were threatened with immediate criminal prosecution under certain provisions of the Act. The Court concluded that ". . . a proper claim of the constitutional privilege against self-incrimination provides a full defense to prosecutions either for failure to register a firearm . . . or for possession of an unregistered firearm. . . ." 390 U.S. at 100.
In response to the Court's decision in Haynes, Congress amended the Act in an attempt to overcome the infirmities pointed out in that decision.[3] Defendant in the instant case has been charged with violations of provisions of the amended Act.
*712 Haynes suggests that there are two inquiries which must be made with respect to the constitutionality of Sections 5861(d) and 5861(i). The first is whether punishment of a person under Section 5861(d) for receipt or possession of a firearm not registered to him constitutes punishment for his failure to register the firearm and whether punishment of a person under Section 5861(i) for receipt and possession of a firearm not identified by a serial number in effect constitutes punishment for his failure to identify the firearm. If the answer to the first inquiry is in the affirmative, the next inquiry is whether compliance with the registration provisions of Section 5841 and the identification procedures of Section 5842 involves a substantial risk of self-incrimination.
With respect to the first inquiry, Sections 5841 and 5842 dealing with the registration and identification of firearms impose duties on the transferor of a firearm rather than the transferee. Since Section 5861(d) and Section 5861 (i) impose penalties on the transferee rather than the transferor (this was done deliberately by Congress to avoid the problem raised by Haynes), it follows that punishment for receipt or possession of a firearm not registered to the transferee or not identified with a serial number, under Sections 5861(d) and 5861 (i), respectively, does not constitute punishment for failure to register or identify a firearm. There are two decisions which lend support to this position. United States v. Schofer, 69 CR 362 (E.D.N.Y., filed December 15, 1969); United States v. Britton, Crim.No. 69-H-300 (S.D.Tex., filed November 6, 1969).
With respect to the second inquiry, compliance with the amended registration requirements does not involve a substantial risk of self-incrimination in view of the restriction upon the use of registration information imposed by new Section 5848(a):
"No information or evidence obtained from an application, registration, or records required to be submitted or retained by a natural person in order to comply with any provision of this chapter or regulations issued thereunder, shall, except as provided in subsection (b) of this section, be used, directly or indirectly, as evidence against that person in a criminal proceeding with respect to a violation of law occurring prior to or concurrently with the filing of the application or registration, or the compiling of the records containing the information or evidence."
As defendant correctly points out, Section 5848(a) does not impose a restriction upon the utilization of registration information as evidence in connection with prospective violations; and Marchetti v. United States, 390 U.S. 39, 53 (1968), makes it clear that the self-incrimination privilege is applicable to prospective acts. Marchetti, however, holds that the applicability of the privilege depends upon whether "the claimant is confronted by substantial and `real,' and not merely trifling or imaginary, hazards of incrimination." 390 U.S. at 53.
The hazards here involved with respect to the amended registration requirements are not substantial and real. In this regard, it should be noted that the registration challenged in Haynes was directed principally at those persons who had obtained possession of a firearm without complying with the other requirements of the Act and who therefore were threatened with immediate criminal prosecution. The registration and identification procedures at issue in the instant case, which are much broader, are not so directed. Thus, in Haynes the act of registering would have constituted a direct admission that an unregistered firearm was acquired in violation of the Act. This is not so under the amended registration and identification procedures of the Act.
As the First Circuit stated (in the context of a self-incrimination claim under Sections 5851 and 5814) in Varitimos *713 v. United States, 404 F.2d 1030, 1033 (1 Cir. 1968), cert. denied, 395 U.S. 976 (1969):
"That one has properly started the legal process of qualifying to receive a firearm is no indication that he will subsequently depart from that process."
Moreover, in Varitimos the claim was made that:
"[E]ven though a firearm is acquired lawfully, its acquisition focuses suspicion on the transferee because of the legislative purpose of the Act. Thus, should a transferee subsequently engage in illegal activity involving a firearm, the order form would provide a link in the chain leading to conviction." 404 F.2d at 1034.
The First Circuit rejected this argument:
"[T]he protection of the Fifth Amendment privilege is inapplicable to prospective acts involving only a speculative and insubstantial hazard of incrimination. . . .
In Marchetti the fact that 49 states prohibited the very activity disclosed by payment of the tax constituted a real hazard of incrimination. But here there is no prohibition, either state or federal, against possession of a firearm lawfully acquired under the National Firearms Act. [Footnote omitted.] Necessarily, a question of incrimination can arise only if a wholly different criminal act is performed at some point in the future. To accept appellant's argument would be tantamount to saying that a pharmacist should not be required to acknowledge receipt of certain drugs since he may secretly intend to distribute them without a prescription, and would therefore be supplying evidence of receipt which would incriminate him." 404 F.2d at 1034.
The Court of Appeals for the Second Circuit, in its recent decision (in the context of a self-incrimination claim under Section 5821 of the Act) in Desimone v. United States, 423 F.2d 583 (2 Cir. 1970), expressly agreed with the holding of the First Circuit referred to above in Varitimos:
"[W]e agree with the First Circuit that the possibility that appellant or one of his customers may decide to commit a different criminal act in the future is not enough to support the fifth amendment claim."
The Court denies defendant's motion to dismiss the indictment on the ground that the registration requirements of the Act violate his privilege against self-incrimination.[4]
CLAIM THAT DEFENDANT DID NOT POSSESS A "DESTRUCTIVE DEVICE" WITHIN MEANING OF ACT
As a second ground of his motion to dismiss the indictment, defendant argues that the requirements of registering and identifying a firearm with a serial number are not applicable here because he did not possess a firearm as defined by the Act. He claims, therefore, that he cannot be charged with receipt or possession of a firearm not registered to him in violation of Section 5861(d) or receipt or possession of a firearm not identified by a serial number in violation of Section 5861(i).
The "firearm" which defendant is charged with having received or possessed *714 is described in the indictment as "explosive material, more specifically, cloth, gasoline and empty bottles used in the manufacture of certain types of fire bombs". The government claims, based on defendant's statement immediately after his arrest, that he intended to construct a Molotov cocktail from these materials.
Section 5845(a)(8) provides that the term "firearm" as used in the Act includes a "destructive device". The government is proceeding on the theory that the materials defendant possessed at the time of his arrest constituted a "destructive device" as defined by Section 5845 (f):
"The term `destructive device' means (1) any explosive, incendiary, or poison gas (A) bomb, (B) grenade, . .
or (F) similar device; . . . and (3) any combination of parts either designed or intended for use in converting any device into a destructive device as defined in subparagraphs (1) . . . and from which a destructive device may be readily assembled. The term `destructive device' shall not include any device which is neither designed nor redesigned for use as a weapon; . . ."
It is the government's contention that the cloth, gasoline and bottles here involved are a "combination of parts either designed or intended for use in converting any device into a destructive device" as that term is used in Section 5845(f).
Defendant argues that the materials allegedly possessed by him cannot be said to constitute a "combination of parts", since the common dictionary meaning of combination is a union or aggregation, and no such union or aggregation of parts is claimed to have existed in the instant case. He asserts that what he is alleged to have possessed was nothing more than a "collection" of parts. Further, he asserts that, if the word combination is so broadly construed as to include the collection of materials he allegedly possessed, the reach of the Act would be overbroad because almost every household has within it a container of flammable material, cloth and empty bottles.
It is true that the common meaning of the term combination is union. The context in which the term "combination" is used in the Act, however, clearly indicates that what Congress meant by the term was an association of the components of a destructive device, at the same time and place, capable of being converted into a destructive devicenot an actual union of parts in an assembled device. Defendant's argument that, under such a construction of the term combination, the contents of almost any household would fall within the purview of the Act is without merit, since Section 5845(f) specifically provides that only a "combination of parts either designed or intended for use in converting any device into a destructive device" constitutes a destructive device.
In short, defendant's argument rests on a narrow construction of the terms of the Act which ignores the context in which they are used.
The Court denies defendant's motion to dismiss the indictment on the ground that the registration and identification requirements of the Act are not applicable because he did not possess a firearm defined as a "destructive device", within the meaning of the Act. See United States v. Lanchli, 371 F.2d 303, 311-13 (7 Cir. 1966); United States v. Kokin, 365 F.2d 595 (3 Cir.), cert. denied, 385 U.S. 987 (1966).
ORDER
ORDERED that defendant's motion to dismiss the indictment is denied in all respects.
NOTES
[1] 26 U.S.C. §§ 5801-72 (Supp. IV, 1965-68), as amended by the Gun Control Act of 1968, Pub.L. 90-618, 82 Stat. 1234, effective November 1, 1968. See 1968 U.S.Code Cong. & Adm.News, pp. 4410-35.
[2] Supra note 1.
[3] 1968 U.S.Code Cong. & Adm.News, p. 4435.
[4] For other post-Haynes decisions rejecting claims of self-incrimination under other sections of the Act, see United States v. Thompson, 420 F.2d 536, 541-44 (3 Cir. 1970) (Sections 5851 and 5821); United States v. Benner, 417 F.2d 421, 423 (9 Cir. 1969) (Sections 5851 and 5821); Burton v. United States, 414 F.2d 261, 262-63 (5 Cir. 1969) (Sections 5851 and 5821); Lewis v. United States, 408 F.2d 1310 (10 Cir. 1969) (Sections 5851 and 5821); Mower v. United States, 402 F.2d 982, 985 (8 Cir. 1968) (Sections 5851, 5861, 5812(b)); Reed v. United States, 401 F.2d 756, 761-63 (8 Cir. 1968) (Sections 5851 and 5821); United States v. Casson, 288 F.Supp. 86 (D.Del.1968) (Sections 5851, 5821, 5811 and 5814); United States v. Taylor, 286 F.Supp. 683 (E.D.Wis.1968) (Sections 5851 and 5821).
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F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
APR 21 2003
TENTH CIRCUIT
PATRICK FISHER
Clerk
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
No. 02-6137
v. (D.C. No. CR-01-138-C)
(W.D. Okla.)
BILLY MINH LE,
Defendant - Appellant.
ORDER *
Before EBEL, HENRY and HARTZ, Circuit Judges.
Defendant Billy Minh Le pled guilty to conspiracy to distribute a list 1
precursor chemical, pseudoephedrine, which can be used to manufacture
methamphetamine. (Aplt. App. at 24, 48.) As part of his plea agreement,
Defendant waived his right to appeal or to collaterally attack his “guilty plea and
*
After examining appellant’s brief and the appellate record, this panel has
determined unanimously that oral argument would not materially assist the
determination of this appeal. See Fed. R. App. P. 34(a)(2) and 10th Cir. R.
34.1(G). The case is therefore ordered submitted without oral argument. This
order is not binding precedent, except under the doctrines of law of the case, res
judicata, and collateral estoppel. The court generally disfavors the citation of
orders; nevertheless, an order may be cited under the terms and conditions of 10th
Cir. R. 36.3.
any other aspect of his conviction, including but not limited to any rulings on
pretrial suppression motions or any other pretrial dispositions of motions and
issues.” (Plea Agreement at 8.) He also waived the right to appeal his sentence
and the manner in which it was determined, provided that it fell within or below
the applicable Sentencing Guideline range. (Id. at 8-9.) On November 20, 2001,
before accepting his guilty plea, the district court engaged in an extensive Rule 11
colloquy with Defendant to ensure that his plea was knowing and voluntary.
(Change-of-Plea Tr. at 4–18.) Satisfied that it was, the court found Defendant
guilty as charged and set a date for sentencing. (Id. at 18.)
On April 9, 2002, Defendant filed a motion to withdraw his guilty plea.
(Aplt. App. at 21.) In an Order filed April 16, the court denied his motion. (Id.
at 47.) Defendant was sentenced to 168 months in prison, the low end of the
applicable Guideline range, as well as three years of supervised release. (Aplt.
App. at 49-50.) He now appeals the denial of his motion to withdraw his plea and
argues that he did not enter it knowingly and voluntarily. (Aplt. Br. at 1.)
“A defendant’s knowing and voluntary waiver of the statutory right to
appeal his sentence is generally enforceable.” United States v. Elliott, 264 F.3d
1171, 1173 (10th Cir. 2001) (internal quotation marks and citation omitted). “If
Defendant’s waiver is effective, we would certainly overreach our jurisdiction to
entertain this appeal when the plea agreement deprived Defendant of the right to
-2-
appeal. We do, however, have jurisdiction to determine our jurisdiction.” United
States v. Rubio, 231 F.3d 709, 712 (10th Cir. 2000) (citations omitted).
Having reviewed the transcript of the district court’s thorough Rule 11
colloquy with Defendant, we are left with no doubt that Defendant entered his
guilty plea knowingly and voluntarily. We will hold Defendant to the terms of his
plea agreement, which waived his right to appeal or collaterally attack his plea,
conviction or sentence. Accordingly, we DISMISS Defendant’s appeal for lack of
jurisdiction.
ENTERED FOR THE COURT
David M. Ebel
Circuit Judge
-3-
|
{
"pile_set_name": "FreeLaw"
}
|
United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 08-2001
___________
Reggie White; Michael Buck, Hardy *
Hardy Nickerson; Vann McElroy; *
Dave Duerson, *
*
Appellees, *
*
v. *
*
National Football League; The Five *
Smiths, Inc.; Buffalo Bills, Inc.; * Appeal from the United States
Chicago Bears Football Club, Inc.; * District Court for the
Cincinnati Bengals, Inc.; Cleveland * District of Minnesota.
Browns, Inc.; The Dallas Cowboys *
Football Club, Ltd.; PDB Sports, Ltd.; *
The Detroit Lions, Inc.; The Green Bay *
Packers, Inc.; Houston Oilers, Inc.; *
Indianapolis Colts, Inc.; Kansas City *
Chiefs Football Club, Inc.; The Los *
Angeles Raiders, Ltd.; Los Angeles *
Rams Football Company, Inc.; Miami *
Dolphins, Ltd.; Minnesota Vikings *
Football Club, Inc.; KMS Patriots *
Limited Partnership; The New Orleans *
Saints Limited Partnership; New York *
Football Giants, Inc.; New York Jets *
Football Club, Inc.; The Philadelphia *
Eagles Football Club, Inc.; B & B *
Holdings, Inc.; Pittsburgh Steelers *
Sports, Inc.; The Chargers Football *
Company; The San Francisco Forty- *
Niners, Ltd.; The Seattle Seahawks Inc.; *
Tampa Bay Area NFL Football Club, *
Inc.; Pro-Football, Inc., *
*
Appellants. *
___________
Submitted: March 12, 2009
Filed: November 10, 2009
___________
Before WOLLMAN, RILEY, and COLLOTON, Circuit Judges.
___________
WOLLMAN, Circuit Judge.
Since the entry of a 1993 consent decree, the district court1 has overseen the
enforcement of a settlement in an antitrust class action brought by the above-named
class members against the National Football League and its member clubs (NFL or
League). Throughout that time, the district court has resolved numerous disputes over
the terms of the Stipulation and Settlement Agreement (settlement agreement) and
parallel Collective Bargaining Agreement (CBA) that govern player employment in
the NFL.
In August 2007, Michael Vick, then quarterback for the Atlanta Falcons, pled
guilty to federal dog fighting charges. The NFL Commissioner thereafter suspended
Vick indefinitely without pay, and the League initiated a grievance procedure seeking
a declaration that the Falcons could recover certain bonus money that had been paid
to Vick with the expectation that he would play football through 2014. Class counsel
and the National Football League Players Association (Association) challenged the
recovery as violative of anti-forfeiture provisions contained in the settlement
agreement and CBA. Special Master Stephen Burbank issued an opinion that the
1
The Honorable David S. Doty, United States District Judge for the District of
Minnesota.
-2-
Falcons were entitled to recover the amounts sought. The decision was appealed to
the district court, which entered an order (Vick Order) stating that the bonus payments
were already earned and thus not subject to forfeiture. The League then filed a Rule
60(b) motion to vacate the district court’s judgment, arguing that (1) the district
court’s oversight of the consent decree should be terminated because of intervening
changes in the law and factual circumstances and (2) the district judge should remove
himself from the case because of the reasonable perception that he was biased. The
district court denied the motion. The League now appeals from the Vick Order and
the denial of its Rule 60(b) motion to vacate the judgment. We affirm.
I. Factual Background
A. The White Settlement Agreement
The 1993 settlement represented the resolution to a decades-old dispute
between football players and team owners. Although professional football generates
significant revenue, players and owners often have differing ideas about how the
money should be spent. Owners desire cost-cutting mechanisms such as salary caps
and player drafts; players want free agency and competition among clubs for the best
talent. For many years, team owners worked together to minimize labor costs,
instituting, for example, the Rozelle Rule—a measure that virtually eliminated free
agency by requiring any team acquiring a free agent to compensate the player’s
original team. This court’s decision in Mackey v. National Football League, 543 F.2d
606 (8th Cir. 1976), ended that practice, holding that the Rozelle Rule violated
antitrust law as an impermissible restraint on competition for player services. The fact
that the Rozelle Rule was unilaterally implemented by team owners was critical to our
holding, because we recognized that a similar collectively bargained provision would
have been shielded from antitrust liability by the nonstatutory labor exemption to the
antitrust laws. See id. at 615-16.
-3-
The players’ initial antitrust victory was short lived, for following the ruling in
Mackey the owners used their leverage in collective bargaining to reestablish the
status quo, exchanging the Rozelle Rule for similar collectively bargained provisions
that were impervious to antitrust attack. See Powell v. National Football League, 930
F.2d 1293, 1304 (8th Cir. 1989) (holding that the collectively bargained “Right of
First Refusal/Compensation” system was not subject to antitrust liability). The
Association organized strikes in 1982 and 1987, but those efforts failed to win free
agency or other desired changes in League rules. Consequently, in 1989 the
Association chose to decertify as a union and abandon collective bargaining in favor
of renewed antitrust litigation.
After several successful antitrust lawsuits brought by individual players, Reggie
White and four other named plaintiffs filed a lawsuit in the United States District
Court for the District of Minnesota on behalf of
(i) all players who have been, are now, or will be under contract to play
professional football for an NFL club at any time from August 31, 1987,
to the date of final judgment . . . and (ii) all college and other football
players who, as of August 31, 1987, to the date of final judgment . . .
have been, are now, or will be eligible to play football as a rookie for an
NFL team.
The complaint sought antitrust injunctive relief and damages stemming from various
League rules, including the mandatory right of first refusal system, the standard NFL
contract, and the college draft. On April 30, 1993, the district court approved a
consent decree that provided the players with monetary relief and made a variety of
significant changes to League rules. The agreement also allowed for the
recertification of the Association and the resumption of the collective bargaining
relationship between the players and the owners. Additionally, the settlement stated
that the district court would retain jurisdiction over the enforcement of the agreement
-4-
through appointment of a Special Master, who would hear disputes subject to review
by the district court.
Since the original approval of the settlement agreement, it has been amended
five times, most recently in 2006. Each time, the enforcement jurisdiction of the
district court has been retained as part of the agreement. A new CBA was also formed
in 1993, with terms mirroring those in the settlement agreement. Thereafter,
whenever the parties have agreed to change a provision in the CBA, a conforming
change has also been made to the settlement agreement. In the event of a conflict, the
provisions in the settlement agreement trump the CBA.
B. Michael Vick’s Contract
One of the changes to the settlement agreement in 2006 was the addition of an
anti-forfeiture provision, the effect of which was to limit the instances in which
players would have to return money to their teams. Guaranteed income is coveted by
football players, due to the high risk of injury and the fact that the standard NFL
contract allows a team to cut a player who does not meet expectations. As a result,
players commonly negotiate bonus payments in addition to their yearly salary. The
bonuses may be guaranteed for skill or injury—thus allowing a player to keep the
money in certain instances in which the remainder of his contract (i.e., yearly salary)
is terminated.2 Although some of the terms of individual player contracts may vary,
a contract cannot provide for forfeiture that is prohibited under the terms of the
settlement agreement and CBA.
In 2004, Vick negotiated a contract with the Atlanta Falcons to play football for
the team through 2014. In addition to a yearly salary, the contract included two roster
2
A skill guarantee ensures that a player can retain the bonus regardless of his
subsequent performance level; an injury guarantee ensures that a player can retain the
bonus even if he is subsequently injured and unable to play.
-5-
bonuses—one for 2005 ($22.5 million) and one for 2006 ($7 million).3 The contract
stated that the bonus amounts would be additional consideration for the execution of
the long-term player contract, provided that (1) Vick adhered to all contract provisions
and (2) Vick was on the Falcons’ eighty-man roster on the fifth day of the 2005 and
2006 league years. The contract also gave the Falcons the discretion to guarantee the
bonuses for skill and stated that, if so guaranteed, Vick had an obligation to execute
a new contract setting forth the terms of the skill guarantee. The Falcons subsequently
exercised their right to guarantee the bonuses for skill. Vick met the roster provisions
in the contract and was accordingly paid $29.5 million.
As set forth above, after playing just two seasons under his contract, Vick pled
guilty to federal dog fighting charges and was suspended by the League
Commissioner. The Falcons sought to recover $16.22 million from Vick, a prorated
portion of the bonuses based on the remaining years in his contract that he was unable
to perform. On behalf of the Falcons, the League filed a grievance with the Special
Master seeking a declaration that recovering the bonus money would not violate the
anti-forfeiture provisions in the CBA and settlement agreement. The Special Master
determined that the Falcons could recover bonus payments properly allocable to years
Vick had not performed. On appeal, the district court disagreed, concluding instead
that Vick’s failure to perform was irrelevant because Vick had fully earned the bonus
payments when he met the roster provisions in his contract.
3
A roster bonus is additional compensation contingent on a player appearing on
his team’s roster as of a specified date. Generally speaking, the existence of the
condition precedent distinguishes a roster bonus from a signing bonus, which is paid
upon the signing of a contract.
-6-
C. The League’s Rule 60(b) Motion
Following the district court’s ruling on the forfeiture issue, the League filed a
Rule 60(b) motion to vacate the judgment on the ground that (1) the Supreme Court’s
decision in Brown v. Pro Football, Inc., 518 U.S. 231 (1996), as well as changes in
factual circumstances, warranted a modification of the consent decree to eliminate the
district court’s oversight; and (2) the district judge’s statements in two sports-related
news articles and his practice of having ex parte meetings with counsel for the
Association created a perception that he was biased against the League.
On the issue of bias, the district judge stated that his comments in the sports
articles did not relate to the merits of the Vick proceeding and would not lead a
reasonable person to question his impartiality. The district judge acknowledged
having had ex parte meetings with counsel for the Association, but stated that a
reasonably informed person would know that the merits of a proceeding were never
discussed, that such meetings often preceded decisions in the League’s favor, and that
the practice is the result of a long history—stemming back to the 1993 settlement—in
which both parties were invited to meet in the judge’s chambers for coffee and the
exchange of social pleasantries. Concluding that the League had not established a
reasonable perception of bias, nor any changed circumstances warranting modification
of the consent decree, the district court denied the Rule 60(b) motion.
II. Discussion
Because the League’s Rule 60(b) motion implicates the broader issues of the
district court’s continuing supervision of the settlement agreement and the propriety
of the district judge’s participation in the case, we address those arguments before
turning to the narrower forfeiture issue.
-7-
A. Modification of the Consent Decree
We review for abuse of discretion a district court’s denial of a Rule 60(b)
motion to amend the judgment. Keith v. Mullins, 162 F.3d 539, 541 (8th Cir. 1998).
Federal Rule of Civil Procedure 60(b)(5) provides that “[o]n motion and just terms,
the court may relieve a party . . . from a final judgment . . . [if] applying it
prospectively is no longer equitable.” A district court thus retains authority to modify
an injunction entered pursuant to a consent decree “when changed circumstances have
caused it to be unjust.” Keith, 162 F.3d at 540-41. A consent decree must also be
modified if “one or more of the obligations placed upon the parties has become
impermissible under federal law.” Rufo v. Inmates of Suffolk County Jail, 502 U.S.
367, 388 (1992); see also Gavin v. Branstad, 122 F.3d 1081, 1088 (8th Cir. 1997)
(observing that “a court that takes Rufo seriously” must consider altering a consent
decree if changed circumstances have made compliance substantially more onerous,
changed laws have made legal what the decree was designed to prevent, or if the
agreement was based on a misunderstanding of governing law). “Ordinarily,
however, modification should not be granted where a party relies upon events that
actually were anticipated at the time it entered into a decree.” Rufo, 502 U.S. at 385.4
4
The parties dispute whether the standard announced in Rufo is limited to
institutional reform cases or whether it applies to Rule 60(b)(5) motions in other
contexts. Compare W.L. Gore & Assocs. v. C.R. Bard, Inc., 977 F.2d 558, 562-63
(Fed. Cir. 1992) (differentiating institutional reform cases from consent decrees
settling commercial disputes), with In re Hendrix, 986 F.2d 195, 198 (7th Cir. 1993)
(observing that Rufo’s flexible standard is not limited to institutional reform cases),
and Alexis Lichine & Cie. v. Sacha A. Lichine Estate Selections, Ltd., 45 F.3d 582,
586 (1st Cir. 1995) (adopting an intermediate position wherein the court considers the
identity of the parties in its Rule 60(b)(5) analysis). Although it is unnecessary to
resolve this question in the present appeal, we note that the Supreme Court’s recent
decision in Horne v. Flores, 129 S. Ct. 2579, 2593 (2009), highlights several concerns
in institutional reform cases that may not be present in other contexts.
-8-
The League argues that, post-Brown, the district court’s oversight of the
settlement agreement is no longer permissible because it amounts to unlawful
meddling in the collective bargaining process. We disagree. The issue in Brown was
whether the players could bring an antitrust lawsuit against NFL owners after labor
negotiations had reached an impasse and the owners unilaterally implemented the
terms of their last best offer. 518 U.S. at 234. The Court held that the owners could
not be sued because the nonstatutory labor exemption to the antitrust laws protected
their conduct. Id. at 250. Brown addressed antitrust liability, whereas the question
presented here is whether a district court may maintain oversight pursuant to the terms
of an antitrust settlement.
The rationale in Brown does not apply in the present context. In Brown, the
Court gave two primary reasons for shielding owners from antitrust liability: (1) a
concern that such liability would stifle behavior integral to the bargaining process, and
(2) a desire to defer to the congressionally sanctioned balance of power between labor
unions, owners, and the National Labor Relations Board. See id. at 236-37, 241-42.
With regard to the first reason, the Court recognized that the nonstatutory labor
exemption was necessary to avoid placing the owners in an untenable position,
observing that permitting antitrust liability in such situations would “introduce
instability and uncertainty into the collective-bargaining process, for antitrust law
often forbids or discourages the kinds of joint discussions and behavior that the
collective-bargaining process invites or requires.” Id. at 242. In this case, however,
there is no concern that the collective behavior necessary for effective bargaining will
become fodder for an antitrust lawsuit. For the last sixteen years, the League has had
an active collective bargaining relationship with the Association, and there is no
indication that the owners have been restrained by any fear of antitrust liability. The
second reason is similarly inapplicable because the parties’ agreement to the district
court’s involvement mitigates concerns about unsettling the power structure under the
labor laws.
-9-
Moreover, the law in this circuit at the time the parties entered the settlement
agreement was fully consistent with Brown. In 1989, we considered the scope of the
nonstatutory labor exemption and reached a nearly identical conclusion. See Powell,
930 F.2d at 1304. The basic dichotomy between labor law and antitrust, as well as its
application in professional sports, was recognized decades ago. See, e.g., Michael S.
Jacobs & Ralph K. Winter, Jr., Antitrust Principles and Collective Bargaining by
Athletes: Of Superstars in Peonage, 81 Yale L.J. 1 (1971). When the settlement was
approved, both the League and the Association were well aware that the existence of
a collective bargaining relationship would preclude the players’ antitrust lawsuits.
The applicability of the nonstatutory labor exemption was what caused the
Association to decertify after its second failed strike, and it is presumably what led the
League to insist on recertification and resumption of collective bargaining as part of
the settlement. Brown therefore does not constitute a change in the law requiring
modification of the settlement agreement.
The League argues that the recertification of the players union, the resumption
of collective bargaining, and the diminishing number of original class members who
continue to play football constitute circumstances that warrant modification of the
settlement agreement. We do not agree, for the first two cannot be considered
changed circumstances because they occurred contemporaneously with the execution
of the original agreement. At the time the consent decree was entered, the League
sought the ability to terminate the settlement if the players failed to ratify a new CBA.
See White v. NFL, 836 F. Supp. 1458, 1482 (D. Minn. 1993) (finding that the
proposed amendment would have no impact on the class members because a new
collective bargaining agreement had already been reached). A basic goal of the
settlement was the resumption of the parties’ working relationship; collective
bargaining and union recertification were both essential means to that end. Similarly,
the gradual retirement of class members was anticipated in 1993, as it has been each
time the settlement agreement has been amended. When, as here, changed conditions
have been anticipated from the inception of a consent decree, they will not provide a
-10-
basis for modification unless the party seeking relief has satisfied a heavy burden of
showing that “it agreed to the decree in good faith, made a reasonable effort to comply
with the decree, and should be relieved of the undertaking under Rule 60(b).” Rufo,
502 U.S. at 385. The League has made no such showing in this case, and thus the
district court did not abuse its discretion in denying the League’s Rule 60(b) motion
to end the court’s oversight.
B. Recusal
The League also contends that the district judge erred in refusing to recuse
himself because of his comments in the press and ex parte meetings with Association
representatives. We review for abuse of discretion a district court’s denial of a motion
to recuse. Am. Prairie Constr. Co. v. Hoich, 560 F.3d 780, 789 (8th Cir. 2009).
Under 28 U.S.C. § 455(a), a judge is required to recuse himself “in any proceeding in
which his impartiality might reasonably be questioned.” In analyzing whether recusal
is required, we ask “whether the judge’s impartiality might reasonably be questioned
by the average person on the street who knows all the relevant facts of a case.” Moran
v. Clarke, 296 F.3d 638, 648 (8th Cir. 2002) (quotation omitted). Section 455(a)
establishes an objective standard, and the existence of actual bias is irrelevant. Id.
A motion to recuse, however, “is not intended to give litigants a veto power
over sitting judges, or a vehicle for obtaining a judge of their choice.” United States
v. Cooley, 1 F.3d 985, 993 (10th Cir. 1993). We assume the impartiality of a sitting
judge and “the party seeking disqualification bears the substantial burden of proving
otherwise.” United States v. Denton, 434 F.3d 1104, 1111 (8th Cir. 2006). We have
also held that a motion to recuse will be denied if it is not timely made. See Holloway
v. United States, 960 F.2d 1348, 1355 (8th Cir. 1992). “Timeliness requires a party
to raise a claim at the earliest possible moment after obtaining knowledge of facts
demonstrating the basis for such a claim.” Fletcher v. Conoco Pipe Line Co., 323
F.3d 661, 664 (8th Cir. 2003) (quotation omitted).
-11-
The League first takes issue with two newspaper articles, both of which focused
on the district judge’s role in prompting the 1993 antitrust settlement and contributing
to a period of peace and prosperity in professional football. The first article was
published on July 10, 2005, in the Colorado Springs Gazette, and entitled “The
Peacemaker: Sports’ most stable league was forged in Judge David Doty’s
courtroom.” Along with the text, the article featured two large pictures of the district
judge in a black robe, holding a football. The story was largely historical, explaining
how the antitrust lawsuit developed, came before the district judge, and was settled
after the judge convinced League officials to compromise. The article included
statements from top NFL and Association officials, including Harold Henderson, the
NFL’s executive vice president for labor relations. The district judge shared a brief
anecdote about cajoling the League into a settlement, and he is quoted as saying that
the relationship between the top NFL and Association labor officials should be a
model for other sports leagues. Near the end of the article, the district judge is quoted
again in the following passage:
Doty said during one good stretch of negotiations, he said jokingly to the
attorneys for each side they did not need him any longer.
“It was just an off-handed comment,” Doty said. “But a few days later
I received a letter from the owners’ group requesting, based on what I
said, that I remove myself from matters involving the NFL and the
players’ union. I laughed at the letter and wrote them a letter kindly
denying their request. They would have loved for me to be out of the
way. But the letters were good-natured fun.”
The second article was published on January 28, 2008, in the Street & Smith’s
Sports Business Journal, and entitled “NFL’s toughest official wields a gavel, not a
whistle.” It was written to commemorate the twentieth anniversary of the district
judge’s first major ruling in professional football antitrust litigation. The article
recounted much of the same history that appeared in the Gazette story and included
-12-
the district judge’s observation that then-NFL Commissioner Paul Tagliabue was “[a]
damn good lawyer.” The district judge is also quoted in two other passages:
“[NFL Owners] pretend they’re getting beaten around. Well, they did,
initially, but they had a position that was not legally sound.” Through
a league spokesman, Tagliabue declined comment. Said Doty, though,
“I think if you ask Tagliabue, he would say, ‘The whole thing has come
out our way.’ Because, even though they complain about it . . . all
they’ve done is make tons of money.”
***
[The district judge] admits there’s a pinch of ego involved in his
retention of the NFL matters. “I could walk away from this case,” he
said. “But there’s one problem: I know that I know too much. They
know, including the NFL guys, that they don’t have to re-educate me
every time they show up here.”
In assessing the impact of these comments, we believe the average person
would be aware of the fact that the district judge’s comments referred to rulings that
he made many years earlier and related to matters long since resolved. In these
circumstances, we do not believe that the average person would interpret the
comments as reflecting bias. The comments focused almost exclusively on the well-
documented history of the antitrust settlement and did not address the merits of the
Vick proceeding. Viewed in historical context, then, the district judge’s comments
about the League’s desire to shed itself of the district court’s oversight and his
observations regarding the owners’ fiscal success were largely statements of the
obvious. The tone of the comments, though perhaps unduly casual, was not
derogatory or disrespectful—indeed, the district judge praised the NFL leadership and
cited the labor leaders on both sides as examples for other leagues. The fact that he
has sometimes sided with the League is part of the district judge’s course and pattern
of conduct that warrants consideration in the determination of whether his impartiality
might reasonably be questioned. See Moran, 296 F.3d at 649.
-13-
The League expresses particular concern with the district judge’s statement that
he laughed at the NFL’s request that the court end its oversight, arguing that the
comment suggests he did not take the request seriously. But an informed observer
would know that the district court responded to the request with an eight-page order
that addressed the legal issues that the League raised. To the extent that the district
judge’s statements were jocular and informal, we believe the average observer would
see that as reflective of his down-to-earth approach to resolving the oft-contentious
disputes brought to him by the parties.
We recognize that, aside from creating a perception of bias, there is a danger
that may flow from even seemingly innocuous statements to the press. Judges should
not create the impression that they covet publicity. “[I]n order to be and remain
impartial, and to be ‘perceived’ as impartial, the judge must be above the fray, not
become an advocate in it.” Mark I. Harrison & Keith Swisher, When Judges Should
be Seen, Not Heard: Extrajudicial Comments Concerning Pending Cases and the
Controversial Self-Defense Exception in the New Code of Judicial Conduct, 64
N.Y.U. Ann. Surv. Am. L. 559, 583 (2009). When judges make gratuitous public
comments on issues closely related to judicial duties, they risk giving the impression
that they have “an uncommon interest and degree of personal involvement in the
subject matter.” Cooley, 1 F.3d at 995. Self-interested behavior in submitting to press
interviews may also lead to accusations that a judge will be motivated to decide issues
in a way that prompts favorable media attention. Harrison & Swisher, supra, at 583;
see also United States v. Microsoft Corp., 253 F.3d 34, 115 (D.C. Cir. 2001)
(“Members of the public may reasonably question whether . . . a publicity-seeking
judge might consciously or subconsciously seek the publicity-maximizing outcome.”).
Certain public comments are also specifically proscribed by Canon 3(A)(6) of
the Code of Conduct for United States Judges, which at all times relevant to this case
read as follows:
-14-
A judge should avoid public comment on the merits of a pending or
impending action, requiring similar restraint by court personnel subject
to the judge’s direction and control. This proscription does not extend
to public statements made in the course of the judge’s official duties, to
the explanation of court procedures, or to a scholarly presentation made
for purposes of legal education.5
The Code of Conduct, which establishes aspirational rules and relies upon self-
enforcement, “does not overlap perfectly with § 455(a) [and] it is possible to violate
the Code without creating an appearance of partiality.” In re Boston’s Children First,
244 F.3d 164, 168 (1st Cir. 2001). The district judge concluded that his remarks to
the press did not violate Canon 3(A)(6), because he did not mention Michael Vick or
the Atlanta Falcons, the two parties in the underlying dispute. True enough, perhaps,
but a broader view of the Canon’s prohibition on public comment strikes us as
preferable to a narrow, technical reading of the matters included within the Canon’s
scope. Thus, although we do not believe that the articles created a reasonable
perception of bias, within the meaning of § 455(a) or Canon 3(A)(6), the district judge
would have been well advised not to opine publicly about his role in enforcing an
ongoing consent decree.
With regard to the ex parte meetings with Association counsel, there is no
evidence that any of them involved discussion of the merits of a proceeding. To the
contrary, it appears that, as described earlier, the meetings consisted solely of a brief
5
As of July 1, 2009, Canon 3(A)(6) was revised to read:
A judge should not make public comment on the merits of a matter
pending or impending in any court. A judge should require similar
restraint by court personnel subject to the judge’s direction and control.
The prohibition on public comment on the merits does not extend to
public statements made in the course of the judge’s official duties, to
explanations of court procedures, or to scholarly presentations made for
purposes of legal education.
-15-
exchange of pleasantries in chambers when counsel arrived from out of town.
Apparently, and for no explained reason, only representatives of the Association have
attended these meetings. If there were a policy of greeting only representatives of the
Association, such differential treatment could give rise to a perception of bias. On this
record, however, we do not believe that any such inference is strong enough to require
recusal. Moreover, we are troubled by the League’s long delay in raising this issue.
Although it has been aware of this practice for a number of years, the League voiced
a complaint only after receiving an adverse decision with which it strongly disagrees.
A motion to recuse should not be withheld as a fallback position to be asserted only
after an adverse ruling. To the extent that the League relies on the ex parte meetings,
its motion to recuse is untimely.6 We conclude, therefore, that the district judge did
not abuse his discretion in denying the motion to recuse.
C. The Vick Order
Finally, the League argues that the district court erred in holding that the
Falcons could not recover a prorated portion of Vick’s roster bonuses for the years he
did not play football. “[B]ecause the content of a consent decree is generally a
product of negotiations between the parties, decrees are construed for enforcement
purposes as contracts.” Martin v. Wilks, 490 U.S. 755, 788 n.27 (1989). When, as
here, a district court’s interpretation of a consent decree is based solely on the written
document, we review the court’s interpretation de novo. United States v. Knote, 29
F.3d 1297, 1299-1300 (8th Cir. 1994). “However, even when interpreting the
meaning of a consent decree ‘as written,’ we are not to ignore the context in which the
parties were operating, nor the circumstances surrounding the order.” Id. at 1300
(citing United States v. ITT Continental Banking Co., 420 U.S. 223, 243 (1975)).
6
The record also suggests that the League was aware of the Gazette story when
it was published in 2005, as the article included quotes from top NFL labor officials.
-16-
“We therefore give a large measure of deference to the interpretation of the district
court that actually entered the decree.” Id.
The parties agree that interpretation of the settlement agreement is governed by
New York law. The relevant language is found in Article XIV, Section 9(c) of the
CBA, which states: “[n]o forfeitures permitted (current and future contracts) for
signing bonus allocations for years already performed, or for other salary escalators
or performance bonuses already earned.” In an earlier decision that the League did
not appeal, the district court determined that Section 9(c) creates two distinct
forfeiture tests: one for “signing bonus allocations,” which may not be forfeited for
years already performed; and another for “other salary escalators or performance
bonuses,” which may not be forfeited if they have already been earned. See White v.
NFL (In re Ashley Lelie), No. 4-92-906, 2007 WL 939560 (D. Minn. 2007). The
court further held that only the years-performed test turned on whether a player had
played football in the relevant years. The already-earned test, in contrast, was met by
the satisfaction of any conditions precedent other than performance. The distinction
is significant, because it means that bonus money classified as a “signing bonus
allocation” may be forfeited if a player does not perform under his contract, whereas
a team cannot recoup money that falls into the other categories.
Both parties recognize that under this rubric, the relevant question is whether
Vick’s roster bonuses should be categorized as “signing bonus allocations,” subject
to the years-performed test, or “other salary escalators or performance bonuses,”
subject to the already-earned test. The Association argues that, whatever a roster
bonus is, it is not a signing bonus allocation because the terms “roster bonus” and
“signing bonus” are commonly understood to refer to two distinct payment
arrangements. Logically, therefore, a roster bonus must fall into one of the two
categories of compensation subject to the already-earned test. Since Vick satisfied the
preconditions of making the eighty-man roster in 2005 and 2006, the Association
contends that the money was fully earned.
-17-
The League argues, however, that the roster bonuses were actually signing
bonus allocations because certain rules governing the salary cap and minimum player
salary (1) define the term “signing bonuses” to include roster bonuses in certain
circumstances and (2) address a team’s choice to convert non-guaranteed
compensation into a signing bonus allocation. Specifically, Article XXIV, Section
7(b)(iv) states that “[f]or purposes of determining Team Salary under the foregoing,
the term ‘signing bonus’ shall include . . . any roster bonus or Paragraph 5 Salary that
the Club had the right to guarantee for skill, when the Club subsequently exercises the
right to guarantee such bonus or Paragraph 5 Salary for skill.” Article XXXVIII-A,
Section 11 also contains an oblique reference to “convert[ing] non-guaranteed
compensation to a signing bonus allocation.” Reading the two provisions together,
the League argues that a roster bonus is converted into a signing bonus allocation
when it is guaranteed for skill. Both of Vick’s roster bonuses included an option for
the Falcons to guarantee the bonuses for skill, which the team properly exercised. The
League argues that once that occurred, the money became a signing bonus allocation,
subject to forfeiture for years not performed. The Special Master accepted this
characterization and concluded that the Falcons could recover a prorated portion of
Vick’s bonuses.
The League contends that the district court’s contrary decision violated
important rules of contract construction, in that it failed to use the language on the
salary cap and minimum player salary to interpret the forfeiture provision. See 11
Samuel Williston, Treatise on the Law of Contracts § 32:6 (Richard A. Lord, ed.,
Supp. 2007) (“Generally, a word used by the parties in one sense will be given the
same meaning throughout the contract in the absence of countervailing reasons.”);
Reda v. Eastman Kodak Co., 233 A.D.2d 914, 915 (N.Y. App. Div. 1996) (noting that
a court must make a reasonable effort to harmonize all of the terms in a contract). But
this is not a case where a word or phrase has a straightforward meaning in one context
that can be directly applied in another. Section 7(b)(iv), on which the League
primarily relies, states that its equation of a roster bonus with a signing bonus is “[f]or
-18-
purposes of determining Team Salary,” and it does not use the phrase “signing bonus
allocation.” Conversely, the provision on converting non-guaranteed compensation
to a signing bonus allocation does not mention roster bonuses. The League’s
argument amalgamates the two statements to create a third, implicit rule that it applies
to Section 9(c). It is not clear that Section 9(c) was drafted with such an interpretation
in mind.
Faced with a forfeiture provision that is ambiguous at best, the district court
concluded that the League’s interpretation was the least logical of the two. As the
League would have it, the forfeitability of Vick’s bonuses turns on whether the
Falcons guaranteed the bonuses for skill. That distinction makes little sense in the
context of forfeiture. Guaranteeing a bonus for skill simply means that a player can
keep the money no matter how poor his performance. Such a guarantee is clearly
germane to regulating team salary because it distinguishes money that is committed
to a player from money that is only tentatively slated for distribution. But there is no
reason to require forfeiture because a bonus has been guaranteed for skill. Further, the
district court correctly observed that the League’s position was contrary to the prior,
unappealed holding in Lelie, in which the court refused to use the salary cap and
minimum player salary rules to interpret Section 9(c).
Affording the district court a measure of deference as the court that entered the
consent decree and has overseen each of the subsequent amendments, we conclude
that it properly rejected the League’s argument that Vick’s roster bonuses were
signing bonus allocations subject to the years-performed test. Accordingly, the
district court did not err in determining that the bonuses were earned when Vick met
the roster provisions in his contract, and thus not subject to forfeiture.
The judgment is affirmed.
______________________________
-19-
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UNITED STATES OF AMERICA
MERIT SYSTEMS PROTECTION BOARD
DEGERALD R. WILSON, DOCKET NUMBER
Appellant, DC-3330-14-0298-I-1
v.
DEPARTMENT OF EDUCATION, DATE: August 26, 2014
Agency.
THIS FINAL ORDER IS NONPRECEDENTIAL 1
DeGerald R. Wilson, San Antonio, Texas, pro se.
Eun Kim, Esquire, Washington, D.C., for the agency.
BEFORE
Susan Tsui Grundmann, Chairman
Anne M. Wagner, Vice Chairman
Mark A. Robbins, Member
FINAL ORDER
¶1 The appellant has filed a petition for review of the initial decision, which
dismissed his nonselection appeal for lack of Board jurisdiction. Generally, we
grant petitions such as this one only when: the initial decision contains erroneous
findings of material fact; the initial decision is based on an erroneous
1
A nonprecedential order is one that the Board has determined does not add
significantly to the body of MSPB case law. Parties may cite nonprecedential orders,
but such orders have no precedential value; the Board and administrative judges are not
required to follow or distinguish them in any future decisions. In contrast, a
precedential decision issued as an Opinion and Order has been identified by the Board
as significantly contributing to the Board’s case law. See 5 C.F.R. § 1201.117(c).
2
interpretation of statute or regulation or the erroneous application of the law to
the facts of the case; the judge’s rulings during either the course of the appeal or
the initial decision were not consistent with required procedures or involved an
abuse of discretion, and the resulting error affected the outcome of the case; or
new and material evidence or legal argument is available that, despite the
petitioner’s due diligence, was not available when the record closed. See Title 5
of the Code of Federal Regulations, section 1201.115 (5 C.F.R. § 1201.115).
After fully considering the filings in this appeal, and based on the following
points and authorities, we conclude that the petitioner has not established any
basis under section 1201.115 for granting the petition for review. Therefore, we
DENY the petition for review and AFFIRM the initial decision, which is now the
Board’s final decision. 5 C.F.R. § 1201.113(b).
¶2 In September 2013, the appellant applied for a position as an Economist
with the agency. Initial Appeal File (IAF), Tab 8 at 16-20. In November 2013,
the agency notified the appellant that he had been found “well qualified” for the
position but that he was not among the list of candidates referred to the selecting
official as “best qualified.” Id. at 10. The appellant appealed his nonselection to
the Board. The administrative judge dismissed that appeal for lack of jurisdiction
but docketed a new Veterans Employment Opportunities Act (VEOA) appeal
regarding the appellant’s nonselection based on new allegations in the appellant’s
pleadings. Wilson v. Department of Education, MSPB Docket No. DC-3443-14-
0239-I-1, Initial Decision at 2 (Jan. 8, 2014).
¶3 After docketing this VEOA appeal, 2 the administrative judge issued an
order directing the appellant to meet his burden of proving the Board’s
2
The appellant has two other similar VEOA appeals. Wilson v. Department of State,
MSPB Docket No. AT-3443-14-0269-I-1; Wilson v. Department of State, MSPB Docket
No. DC-3330-14-0354-I-1. Because the respondent in those appeals is a different
federal agency, we are adjudicating them separately from his appeal against the
Department of Education.
3
jurisdiction. IAF, Tab 3. The appellant submitted a response, IAF, Tab 5, and
the agency submitted a motion to dismiss, IAF, Tab 6.
¶4 Without holding a hearing, the administrative judge dismissed the appeal
for lack of jurisdiction. IAF, Tab 9, Initial Decision (ID). The judge concluded
that the appellant failed to meet his burden of proving that he had exhausted his
administrative remedies with the Department of Labor (DOL), as instructed in the
jurisdictional order and required by 5 U.S.C. § 3330a(a)(d)(1). ID at 2-3.
¶5 The appellant has filed a petition for review. Petition for Review (PFR)
File, Tab 1. The agency has filed a response. PFR File, Tab 3.
¶6 The Board’s jurisdiction is not plenary; it is limited to those matters over
which it has been given jurisdiction by law, rule or regulation. Maddox v. Merit
Systems Protection Board, 759 F.2d 9, 10 (Fed. Cir. 1985). An agency’s failure
to select an applicant for a vacant position is generally not appealable to the
Board. Prewitt v. Merit Systems Protection Board, 133 F.3d 885, 886 (Fed. Cir.
1998). However, an exception exists under VEOA.
¶7 The Board has held that, in order to establish jurisdiction over a VEOA
appeal, an appellant must: (1) show that he exhausted his remedy with DOL; and
(2) make nonfrivolous allegations that (i) he is a preference eligible within the
meaning of VEOA; (ii) the action at issue took place on or after the enactment
date of VEOA; and (iii) the agency violated his rights under a statute or
regulation relating to veterans’ preference. Alegre v. Department of Navy,
118 M.S.P.R. 424, ¶ 12 (2012). For an appellant to meet VEOA’s requirement
that he exhaust his remedy with DOL, he must establish that: (1) he filed a
complaint with the Secretary of Labor; and (2) the Secretary of Labor was unable
to resolve the complaint within 60 days or has issued a written notification that
the Secretary’s efforts have not resulted in resolution of the complaint. Id.; see
Graves v. Department of Veterans Affairs, 117 M.S.P.R. 491, ¶ 8 (2012)
(explaining that the complaint to DOL must contain a summary of the allegations
that form the basis for the complaint). The purpose of this requirement is to
4
afford DOL the opportunity to conduct an investigation that might lead to
corrective action before involving the Board in the case. Graves, 117 M.S.P.R.
491, ¶ 8.
¶8 Despite the jurisdictional order instructing him to prove that he had
exhausted his remedies with DOL, IAF, Tab 3 at 5, the appellant’s response was
silent on the issue, see IAF, Tab 5. Therefore, because the appellant failed to
provide any evidence that he filed a DOL complaint, the administrative judge
correctly found that the Board lacked jurisdiction over his VEOA claim. See
Wible v. Department of Army, 120 M.S.P.R. 333, ¶ 10 (2013) (the Board lacks
jurisdiction over a VEOA claim if an appellant does not provide any evidence that
he filed a DOL complaint because evidence of exhaustion with DOL is mandated
by statute).
¶9 In his petition for review, the appellant did not present any argument or
evidence that the administrative judge erred in dismissing his appeal. Instead, the
appellant vaguely asserts that DOL was contacted 3 to initiate a complaint on
February 10, 2014, after the administrative judge dismissed his Board appeal.
PFR File, Tab 1 at 2.
¶10 The Board’s practice is to adjudicate an appeal that was premature when
filed but becomes timely while pending before the Board. Wooten v. Department
of Veterans Affairs, 96 M.S.P.R. 671, ¶ 9 (2004). However, the appellant’s bare
assertion that a complaint has been initiated with DOL, without any supportive
evidence, does not establish that his appeal is now ripe. Even if a complaint were
initiated with DOL, as he alleges, the initiation of a complaint does not meet the
appellant’s jurisdictional burden of proving that he exhausted his administrative
remedies. See Burroughs v. Department of Defense, 114 M.S.P.R. 647, ¶¶ 8-9
3
The appellant’s petition states, “The United States Department of Labor was contacted
to initiate the Complaint Information Form, submitted by Fax, from Texas Workforce
Commission, San Antonio, Texas.” PFR File, Tab 1 at 2.
5
(2010), aff’d, 426 F. App’x 897 (Fed. Cir. 2011) (the mere filing of a complaint
with DOL is not sufficient to establish Board jurisdiction over a VEOA appeal).
NOTICE TO THE APPELLANT REGARDING
YOUR FURTHER REVIEW RIGHTS
You have the right to request review of this final decision by the United
States Court of Appeals for the Federal Circuit. You must submit your request to
the court at the following address:
United States Court of Appeals
for the Federal Circuit
717 Madison Place, N.W.
Washington, DC 20439
The court must receive your request for review no later than 60 calendar
days after the date of this order. See 5 U.S.C. § 7703(b)(1)(A) (as rev. eff. Dec.
27, 2012). If you choose to file, be very careful to file on time. The court has
held that normally it does not have the authority to waive this statutory deadline
and that filings that do not comply with the deadline must be dismissed. See
Pinat v. Office of Personnel Management, 931 F.2d 1544 (Fed. Cir. 1991).
If you need further information about your right to appeal this decision to
court, you should refer to the federal law that gives you this right. It is found in
Title 5 of the United States Code, section 7703 (5 U.S.C. § 7703) (as rev. eff.
Dec. 27, 2012). You may read this law as well as other sections of the United
States Code, at our website, http://www.mspb.gov/appeals/uscode.htm.
Additional information is available at the court's website, www.cafc.uscourts.gov.
Of particular relevance is the court's "Guide for Pro Se Petitioners and
Appellants," which is contained within the court's Rules of Practice, and Forms 5,
6, and 11.
If you are interested in securing pro bono representation for your court
appeal, you may visit our website at http://www.mspb.gov/probono for a list of
attorneys who have expressed interest in providing pro bono representation for
6
Merit Systems Protection Board appellants before the court. The Merit Systems
Protection Board neither endorses the services provided by any attorney nor
warrants that any attorney will accept representation in a given case.
FOR THE BOARD: ______________________________
William D. Spencer
Clerk of the Board
Washington, D.C.
|
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213 F.Supp. 835 (1961)
William FLAHERTY
v.
UNITED ENGINEERS & CONSTRUCTORS, INC., and
Lorain Shovel Company.
Civ. A. No. 25200.
United States District Court E. D. Pennsylvania.
December 28, 1961.
*836 Larry J. Friedman, Philadelphia, Pa., for plaintiff William Flaherty.
Peter P. Liebert, III, Philadelphia, Pa., for United Engineers and Constructors, Inc.
Edward W. Madeira, Philadelphia, Pa., for Lorain Shovel Co.
BIGGS, Circuit Judge.[*]
I
AMENDED MOTION FOR SUMMARY JUDGMENT OF UNITED ENGINEERS AND CONSTRUCTORS, INC.
William Flaherty, the plaintiff, a citizen of New Jersey, has sued United Engineers and Constructors, Inc., a Delaware corporation, and the Lorain Shovel Company [Thew Shovel Company[1]], an Ohio corporation, for personal injuries. The suit is based on diversity and Pennsylvania law applies. Flaherty was injured on June 13, 1957. The original complaint was filed on August 14, 1958. It asserts that the defendant, United, was the general contractor engaged in building the Philadelphia Electric Company's new plant at Eddystone, Pennsylvania, and that Kolyn Contracting Company, a New Jersey business partnership was a sub-contractor; that Kolyn's foreman was Osterberger and that he was drunk while on duty at the job; that the plaintiff, Flaherty, serving as a "monkey",[2] was on top of the leads of the boom of the crane to set a pile into position when Osterberger ordered the boom down despite the fact that he was "fully aware of the position of the plaintiff atop of the leads". The complaint goes on to say that upon receiving a signal from Osterberger, the operating engineer "boomed down when the entire gear works did not operate properly", thus severely injuring Flaherty. The complaint alleges as acts of negligence the "improper condition" of Osterberger and his lack of control of his faculties, incompetent supervisory personnel, defective equipment and insufficient safety devices on the crane. On February 4, 1960, United filed a motion for summary judgment. An amended motion for summary judgment was filed on June 20, 1961. The issues raised by these motions are presently before us.
Depositions have been taken; interrogatories have been filed and answered; affidavits have been filed; discovery has been had. No material fact is in dispute.[3] There is no doubt that Flaherty was United's statutory employee under the provisions of Section 203 of the Workmen's Compensation Act of Pennsylvania, Act of June 2, 1915, P.L. 736, Article II, as amended, 77 P.S. § 52. It follows that the original complaint filed on August 14, 1958, states no cause of action cognizable against United and that that Company therefore was entitled to summary judgment at the time the original motion was filed.
Additional operational facts must now be considered. The plaintiff, Flaherty, was compensable for personal injuries received by accident under the provisions of the Workmen's Compensation Act. He had not rejected the provisions of that Act and has received compensation pursuant to its provisions. The defendant, *837 United, had not posted the premises on which Flaherty was injured with any notice of its intention not to be bound by the provisions of the Act in regard to any injury to Flaherty or any other employee of Kolyn. On July 2, 1959, however, the Supreme Court of Pennsylvania handed down its opinion in Dolan v. Linton's Lunch, 397 Pa. 114, 152 A.2d 887, in which it was held, Mr. Chief Justice Jones and Mr. Justice Cohen dissenting, that the definition of injury by accident in the course of employment as used in the Workmen's Compensation Act specifically excludes an assault and an attack by a third person upon an employee because of personal animosity. In so holding the Supreme Court reversed a decision of Judge Doty of the Court of Common Pleas No. 2, Philadelphia County, at No. 1652, September Term 1957. The decision of the Supreme Court in the Dolan case may be deemed perhaps to have opened an avenue for the prosecution of tort claims of employees against employers theretofore not deemed available.
Approximately eighteen months later, on December 15, 1960, Flaherty's counsel in open court made an oral motion to amend his complaint. When informed by the court that such a motion would have to be in writing he complied by filing a written motion in proper form on December 22, 1960. The gist of the proffered amendment is contained in paragraph 5 of the motion and would amend paragraph 13 of the complaint.[4] Paragraph 13 of the complaint, if the amendment be allowed, will read that "the plaintiff, while in a lawful position known in the construction business as a monkey, was atop the leads and set the pile in position, when the foreman, Leonard Osterberger, intentionally and purposely ordered the boom down, fully aware of the position of plaintiff atop the leads to cause the plaintiff herein harm and injury." In other words, the pleading is made to conform with the ruling of the Supreme Court in the Dolan case, supra.
At an oral argument on December 15, 1960, when Flaherty was represented by Irving Segal, Esquire, Mr. Segal was asked by the court when he had learned about the "personal animosity of Osterberger for Flaherty". He replied, "I think we could tell that from the date of the complaint.", and went on to say in response to a further question from the court, "It would be prior to that time, your Honor, in that period of time [sic]."
On June 5, 1961, United took Flaherty's deposition and it is obvious from that deposition that he does not think that he was injured because Osterberger had personal animosity toward him. Flaherty was asked:
"Q. What happened to cause an injury to you?
* * * * * *
"A. Well, everything dropped. It hit the ground and apparently I was thrown clear.
"Q. What dropped?
"A. The boom and the leads.
"Q. They all dropped?
"A. Yes, sir. When the boom came down there was nothing else to hold everything up. That is what holds everything up. As * * * [the operating engineer, who had been signaled to by Osterberger,] started to lower the boom it got away from him.
"Q. It got away from whom, the operator?
"A. The operator, he couldn't hold it.
"Q. What couldn't he hold?
"A. The boom. He couldn't stop it.
"Q. Do you know why?
* * * * * *
"A. My business agent came down and got in touch with the manufacturers *838 of the rig and had an inspector come down and look at it. He said the whole boom hoist was completely shot, and the rig was condemned at that point. It wasn't allowed to go back to work until it was repaired.
"Q. In other words, you feel from what you have learned that there was something wrong with the rig itself, meaning the crane?
"A. Yes, sir.
"Q. That is what caused your injury?
"A. Yes, sir."
But Flaherty also testified that he, like many other workmen on the job, had "had words" with Osterberger about the latter's drinking and that usually Osterberger waited until he was clear of the boom before lowering it; that on this occasion Osterberger had lowered the boom when he, Flaherty, had one foot on the boom and other on the "rest". It can be argued that Osterberger by giving the signal to the operator under these circumstances demonstrated an intentional desire to injure Flaherty. Questions of fact lurk in this issue that cannot be settled properly at this stage of the proceedings.
United also contends that because Flaherty has accepted compensation he is estopped from now claiming damages. It is true that Section 303 of the Workmen's Compensation Act, 77 P.S. § 481, provides that acceptance of compensation shall operate as a surrender by the parties of their rights to any form or amount of compensation or damages for any injury or death occurring in the course of the employment other than as provided in Article III of the Act. But Section 301(c), as amended, 77 P.S. § 411, included in Article III, according to the Dolan decision specifically excludes injuries resulting from personal animosity. It would follow therefore that Flaherty may be able to collect damages from United if he can prove that his injuries resulted from the personal animosity of Osterberger. He is not estopped to proceed with his suit on this ground.
United also asserts that Flaherty is attempting to set up a new cause of action, one based on assault and battery as distinguished from one based on negligent conduct and since the "new" cause of action is barred by the statute of limitations, 12 P.S. § 34, he is not entitled to amend his complaint to include it. To put United's position briefly, it is that the act complained of has ceased to be one of negligence and has become one of malevolence. But is this a "new" cause of action? Rule 15(c), Fed.R.Civ.Proc., 28 U.S.C., provides that when the claim arises out of the conduct, transaction, or occurrences set forth in the original pleadings the amendment relates back to the date of the original pleadings. We think it is clear that the cause of action asserted by the amendment arises out of the conduct, transaction, or occurrences set forth in the original complaint. The motivation which causes the occurrence is different but the occurrence itself seems to be identical. We hold therefore that the provisions of Rule 15(c) are applicable and that Flaherty is entitled to amend the complaint insofar as any problem presented by the statute of limitations is concerned.
United also alleges that Flaherty is barred to assert Osterberger's personal animosity because of laches. It is true that a period of three-and-a-half years elapsed after the accident had occurred before Flaherty asserted that Osterberger had been animated by personal animosity in ordering the boom down and that Flaherty's counsel stated that he knew of Osterberger's animosity before the original complaint was filed. It is equally correct, as pointed out by United, that the pleading had been completed and that the case had been at issue for approximately two-and-a-half years before the motion to amend the complaint was made. But it is also the case that the amendment was offered within eighteen months after a substantial change in the interpretation of the Workmen's Compensation Act of Pennsylvania was *839 effected by the Dolan decision. It is probable that no party to the controversy considered that the alleged personal animosity of Osterberger was relevant and that all the parties were of the view that the court did not have jurisdiction to dispose of the controversy between Flaherty and United because of the statutory employer doctrine. Under the circumstances it would seem unfair to destroy Flaherty's cause of action because of a delay of eighteen months in filing a motion to amend his complaint. But quite apart from the foregoing, on reviewing the entire situation, we can perceive no substantial prejudice accruing to United if the amendment is allowed. It is of course the policy of the federal law to allow amendments freely to serve the ends of justice.
The motion for summary judgment will be denied and the proposed amendment to the complaint will be allowed and treated as filed. The only valid issues to be tried between Flaherty and United are: Did Osterberger's personal animosity cause the injuries suffered by Flaherty, and if so, can United be held responsible for Osterberger's action?
II
ON DEFENDANT THEW SHOVEL COMPANY'S MOTION UNDER RULE 12(b) TO DISMISS THE COMPLAINT AND ITS MOTION FOR A PROTECTIVE ORDER UNDER RULE 30(b).
The Supreme Court of Pennsylvania decided Rufo v. Bastian-Blessing Co., 405 Pa. 12, 173 A.2d 123, on July 17, 1961, and held that subdivision B of Section 1011 of the Pennsylvania Business Corporation Act requires as an essential element of jurisdiction over a foreign corporation that the action sued upon must arise out of a corporate act or omission occurring within the Commonwealth of Pennsylvania. See 15 P.S. § 2852-1011, subd. B. In so holding the Supreme Court of Pennsylvania demolished the decision of the Court of Appeals of this Circuit on this point in Florio v. Power Tool Co., 248 F.2d 367, 374 (3 Cir., 1957).[5]
Flaherty concedes that the complaint does not allege any act or omission on the part of Thew in Pennsylvania unless it be those set out in paragraph 20. There are ten breaches of express and implied warranties alleged in that paragraph. The fatal defect in Flaherty's position, however, is that he has not shown any act or omission by Thew within the Commonwealth of Pennsylvania. Absent an act or omission by Thew in Pennsylvania that defendant could not be served validly under Section 1011, subdivision B. It follows that the court does not have jurisdiction over the person of Thew. Despite the foregoing, although the crane was manufactured in Ohio, the court would grant a reasonable opportunity to Flaherty to discover whether or not any repairs were made on it by Thew's servicemen[6] in Pennsylvania for the change effected in the pre-existing law by the decision of the Supreme Court in the Rufo case had occurred less than six months ago. But such a course would not aid the plaintiff since he is unable to meet the second requirement of jurisdiction for service of summons as set out immediately hereinafter.
*840 While Flaherty has proved beyond any question that Thew solicited business in Pennsylvania in the year 1959 and in prior years, he has failed to meet the "solicitation-plus" standard which was the test of doing business in Pennsylvania under 15 P.S. § 2852-1011, subd. B on July 22, 1959. It will be borne in mind that the alias summons in this case was served on the Secretary of the Commonwealth on that day and that subdivision C had then been deleted from the Pennsylvania Business Corporation Act. See the prior opinion in this case, 191 F.Supp. 661 (1961). The law therefore was in the same condition as it was at the time of the decision of the Supreme Court of Pennsylvania in Lutz v. Foster & Kester Co., 367 Pa. 125, 79 A.2d 222 (1951). In the Lutz opinion Mr. Chief Justice Jones, referring to the earlier decision of Shambe v. Delaware & Hudson R. R. Co., 288 Pa. 240, 135 A. 755 (1927), and quoting from the opinion in that case, made clear that a foreign corporation had to have an agent or employee in the Commonwealth of Pennsylvania with the authority to bind the corporation contractually if the solicitation-plus test was to be met. Mr. Chief Justice Jones said that this factor was "crucial".[7] It is clear that Broad, Thew's district manager, did not have power to bind Thew contractually. It is equally apparent that Thew's distributor in the eastern area, L. B. Smith, Incorporated, was not a mere agent but an independent contractor, one which bought cranes from Thew and re-sold them. See note 6, supra. Smith exercised complete control over its own operations and sold machinery of other manufacturers in addition to that made by Thew.[8] Flaherty has produced no proof of the existence of any agent or employee of Thew in the Commonwealth of Pennsylvania with authority to bind it contractually.
Flaherty's position will not be assisted by answers to the interrogatories which he has filed and which are the subject of the protective order based on Rule 30(b) presently sought by Thew. The number and monetary amount of sales by Thew to persons in Pennsylvania in the years 1955-1959 and the names of the individuals who made service calls in the Commonwealth and the frequency of their calls during the years stated would aid Flaherty in showing solicitation but as had been stated solicitation has been sufficiently demonstrated by evidence already in the record. The answers would fail to disclose information showing the presence in the Commonwealth of any individual or individuals who had power to bind Thew contractually. Ample time has been allowed to Flaherty to develop the solicitation-plus aspect of his case. He has failed to do so. The complaint must be dismissed as to Thew because it was not doing business within the State of Pennsylvania and therefore could not be validly served under Section 1011, subdivision B.
This decision will render Thew's motion for a protective order under Rule 30(b) moot.
III
This case is nearly three-and-a-half years old. It must be proceeded with vigorously. The order of October 23, *841 1961, limiting discovery, will be vacated. A period of three months from the date when issue is joined on the first count as amended will be allowed to the parties to complete discovery. As soon as practicable thereafter a final pretrial conference will be held and trial had.
NOTES
[*] Specially designated.
[1] The correct name is Thew Shovel Company. The defendant, Thew, however makes no issue as to misnomer. See note 1 cited to the text, 191 F.Supp. 661, at p. 662.
[2] A man who, from the top of the boom of a crane, directs a pile into the position at which it is to be driven into the ground.
[3] Rule 36, Fed.R.Civ.Proc. 28 U.S.C., has supplied the basis for many of the operative facts because of the failure of Flaherty to respond to some of the admissions of facts requested by United. The details of these requests for admissions need not be given here.
[4] There are other proffered amendments but the proposed amendment to paragraph 13 is typical and serves as sufficient basis for deciding the question presently before the court.
[5] Opinion by the present writer.
[6] On December 15, 1959, Poorman, the manager of L. B. Smith, Incorporated, testified by deposition. He stated that L. B. Smith, Incorporated, purchased cranes from Thew and that Smith performed all servicing of the cranes sold in turn by it, but he subsequently qualified this statement by indicating that men from the factory, i. e., from Thew's factory at Lorain, Ohio, were brought in perhaps four or five times a year to make repairs. No attempt has been made by Flaherty's counsel to identify the crane on which Flaherty was working at the time he was injured.
Broad, Thew's soliciting agent in Eastern Pennsylvania, stated that he had a record of "every machine" in the territory, a "performance record", by distributors. Broad's deposition was taken June 14, 1961, but insofar as appears from the record no attempt was made to follow this lead up on Flaherty's account.
[7] See also Motch & Merryweather Machinery Co. v. Pittsburgh School District, 381 Pa. 619, 116 A.2d 733 (1955); Segal v. E. L. Bruce Co., 21 Pa.Dist. & Co.R.2d 43, 47-48 (1959); Baker v. Aetco Equipment Co., 19 Pa.Dist. & Co.R. 2d 526, 530 (1958). The cases of Ravner v. Blank, 189 F.Supp. 471 (D.C.E.D. Pa.1960) and Kearns v. The Seven-Up Co., 32 F.R.D. 238 (D.C.E.D.Pa.1961) are not to the contrary. In Ravner the court notes that the factory representative had the power to bind the company in certain instances, 189 F.Supp. at 473-474; in Seven-Up subsection (C) of Section 2852-1011 was applicable.
[8] For comparable situations, see Lutz v. Foster & Kester Co., 367 Pa. 125, 128, 79 A.2d 222 (1951); Swavely v. Vandegrift, 19 Pa.Dist. & Co.R.2d 153, 156-157, 162 (1959), aff'd on opinion below, 397 Pa. 281, 154 A.2d 779 (1959) (dismissed for want of jurisdiction over corporate defendant, even though provisions of Section 2852-1011(C) were applicable).
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United States Court of Appeals
For the Eighth Circuit
___________________________
No. 15-1835
___________________________
United States of America
lllllllllllllllllllll Plaintiff - Appellee
v.
Johna Loreen Vandemore, also known as Johna Volger, also known as Johna Ratliff
lllllllllllllllllllll Defendant - Appellant
____________
Appeal from United States District Court
for the Southern District of Iowa - Davenport
____________
Submitted: February 29, 2016
Filed: April 11, 2016
[Unpublished]
____________
Before WOLLMAN, BYE, and SHEPHERD, Circuit Judges.
____________
PER CURIAM.
Johna Vandemore waived indictment and pled guilty, pursuant to a plea
agreement, to one count of mail fraud in violation of 18 U.S.C. § 1341. Vandemore
was sentenced to a term of 18 months imprisonment. She now appeals her sentence
asserting that the district court1 erred under the advisory sentencing guidelines in
applying an increase in the offense level for an offense that involves sophisticated
means. We affirm.
Vandemore did not object to the facts of the offense conduct as set forth in the
presentence investigation report and also agreed to the factual basis for her guilty plea
as set forth in the plea agreement. No additional evidence with respect to the offense
conduct was presented at the sentencing hearing. Vandemore perpetrated an extortion
scheme that involved the United States mails and emails and spanned at least six
years. In 2007, Vandemore and the victim engaged in a sexual relationship. In
August 2007, Vandemore contacted the victim and advised that she was pregnant
with the victim’s child. In actuality, Vandemore was either not pregnant or had
miscarried and faked the continuation of the pregnancy in order to obtain money from
the victim. The victim explained he did not desire to have a relationship with the
child and initially refused to pay Vandemore, but when Vandemore threatened court
action, he agreed to provide financial support of $1,000 per month and pay additional
monthly expenses. As part of the scheme, Vandemore sent the victim a falsified birth
certificate indicating Vandemore had delivered a daughter.
Vandemore submitted falsified medical bills to the victim for the fictitious
child, which the victim paid. When the victim asked Vandemore questions related
to the paternity of the child, she threatened legal action. When the victim requested
photographs of the child on several occasions, Vandemore sent photographs of
Vandemore’s niece representing that they depicted her daughter. Some of these
photographs were transmitted to the victim via email. When the victim questioned
the authenticity of the photographs, Vandemore again threatened legal action.
1
The Honorable Stephanie M. Rose, United States District Judge for the
Southern District of Iowa.
-2-
From August 2007 to October 2013, the victim paid Vandemore at least 90
separate cash payments totaling $95,850. He also paid medical bills submitted to
him. In all, the victim paid Vandemore at least $100,000 in support payments and
medical bills. These payments were sent by check from the victim to Vandemore
through the United States mail addressed to a post office box in Bettendorf, Iowa.
Vandemore regularly traveled to Bettendorf and picked up and cashed these checks.
When Vandemore’s husband questioned the source of these sums, she falsely
claimed that the money was compensation owed from prior employment. Eventually,
the victim grew suspicious and discovered that he had been defrauded after
conducting his own investigation and utilizing the services of a private investigator.
Where the facts underlying the sophisticated means enhancement are not in
dispute we review de novo “whether the district court correctly applied the guidelines
when it determined those facts constitute sophisticated means.” United States v. Hart,
324 F.3d 575, 579 (8th Cir. 2003). In this appeal, Vandemore does not challenge the
district court’s factual findings. Instead, she challenges the district court’s legal
conclusion that those facts constituted sophisticated means under the guidelines
contending that procedural error was committed.
Under the guidelines, sophisticated means are “especially complex or
especially intricate offense conduct pertaining to the execution or concealment of an
offense.” United States Sentencing Commission, Guidelines Manual,
§ 2B1.1(b)(10)(C) cmt. n.9(B). The sophisticated means enhancement is appropriate
when the offense conduct, “viewed as a whole, was notably more intricate than that
of the garden-variety [offense].” United States v. Hance, 501 F.3d 900, 909 (8th Cir.
2007). “Repetitive and coordinated conduct, though no one step is particularly
complicated, can be a sophisticated scheme.” United States v. Finck, 407 F.3d 908,
915 (8th Cir. 2005).
-3-
After reviewing the application of the sentencing enhancement de novo, we
conclude that Vandemore’s conduct was of sufficient complexity and coordination
as to justify the application of the sophisticated means enhancement. Her scheme was
perpetrated over a six-year period, during which time her victim was defrauded out
of over $100,000 paid out in at least 95 payments mailed to a post office box in
another city. The perpetration of the plan involved the fabrication of a story with
respect to the birth of a child, the falsification of a birth certificate and medical
records, the promulgation of borrowed photographs contending that they depicted her
nonexistent daughter, and the use of the mails and emails to execute her plan.
Viewing the offense conduct as a whole, we agree with the district court that the
offense conduct was sufficiently more intricate and repetitive than the garden-variety
offense so as to support the imposition of the sophisticated means enhancement. See
United States v. Jenkins, 578 F.3d 745, 751-52 (8th Cir. 2009) (affirming application
of sophisticated means enhancement in insurance fraud case where defendant “lied
about meeting with applicants; forged applicant signatures; provided false driver’s
license numbers, social security numbers, addresses, and employment information;
arranged for a co-schemer to falsify medical examination results and forward them
to the insurers; sold dozens of fraudulent policies over a time period of at least three
years; and conspired with co-schemers in Texas, California, and Florida to defraud
insurers in Iowa and Maryland”); United States v. Rettenberger, 344 F.3d 702, 709
(7th Cir. 2003) (affirming that husband and wife’s faking of husband’s disability to
collect insurance money, though consisting of simple lies, was sophisticated because
“[c]areful execution and coordination over an extended period enabled the
[defendants] to bilk more insurers and reduce the risk of detection”).
We affirm Vandemore’s sentence.
______________________________
-4-
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801 F.2d 402
*1**Richardsonv.Lankford
85-9003
United States Court of Appeals,Eleventh Circuit.
9/9/86
1
N.D.Ga.
AFFIRMED
*
Fed.R.App.P. 34(a); 11th Cir.R. 23
**
Local Rule: 25 case
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165 F.2d 33 (1948)
BOMZE et al.
v.
NARDIS SPORTSWEAR, Inc.
No. 101, Docket 20782.
Circuit Court of Appeals, Second Circuit.
January 7, 1948.
Barnet Kaprow and Kramer & Kaprow, all of New York City (David L. Weissman, of New York City, of counsel), for appellants.
Samuel M. Ostroff, of New York City (Charles L. Raskin, of New York City, on the brief), for appellee.
Before L. HAND, SWAN, and AUGUSTUS N. HAND, Circuit Judges.
*34 L. HAND, Circuit Judge.
The plaintiffs appeal from an order and judgment quashing the service of the summons and dismissing the complaint on the ground that the plaintiffs had not acquired personal jurisdiction over the defendant, a Texas corporation. The complaint was filed in the state court, and service of the summons (and complaint) was made upon one, Rudolf Pick, as "managing agent" of the local business. The complaint alleged that both the plaintiffs and the defendant made and distributed women's clothes, on which the plaintiffs used the words, "June Arden," as a registered trade-mark, and the word, "Junard," as an unregistered trademark; that they had "offered for sale, and sold in the State of New York and elsewhere in the United States and shipped in interstate commerce," quantities of women's clothes bearing these marks; that since July, 1944, the defendant had been selling "in the State of New York and elsewhere in the United States in interstate commerce," women's clothes with the trademark, "Junard." After the defendant had removed the case for diversity of citizenship (the plaintiffs are citizens of Pennsylvania), it moved to quash the service and dismiss the complaint upon the ground that it was not doing business in New York, and that Pick was not its "managing agent." The supporting and opposing affidavits used upon the motion being in conflict, the judge, on March 2, 1945, directed a reference to a special master to take testimony and report; and on October 22, 1945, the master filed a report, finding that the defendant did not do business in the Southern District of New York, that Pick was not its "managing agent," and that for these reasons the service should be quashed and the complaint dismissed. On June 25, 1946, the judge so ordered, and on July 9, 1946, a judgment was entered in favor of the defendant for costs. In the order of reference, the judge had provided that the expenses of the hearing, if the defendant was unsuccessful, might be borne by the party who eventually failed in the action; and the plaintiffs' appeal is from this order as well.
The facts, so far as relevant, are as follows. On December 18, 1942, the defendant entered into an agreement with three persons Sorter, Hertz and Pick, then doing business as "West Coast Sales Company" by which it appointed them its agents, "to solicit orders and to further the sale for it of women's sportswear manufactured by it," subject to "written approval and acceptance" at such prices and upon such conditions as it should authorize in writing: the power to accept orders or assume obligations being absolutely reserved to it. They were to maintain a show-room for the display of the defendant's goods, and to employ their own assistants; and they were to be responsible for employer's liability, workmen's compensation, unemployment insurance, and other liabilities of the kind. As compensation they were to have seven per cent of the net sale price upon all orders accepted by the defendant, and three and one-half per cent upon any merchandise sold by them in any showrooms set up by them in outside territory. The defendant agreed to pay $100 a week advance commissions for the first twelve weeks, $100 a month for the first six months toward the expenses of maintaining the show-room, and $125 rent for the New York show-room for the first month, January, 1943; but except for these the agents were to pay all their expenses out of their commissions. Sorter, Hertz and Pick organized a company, known as the Sopic Corporation, which took over the contract, and later they filed a certificate allowing them to do business as the "Sopic Trading Company," under which name after June, 1944, they took back the business. They leased a show-room in Manhattan, paid the rent, employed two salesmen to solicit orders, and two office girls; they carried on altogether without interference from the defendant, paid for the telephone, outfitted the office, paid all taxes and similar liabilities; and secured orders in 1944 amounting to $400,000 which was about nine per cent of the defendant's total business. Of the three Pick was the person in charge. The judge held that the rule still obtained that the solicitation of orders alone did not subject a foreign corporation to service in personam in a transitory action; and that there were not enough additional activities to take the case out of this doctrine.
*35 By removal a defendant does not lose his right to challenge the invalidity of the service in the state court;[1] and thus the first question is whether the service was valid under the New York decisions. If we conclude that it was not, of course the case ends; but, if we conclude that it was, there arises the second question: i. e. whether the service was valid under the Constitution.[2] This approach is the proper one, because the law of New York may not extend to suitors' access to its courts against foreign corporations as amply as it has power to do under the Constitution. In the first inquiry we need not go back of Judge Cardozo's opinion in Tauza v. Susquehanna Coal Co.,[3] for that has been accepted as the basis of the later decisions. The test there set was the familiar one: whether the corporation was "present" in the state by virtue of those activities which it there set in motion. How extensive these must be to make the corporation "present" was left at large in that case, as it had been before and has been since; for in the last decision,[4] Conway, J., after summing up those local activities of the corporation Vanguard Films, Inc. which, he held, proved it to have been "`here' within the meaning of the Tauza Case," made no attempt to lay down any general proposition from which that conclusion could be deduced. Nor had any of the intervening decisions attempted to do so.[5] It would have been possible from some of the language in Bagdon v. Philadelphia & Reading Coal & Iron Co.,[6] to infer that, if the liability in suit arises out of the local activities, it is not necessary to go further, except to show that these were continuous. However, we understand that since Tauza v. Susquehanna Coal Co., supra,[7] the law of New York has been that a foreign corporation is either "present," or it is not; and once it is found to be "present," it becomes subject to process, regardless of whether the particular liability in suit has arisen out of the activities which collectively constitute the "presence." How far this has been a reflection of what the New York courts suppose to be the constitutional limit of their power is not clear. In Lillibridge, Inc. v. Johnson Bronze Co., supra,[8] Finch, J., declared that the state courts should take the federal decisions as their absolute standard, positive as well as negative; but, when the Court of Appeals affirmed the decision, it wrote no opinion.
If the state courts do take the Supreme Court decisions in both senses: that is, if they regard the inquiry, how far they may go, as coalesced with the inquiry, how far they will go, International Shoe Co. v. Washington,[9] has effected a change. The Supreme Court there declared that the corporation's "presence" was to be determined by balancing the opposed interests: the convenience of the obligee against the burden upon the corporation. That is a test not different in kind from that which has been repeatedly used, when the inquiry is whether it will "unduly burden" interstate commerce to fetch a corporation, engaged in such commerce, from the place of its principal activities to defend the action. If that be the test, the question at once becomes relevant whether the action is based upon a liability arising out of the local activities; for it is almost always less burdensome to subject a corporation to the defense of actions so arising than to those arising elsewhere.[10] Indeed, probably some such notion is at the basis of those decisions which permit a state to subject to process *36 in personam transients who, while within its borders, have incurred a liability under its laws.[11] In the case at bar such a rule would answer any objections to jurisdiction, for the complaint alleges that the defendant has sold goods in New York bearing the trade-mark, "Junard"; and, if so, the wrong was pro tanto a direct consequence of the continuous New York solicitation of orders. Nevertheless, we hesitate to say that the New York courts will occupy the new enclave, now opened to them by International Shoe Co. v. Washington, supra;[12] and, until they do, we see no other course but to compare the facts in the case at bar with those which existed in the bellwether decisions of the state, and to appraise a more candid word would be to guess at the importance of any differences. This we shall try to do.
In Tauza v. Susquehanna Coal Co., supra,[13] the foreign corporation had an agent in charge of the New York office who employed eight salesmen, over whom he had the entire direction. The corporation kept a bank account in New York out of which all office expenses were paid, including salaries and rent. This managing agent had no power to close any contracts; he merely solicited orders and sent them to the home office for acceptance, but he used the corporation's name upon the door and elsewhere, as he desired. The differences are that in the case at bar Pick was obliged to pay all expenses out of his commisssions, that he employed fewer assistants and salesmen, and that the local business is not so large. His use of the defendant's name on the door, in public directories, in the telephone book, and on stationery was obviously with the defendant's acquiescence; Gold, its president went to the office not infrequently, and the defendant actually furnished the stationery. We cannot think it crucial that the principal pays the salaries of the salesmen, the rent and the other expenses incidental to the business, instead of fixing the commissions high enough to cover these charges; and indeed in the only case in which the question has arisen in New York,[14] that was the ruling. A local bank account is obviously necessary if the principal is to pay the expenses itself.
In Chaplin v. Selznick, supra,[15] Vanguard Films, Inc. had a New York office where there were only three employees, whose duties were to look over such scripts and other literary material as came in, and to forward to the home office any that appeared promising. The corporation paid all the expenses, however, and kept a bank account for the purpose. The majority dwelt with some emphasis upon the corporation's payment of an "occupancy tax," arguing that it could not well assert that it was not "present" after such an implied admission. Yet it would seem that to pay the charges imposed upon a resident employer employer's liability, unemployment and the like which Pick paid, as much justifies the inference of "presence" as the payment of an "occupancy tax," though verbally the argument is not so strong. If it is as strong in substance, and if, as we think, it makes no difference whether the principal or the agent pays the expenses of the business, so long as they come out of the same pocket in the end, the "occupancy tax" is not an important distinction here. Nor is it one that on one occasion Vanguard Films, Inc. tried unsuccessfully to borrow a large sum from a New York bank. What we have just said as to Tauza v. Susquehanna Coal Co., supra,[16] applies to this decision; the distinctions between the situation there and here seem to us insubstantial.
On the other hand we do find it difficult to reconcile Lillibridge, Inc. v. Johnson Bronze Co., supra,[17] for we cannot see that it was important that the agent worked for several principals. In the end any decision must seem like the fiat of a piepowder *37 court. That will indeed be to some measure true, even though the federal test is applied of balancing the conflicting interests; but at least that will serve to center the inquiry upon those considerations which count with the parties, and to remove it from that world of abstractions drawn from the analogy of arrest under a capias in which it has hitherto so helplessly floundered. Our own decisions need not detain us. In Deutsch v. Hoge,[18] the extract from Judge Goddard's opinion says among other things that the "defendants did not conduct a regular course of business in New York." Whether by this he meant that the agent's work was intermittent and sporadic, or whether it was merely his legal conclusion from the evidence is not clear. In any event the majority cited only federal decisions, and apparently proceeded on the assumption that these were conclusive; International Shoe Co. v. Washington, supra,[19] had not been decided and might have resulted in an opposite conclusion. The same is true of Davega, Inc. v. Lincoln Furniture Mfg. Co.,[20] where also we did not distinguish between the state and the federal law. In conclusion we hold that the defendant was doing enough business in New York to satisfy the state decisions; and that, since the cause of action arose at least as to New York sales out of those activities which made the corporation "present," any federal question is set at rest.
There remains the question whether the service on Pick was valid under the New York Civil Practice Act,[21] strictly a question of state law. This is in two parts: whether Pick was a "managing agent" at all; whether the plaintiffs had exercised due diligence to ascertain that the persons mentioned in subdivision one of § 229 were not available for service. As to the first issue, Pick was concededly in charge of the local business, when Gold, the president, was not in New York, which was only occasionally. That being true, Pick was the "managing agent," as the statute uses the word; for we understand the New York courts to hold that, whatever activities make the corporation "present," the agent in charge of those activities is the "managing agent" pro hac vice.[22] The master also found that the process servers did not exercise due diligence to ascertain the absence from New York of the officers mentioned in subdivision one. Two process servers testified: Wechsler and Kruger. Wechsler said that he went to Pick's office on December 28 and 29, 1944, and asked whether any officers of the defendant were there; and that on one occasion anyway he was told that they were out of town. The master doubted this testimony, because he thought that if Wechsler had been there, he would have served Pick as soon as he heard that the officers were out of town. Be that as it may, on January 5, 1945, Kruger undoubtedly did appear, asked to see an officer or a director, and was told that they were all in Dallas and that Pick was in charge. This is to some extent confirmed by the affidavit of one, Satz, that Kruger was told that no officer "was around." The master apparently believed Kruger; but he thought that due diligence called for further inquiry. The last is not a finding of fact, and we cannot agree with the conclusion. The statute does not impose on a plaintiff the duty of waiting till some officer appears; he may choose his own time to sue. (We mention, merely to leave the answer open, the possibility of a situation in which the officers are regularly present, but the plaintiff deliberately selects an occasion when he knows that all will be away.) There is no such evidence here; so that all the plaintiffs had to do was to make reasonable effort, when they did seek to serve the process, to serve any officer or director who was then within the state. To go to the place of the local business, and there to ascertain from the person in charge that all are 1500 miles away, was enough. Indeed, the master's rulings result in a curious inconsistency: he discredited Wechsler because he thought Wechsler would have served Pick *38 upon getting precisely that information, which, when Kruger acted upon it, he found to be insufficient diligence. We hold the service valid.
We read the interlocutory order as leaving it to the discretion of the trial judge at the conclusion of the cause to include the costs and disbursements of this interlocutory proceeding within the other costs, and impose them as to him may then seem fair. We think that this was right; this proceeding was a step in the defence of the action, and the trial judge may conclude that the claim as a whole was so destitute of merit as to make it proper to charge the cost of every step in it against the plaintiffs who stirred up the controversy. We do not suggest that he ought to do so; but it is proper to leave his hands free.
Interlocutory order affirmed.
Order quashing summons and dismissing complaint reversed.
NOTES
[1] Lambert Co. v. Baltimore & O. R. Co., 258 U.S. 377, 382, 42 S.Ct. 349, 66 L.Ed. 671.
[2] Chipman v. Jeffery Co., 251 U.S. 373, 379, 40 S.Ct. 172, 64 L.Ed. 314; Lillibridge, Inc. v. Johnson Bronze Co., 220 App.Div. 573, 222 N.Y.S. 130, affirmed without opinion, 247 N.Y. 548, 161 N.E. 177.
[3] 220 N.Y. 259, 115 N.E. 915.
[4] Chaplin v. Selznick, 293 N.Y. 529, 58 N.E.2d 719.
[5] Holzer v. Dodge Bros., 233 N.Y. 216, 135 N.E. 268; Lillibridge, Inc. v. Johnson Bronze Co., supra, 247 N.Y. 548, 116 N.E. 177; Gaboury v. Central Vermont R. Co., 250 N.Y. 233, 165 N.E. 275.
[6] 217 N.Y. 432, 437, 111 N.E. 1075, L. R.A.1910F, 407, Ann.Cas.1918A, 389.
[7] 220 N.Y. 259, 115 N.E. 915.
[8] 220 App.Div. 573, 222 N.Y.S. 130.
[9] 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95, 161 A.L.R. 1057.
[10] Old Wayne Life Ass'n v. McDonough, 204 U.S. 8, 22, 27 S.Ct. 236, 51 L.Ed. 345; Simon v. Southern Railway, 236 U. S. 115, 130-132, 35 S.Ct. 255, 59 L.Ed. 492.
[11] Kane v. New Jersey, 242 U.S. 160, 37 S.Ct. 30, 61 L.Ed. 222; Hess v. Pawloski, 274 U.S. 352, 47 S.Ct. 632, 71 L. Ed. 1091; Young v. Masci, 289 U.S. 253, 53 S.Ct. 599, 77 L.Ed. 1158, 88 A.L.R. 170; Henry L. Doherty & Co. v. Goodman, 294 U.S. 623, 55 S.Ct. 553, 79 L. Ed. 1097.
[12] 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95, 161 A.L.R. 1057.
[13] 220 N.Y. 259, 115 N.E. 915.
[14] Johnson v. Pacific Steel Boiler Corporation, 132 Misc. 735, 739, 230 N.Y. S. 441.
[15] 293 N.Y. 529, 58 N.E.2d 719.
[16] 220 N.Y. 259, 115 N.E. 915.
[17] 247 N.Y. 548, 161 N.E. 177.
[18] 2 Cir., 146 F.2d 201, 202.
[19] 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95, 161 A.L.R. 1057.
[20] 2 Cir., 29 F.2d 164.
[21] § 229 (3).
[22] Tuchband v. Chicago & A. R. Co., 115 N.Y. 437, 22 N.E. 360; Palmer v. Chicago Evening Post Co., 85 Hun 403, 406; Russell v. Washington Life Ins. Co., 62 Misc. 403, 409, 115 N.Y.S. 950; Jackson v. Schuylkill Silk Mills, 92 Misc. 442, 445, 156 N.Y.S. 219.
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IN THE SUPREME COURT OF PENNSYLVANIA
MIDDLE DISTRICT
JP MORGAN CHASE BANK N/A : No. 709 MAL 2015
SUCCESSOR BY MERGER CHASE :
HOME FINANCE LLC, :
: Petition for Allowance of Appeal from
Respondent : the Order of the Superior Court
:
:
v. :
:
:
ERIC LESTER LEINBACH, :
:
Petitioner :
ORDER
PER CURIAM
AND NOW, this 17th day of February, 2016, the Petition for Allowance of Appeal
is DENIED.
Mr. Justice Eakin did not participate in the consideration or decision of this
matter.
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999 A.2d 226 (2010)
HSBC BANK USA, NATIONAL ASSOCIATION, INC.
v.
Kevin F. MacMILLAN and another.
No. 2009-600.
Supreme Court of New Hampshire.
Submitted: April 8, 2010.
Opinion Issued: June 3, 2010.
*227 Hastings Law Office, P.A., of Fryeburg, Maine (Peter J. Malia, Jr. on the brief), for the petitioner.
Kevin F. MacMillan, by brief, pro se.
DALIANIS, J.
The respondents, Kevin F. MacMillan, individually and as executor of the estate of Catherine E. Silvey, and seven other heirs to her estate, appeal the order of the Superior Court (Houran, J.) dismissing their appeal from a probate court decision on a petition to quiet title. See RSA 547:11-c (2007). We affirm.
The record reveals the following facts. In its petition to quiet title, the petitioner, HSBC Bank USA, National Association, Inc., alleged that, through foreclosure, it had acquired property consisting of three merged parcels, but that its predecessors' deed from the estate of Catherine E. Silvey erroneously described only one of the parcels. Thus, the petitioner sought an order quieting its title to the parcels omitted from the deed. The probate court quieted title in the petitioner's favor.
Thereafter, the respondents appealed the probate court's order to the superior court pursuant to RSA 547:11-d (2007), which provides, in pertinent part: "In cases where a right to jury trial is guaranteed by the constitution or granted by statute, a person may, at the time judgment by the probate court is declared, appeal therefrom to the superior court." The petitioner moved to dismiss the appeal, arguing that because there was neither a constitutional nor a statutory right *228 to a trial by jury in a quiet title action, the respondents could not appeal under RSA 547:11-d. The trial court granted the petitioner's motion, and this appeal followed.
The respondents first argue that the trial court erred by concluding that they had no right to a jury trial under Part I, Article 20 of the State Constitution. As the final arbiter of state constitutional disputes, we review the trial court's construction of constitutional provisions de novo. Gilman v. Lake Sunapee Props., 159 N.H. 26, 29, 977 A.2d 483 (2009).
Part I, Article 20 governs civil jury trials and provides, in pertinent part:
In all controversies concerning property, and in all suits between two or more persons except those in which another practice is and has been customary and except those in which the value in controversy does not exceed $1,500 and no title to real estate is involved, the parties have a right to a trial by jury. This method of procedure shall be held sacred. . . .
Although Part I, Article 20 of the New Hampshire Constitution generally guarantees a jury trial right "[i]n all controversies concerning property," the right does not extend to controversies concerning property that were "not resolved by a jury at the time of the adoption of the constitution" in 1784. Id. at 30, 977 A.2d 483. In 1784, equity matters, as contrasted with actions at law, were tried to the bench, not to a jury. See id. at 32, 977 A.2d 483. Accordingly, "[t]he mere fact that title to real estate is involved does not establish the right to a jury trial which deprives equity of all jurisdiction." Hampton v. Palmer, 99 N.H. 143, 145, 106 A.2d 397 (1954).
The respondents rely upon Gilman to argue that they are entitled to a jury trial with respect to the petition to quiet title. In Gilman, we examined substantial historical evidence, and concluded that, while partition today has developed into a remedy "calling heavily upon the court's equity powers," Gilman, 159 N.H. at 36, 977 A.2d 483 (Hicks, J., concurring), it was decided in an action at law in 1784, see id. at 31-36, 977 A.2d 483.
The respondents provide no support for their contention that title disputes, like partition actions, were decided in actions at law in 1784. To the contrary, title to real estate generally could not be adjudicated in actions at law, except in the narrow class of cases where a plaintiff's right of possession was actually interfered with by the adverse claimant. See Harvey v. Harvey, 73 N.H. 106, 108, 59 A. 621 (1904). Thus, equity, amplified by statutes such as RSA 547:11-c, developed "to grant relief by way of quieting title or removal of a cloud from a title." Dowd v. Gagnon, 104 N.H. 360, 362, 187 A.2d 63 (1962); see also Harvey, 73 N.H. at 108, 59 A. 621 (quiet title statute intended for persons whose actual possession of land prevented actions at law to establish title); Tucker v. Kenniston, 47 N.H. 267, 270 (1867) ("[c]ourts of equity have jurisdiction to remove a title or claim which may operate as a cloud upon the title of the owner"). Here, the petitioner sought relief that would not have been available in an action at law in 1784. Under these circumstances, a right to a jury trial and, thus, an appeal under RSA 547:11-d, was unavailable to the respondents.
The respondents next argue that the superior court erred by failing to find that the petitioner's counsel had a conflict of interest under New Hampshire Rule of Professional Conduct 1.11(c). The respondents have failed to establish how the alleged violation of Rule 1.11 by the petitioner's counsel has caused them prejudice. See Broughton v. Proulx, 152 N.H. 549, 553, 880 A.2d 388 (2005). "The New *229 Hampshire Rules of Professional Conduct are aimed at policing the conduct of attorneys, not at creating substantive rights on behalf of third parties." State v. Decker, 138 N.H. 432, 438, 641 A.2d 226 (1994). Accordingly, we agree with the petitioner that the alleged conflict does not warrant reversal of the superior court's decision. The respondents' remaining arguments are without merit, warranting no further discussion. See Vogel v. Vogel, 137 N.H. 321, 322, 627 A.2d 595 (1993).
Affirmed.
BRODERICK, C.J., and DUGGAN, HICKS and CONBOY, JJ., concurred.
|
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141 Ga. App. 175 (1977)
233 S.E.2d 33
PIERCE
v.
LIBERTY FURNITURE COMPANY, INC. et al.
53207.
Court of Appeals of Georgia.
Submitted January 11, 1977.
Decided February 2, 1977.
Calhoun & Donaldson, John R. Calhoun, for appellant.
Bouhan, Williams & Levy, James M. Thomas, Falligant, Karsman, Kent & Toporek, Stanley Karsman, Timothy F. Callaway, III, for appellees.
STOLZ, Judge.
The appellant bought a porch swing kit from appellee Liberty Furniture Company and assembled the set on her porch. Liberty had purchased the kit in a sealed package, complete with oak chair and hardware from appellee Gore and Easterling Chair Company. The hardware was not constructed by Gore, but was bought by Gore from another company in a closed, plastic container for insertion in the swing kit. On the day of purchase, the appellant attempted to sit on her swing, which collapsed and injured her due to the breaking of one of the hardware pieces. The appellant originally sued both Liberty and Gore under the provisions of Code Ann. § 105-106 (Ga. L. 1968, pp. 1166, 1167) and for negligence. She subsequently amended her complaint to include counts of fraud and breach of warranty by Liberty. Motions for summary judgment made by both appellees were granted. We reverse both grants of summary judgment.
1. Although we must reverse the grant of summary judgment below in favor of appellee Liberty, several of the grounds upon which the plaintiff-appellant based her case were properly dismissed.
Because there is absolutely no evidence that Liberty manufactured the swing, Liberty would not be strictly liable to the appellant under the provisions of Code Ann. § 105-106, supra. Ellis v. Rich's, Inc., 233 Ga. 573 (212 SE2d 373) (1975).
2. Nor, under the affidavits presented for summary judgment, is appellee Liberty liable for negligently permitting defective equipment to be sold to the appellant, as alleged in her complaint. "It is the general rule that a vendor or dealer who is not the manufacturer is *176 under no obligation to test an article purchased and sold by him for the purpose of discovering latent or concealed defects, but that when he purchases and sells an article in common and general use, in the usual course of trade, without knowledge of its dangerous quality, and with nothing tending reasonably to call his attention thereto, he is not negligent in failing to exercise care to determine whether it is dangerous or not. In such a case he may assume that the manufacturer has done his duty in properly constructing the article and in not placing upon the market a commodity which is defective and likely to inflict injury." King Hardware Co. v. Ennis, 39 Ga. App. 355, 360 (147 SE 119) (1928); see Lowe v. American Machine &c. Co., 132 Ga. App. 572 (1) (a) (208 SE2d 585) (1974).
3. However, the appellant has stated sufficient grounds for a finding that appellee Liberty is liable for a breach of warranty. There is evidence of a defect in the swing which rendered it unfit for the ordinary purposes for which such goods are used. Thus Liberty may be held liable under the Uniform Commercial Code's implied warranty of merchantability. Code Ann. § 109A-2-314 (Ga. L. 1962, pp. 156, 189).
All of the post-U.C.C. authority that we have studied indicates that the implied warranty of merchantability does not base any distinctions upon whether or not goods are sold in their original packages. See, e.g., Anderson, 1 Uniform Commercial Code §§ 2-314: 70-72 (2d Ed. 1970); Kock, Georgia Commercial Practice, 40-41 (1964); White, Sales Warranties Under Georgia's Uniform Commercial Code, 1 Ga. S. B. J., 191, 196 (1964). The provision, in fact, establishes a concept for retailers similar to that employed in Code Ann. § 105-106, supra, by which manufacturers may be held strictly liable for defective products.
Prior to the enactment of the U.C.C., Georgia adhered to the "sealed container doctrine." See Wood v. Hub Motor Co., 110 Ga. App. 101 (2) (137 SE2d 674) (1964); Maroney v. Montgomery Ward & Co., 72 Ga. App. 485 (34 SE2d 302) (1945); Bel v. Adler, 63 Ga. App. 473 (2) (11 SE2d 495) (1940). According to that doctrine, no warranty of merchantability applied as to the retailer of *177 goods in their original packages, manufactured by reputable manufacturers, and in general use in the retail trade. In Wood v. Hub Motor Co., supra, however, it was specifically noted that this line of decisions was based on Code § 96-301, which was repealed with the advent of the U.C.C. in Georgia.
Since the adoption of the U.C.C., several Georgia cases have applied the implied warranty of merchantability to retailers of goods sold in sealed packages. In Fender v. Colonial Stores, Inc., 138 Ga. App. 31 (1) (A) (225 SE2d 691) (1976), the plaintiff took a six-pack carton of Coca-Cola from a shelf in the supermarket. She then proceeded to the check-out counter, and placed the carton upon the counter, at which time a bottle exploded and injured her. She sued the supermarket and suffered a directed verdict. This court held, on p. 35, "that Coca-Cola bottles which would break under normal handling are not fit for the ordinary use for which they were intended ..." and thus there was a prima facie showing by the plaintiff of a claim under the U.C.C.'s implied warranty of merchantability. The case was remanded for a jury trial.
Chaffin v. Atlanta Coca Cola Bottling Co., 127 Ga. App. 619 (1) (194 SE2d 513) (1972), also deals with a bottled soft drink which was not merchantable. In this case the plaintiff's daughter purchased a Coke from a vending machine at a Big Apple grocery store. The plaintiff was injured while drinking an impure substance which was contained in the bottle. The plaintiff sued the grocery store on several grounds, including that of breach of the U.C.C. implied warranty of merchantability. The judge refused to charge the jury as to the implied warranty, and the jury found against the plaintiff. This court held that the trial court erred in its refusal to charge.
Numerous other cases from this court, while not dealing specifically with goods sold in original containers, have used a strict liability approach to hold retailers liable for damage, suffered due to a breach of the U.C.C. implied warranty of merchantability. Redfern Meats v. Hertz, 134 Ga. App. 381 (215 SE2d 10) (1975) (improperly operating truck); Ray v. Deas, 112 Ga. App. 191 (144 SE2d *178 468) (1965) (foreign substance in hamburger).
Ellis v. Rich's, Inc., 233 Ga. 573, supra, would appear at first glance to hold that the sealed-container doctrine still applies. In Ellis, the buyer purchased a fondue pot from Rich's and gave it as a Christmas gift to Mrs. Ellis. When the pot broke, injuring Mrs. Ellis, she sued Rich's, claiming a breach of the implied warranty of merchantability. The Supreme Court held summarily that she had no claim for breach of warranty under the U.C.C. because of lack of privity she was a donee. 233 Ga., p. 576. The U.C.C. is explicit in its requirement that privity exist if a party is to claim the benefits of an implied warranty. Code Ann. § 109A-2-318 (Ga. L. 1962, pp. 156, 191). Therefore, the result in Ellis is not applicable to a fact pattern where the injured party purchased the goods personally.
It should be noted that under this holding a retailer is not a defenseless party who will be caught with a monetary loss due to another's faulty construction of products. The retailer's remedy is an action over against his seller not exculpation. The retailer may rely on the wholesaler or manufacturer to supply merchantable goods, and if they are not merchantable, the retailer has the same claim for breach of warranty as its customer had against it. Kock, Georgia Commercial Practice, 41 (1964).
For the reasons given in this division of our opinion, we reverse the grant of summary judgment as to appellee Liberty.
4. We also find it necessary to reverse the grant of summary judgment in favor of appellee Gore. Code Ann. § 105-106, supra, imposes strict liability in tort upon the manufacturer of personal property. In this case we are faced with the issue of whether or not Gore is a "manufacturer."
The party resisting a motion for summary judgment is given the benefit of all inferences that may be drawn from the evidence. Ford Motor Credit Co. v. Moulder, 132 Ga. App. 867 (209 SE2d 685) (1974). Thus construing the evidence in the case sub judice, we find that one could infer that Gore sold the defective hardware as a part of a kit under its own name and trademark. Gore did not act as a mere distributor selling products acknowledged to have *179 been constructed by others.
It is an issue of first impression in this state as to whether one who assembles component parts and sells them as a single product under its trade name is a manufacturer of the entire product into which the parts are integrated. Numerous other states have held the assembler to be a manufacturer. See, e.g., Bradford v. Bendix-Westinghouse Automotive Air Brake Co., 517 P2d 406 (13) (Colo. App. 1973); Holman v. Ford Motor Co., 239 S2d 40 (1) (Fla. App. 1970); Vandermark v. Ford Motor Co., 61 Cal.2d 256 (391 P2d 168) (1964). In addition, the second Restatement of the Law of Torts § 400 states, "One who puts out as his own product a chattel manufactured by another is subject to the same liability as though he were its manufacturer." See Moody v. Sears, Roebuck & Co., 324 FSupp. 844 (S.D. Ga. 1971). Based on this precedent and the fact that one selling a product under its trade name causes the chattel to be used in reliance upon its care in making the item, we hold that an entity which assembles component parts and sells them as a single product under its trade name is a "manufacturer" within the meaning of Code Ann. § 105-106, supra.
Judgment reversed. Quillian, P. J., and Shulman, J., concur.
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819 F.2d 1130
Lanev.Lincoln First Bank N.A.
86-7882
United States Court of Appeals,Second Circuit.
4/14/87
1
W.D.N.Y.
AFFIRMED
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300 F.3d 620
APANI SOUTHWEST, INC., Plaintiff-Appellant,v.COCA-COLA ENTERPRISES, INC., Defendant-Appellee.
No. 01-11026.
United States Court of Appeals, Fifth Circuit.
August 12, 2002.
COPYRIGHT MATERIAL OMITTED COPYRIGHT MATERIAL OMITTED Harold Houston Pigg (argued), Clifford, Field, Krier, Manning, Stone & Wilkerson, Lubbock, TX, for Plaintiff-Appellant.
Jerry L. Beane, Kay Lynn Brumbaugh (argued), Strasburger & Price, Dallas, TX, for Defendant-Appellee.
Appeal from the United States District Court for the Northern District of Texas.
Before STEWART and CLEMENT, Circuit Judges.1
CARL E. STEWART, Circuit Judge:
1
Plaintiff-Appellant, Apani Southwest, Inc. ("Apani"), appeals from the district court's dismissal of its antitrust claims against Coca-Cola Enterprises, Inc. ("CCE") arising out of a contract between CCE and the city of Lubbock, Texas (the "City"), which granted CCE the exclusive right to sell bottled water on property owned by the City. For the reasons stated herein, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
2
Apani is a manufacturer of purified bottled water operating in and around the Lubbock, Texas area. Prior to the events in question, Apani had developed a business relationship with the City, which permitted Apani to sell its product in facilities owned and operated by the City. On August 26, 1999, however, the City entered into an exclusive contractual agreement with CCE allowing CCE to supply non-alcoholic beverages to all facilities "owned and operated" by the City and precluding the City from purchasing beverages from other parties.2 The agreement, therefore, effectively eliminated the City's business relationship with Apani.3 The contract between the City and CCE arose from a proposal by the City that CCE donate approximately one million dollars for the construction of two new scoreboards at the Lubbock Municipal Coliseum. CCE agreed to provide the funds for the scoreboards as long as it would be permitted to recoup some of its investment. Accordingly, a contract was drafted giving CCE "the exclusive right to advertise and promote Exclusive Beverages in and with respect to the Territory(s), the Locations and Sites, and with respect to the CITY of LUBBOCK, events at the Locations...." The agreement, however, provided for several exceptions, including the following:
3
(1) the right of the city to make available fresh-squeezed juice, tea, coffee products, water drawn from the public water supply, and milk products as long as CCE does not distribute a similar product;
4
(2) permit trade show exhibitors who have an exclusive agreement for competitive products to advertise, display, serve, or sample products during trade show events;
5
(3) allow customers with a single beverage serving for immediate consumption to drink but not refill them;
6
(4) permit local water bottling (Apani) company, that is the official sponsor of the Cotton Kings, to sell bottled water at professional hockey games. This water will not be chilled or iced down; and
7
(5) allow amateur sports leagues in city parks the option to sell concessions using competing products.
8
Apani filed suit against CCE seeking damages for violations of § 3 of the Clayton Act, 15 U.S.C. § 14, and the Texas Free Enterprise and Antitrust Act ("TFEAA"), TEX. BUS. & COM. CODE ANN. § 15.01 et seq. It also alleged claims of tortious interference with existing and prospective business relations. CCE filed a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. The district court granted CCE's motion as to the state and federal antitrust claims, but denied the motion with regard to the tortious interference claims. Subsequent to the partial dismissal, the court allowed Apani to file a Second Amended Complaint adding causes of action under the Sherman Act, 15 U.S.C. §§ 1 and 15, and a civil conspiracy claim. The district court again dismissed all of the antitrust claims pursuant to Rule 12(b)(6). CCE then filed a Motion for Summary Judgment as to the tortious interference and civil conspiracy claims. The district court granted the motion as to both claims. Thereafter, Apani filed a motion to Alter or Amend Summary Judgment, which the district court denied.
STANDARD OF REVIEW
9
We review a district court's ruling on a Federal Rule of Civil Procedure 12(b)(6) motion de novo. Jackson v. City of Beaumont Police Dep't, 958 F.2d 616, 618 (5th Cir.1992). In reviewing the dismissal of a claim pursuant to 12(b)(6), this court must accept all of the plaintiff's factual allegations as true. Blackburn v. City of Marshall, 42 F.3d 925, 931 (5th Cir. 1995). "The motion may be granted only if it appears that no relief could be granted under any set of facts that could be proven consistent with the allegations." Jackson, 958 F.2d at 618 (quotation marks and citations omitted). "[D]ismissal is proper if the complaint lacks an allegation regarding a required element necessary to obtain relief." Blackburn, 42 F.3d at 931 (citation omitted).
10
A district court's grant of summary judgment is also reviewed de novo. Melton v. Teachers Ins. & Annuity Ass'n of Am., 114 F.3d 557, 559 (5th Cir.1997). Summary judgment is proper where the pleadings and summary judgment evidence present no genuine issue of material fact and the moving party is entitled to a judgment as a matter of law. FED. R. CIV. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A factual dispute will preclude an award of summary judgment if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
DISCUSSION
11
Apani asserts antitrust violations against CCE under the Clayton Act, the Sherman Act, and the TFEAA. Specifically, in its Second Amended Complaint, Apani asserted that "[t]he Agreement, having a duration of ten (10) years, represents a contractual agreement resulting from an illegal combination or conspiracy by the City of Lubbock and Coca-Cola, and which constitutes a restraint of trade in violation of the Sherman Antitrust Act, the Clayton Antitrust Act, and the Texas Free Enterprise and Antitrust Act of 1983."
I. Clayton Act
12
Section 3 of the Clayton Act makes it unlawful to sell goods on the "condition, agreement, or understanding" that the purchaser refrain from dealing with competitors of the seller if the effect "may be to substantially lessen competition or tend to create a monopoly in any line of commerce." 15 U.S.C. § 14 (1997). Two types of restrictions on competition may be challenged under § 3: tying restraints and exclusive-dealing arrangements. Gulf Oil Corp. v. Copp Paving Co., Inc., 419 U.S. 186, 194, 95 S.Ct. 392, 42 L.Ed.2d 378 (1974). Tying restraints occur when a seller agrees to sell one product on the condition that the buyer also agree to purchases a different, or tied product, or the buyer agrees that he will not purchase the same product from another supplier. Kaiser Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1048 n. 5 (5th Cir. 1982). Exclusive dealing, in contrast, occurs when a seller agrees to sell its output of a commodity to a particular buyer, or when a buyer agrees to purchase its requirements of a commodity exclusively from a particular seller. WILLIAM C. HOLMES, ANTITRUST LAW HANDBOOK § 4.02[3] (1999). Here, Apani's claim under § 3 arises from the exclusive arrangement between the City and CCE in which the City agreed to permit CCE to sell its products exclusively on property owned and operated by the City. This court has recognized that an exclusive-dealing arrangement does not violate § 3 of the Clayton Act unless the probable effect of the agreement "will foreclose competition in a substantial share of the line of commerce affected." Bob Maxfield, Inc. v. Am. Motors Corp., 637 F.2d 1033, 1036 (5th Cir.1981) (citing Tampa Elec. Co. v. Nashville Coal Co., 365 U.S. 320, 327, 81 S.Ct. 623, 5 L.Ed.2d 580 (1961)).
13
When assessing whether an exclusive-dealing arrangement has the probable effect of substantially lessening competition, the Supreme Court has identified a three-part inquiry. Tampa Elec. Co., 365 U.S. at 327-28, 81 S.Ct. 623. First, the relevant product market must be identified by considering interchangeability and cross-elasticity of demand. Second, the relevant geographic market must be identified, "by careful selection of the market area in which the seller operates and to which the purchaser can practicably turn for supplies." Id. Finally, a plaintiff must show that the "competition foreclosed by the arrangement constitutes a `substantial share of the relevant market.'" Id. That is, "the opportunities for other traders to enter into or remain in that market must be significantly limited." Id.
14
In applying this three-step analysis, it is clear that in order to determine whether a substantial portion of the competition has been foreclosed, Apani must first identify the relevant product and geographic markets.
A. Product Market
15
In ascertaining the relevant product market, courts consider the extent to which the seller's product is "interchangeable in use" and the degree of "cross-elasticity of demand between the product itself and substitutes for it." C.E. Servs., Inc. v. Control Data Corp., 759 F.2d 1241, 1245 (5th Cir.1985) (citing Brown Shoe Co. v. United States, 370 U.S. 294, 325, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962)). Within the product market, there may exist submarkets which, in themselves, represent product markets for antitrust purposes. Heatransfer Corp. v. Volkswagenwerk, A. G., 553 F.2d 964, 980 (5th Cir.1977) (citing United States v. E.I. duPont de Nemours & Co., 353 U.S. 586, 593-595, 77 S.Ct. 872, 1 L.Ed.2d 1057 (1957)). "The boundaries of such a submarket may be determined by examining such practical indicia as industry or public recognition of the submarket as a separate economic entity, the product's peculiar characteristics and uses, unique production facilities, distinct customers, distinct prices, sensitivity to price changes, and specialized vendors." Heatransfer Corp., 553 F.2d at 980 (quoting Brown Shoe Co., 370 U.S. at 325, 82 S.Ct. 1502). The district court properly determined, and neither of the parties contest, that the relevant product market is bottled water.
B. Geographic Market
16
We focus on the area of "effective competition" in determining the relevant geographic market. Jim Walter Corp. v. F.T. C., 625 F.2d 676, 682 (5th Cir.1980). The area of effective competition in the known line of commerce must be charted by careful selection of the market area in which the seller operates and to which buyers can practicably turn for supplies. Tampa Elec. Co., 365 U.S. at 327, 81 S.Ct. 623. The geographic market must "`correspond to the commercial realities' of the industry and `be economically significant.'" Brown Shoe Co., 370 U.S. at 336-337, 82 S.Ct. 1502. "Thus, although the geographic market in some instances may encompass the entire Nation, under other circumstances it may be as small as a single metropolitan area." Id. (citation omitted).4
17
When determining whether a geographic market corresponds to commercial realities, courts have taken into account practical considerations such as the size, cumbersomeness, and other characteristics of the relevant product. In addition, determinants that affect the behavior of market participants may also be considered such as regulatory constraints impeding the free flow of competing goods into the area, perishability of products, and transportation barriers. EARL W. KINTNER, FEDERAL ANTITRUST LAW: VOLUME IV THE CLAYTON ACT SECTION 3; SECTION 7; MERGERS AND MARKETS § 38.3 (1984); United States v. Conn. Nat'l Bank, 418 U.S. 656, 669-671, 94 S.Ct. 2788, 41 L.Ed.2d 1016 (1974); United States v. Gen. Dynamics Corp., 341 F.Supp. 534 (N.D.Ill.1972).
18
On the other hand, the economic significance of a geographic area "does not depend upon singular elements such as population, income, political boundaries, or geographic extent, but rather upon the relationship between these elements and the characteristics of competition in the relevant product market within a particular area." EARL W. KINTNER, FEDERAL ANTITRUST LAW: VOLUME IV THE CLAYTON ACT SECTION 3; SECTION 7; MERGERS AND MARKETS § 38.2 (1984). Put differently, in order for an area to qualify as being economically significant, it must contain an "appreciable segment of the product market." Id. "Whether a segment is `appreciable' depends upon whether it includes either an appreciable proportion of the product market as a whole, or a proportion of the product market which is `largely segregated from, independent of, or not affected by' competition elsewhere." Id. Therefore, it is not required that an area encompass a large percentage of all business activity in the relevant product market to be considered economically significant. An area containing only a small percentage of business activity may qualify as being economically significant if the relevant competition in that specific area is insulated from equivalent competition elsewhere.
C. Foreclosure of Competition
19
After the relevant market has been identified, it must then be determined whether the arrangement foreclosed competition in a substantial share of the established market. Tampa Elec. Co., 365 U.S. at 327-28, 81 S.Ct. 623.
II. Sherman Act
20
Section 1 of the Sherman Act provides that "[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal." 15 U.S.C. § 1 (1997). In order to demonstrate a claim of unreasonable restraint of trade under Section 1, Apani must establish that: (1) the City and CCE engaged in a conspiracy, (2) the conspiracy had the effect of restraining trade, and (3) trade was restrained in the relevant market. Spectators' Comm. Network Inc. v. Colonial Country Club, 253 F.3d 215, 220 (5th Cir.2001); Johnson v. Hosp. Corp. of Am., 95 F.3d 383, 392 (5th Cir.1996). Apani, as the plaintiff, has the burden of proving all the elements of a Section 1 violation. Id. (citing Jefferson Parish Hosp. Dist. No. 2, v. Hyde, 466 U.S. 2, 29, 104 S.Ct. 1551, 80 L.Ed.2d 2 (1984)).
21
As an initial matter, Apani does not contend on appeal that CCE's actions were per se illegal. Thus, the rule of reason analysis is applicable to Apani's claim. Doctor's Hosp. of Jefferson, Inc. v. Southeast Med. Alliance, Inc., 123 F.3d 301, 307 (5th Cir.1997). Under this rule, Apani must demonstrate that the "complained-of actions unreasonably restrained trade." Id. The court must then balance the "anti-competitive evils of a restrictive practice ... against any procompetitive benefits or justifications within the confines of the relevant market. Proof that the defendant's activities, on balance, adversely affected competition in the appropriate product and geographic markets is essential to recovery under the rule of reason." Id. (citing Hornsby Oil Co. v. Champion Spark Plug Co., 714 F.2d 1384, 1392 (5th Cir. 1983)) (emphasis added). Thus, as under the Clayton Act, the first step in analyzing a Section 1 claim is defining the relevant product and geographic markets. The same test applied for determining the relevant product and geographic markets for Clayton Act claims is also used for alleged violations of the Sherman Act. Bob Maxfield, Inc., 637 F.2d at 1036.
III. Texas Free Enterprise and Antitrust Act
22
The TFEAA was enacted to establish antitrust laws for the State of Texas. TEX. BUS. & COMM. CODE § 15.01 et seq. (Vernon 1987). Each provision of the Act is modeled after a corresponding provision of federal antitrust law. Roy B. Taylor Sales, Inc. v. Hollymatic Corp., 28 F.3d 1379, 1388 (5th Cir.1994); Caller-Times Pub. Co., Inc. v. Triad Communications, Inc., 826 S.W.2d 576, 580 (Tex.1992). As such, Texas courts are statutorily instructed to interpret the TFEAA in harmony with federal judicial interpretations of equivalent federal laws. TEX. BUS. & COMM. CODE § 15.04; Caller-Times Pub. Co., Inc., 826 S.W.2d at 580. Accordingly, Texas courts have adopted federal standards for determining violations of the TFEAA, including the use of a relevant market to determine whether substantial reductions in competition have occurred. Roy B. Taylor Sales, Inc., 28 F.3d at 1388; Caller-Times Pub. Co., Inc., 826 S.W.2d at 580.
IV. Dismissal of Antitrust Claims
23
The district court dismissed all of Apani's antitrust claims, finding Apani's geographic market definition legally insufficient as a matter of law. Whether a relevant market has been identified is usually a question of fact; however, in some circumstances, the issue may be determined as a matter of law. Seidenstein v. Nat'l Med. Enters., Inc., 769 F.2d 1100, 1106 (5th Cir.1985). Where the plaintiff fails to define its proposed relevant market with reference to the rule of reasonable interchangeability and cross-elasticity of demand, or alleges a proposed relevant market that clearly does not encompass all interchangeable substitute products even when all factual inferences are granted in plaintiff's favor, the relevant market is legally insufficient, and a motion to dismiss may be granted. See, e.g., Queen City Pizza Inc. v. Domino's Pizza, Inc., 124 F.3d 430, 436 (3d Cir.1997) (affirming the district court's dismissal of an antitrust claim for failure to plead a relevant market because the definition of the proposed market was too narrow); TV Comms. Network, Inc. v. Turner Network Television, Inc., 964 F.2d 1022, 1025 (10th Cir.1992) (upholding the district court's dismissal of a claim for failure to plead a relevant market where the alleged market consisted of only one specific television channel). Because a relevant geographic market must be identified for Apani's claims under the Clayton Act, the Sherman Act, and the TFEAA, this court's analysis of the relevant market shall be equally applicable to all of Apani's antitrust claims.
24
As stated previously, the alleged geographic market must correspond to the commercial realities of the industry and be economically significant. Brown Shoe Co., 370 U.S. at 336-337, 82 S.Ct. 1502. After giving careful consideration to each of the factors identified for determining whether a geographic area corresponds to the commercial realities of the industry, the district court concluded that the relevant geographic market could not consist of only the twenty-seven facilities owned by the City as Apani suggests. The court pointed out that Apani had done business in and throughout Lubbock, Texas with customers other than the City, such as Texas Tech University. Thus, it concluded that there were no limitations on Apani's geographic sales market by the size, cumbersomeness, or perishability of its bottled water that would warrant restricting the geographic market to the City facilities covered by the exclusive agreement. The court further noted that there were no regulatory requirements, or inherent shipping limitations affecting Apani's product distribution that would support confining the geographic market of competition to the twenty-seven City-owned facilities. Thus, the court found that Apani's relevant geographic market definition did not comport with the commercial realities of the industry. It stated that, at the very least, the commercial realities of the industry suggest that the relevant geographic market must include the entire city of Lubbock.
25
The district court next considered whether the restraint on the alleged geographic market was economically significant. When assessing economic significance, a court must determine whether the geographic area contains an appreciable segment of the product market. EARL W. KINTNER, FEDERAL ANTITRUST LAW: VOLUME IV THE CLAYTON ACT SECTION 3; SECTION 7; MERGERS AND MARKETS § 38.2 (1984). As discussed supra, "whether a segment is appreciable depends on whether the segment includes either an appreciable proportion of the product market as a whole, or a proportion of the product market largely segregated from, independent of, or not affected by, competition elsewhere." Id. The district court found that "[n]o unique limitation on competition would suggest that competition for the City of Lubbock bottled water business is separate from competition for bottled water business elsewhere in the Lubbock, Texas bottled water market." Because Apani failed to allege that an appreciable proportion of the sale of bottled water in the Lubbock area was affected by the agreement, the court determined that Apani's geographic market definition also failed to meet the economic significance test. Thus, the court concluded that "[t]here is no set of facts under which Apani can recover; either the relevant geographic market is too small to meet the requirements set forth by the Supreme Court, or the injury to competition is not sufficiently significant to be a violation of the Act."
26
In the alternative, the court determined that Apani's geographic market definition was inadequate because the City is a "single purchaser," and "one purchaser in a market of competing purchasers cannot constitute a relevant geographic market, absent exceptional market conditions." See Jayco Sys., Inc. v. Savin Bus. Mach. Corp., 777 F.2d 306, 319 n. 43 (5th Cir. 1985). In Jayco, the plaintiff, a distributor for a major copier manufacturer, alleged that the defendant attempted to monopolize the copier business of one customer, the State of Texas. The plaintiff defined the relevant market as "low and medium volume copiers" for the State of Texas copier business. Id. at 319. We explained that "as a matter of common sense a single purchaser of a product cannot generally be considered a relevant market, lest we wish to clothe each and every sale with an antitrust suit." Id. at 320. However, this court noted that "[w]e hazard the suggestion that a single purchaser could not be considered a relevant market unless plaintiff made some showing of the purchaser's monopsony power."5 Id. at n. 46. The district court reasoned that Apani's asserted geographic market alleges a "single purchaser" within the meaning of Jayco and therefore, as a matter of law, it failed to properly define a relevant geographic market upon which relief may be granted.
27
In addition, the district court found that Apani's argument was deficient because it, in effect, suggested that a seller or owner of property to which potential buyers come, may not decide what products it will sell or permit to be sold on the property. In support of this proposition, the court relied on the Seventh Circuit's opinion in Elliott v. United Ctr., 126 F.3d 1003 (7th Cir.1997). In Elliott, a licensed peanut vendor, who formerly sold peanuts outside the United Center, an entertainment complex, sued the United Center on the grounds that its policy of prohibiting patrons from bringing food into the complex violated the Sherman Act. The vendor alleged that the "market for food concessions within and around the United Center itself' constituted a relevant market for antitrust purposes. Id. at 1005. The district court dismissed the claim finding that the vendor failed to adequately identify a relevant geographic market. In affirming the district court's ruling, the Seventh Circuit stated that
28
The logic of Elliott's argument would mean that exclusive restaurants could no longer require customers to purchase their wines only at the establishment, because the restaurant would be "monopolizing" the sale of wine within its interior. Movie theaters, which traditionally (and notoriously) earn a substantial portion of their revenue from the sales of candies, popcorn, and soda, would be required by the antitrust laws to allow patrons to bring their own food.
29
Id.
30
In the instant case, the district court stated that Apani's argument, like the one presented in Elliott, would deny property owners the right to determine for themselves what products they will sell on their property. It reasoned that the antitrust laws are not designed to preclude businesses from selling what they choose on their property, rather the laws are intended to prevent persons from manipulating the marketplace in restraint of trade. The court concluded that Apani's claims fell outside the realm of injuries for which the antitrust laws were enacted to protect, and therefore Apani failed to state a claim upon which relief could be granted.
31
Apani asserts several points of error in connection with the district court's conclusion that it failed to sufficiently allege a relevant geographic market. First, Apani challenges the district court's determination that the "territory(s)" and "locations" owned by the City within the meaning of the exclusive dealing agreement are too narrow from a geographic standpoint to constitute a relevant market. It argues that the district court erroneously designated the relevant property as that "owned" by the City, which consists of twenty-seven locations, rather than that "owned or operated" by the City, as alleged in Apani's complaint, or "owned and operated" by the City, as provided in the exclusive agreement. Apani explains that, had the district court considered all the property owned and/or operated by the City, the effect would have been an expansion of the alleged geographic area.
32
Next, Apani concedes that identifying a relevant market requires more than a determination of "metes and bounds,"6 however, it argues that there is no existing case law that places such a restrictive view in a Rule 12(b)(6) context. It suggests that in construing the pleading requirement for a relevant geographic market, we look to the Seventh Circuit's decision in MCM Partners, Inc. v. Andrews-Bartlett & Associates, Inc., 62 F.3d 967 (7th Cir. 1995). In MCM Partners, Inc., MCM, a rental equipment company, brought an antitrust suit against exhibition contractors alleging that the contractors violated Section 1 of the Sherman Act and the Racketeer Influenced and Corrupt Organizations Act, when they refused to rent forklifts and other material handling and personnel moving equipment from MCM. The district court dismissed MCM's antitrust claim with prejudice, finding that it failed to state a claim for which relief could be granted under Section 1 because it had not sufficiently alleged a contract, combination, or conspiracy in restraint of trade. In the alternative, the court determined that MCM failed to plead facts supporting its definition of the relevant geographic market.
33
In its complaint, MCM defined the relevant market as "the rental of forklifts, material handling and personal moving equipment to the convention and trade show industry in Chicago, Illinois." Id. at 975. It alleged that the "vast majority" of Chicago's convention and trade show activities take place at Chicago's McCormick Place Complex and that the consumers in that market consisted of "exhibition contractors who set up, install, and disassemble the booths and other physical items" used in the industry. Id. The district court stated that these allegations defined the relevant market too narrowly because MCM failed to include in its complaint facts demonstrating that the market for MCM's equipment was limited to exhibition contractors. In overturning the district court's ruling the Seventh Circuit held that
34
The district court's willingness to look behind MCM's allegations because it believed MCM had not alleged facts to support the complaint's market definition is in considerable tension with our recent decision in Hammes v. AAMCO Transmissions, Inc., 33 F.3d 774, 778, 782 (7th Cir.1994). There, we explained that judicial attempts to apply a heightened pleading standard in antitrust cases had been "scotched" by the Supreme Court's decision in Leatherman v. Tarrant County Narcotics Intelligence and Coordination Unit, 507 U.S. 163, 113 S.Ct. 1160, 122 L.Ed.2d 517 (1993), and that after Leatherman, an antitrust plaintiff need not include "the particulars of his claim" to survive a motion to dismiss. 33 F.3d at 782. It is instead sufficient for the plaintiff to include in its complaint only "a short and plain statement of the claim" showing an entitlement to relief. FED.R. CIV. P. 8(a)(2); see Leatherman, 507 U.S. at 167-68, 113 S.Ct. at 1163; Hammes, 33 F.3d at 778.... [I]t is not inconceivable to us that MCM could prove a set of facts supporting the relevant market definition alleged in its complaint. See Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957). It was therefore erroneous for the district court ... to dismiss MCM's section 1 claim on this ground.
35
Id. at 976-77 (emphasis added).
36
Apani asserts that an application of the standard set out in MCM Partners, Inc., to the present case would compel a reversal of the district court's ruling. It directs our attention to the fact that the Seventh Circuit specifically determined that it is not inconceivable that MCM could prove a set of facts supporting the relevant market definition alleged in its complaint. Apani argues that its complaint indicated a more defined geographic area than that in MCM Partners, Inc. and involved absolute preclusion of competition as opposed to mere restraint. Thus, Apani submits that its allegations of a relevant market fully comply with Federal Rule of Civil Procedure 8(a)(2)'s "short and plain statement" requirement. However, Apani claims that in dismissing its complaint, the district court erroneously applied a heightened pleading standard to its antitrust claims, rather than that set forth in Rule 8(a)(2). It argues that such an application is inconsistent with the Supreme Court's admonishment in Leatherman. Lastly, Apani argues that the district court erroneously applied this court's reasoning in Jayco to the instant case. Specifically, Apani maintains that with regard to the relevant geographic market, the pertinent inquiry is not whether there is a "single purchaser," rather the court should consider the geographic area, and degree of market activity controlled by the City, which has been foreclosed by the agreement. It claims that by foreclosing competition in all public facilities owned, or controlled by the City, the agreement had the effect of totally eliminating competition in those venues in which there are mass gatherings of people, including conventions, trade shows, entertainment events, sports events, and other activities. Apani concludes that any reference to the City as a "single purchaser" mischaracterizes the offensive nature of the subject agreement as the City may or may not be a purchaser of the product, but the City granted the "exclusive dealing arrangement," which dictates the beverage product offered to the captive persons in attendance at the defined properties, and forecloses any other competition at the public venues.
37
With respect to the district court's reliance on Elliott, Apani argues that Elliott can be distinguished from the present case. First, it points out that Elliott presented claims of only antitrust violations under the Sherman Act. Second, Apani asserts that the alleged antitrust violation in Elliott was not based on an anti-competitive agreement entered into between the owner of the facility and a beverage or food supplier, but rather involved a complaint that the arena policy prohibited sale of peanuts outside of the arena to its patrons, which could not then be brought into the arena. It claims that such a factual situation is distinguishable from the instant case in that the agreement between CCE and the City represents a definite written agreement to foreclose competition through an "exclusive dealing arrangement," relating to all beverages sold or distributed by CCE within a defined geographic market.
38
In addition, Apani argues that the district court has failed to take into consideration that a patron attending an event at a City-owned facility will not likely cross the street to purchase a beverage at a convenience store where competing products may be displayed. It states that the patron is compelled by physical and/or time limitations to purchase the products of the entity that has obtained the exclusive right to sell the product within the specific building or area. Apani further argues that, as a practical matter, the elements of interchangeability and cross-elasticity of demand are of little significance because any analysis that determines the "relevant geographic market" only on the basis of square footage or acreage, ignores the intended prohibitions of the antitrust statutes.
39
After reviewing the record on appeal, and considering Apani's arguments in light of the applicable law and standards, we conclude the district court correctly decided to dismiss the antitrust claims. With regard to Apani's criticism of the district court for purportedly misstating the scope of the alleged geographic market, we find that no error was committed. In its Second Amended Complaint, Apani alleged as the relevant market "all City of Lubbock owned or operated facilities, numbering approximately twenty-seven (27) separate properties." Apani now argues that the district court erroneously referred to the twenty-seven locations owned by the City as the claimed relevant market. Specifically, it maintains that the district court only considered property "owned" by the City, rather than "owned or operated" by the City. This argument is without merit. Whether the property at issue is referred to as the property "owned" by the City, or the property "owned or operated" by the City, according to the facts stated in Apani's complaint, the subject property consists only of twenty-seven locations. Thus, the "owned or operated" issue raised by Apani is no more than an exercise in semantics and does not alter the correctness of the district court's decision to dismiss the antitrust claims.
40
We reject Apani's claim that the language of the exclusive agreement itself expands the relevant market beyond the geographic area identified by the district court. The operative language of the agreement defines the relevant property as that "owned and operated by CITY OF LUBBOCK, except City Hall and Lubbock International Airport." Apani claims that the number of properties covered by the agreement would have been "expanded" had the district court considered properties both "owned and operated" by the City. This argument makes little logical sense. Given the use of the conjunction "and," there can be no subset of properties that might fit within the "owned and operated" category but not within the "owned" category since every facility "owned and operated" by the City must also be "owned" by the City.
41
Having concluded that the district court properly identified the twenty-seven City-owned facilities as the alleged relevant geographic market, we must now consider whether the defined market is insufficient as a matter of law. As an initial matter, Apani is correct in its assertion that a heightened pleading standard may not be applied to antitrust claims, however, a less stringent standard of pleading does not relieve Apani from its obligation to allege facts sufficient to support an antitrust violation. See Endsley v. City of Chicago, 230 F.3d 276, 282 (7th Cir.2000) ("It is true that Leatherman v. Tarrant County, 507 U.S. 163, 113 S.Ct. 1160, 122 L.Ed.2d 517 (1993), bars the district court from applying a heightened pleading standard in antitrust cases.... However, to survive a motion to dismiss, plaintiffs still must set forth facts sufficient to create an inference that defendant had enough market power to create a monopoly." (citation omitted)).
42
In insisting that the relevant geographic market requirement has been met, Apani relies heavily on MCM Partners, Inc. That reliance is sorely misplaced. In MCM Partners, Inc., the alleged geographical market, i.e. the convention and trade show industry, is obviously broader than the geographic market alleged by Apani, even though most of the convention and trade show activity took place at Chicago's McCormick Place. Here, Apani has simply attempted to artificially narrow a broader economic market, the City of Lubbock, to specific venues. Such pleading maneuvers may not be used for the purpose of creating a fictitious market. Thus, we find Apani's geographic market definition insufficient as a matter of law.
43
Because we find that the district court's initial reason for dismissing Apani's claim, i.e. the alleged geographic market did not correspond to the commercial realities of the industry and was not economically significant, was proper, we do not reach the issue of whether the City is a "single purchaser" under the Jayco analysis.
V. Tortious Interference
44
Next, Apani argues that the district court erred in granting CCE summary judgment on its claims of tortious interference with both existing and prospective business relations.
45
A. Tortious Interference with Existing Business Relations
46
The essential elements of a tortious interference with an existing business relationship cause of action are (1) unlawful actions undertaken without justification or excuse; (2) with intent to harm; and (3) actual damages. Morris v. Jordan Fin. Corp., 564 S.W.2d 180, 184 (Tex.Civ. App.1978). In proving this claim, the plaintiff does not need to prove the existence of a valid contract, but only that the defendant's interference is motivated by malice. CF & I Steel Corp. v. Pete Sublett & Co., 623 S.W.2d 709, 715 (Tex.Civ.App. 1981). The district court dismissed Apani's claim because it concluded that Apani had failed to demonstrate the first element of the claim-an unlawful act. Apani argues that it produced credible evidence that the existing business relationship between Apani and the City would have continued had CCE not entered into a contract with the City, effectively eliminating the City's business relationship with Apani. Thus, it concludes that CCE was not entitled to summary judgment on this issue. In its brief, Apani does not point to any unlawful act supporting its claim. However, in its Second Amended Complaint, Apani alleges that CCE's conduct in entering into an exclusive contract with the City was "wanton, improper, unlawful, and unfair, in that the structure of the Agreement constituted an illegal restraint of trade and intentional interference with [its] business relations, both existing and prospective.... Such conduct constitutes a violation of the antitrust laws ... and/or such conduct was illegal in causing the City of Lubbock to refuse to deal with Apani." Having already concluded that CCE has not violated any antitrust laws, and that entering into an exclusive agreement, in and of itself, does constitute an unreasonable restraint on trade, we affirm the district court's ruling on this issue.
47
B. Tortious Interference with a Prospective Business Relationship
48
The Texas Supreme Court has not yet set out all the elements of a tortious interference with a prospective business contract or relations claim, and the appellate courts have not been uniform in their characterization of such actions. Tortious interference with business relationships, in the context of prospective relationships, has been identified with two sets of elements. Some courts have found that such a claim requires: (1) a reasonable probability that the parties would have entered into a business relationship, (2) an intentional and malicious act by the defendant that prevented the relationship from occurring, with the purpose of harming the plaintiff, (3) the defendant lacked privilege or justification to do the act, and (4) actual harm or damage resulted from the defendant's interference. Robles v. Consolidated Graphics, Inc., 965 S.W.2d 552, 561 (Tex.App.1997). Other courts differ with regard to the first element by demanding that the plaintiff establish a reasonable probability that the parties would have entered into a contractual relationship. Santa Fe Energy Operating Partners, L.P. v. Carrillo, 948 S.W.2d 780, 784 (Tex. App.1997). The district court adopted the standard set out in Santa Fe Energy Operating Partners, L.P. and concluded that Apani failed to establish that there was a reasonable probability it would have entered into a contractual relationship with the City, but for the exclusive agreement. Apani argues that the district court improperly determined that it could not establish its claim, absent proof of a prospective contract.
49
Although the Texas Supreme Court has not specifically set forth all of the elements necessary for a tortious interference with prospective business relations cause of action, it has recently recognized that "to establish liability for interference with a prospective contractual or business relation the plaintiff must prove that it was harmed by the defendant's conduct that was either independently tortious or unlawful." See Wal-Mart Stores, Inc. v. Sturges, 52 S.W.3d 711, 713 (Tex.2001). The court clarified that "[b]y `independently tortious' we mean conduct that would violate some other recognized tort duty." Id. Based on Sturges, the district court alternatively concluded that CCE was entitled to judgment as a matter of law since Apani had not shown any unlawful conduct on the part of CCE. Apani concedes that Sturges requires it to show that CCE's conduct was independently tortious or unlawful. However, Apani claims that it has met this burden because it alleged violations of state and federal antitrust statutes, the Texas Constitution, and municipal statutory bidding laws. As stated previously, we have found no violations of antitrust law. Further, for the reason discussed below, Apani has also failed to establish claims under either the Texas Constitution, or municipal bidding statutes. Thus, we agree with the district court that Apani's claim must fail for the same reason its existing business relations claim fails-the absence of an unlawful act. Because a determination of whether a prospective contract is required to establish a claim for tortious interference of prospective business relations will not affect the outcome of this case, we find it unnecessary to decide the issue today, and decline to do so.
VI. Civil Conspiracy
50
To prove a cause of action for civil conspiracy under Texas law, a plaintiff must establish the following elements: "(1) two or more persons; (2) an object to be accomplished; (3) a meeting of minds on the object or course of action; (4) one or more unlawful, overt acts; and (5) damages as the proximate result." Massey v. Armco Steel Co., 652 S.W.2d 932, 934 (Tex. 1983). Solely at issue here is whether Apani raised a fact issue with regard to an unlawful overt act to support its conspiracy cause of action. Apani alleges three independent unlawful acts, each of which Apani contends would individually support the civil conspiracy claim. First, it alleges that the creation of the agreement between CCE and the City violates Article I, Section 26 of the Texas Constitution. Second, Apani avers that the exclusive agreement was created in violation of Texas statutory bidding requirements under Section 252.021 of the Texas Government Code. Lastly, Apani contends that its separate claims for tortious interference with business relations may also support a civil conspiracy claim. Having concluded that Apani has not met the essential elements of a tortious interference claim, we will address only the alleged violations of the Texas Constitution and the statutory bidding laws.
A. Texas Constitution
51
Article I, Section 26 of the Texas Constitution provides that "[p]erpetuities and monopolies are contrary to the genius of a free government, and shall never be allowed, nor shall the law of primogeniture or entailments ever be in force in this State." TEX. CONST. art. I § 26. Texas courts, however, have recognized several exceptions to this general rule of law. These exceptions are: (1) contracts between an agent and its principal wherein the agent is prohibited from dealing for himself or representing others besides his principal, (2) contracts involving the sale of a business in which the seller agrees not to engage in a competing business for a limited time, (3) lease agreements that require the lessee to sell only certain products on the leased premises, and (4) "cases in which an exclusive right or privilege is granted only upon the property or premises of the grantor." Airport Coach Serv., Inc. v. City of Fort Worth, 518 S.W.2d 566, 572 (Tex.Civ.App.1974).
52
Apani asserts that the exclusive agreement violates Section 26's prohibition against states and their political subdivisions granting monopolies. CCE argues that the TFEAA provides the exclusive cause of action for claims concerning monopolies and that Apani's claim under the TFEAA had been previously found by the district court to be without merit. Alternatively, it contends that if this court concludes that Apani can assert a claim under the Texas Constitution independent of the TFEAA, Apani is still unable to prove a violation because CCE has met one or more of the exceptions under the constitutional provision. Lastly, CCE contends that its agreement with the City does not fall within the meaning of "monopoly" established by the Texas Supreme Court.7
53
After analyzing the cases relied on by Apani in support of its proposition that the exclusive right granted by the agreement violated Section 26, the district court concluded that the factual pattern here is totally distinguishable from the cases cited by Apani. See Jones v. Carter, 45 Tex.Civ. App. 450, 101 S.W. 514 (1907); see also Ennis Waterworks v. City of Ennis, 105 Tex. 63, 144 S.W. 930, 934-35 (1912) (holding that under Article I, Section 26 of the Texas Constitution, a municipal corporation is without the power to grant an exclusive franchise to a water company); Lea County Elec. Co-op., Inc. v. City of Plains, 373 S.W.2d 90, 93 (Tex. Civ.App. 1963) (finding that a city does not have a right to grant an exclusive franchise to itself or anyone else for the furnishing of electric energy to its inhabitants). Specifically, the court noted that these cases
54
involved a city making an agreement with a third party, providing exclusive right to that party to provide either water, electric, or all utilities to that city and all of its inhabitants. The citizens of those cities were forced to purchase electrical, water or other utilities for their private consumption in their homes from a party the city chose to grant an exclusive franchise. In the instant action, however, the agreement is limited to the purchase of non-alcoholic beverages at 27 City facilities. Coke was not granted an exclusive right to sell its products throughout the City to the exclusion of other companies, including Apani.
55
We agree that this case does not involve the degree of exclusivity required to constitute a "monopoly" under the Texas Constitution. We therefore uphold the district court's conclusion on this issue.
56
In addition to finding that Apani has failed to show a monopoly, the district court also determined that the agreement fell within one of the exceptions to Section 26. The court reasoned that since the subject property was owned by the City, the fourth exception under Airport Coach Service, Inc., i.e. cases in which an exclusive right or privilege is granted upon the property of the grantor, applies to this case. We agree. In Airport Coach Service, Inc., a Texas appellate court was presented with the issue of whether Dallas and Fort Worth, Texas, violated Section 26 by granting exclusive rights to a single business to provide ground transportation services at Dallas/Fort Worth Regional Airport. Finding that the airport was owned exclusively by the two cities, the court concluded that the agreement fell within the fourth exception, and therefore the grant of the exclusive contract for ground transportation services was not a prohibited monopoly. Apani argues that the court's reliance on Airport Coach Service, Inc. was misplaced because the court failed to take into consideration that the agreement gives CCE exclusive rights on property not only owned by the City, but also operated by the City. As stated previously, Apani has not shown that the facilities operated by the City are not also owned by the City. Thus, this argument is without merit. Finding no meaningful distinction between the situation presented here, and that addressed in Airport Coach Service, Inc., we conclude that the exclusive agreement met the fourth exception to Section 26. Because Apani is unable to show a violation of the Texas Constitution independent of the TFEAA, a determination of whether the TFEAA provides the exclusive remedy in Texas for monopoly claims is unnecessary.
B. Statutory Bidding Laws
57
Lastly, Apani alleges that CCE and the City negotiated a contract for the sale of beverages without complying with statutory bidding requirements set forth in Section 252.001 et seq. of the Texas Local Government Code. Section 252.021(a) provides in relevant part that "Before a municipality may enter into a contract that requires an expenditure of more than $25,000 from one or more municipal funds, the municipality must ... comply with the procedure prescribed by this chapter for competitive sealed bidding or competitive sealed proposals." TEX LOC. GOV'T. CODE § 252.021(a)(1) (Vernon 1999). Primarily, Apani contends that the statutory bidding laws were violated because no bidding was permitted on the exclusive beverage contract. In the district court, CCE presented several arguments as to why the court should not allow this claim to form the basis of Apani's conspiracy cause of action. The district court rejected all of CCE's contentions except for one. The court agreed with CCE that Apani failed to submit any evidence that CCE intentionally conspired with the City to violate the bidding laws. In Texas, a "civil conspiracy requires specific intent." Triplex Comms., Inc. v. Riley, 900 S.W.2d 716, 719 (Tex. 1995). Proof that a defendant "intend[ed] to engage in the conduct" is insufficient. Id. Instead, "[f]or a civil conspiracy to arise, the parties must be aware of the harm or wrongful conduct at the inception of the combination or agreement." Id. CCE argues that it not only was unaware of any violation, but it specifically negotiated a provision in the agreement requiring the City to represent that it had full authority to enter into the agreement. A review of the record reveals that Apani has not presented any evidence countering CCE's assertion of lack of intent. Therefore, the district court properly granted CCE judgment as a matter of law on this issue.8
CONCLUSION
58
For the foregoing reasons, we AFFIRM the district court's rulings dismissing all of Apani's claims.
59
AFFIRMED.
Notes:
1
Judge Politz was a member of the panel that heard oral arguments. However, due to his death on May 25, 2002, he did not participate in this decision. This case is being decided by a quorum pursuant to 28 U.S.C. § 46(d) (1996)
2
In its complaint, Apani stated that the property "owned and operated" by the City consisted of twenty-seven facilities
3
This contract provided for a ten-year term and the automatic right to renew for an additional five years
4
AlthoughBrown Shoe Co. involved a violation of § 7 of the Clayton Act, the tests for determining a geographic market under §§ 3 and 7 of the Act are similar. Brown Shoe Co., 370 U.S. at 329, 82 S.Ct. 1502; United States v. Philadelphia Nat'l Bank, 374 U.S. 321, 366, 83 S.Ct. 1715, 10 L.Ed.2d 915 (1963). Thus, cases determining a geographic area under § 7 are equally applicable to cases brought under § 3. Brown Shoe Co., 370 U.S. at 329-330, 82 S.Ct. 1502.
5
Monopsony refers to price fixing or monopolization by a single buyerIn re Beef Industry Antitrust Litigation, 600 F.2d 1148 (5th Cir.1979).
6
Tampa Elec. Co., 365 U.S. at 331-32, 81 S.Ct. 623.
7
CCE also claims that in order to show a violation of Article I, Section 26 of the Texas Constitution, Apani must establish the elements necessary to sustain a cause of action under federal antitrust laws, namely, a relevant market. The district did not address this issue. Because we find that Apani has failed to demonstrate a viable cause of action under Section 26, we need not address this alternative basis for affirmance
8
With respect to Apani's assertion that the alleged violation of the bidding laws is an unlawful act, which may support its tortious interference claim, we find this argument meritless. As the district court correctly stated, in denying Apani's motion to alter or amend summary judgment, Apani had failed to address or provide any authority supporting its conclusion that an independent cause of action under the Texas bidding statutes may be asserted against a third party who enters into a contract with a governmental entity. Since Apani did not present any evidence at the district court level on this issue, nor argue this question in its brief, we conclude that the issue is not properly before usSt. Paul Mercury Ins. Co. v. Williamson, 224 F.3d 425, 445 (5th Cir.2000) ("[W]e deem abandoned those issues not presented and argued in an appellant's initial brief, nor do we consider matters not presented to the trial court.").
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{
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FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT December 12, 2017
_________________________________
Elisabeth A. Shumaker
Clerk of Court
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v. No. 17-2062
(D.C. Nos. 1:16-CV-00410-LH-CG &
JONATHAN SANDOVAL, 1:11-CR-02992-LH-1)
(D. N.M.)
Defendant - Appellant.
_________________________________
ORDER DENYING
CERTIFICATE OF APPEALABILTIY*
_________________________________
Before TYMKOVICH, Chief Judge, HARTZ and O’BRIEN, Circuit Judges.
_________________________________
Jonathan Sandoval is a federal prisoner who seeks a certificate of appealability
(COA) to appeal the denial of his motion under 28 U.S.C. § 2255. See 28 U.S.C.
§ 2253(c)(1)(B) (requiring a COA to appeal the denial of a § 2255 motion). After he
pleaded guilty to being a felon in possession of ammunition, 18 U.S.C. § 922(g)(1),
the district court sentenced him to 15 years in prison under the Armed Career
Criminal Act (ACCA), see id. § 924(e)(1), based on at least three prior convictions in
*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist in the determination of
this matter. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order is not binding precedent, except
under the doctrines of law of the case, res judicata, and collateral estoppel. It may be
cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1 and
10th Cir. R. 32.1.
New Mexico for residential burglary, see N.M. Stat. Ann. § 30-16-3(A).1 Sandoval
moved to vacate his sentence under § 2255, arguing residential burglary encompasses
more conduct than generic burglary for purposes of applying the ACCA. The district
court denied relief and also denied a COA.
To obtain a COA from this court, Sandoval must make “a substantial showing
of the denial of a constitutional right.” 28 U.S.C. § 2253(c)(2). He must show
“reasonable jurists could debate whether (or, for that matter, agree that) the petition
should have been resolved in a different manner or that the issues presented were
adequate to deserve encouragement to proceed further.” Miller-El v. Cockrell,
537 U.S. 322, 336 (2003) (internal quotation marks omitted).
Sandoval’s arguments might have been debatable before our decision in United
States v. Turrieta, No. 16-2281, 2017 WL 5709612 (10th Cir. Nov. 28, 2017), but
they are no longer. Turrieta held a New Mexico conviction for residential burglary
qualifies as a generic burglary under the ACCA. Id. at *6. Thus, no reasonable jurist
1
New Mexico’s burglary statute states:
Burglary consists of the unauthorized entry of any vehicle, watercraft, aircraft,
dwelling or other structure, movable or immovable, with the intent to commit any
felony or theft therein.
A. Any person who, without authorization, enters a dwelling house with intent
to commit any felony or theft therein is guilty of a third degree felony.
B. Any person who, without authorization, enters any vehicle, watercraft,
aircraft or other structure, movable or immovable, with intent to commit any
felony or theft therein is guilty of a fourth degree felony.
N.M. Stat. Ann. § 30-16-3.
2
would debate the district court’s decision or debate whether Sandoval’s arguments
deserve encouragement to proceed further. They do not. Accordingly, we deny a
COA and dismiss this appeal.
Entered for the Court
Terrence L. O’Brien
Circuit Judge
3
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394 S.W.2d 792 (1965)
HUDIBURG CHEVROLET, INC., Petitioner,
v.
GLOBE INDEMNITY COMPANY, Respondent.
No. A-10473.
Supreme Court of Texas.
October 6, 1965.
Rehearing Denied November 3, 1965.
*793 Kerr, Day & Gandy, Fort Worth, for petitioner.
Thompson, Knight, Wright & Simmons, Pinkney Grissom, David S. Kidder and George C. Chapman, Dallas, for respondent.
POPE, Justice.
Hudiburg Chevrolet, Inc., the named insured in two policies issued by Globe Indemnity Company, sued Globe to recover for a loss caused by the theft of a Chevrolet truck tractor that Hudiburg held in storage under a contract with General Motors Acceptance Corporation. Comas Roark, the one from whom GMAC had repossessed the truck, took the truck from Hudiburg's lot without permission. GMAC then demanded that Hudiburg pay its losses, which Hudiburg did by paying $2,428.83, the unpaid balance that Roark owed GMAC. Hudiburg then asserted one claim against Globe for the $2,428.83 it paid to GMAC and another for $688.35 for parts it furnished Roark to install on the truck while stored in Hudiburg's shops. A jury found that (1) the taking of the truck by Roark was a theft, (2) the truck's reasonable cash market value was $4,000.00, and (3) Hudiburg paid GMAC the sum of $2,428.83. The trial court disregarded these answers and held there was not theft but gave Hudiburg judgment for $688.35 for the parts. The Court of Civil Appeals held that the policies afforded Hudiburg no coverage for either the truck or the parts and denied all recovery. 383 S.W.2d 65. We affirm the Court of Civil Appeals' denial of judgment for the parts, but reverse the judgments below which denied recovery for theft of the truck.
Hudiburg has preserved no point complaining of the intermediate court's reversal of the trial court's judgment for $688.35, so we are concerned only with Hudiburg's right to recover for the truck. The basis for the trial court's judgment notwithstanding the verdict was that there was no theft. The first argument advanced in support of that conclusion is that there can be no theft unless the vehicle was taken from the owner and Hudiburg was not the owner. The other argument is that, even if the taking from Hudiburg's possession satisfied the ownership element, Roark, under all the evidence, took the truck under a bona fide claim of right. These are law questions.
Hudiburg Chevrolet, Inc., originally sold the truck to J. W. Parker in July of 1960. Parker paid some cash and owed $4,368.00 under a conditional sales contract. Hudiburg assigned the contract and the legal title to General Motors Acceptance Corporation with recourse. Parker became delinquent in his payments, and GMAC then discovered that in March of 1961 Parker had sold his equity to Comas Roark. There has never been a transfer of the certificate of title from Parker to Roark. Roark made some payments which GMAC accepted, and in May of 1961 he wrecked the truck in Arkansas. Hudiburg learned of the wreck and sent one of its employees to haul the truck to its place of business in Grapevine, Texas. Since Roark was behind on his *794 payments, GMAC and Hudiburg treated the transaction as a repossession. After the wreck, Roark's insurer cancelled the policy covering the truck. GMAC instructed Hudiburg to hold the truck and on May 24, 1961, Hudiburg signed a "Receipt for Repossessed Car," which showed that Hudiburg was storing the truck for GMAC. Hudiburg agreed, as reflected by the receipt, that the truck, "will not be disposed of until the outstanding balance due General Motors Acceptance Corporation is paid." There was evidence that Hudiburg was storing the truck for GMAC after repossession from Roark.
Roark began negotiations with Hudiburg and GMAC to obtain a release of the truck. He agreed to make the repairs to the truck in Hudiburg's shop; Hudiburg agreed to furnish the parts to Roark at cost; and GMAC agreed to release the truck when Roark complied with certain conditions. The new arrangement between the three parties was evidenced by a letter written by GMAC on June 8 and received by Hudiburg and Roark the next day. As of that date, Roark knew that GMAC had repossessed the truck and he had agreed upon the terms by which he could resume his payments and regain possession. Roark, as conditions to approval of a new contract and the resumption of possession, was required to (1) arrange for the transfer of title from Parker to himself, (2) furnish proof to GMAC that all taxes and transfer fees were paid, and (3) furnish a paid-up twelve-month policy on the vehicle. He also agreed to execute a six-months installment note and a mortgage to secure Hudiburg for the parts furnished Roark at cost. Roark testified and acknowledged that he agreed upon these conditions and that he complied with none of them. On June 13, 1961, Roark took the truck from Hudiburg's lot without the knowledge or consent of anyone. GMAC then made demand upon Hudiburg, its bailee and guarantor, for the unpaid balance of $2,428.83 owed by Roark. Hudiburg paid that amount to GMAC and made a claim against Globe, its insurer, for the theft of the truck by Roark.
The courts below have held that there is no evidence which supports the finding of theft of the truck. The first basis for this conclusion is, as expressed by the Court of Civil Appeals, "the vehicle was the property of Roark." The argument is that Roark owned the truck and could not steal his own property or from himself. The record does not support the intermediate court's conclusion that Roark owned the truck or had the right to its possession. Actually the facts admitted by Roark during the trial are to the contrary. As of June 8, 1961, Roark knew that GMAC had repossessed the truck because of the wreck, the delinquent payments, and the cancellation of his insurance. He knew and testified that before he could reinstate his contract and regain possession he had to meet certain conditions and that he did not meet them. Roark was not and knew that he was not entitled to the possession of the truck that was rightfully under the control of GMAC and stored with Hudiburg under a contract not to release it. Hudiburg had the additional claim to a constitutional lien for the parts furnished, and Roark had agreed to give a note and mortgage payable in six months to cover that obligation. He did not comply with that agreement.
Hudiburg was the named insurer on what has been termed "Policy B" in the course of this case. It is the only one that needs discussion. The trial court defined the term "theft" in connection with its issue inquiring about Roark's theft and did so in these words of Article 1410 of the Penal Code:
"* * * the fraudulent taking of corporeal personal property belonging to another from his possession, or from the possession of some person holding the same for him, without his consent, with intent to deprive the owner of the value of the same, and to appropriate it to the use or benefit of the person taking."
*795 "Theft" when used in an insurance policy, as it was in Policy B, is given the same meaning it has under the criminal law. See Bomar v. Insurors Indemnity & Ins. Co., 150 Tex. 484, 242 S.W.2d 160 (1951); Indemnity Co. of America v. Slade, 4 S.W.2d 649 (Tex.Civ.App.1928, writ ref.). Even a true owner, who takes from one who is lawfully in possession of property, may be guilty of theft. Art. 1416, Vernon's Ann. Penal Code. There was a theft when a mortgagor took possession of two horses he had placed in the possession of another as security for a debt, Haley v. State, 70 Tex.Cr.R. 30, 156 S.W. 637 (1913), and when the owner of a pistol took it from his pledgee. Lewis v. State, 50 Tex.Cr.R. 331, 97 S.W. 481 (1906). There was a theft when an owner of a watch fraudulently took it from the possession of the man holding it as security for repairs. State v. Stephens, 32 Tex. 155, 156 (1869). There may be a theft, when, as here, the ownership is in one person, and the possession is in another. Arts. 1414, 1415, 1416, 1417, Vernon's Ann. Penal Code; Winn v. State, 138 Tex.Cr.R. 202, 135 S.W.2d 118 (1940); 55 Tex.Jur.2d, Theft, § 22.
We must also reject the contention that the evidence shows, as a matter of law, that Roark took the truck under a bona fide claim of right. Proof of such a claim of right is a legal defense to the charge of theft, because it negates the element of a fraudulent taking. Burnaman v. State, 130 Tex.Cr.R. 355, 94 S.W.2d 751 (1936); 6 Cyc. of Automobile Law and Practice, § 3711; 5 Appleman, Insurance Law and Practice, § 3211.
Several specific events show that Roark's taking was without a bona fide claim of right to the truck. On May 24, before the truck was repaired, Roark asked permission to remove it from Hudiburg's premises and was refused. After the repairs were made, Hudiburg permitted Roark to test drive it away from the premises only in the company of one of its employees. Roark's bona fide claim of right is based upon his own testimony that he believed he had complied with all of GMAC's requirements because he had brought his payments up to date. On cross-examination, however, he was confronted with the letter GMAC had written to Hudiburg five days before he took the truck. He acknowledged that he was sitting across the desk when K. H. Hudiburg phoned GMAC concerning his, Roark's, resumption of payments and right to regain possession of the truck, and also that he received a copy of the letter. He admitted that he understood the conditions to the new arrangement between him and GMAC and that he had not met those conditions. He testified that he was denied permission to take the truck because the insurance on it had been cancelled and that he knew of this requirement. The day before Roark took the truck, he was in Hudiburg's office again seeking possession of the truck. He asked Hudiburg to call a Dallas insurance agent who would confirm the fact that he had made arrangements for the insurance. Hudiburg called the agent in the presence of Roark, but the agent told Hudiburg no arrangements had been made, that Roark owed him for other insurance, and that he would not cover the truck nor carry Roark.
Hudiburg testified that Roark had threatened to take the truck and, for that reason, he had locked the truck after putting it on his lot that was fenced on three sides with the office building on the other side. He told his employees to guard the truck. While Hudiburg was away from his office for one hour, Roark, with the use of an extra set of keys, moved the truck from Hudiburg's lot. Roark, when asked on cross-examination if he knew that he took the truck against Hudiburg's consent, replied, "I suppose it was." On the very morning of the day that Roark took the truck, Hudiburg again refused Roark's request to permit him to have possession. Upon the basis of the repeated refusals to permit Roark to have possession, the several unfulfilled commitments both to GMAC and Hudiburg which Roark testified about and *796 admitted, and the stealthy manner of taking the truck, it can not be held that Roark's bona fide claim of right to the truck was established as a matter of law. The jury finding of theft should not have been disregarded.
We also sustain Hudiburg's contention that it, as bailee, was covered by the terms of the policy designated as "Policy B" by the Court of Civil Appeals. Insurer Globe argues that the policy covered only the owner of the truck, that Hudiburg was not the owner, and that a bailee was covered only upon proof that it was legally liable. Globe contends that the policy covered Hudiburg, the named insured, only by way of indemnity against its torts, such as its liability to GMAC for negligently permitting Roark to take the truck from the lot. The contention is not sound. The pertinent policy provisions are:
Original Policy
"To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of injury to or destruction of property, including the loss of use thereof, caused by accident and arising out of the hazards hereinafter defined."
"Endorsement 50
"The company agrees to pay within the limits stated in paragraph 4, all sums which the insured shall become obligated to pay by reason of liability imposed by law for direct loss of or damage including loss of use by theft, hereinafter called loss, to automobiles which are the property of others and in the custody of the insured for storage, repair or safekeeping, sustained under those coverages, for which a specific premium is set opposite thereto."
"Endorsement 50A
"In consideration of an additional premium of $14.00, this policy is extended to cover for direct loss of or damage including loss of use by theft, hereinafter called loss, to automobiles which are the property of others and in the custody of the insured for storage, repair or safekeeping, sustained under coverages described in Endorsement 50, garage keeper's legal liability coverage endorsement, attached to this policy, for which a specific premium is set opposite thereto, regardless of the legal liability of the insured. This extension of coverage is to apply only when no specific insurance exists in the name of or for the account of the owner of any such automobile. Such insurance shall be provided in accordance with the terms and conditions of the policy and Endorsement 50 which are not inconsistent with the provisions of this endorsement. Where there is specific insurance in the name of or for the account of the owner, coverage under this policy shall attach only as provided by Endorsement 50, whether such specific insurance be valid or not.
Endorsement 50 insured Hudiburg for "all sums which the insured shall become obligated to pay by reason of liability imposed by law. * * *" Endorsement 50A broadened the coverage to include "direct loss of or damage including loss of use by theft * * * to automobiles which are the property of others and in the custody of the insured for storage, repair or safekeeping, sustained under coverages described in Endorsement 50 * * * regardless of the legal liability of the insured." Insurer Globe contends that its policy covered insured only in the event of the insured's legal liability, but the policy expressly affords coverage "regardless of insured's legal liability." Policies which contained language not so clear as that used in Endorsement 50A, have been generally held to cover the property itself and not by way of indemnity only. The general rule is stated in 29 Am.Jur., Insurance, § 295.
"Policy provisions covering property contained in specified places and `for *797 which the insured is liable' have been held to insure against loss of the property and not to indemnify insured against his legal responsibility in tort or by contract to the owners of the property. * * *"
The rule permits the insured bailee to sue for all the losses and then account to the owner. California Ins. Co. v. Union Compress Co., 133 U.S. 387, 10 S.Ct. 365, 33 L.Ed. 730 (1890); Home Insurance Co. v. Baltimore Warehouse Co., 93 U.S. 527, 23 L.Ed. 868 (1876); Globe & Rutgers Fire Ins. Co. v. United States, 202 F.2d 696 (5th Cir.1953); American Eagle Fire Ins. Co. v. Gayle, 108 F.2d 116 (6th Cir.1939); Hartford Fire Ins. Co. v. Evans, 255 S.W. 487 (Tex.Civ.App.1923, no writ); Southern Cold Storage & Produce Co. v. A. F. Dechman & Co., 73 S.W. 545 (Tex.Civ.App.1903, no writ); Germania Ins. Co. v. Anderson, 15 Tex.Civ.App. 551, 40 S.W. 200 (1897, no writ); Home Ins. Co. v. Favorite, 46 Ill. 263 (1867); Sanford Mfg. Co. v. Western Mutual Fire Ins. Co., 229 Iowa 283, 294 N.W. 406 (1940); Rouse v. Albany Insurance Co., 257 N.C. 267, 125 S.E.2d 424 (1962); Lucas v. Liverpool & London & Globe Ins. Co., 23 W.Va. 258 (1883); Johnston v. Charles Abresch Co., 123 Wis. 130, 101 N.W. 395, 68 L.R.A. 934 (1904); 67 A.L.R.2d 1241; 53 A.L.R. 1409; 11 Couch on Insurance 2d, §§ 42:321, 42:330-332.
The jury found that the reasonable market value of the truck was $4,000.00, which would be the sum Hudiburg would ordinarily be entitled to recover as bailee for GMAC. Reef v. Hamblen, 47 S.W.2d 375 (Tex.Civ.App.1932, writ ref.); Indemnity Co. of America v. Slade, 4 S.W.2d 649 (Tex.Civ.App.1928, writ ref.). However, Hudiburg satisfied GMAC by paying the lesser sum of $2,428.83 and does not pray for recovery of the market value.
We construe the opinion of the Court of Civil Appeals to hold that there was no evidence of a theft and also that the policies did not afford coverage to Hudiburg, the bailee, and it is our opinion that both rulings are in error. Since the Court of Civil Appeals applied the wrong principles of law with respect to the issues of theft and policy coverage, and since Globe preserved a cross-point in that court which urged that the jury finding of theft was against the great weight and preponderance of the evidence, the cause will be remanded to that court.
Hudiburg has waived its $688.35 claim for parts, and that portion of the cause is severed and the judgment of the Court of Civil Appeals denying recovery is affirmed. That part of the judgment of the Court of Civil Appeals which denied recovery to Hudiburg for theft of the truck is reversed and the cause is remanded to the Court of Civil Appeals. Costs are adjudged against Globe.
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400 B.R. 74 (2009)
In re Vance Cole CHESNUT, Debtor.
Mark T. Brown, et al., Appellants,
v.
Vance Cole Chesnut, Appellee.
Nos. 03-41050-DML-13, 4:08-CV-578-A.
United States District Court, N.D. Texas, Fort Worth Division.
January 6, 2009.
*75 Angela D. Allen, Law Office of Tim Truman, North Richland Hills, TX, for Tim Trumann, Trustee.
Dennis O. Olson, Olson Nicoud & Gueck, Dallas, TX, for Mark T. Brown, Templeton Mortgage Corp.
James M. Morrison, Jim Morrison & Associates PC, Fort Worth, TX, for Vance Cole Chesnut.
Pamela Arnold Bassel, Bassel & Wilcox PLLC, Fort Worth, Tex., for Jacqueline Chesnut.
MEMORANDUM OPINION and ORDER
JOHN McBRYDE, District Judge.
This case is before the court as an appeal from rulings made by the bankruptcy court in a memorandum opinion signed July 29, 2008. Appellants are Mark T. Brown and Templeton Mortgage Corporation,[1] and appellee is Vance Cole Chesnut, the Debtor in bankruptcy, ("Debtor"). An amicus curiae brief in support of Debtor's position was filed by Tim Truman, Chapter 13 Trustee. After having reviewed the briefs, pertinent parts of the record, 1 Appellants are related entities. For convenience, the court refers to them collectively as "Templeton" or "appellants." and applicable authorities, the court has concluded that the rulings of the bankruptcy court should be affirmed.
*76 I.
The Rulings From Which the Appeal Was Taken
By the July 29, 2008, memorandum opinion, the bankruptcy court granted a motion filed by Debtor on April 22, 2008, in his chapter 13 bankruptcy case to enforce his final chapter 13 plan ("Plan") and order confirming the Plan.[2] The bankruptcy court had confirmed the Plan by order signed December 8, 2004. The motion sought an order directing the release of the lien held by Templeton on the property titled in the name of Debtor's wife, Jacqueline Chesnut, ("Mrs.Chesnut") as her sole and separate property.
The bankruptcy court held that the res judicata effect of the order confirming the Plan prevents Templeton from maintaining that the lien should not be released because, Templeton maintains, the property to which it attaches ("Eastland County property") has been the separate property of Mrs. Chesnut at 2 Mrs. Chesnut joined in the April 22, 2008, motion. R. at 88. pertinent times. The gist of the bankruptcy court's ultimate ruling was expressed in its memorandum opinion as follows:
[T]he court concludes that TMC and Brown are barred by the doctrine of res judicata and by reason of the Plan's binding effect from contending that the Lien should not be released because the Property belonged to Mrs. Chesnut as her separate property.
. . . .
Because the ownership of the Property was an issue that could have been raised prior to or at the time of confirmation of the Plan and because the issue was not otherwise posed to the court, the res judicata effect of confirmation prevents TMC from raising this issue now....
R. at 20-21 (footnote omitted).
II.
The Issues Raised on Appeal
The five issues raised by Templeton on appeal are as follows:
Issue No. 1. Whether the bankruptcy court erred in ordering the release of lien on property that was never found to be property of the bankruptcy estate.
Issue No. 2. Whether the bankruptcy court erred in failing to conduct a trial of the still pending adversary proceeding, post-remand from the Fifth Circuit of Appeals, in which the Appellants' asserted defense is that the property in issue is not property of the bankruptcy estate.
Issue No. 3. Whether the bankruptcy court erred because it lacks jurisdiction to order the release of a lien on property which is not property of the bankruptcy estate.
Issue No. 4. Whether the bankruptcy court erred because the Debtor's chapter 13 plan did not give Appellants adequate notice that the Debtor intended by his plan to require Appellants to release their lien on property that was not property of the bankruptcy estate.
Issue No. 5. Whether the bankruptcy court erred in finding that the doctrine of res judicata barred Appellants from arguing that their liens should not be released because the property is not property of the bankruptcy estate.
Appellants' Br. at 4.
III.
Pertinent Background[3]
By deed dated March 25, 1999, 2.52 acres of land in Eastland County, Texas, *77 were conveyed to Mrs. Chesnut, with the recitation in the deed that they were being conveyed to her "as her sole and separate property and estate." Resp'ts' Ex. 1 at 13th p. Debtor and Mrs. Chesnut were husband and wife at that time, and had been since September 15, 1996. Docket 1 in Adv. at 2 & Ex. A.[4] Part of the purchase price was a $26,000 promissory note given by Mrs. Chesnut to the grantor, Brooksie Nell Hodges ("Hodges"), Resp'ts' Ex. 7 at 5th p., which was secured by a vendor's lien retained in the deed and a deed of trust lien, Resp'ts' Ex. 1 at 13th p.; Resp'ts' Ex. 7 at 5th p.; Resp'ts' Ex. 9. In January 2002, Templeton acquired ownership from Hodges of the promissory note and the related liens. Resp'ts' Ex. 6.
Because of default in payments on the promissory note, Templeton accelerated payment of the balance owed, and gave notice of a trustee's foreclosure sale to be conducted under the authority of the deed of trust on February 4, 2003. Resp'ts' Ex. 13 at 3rd p. In an attempt to prevent the foreclosure sale, Debtor filed his case under chapter 13 on January 31, 2003. Resp'ts' Ex. 2 at 3rd p. Mrs. Chesnut was not named as a debtor. Id. A copy of Debtor's petition was sent to counsel for Templeton on the date of filing. Resp'ts' Ex. 3; Tr. of Aug. 5, 2003, Hr'g in Adv. at 40.[5] Before proceeding further with the noticed foreclosure sale, Templeton obtained advice of counsel that Debtor did not have an interest in the property, that the foreclosure sale could be conducted as noticed, and that there was no need to obtain a ruling from the bankruptcy court that the sale would not be in violation of the automatic stay. Tr. of Oct. 14, 2003, Hr'g in Adv. at 95; Tr. of Aug. 5, 2003, Hr'g in Adv. at 41-42. The deed of trust foreclosure sale took place as noticed on February 4, 2003. Resp'ts' Ex. 15. Templeton was the successful bidder at the sale. Id. at 2nd p. The substitute trustee who conducted the sale conveyed the property to Templeton by a substitute trustee's deed dated February 4, 2003, id., which shows to have been acknowledged on March 25, 2003, id. at 3rd p.
On June 16, 2003, Debtor initiated Adversary No. 03-04248-dml-13 ("adversary case") in his chapter 13 case by filing his "Plaintiffs Original Complaint to Enjoin Actions Against Property in Violation of the Automatic Stay, for Declaratory Judgment, Restoration of Title and Motion for Sanctions and Contempt." Docket No. 1 in Adv. at 1. Debtor alleged that the Eastland County property was property of the community estate of his marriage to Mrs. Chesnut, id. at 2; and, he sought (1) a declaration that the February 4, 2003, foreclosure sale was void as being in violation of the automatic stay, (2) a judgment directing Templeton to restore the legal title to the Eastland County property and correct the tax records of Eastland County, (3) a declaratory judgment that Templeton was in contempt of the automatic stay injunction, (4) compensatory damages, *78 and (5) sanctions, including all reasonable attorneys' fees, costs, and punitive damages, id. at 7. Templeton answered the complaint by asserting, inter alia, that the Eastland County property was acquired as the sole and separate property of Mrs. Chesnut, who is not a debtor in the case, and that the property, therefore, was not property of Debtor's bankruptcy estate, with the consequence that the automatic stay was not violated by the foreclosure sale. Docket No. 6 in Adv. at 2-3.
On July 17, 2003, Debtor filed in his bankruptcy case a proof of claim purportedly for Templeton as his creditor, asserting that Debtor owed Templeton $22,000 for money loaned and that the debt was secured by collateral on Debtor's "Homestead." R. at 72. Templeton did not file a proof of claim; and, it has disclaimed the one Debtor filed in its name.
On August 5, 2003, the bankruptcy court conducted a hearing in the adversary case on the issue of whether sanctions should be imposed on Templeton for conducting the foreclosure sale after having learned of the existence of Debtor's bankruptcy case. Tr. of Aug. 5, 2003, Hr'g in Adv. at 5. During the course of the hearing, the bankruptcy court made clear that the hearing did not have as a goal the ultimate determination of title to the property. Id. at 64-65. Rather, the bankruptcy court focused on whether Debtor had a colorable claim to the property that should have been resolved in the bankruptcy court before the foreclosure sale took place. Id. at 65. After hearing from three witnesses, the bankruptcy court decided to withhold a ruling until after the trial of the adversary case. Id. at 71-72.
On August 28, 2003, Templeton (in the name of Mark T. Brown) filed a motion to modify co-debtor stay, seeking permission to begin state court collection activity against Mrs. Chesnut. R. at 162. Templeton alleged that: "Vance Chesnut and Jacqueline Chesnut have conspired to file this case in bad faith in an attempt to avoid having separate property of Jacqueline Chesnut become property of the estate while still attempting to use Vance Chenut's [sic] bankruptcy filing to protect Jacqueline's assets." Id. at 163. On September 8, 2003, Debtor answered and objected to Templeton's motion. Id. at 172. Templeton withdrew the motion by a notice filed September 22, 2003. Id. at 176. So far as the court can determine, nothing in the record explains why this motion was filed or why it was withdrawn.
The trial of the adversary case was held October 14, 2003. Tr. of Oct. 14, 2003, Hr'g in Adv. at 1. The bankruptcy court continued to focus on whether Debtor had a "colorable claim" to the Eastland County property, id. at 90-91, that caused the foreclosure sale to be "at least a colorable violation of the stay," id. at 95, not on whether the property was a part of Debtor's bankruptcy estate.
The limited scope of the proceedings held August 5 and October 14 was confirmed in the memorandum opinion the bankruptcy court signed November 6, 2003, in which the bankruptcy court explained:
It is not at this time the chore of the court to determine whether the Property was a community asset or separately owned by Mrs. Chesnut. The court need only decide whether Debtor had an interest in the Property which was protected by the automatic stay. If Debtor had rights respecting the Property which were adversely affected by Defendants' foreclosure, a violation of the stay occurred.
In re Chesnut, 300 B.R. 880, 886 (Bankr. N.D.Tex.2003). In the memorandum opinion, the bankruptcy court imposed a $10,000 sanction on Templeton for its violation *79 of the automatic stay,[6] and advised the litigants that after payment of the $10,000 sanction[7] Templeton "may seek relief from the automatic stay as to the [Eastland County] Property." Id. at 890. Also, the bankruptcy court ordered Templeton to reconvey the Eastland County property to Mrs. Chesnut.[8]Id. The rulings in the November 6, 2003, memorandum opinion were put in the form of a judgment signed by the bankruptcy judge on December 23, 2003. Docket No. 15 in Adv. at 1.
On the appeal by Templeton from the bankruptcy court's December 23, 2003, judgment, this court reversed the bankruptcy court by memorandum opinion and judgment signed July 1, 2004, and remanded to the bankruptcy court for further proceedings. In re Chesnut, 311 B.R. 446, 450 (N.D.Tex.2004). This court's ruling was based on the court's conclusions that the evidence established as a matter of law that the Eastland County property was the separate property of Mrs. Chesnut and was not part of Debtor's bankruptcy estate and that, therefore, the automatic stay was not violated by the foreclosure sale. Id. at 449-50.
On August 19, 2005, the Fifth Circuit reversed the July 1, 2004, judgment of this court and affirmed the December 23, 2003, judgment of the bankruptcy court. The issue decided by the Fifth Circuit, as the court described it, was "whether the creditor violates the stay if, without permission of the bankruptcy court, he forecloses on an asset to which the debtor has only an arguable claim of right ...." In re Chesnut, 422 F.3d 298, 300 (5th Cir.2005). The holding of the Fifth Circuit was that, because Debtor had an arguable interest in the Eastland County property, Templeton violated the automatic stay by not causing there to be a resolution in the bankruptcy court of whether the arguable interest was a real interest before foreclosing the lien on the property. The Fifth Circuit did not decide the issue of ownership of the property or whether the property was part of Debtor's bankruptcy estate, saying "[w]here seized property is arguable property, it is no answer for the creditor to defend the foreclosure by claiming that the property was not properly covered by the stay." Id. at 304.
While the rulings of the bankruptcy court in its December 23, 2003, final judgment in the adversary case were on appeal to this court, but before this court ruled in favor of Templeton, Debtor filed on March 3, 2004, his Final Chapter 13 Plan and Motion for Valuation. R. at 62. It showed Templeton to be a secured creditor of *80 Debtor, that the collateral for Templeton's claim was "HOMESTEAD," that Templeton's claim was the amount of $22,000, and that the value of the collateral was $22,000.[9]Id. The Plan provided that each secured creditor's lien would be released after payment through the Plan of the creditor's allowed claim, and that all secured creditors shall execute any documentation necessary to release their liens upon payment of their allowed secured claim. Id. at 62-63. Templeton did not object to confirmation of the Plan. Id. at 66.
After this court reversed the bankruptcy court's December 23, 2003, judgment on July 1, 2004, and while the appeal to the Fifth Circuit from this court's rulings was pending, the bankruptcy court confirmed the Plan and valuation by order signed on December 8, 2004. Id. at 66. There was no appeal from the confirmation/valuation order.
So far as the court can tell, no ruling was made by the bankruptcy court on any of the issues raised by the pleadings in the adversary case other than the rulings expressed in the December 23, 2003, judgment. The bankruptcy court has not directly ruled in any context on Templeton's contention, as asserted in its answer to Debtor's complaint by which the adversary proceeding was initiated, that the Eastland County property was the sole and separate property of Mrs. Chesnut. Apparently, the first time the issue of ownership of the Eastland County property was raised in the bankruptcy case after the August 19, 2005, ruling of the Fifth Circuit was during a hearing held on September 27, 2007, on an application filed by Debtor's attorney for approval of attorney's fees, when the following exchange occurred between counsel for Templeton and the bankruptcy judge:
MR. OLSON: To look to the adversary proceeding, I think what's still pending in the adversary proceeding is the question as to whether this piece of property is property of the estate. And I think we would like to have an evidentiary hearing and a ruling on that. That, I think, would determine in large part.
THE COURT: You can see what you want to do on that when he files his motion, and we'll tee it up. . . .
Id. at 105.
The record indicates that $22,000 was paid to Templeton pursuant to the terms of the Plan. Next came the May 12, 2008, hearing on Debtor's April 22, 2008, motion to enforce the Plan and order confirming the Plan, which led to the July 29, 2008, ruling of the bankruptcy court that is now on appeal to this court. The bankruptcy court expressed the view, at the hearing that "at this point, [Templeton is] a day late and a dollar short on litigating the issue of whether or not this was in fact not community property, but was in fact Mrs. Chesnut's property." Id. at 128. Thereafter, the following exchange occurred between counsel for Templeton and the bankruptcy judge:
MR. OLSON: ... [W]hen Mr. Morrison was here a few months ago seeking fees, I said at the time that that adversary proceeding was still pending and that that was the vehicle to deal with that, and that we still wanted to litigate that issue. And it hasn't been said or dealt with, and the Court may not intend to.
*81 THE COURT: I now, thewell, I'm not going to quarrel with you. Let's move along. I want to get on with this. I've got another case that's going to take me all day. So let's proceed with this.
Id. at 129.[10]
IV.
Analysis of Templeton's Issues on Appeal
A. The Adversary Case was Concluded.
An ingredient of appellants' Issue No. 2 is the false premise that the Fifth Circuit remanded the case to the bankruptcy court for further proceedings. The first opinion the Fifth Circuit published in In re Chesnut did conclude with the following language:
The judgment of the district court is REVERSED and the judgment of the bankruptcy court is AFFIRMED; and the case is REMANDED to the bankruptcy court for further proceedings not inconsistent with this opinion, including, if necessary, the determination of whether the Eastland property is Mrs. Chesnut's separate property or her and [Debtor's] community property.
Appellants' Br., App. at p. 13 of Aug. 19, 2005, Op. of Fifth Circuit. However, on October 17, 2005, the Fifth Circuit revised its opinion with the one published at 422 F.3d 298, in which it changed the language quoted above to the following:
The judgment of the district court is REVERSED and the judgment of the bankruptcy court is AFFIRMED.
In re Chesnut, 422 F.3d at 307.
Counsel for Templeton takes the position that he did not receive the revised opinion eliminating the remand feature. R. at 18 n. 6; 121-22. Apparently, the bankruptcy judge did not make counsel aware of, or arrange for them to participate in, his communication to the Fifth Circuit urging the Fifth Circuit to change its opinion for the purpose of removing the remand feature. Id. at 122. Regardless of what prompted the Fifth Circuit to change its opinion or whether the bankruptcy judge's communication with the Fifth Circuit was proper, the final version of the Fifth Circuit's opinion eliminated the directive that the case was remanded *82 to the bankruptcy court for further proceedings, including, if necessary, the determination of whether the Eastland County property is Mrs. Chesnut's separate property or her and Debtor's community property. Thus, to whatever extent Templeton contends that the bankruptcy court failed to comply with a directive of the Fifth Circuit, it is mistaken.
If Templeton maintains by Issue No. 2 that the pleadings in the adversary case imposed on the bankruptcy court an obligation to decide in that case whether the Eastland County property was property of the bankruptcy estate, the court can sympathize with Templeton and its counsel because the ruling of this court in its July 1, 2004, opinion reversing the bankruptcy court's December 23, 2003, judgment, was based on the belief of this court that a finding that the Eastland County property was the separate property of Mrs. Chesnut would be determinative of the issues raised in the adversary case. In re Chesnut, 311 B.R. at 450. The Fifth Circuit disagreed.
As noted above, the Fifth Circuit held that the adversary case was properly resolved by the bankruptcy court in Debtor's favor because, according to the Fifth Circuit, the record established that Debtor had an arguable claim of right to the property. In re Chesnut, 422 F.3d at 306. As did the bankruptcy court in its November 6, 2003, opinion, the Fifth Circuit ruled, in effect, that it was not required to determine whether the Eastland County property was property of Debtor's bankruptcy estate. The Fifth Circuit used "arguable claim of right" to the property, 422 F.3d at 300, in the same sense the "colorable claim to that piece of property" concept was used by the bankruptcy court in the October 14, 2003, hearing leading up to the bankruptcy court's November 6, 2003, opinion, Tr. of Oct. 14, 2003, Hr'g in Adv. at 90-91.
The decision of the Fifth Circuit and the December 23, 2003, decision of the bankruptcy court are predicated on the concept that, despite the clear language of 11 U.S.C. § 362,[11] the automatic stay prevented action by Templeton against the Eastland County property, even if Debtor has no ownership interest in the property and it was not property of the bankruptcy estate, so long as Debtor has, as the bankruptcy court put it, a colorable basis for claiming an interest in the property or, as the Fifth Circuit put it, an arguable claim of a right in the property.
Accepting, as the court must, the arguable claim of right/colorable interest concept, the court concludes that the November 6, 2003, memorandum opinion and December 23, 2003, judgment of the bankruptcy court in the adversary case finally concluded that adversary case. The complaint by which the proceeding was initiated did not directly seek an adjudication that Debtor had an interest in the Eastland County property or even that the Eastland County property was a part of Debtor's bankruptcy estate. Reduced to its core, his prayer for relief sought only an adjudication that the deed of trust foreclosure sale was void by reason of having been in violation of the automatic stay, and an order providing sanctions against Templeton, and compensation to Debtor, for the violation. The bankruptcy court decided those issues in favor of Debtor by its November 6, 2003, memorandum opinion and December 23, *83 2003, judgment. The Fifth Circuit affirmed those rulings.
While Templeton urged in its response to the complaint in the adversary case that he did not violate the automatic stay because the Eastland County property was the separate property of Mrs. Chesnut, the bankruptcy court and the Fifth Circuit both made clear that the separate versus community character of the property was not determinative of, or even relevant to, the request for relief made by the adversary complaint.[12] As a result, a reasonable argument can be made that the adversary case was not a "still pending adversary proceeding" following the decision of the Fifth Circuit.
B. The Remaining Issues Raised by Templeton on Appeal Have, in Effect, Been Determined Against Templeton by the Fifth Circuit's Opinion on the First Appeal,
Accepting, as it must, the conclusion expressed by the Fifth Circuit in In re Chesnut that Debtor had a sufficient claim of right to the Eastland County property to cause the foreclosure of its lien on the property to be a violation of the automatic stay, further conclusions the court logically must reach are that (1) the Debtor had a sufficient claim of right to the Eastland County property to cause Templeton and the property to be subject to the bankruptcy court processes in Debtor's chapter 13 case; (2) the notice given to Templeton of the Plan caused Templeton to have an obligation to object to the Plan if it wished to avoid its confirmation; (3) if Templeton wished to complain of the order confirming the Plan, it was obligated to appeal from the order; and, (4) if the elements of res judicata exist, the res judicata effect of the order confirming the Plan forecloses any contention of Templeton at this time that the bankruptcy court erred in ordering the release of Templeton's lien on the property.
The Fifth Circuit has joined other circuit courts in holding that a bankruptcy court's confirmation order is to be given res judicata effect if the essential elements exist. Republic Supply Co. v. Shoaf, 815 F.2d 1046, 1051, 1054 (5th Cir. 1987). The elements essential to res judicata are, as the bankruptcy court noted, "identity of the parties, a prior judgment by a court of competent jurisdiction, that the judgment is final on the merits and that the cause of action is the same." R. at 21 n. 13; see also Republic Supply Co., 815 F.2d at 1051.
Again accepting the ruling of the Fifth Circuit in In re Chesnut, the conclusion follows that Debtor and Templeton were parties to both the Plan and confirmation order proceedings and the instant proceeding initiated by Debtor's April 22, 2008, motion to enforce the Plan and confirmation order. The prior judgment (confirmation order) was rendered by a court of competent jurisdiction and is a final judgment on the merits of the subject matters of the order, one of which was the release of Templeton's lien on the Eastland County property once it received the payment contemplated by the Plan.[13] The issues are *84 identical, i.e., whether Templeton had an obligation to release its lien once it received the payment contemplated by the Plan.
An effect of the ruling of the Fifth Circuit in In re Chesnut is that the fact that the Eastland County property has never been found to be a property of Debtor's bankruptcy estate is not relevant to the outcome. For that reason, and the other reasons stated above, the court is unable to rule in favor of Templeton on its Issues Nos. 1, 3, 4, or 5.
V.
Order
For the stated reasons,
The court ORDERS that the rulings made by the bankruptcy court in its July 29, 2008, memorandum opinion be, and are hereby, affirmed.
NOTES
[1] Appellants are related entities. For convenience, the court refers to them collectively as "Templeton" or "appellants."
[2] Mrs. Chesnut joined in the April 22, 2008, motion. R. at 88.
[3] Additional background information is found in the opinions reported at In re Chesnut, 422 F.3d 298 (5th Cir.2005), In re Chesnut, 311 B.R. 446 (N.D.Tex.2004), and In re Chesnut, 300 B.R. 880 (Bankr.N.D.Tex.2003).
[4] To the extent necessary, the court refers to documents that were not designated for inclusion in the record on this appeal but are contained in Adversary No. 03-04248-dml-13. References to those items will be by docket number, as shown on the docket sheet of the adversary case, and the page number of the document to which reference is being made, i.e., "Docket No. ___ in Adv. at ___"
[5] References are made in this memorandum opinion to the transcripts of hearings held August 5 and October 13, 2003, in the Adversary No. 03-04248-dml-13. Copies of the transcripts are found in volume three in the record of the appeal to the Fifth Circuit that resulted in the opinion reported at In re Chesnut, 422 F.3d 298 (5th Cir.2005).
[6] The bankruptcy court gave the following rationale for his conclusion that the deed of trust foreclosure sale violated the automatic stay:
In the case at bar, the law of Texas determines whether Debtor had an interest in the Property. As admitted even by Defendants, Debtor had, at a minimum, an equitable interest in the Property. Furthermore, whether the Properly belongs to the community and so is properly of the estate is dependent on various facts. Therein lies the problem with Defendants' arguments. At best, from Defendants' perspective, the Properly is presumed to be separately owned by Mrs. Chesnut. See Teas, 460 S.W.2d at 243. At worst, the Property is presumed to be community property. See TEXAS FAMILY CODE ANN. § 3.003. In either case, whether the Property is part of Debtor's estate is a question of fact which must be adjudicated by a court. Debtor unquestionably has a viable claim that the Property was properly includible in his estate.
In re Chesnut, 300 B.R. 880, 887 (Bankr. N.D.Tex.2003).
[7] Presumably, Templeton has paid the $10,000 sanction.
[8] Apparently, following the decision of the Fifth Circuit, Templeton conveyed the Eastland County property back to Mrs. Chesnut.
[9] The part of the Plan pertaining to Templeton's status as a creditor undoubtedly was predicated on the proof of claim Debtor filed in Templeton's name on July 17, 2003. Templeton consistently has maintained that it was not a creditor of Debtor.
[10] That the bankruptcy judge and counsel for Templeton had conflicting views as to the proper scope of the adversary case is evident from the record.
Counsel for Templeton seems to think that its answer to Debtor's complaint in the adversary case was sufficient to require the bankruptcy court to decide whether the Eastland County property was the separate property of Mrs. Chesnut, thus causing Templeton's lien on the property to be free of the administration of Debtor's chapter 13 bankruptcy. R. at 94 (where Templeton alleged in its response to the April 22, 2008, motion that "the issue of whether the [Eastland County property] is property of this bankrupt estate is presently before this Court in adversary proceeding No. 03-42148.") Similar contentions are made in Templeton's brief on this appeal, Br. of Appellants at 5-6; Reply Br. at 2. Templeton's counsel took the bankruptcy court's comment at the September 27, 2007, hearing that "we'll tee it up," R. at 105, to be a commitment to go forward in the adversary case to decide the issue of ownership of the Eastland County property, Reply at 2.
On the other hand, the bankruptcy court made clear in its July 29, 2008, memorandum opinion that it disagreed, saying that the adversary proceeding did not directly present the issue of ownership of the Eastland County property and that the adversary proceeding required the court "only to decide whether Debtor had an interest in the [Eastland County property] which was protected by the automatic stay." R. at 16. In addition, the bankruptcy court expressed its belief that following the decision of the Fifth Circuit neither Debtor nor Templeton raised in the bankruptcy court the question of ownership of the Eastland County property. Id. at 7.
[11] The potentially applicable subparts of 11 U.S.C. § 362, which defines the conduct that is stayed by the automatic stay, are § 362(a)(3), (4), and (5). The (3) and (4) subparts apply only if the property against which the conduct is directed is "property of the estate." Subpart (5) applies only if the property is "property of the debtor."
[12] Had Templeton filed a counterclaim in the adversary case urging relief from the automatic stay by a declaration that the Eastland County property was the separate property of Mrs. Chesnut in which Debtor did not have an interest, perhaps that issue would have been directly presented for decision, but no such counterclaim was filed.
[13] The court is not faced with an argument that there is not an identity of issues due to the failure of the Plan or the order confirming it to make reference to the Eastland County property. The confirmation order does not purport to identify the property; and, the Plan limits its description of the collateral held by Templeton to the word "HOMESTEAD." R. at 62. The record makes clear that the Eastland County property was not Debtor's homestead. Inasmuch as Templeton failed to make such an argument in its brief, the court does not give further consideration to the discrepancy between the Plan's description of the collateral and the description of the property from which Debtor seeks a release of lien.
|
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|
5th Division
March 31, 1998
1-96-3929
HARRY WADE and JOANN WADE, ) Appeal from the
) Circuit Court of
Plaintiffs-Appellees, ) Cook County.
)
v. )
)
CITY OF CHICAGO HEIGHTS, ) Honorable
) Irwin J. Solganick,
Defendants-Appellants. ) Judge Presiding.
JUSTICE HARTMAN delivered the opinion of the court:
This is the second appeal, following a second trial, involving these parties. Plaintiffs Harry and Joann Wade filed a negligence claim seeking damages for injuries suffered in an accident in which Harry was the driver and sole occupant of a car that struck the east side of a building on the northeast corner of 14th and Wentworth in the city of Chicago Heights. In
Wade v. City of Chicago Heights
, 216 Ill. App. 3d 418, 575 N.E.2d 1288,
appeal
denied
, 141 Ill. 2d 562, 580 N.E.2d 137 (1991) (
Wade I
), defendant city of Chicago Heights (City) appealed the jury's verdict awarding plaintiffs $3,582,627.70 in personal injury damages and $904,166.67 in consortium damages. This court affirmed in part, reversed in part, and remanded for a new trial, with instructions.
After the instant second trial (
Wade II
), the jury awarded plaintiffs $1,923,000 in personal injury damages and $300,000 in consortium damages. The City appeals, alleging error in the circuit court's having: (1) denied the City's motion for a directed verdict or judgment notwithstanding the verdict; (2) permitted a licensed traffic engineer to offer testimony of his opinion regarding the cause of the accident although he was not an expert in accident reconstruction; (3) refused to allow any evidence of Harry's alcohol consumption or level of intoxication at the time of the accident; and (4) denied the City's motion for a mistrial after a juror admitted visiting the scene of the accident.
The accident occurred at about 3:49 a.m. on May 19, 1982, while Harry, driving his car westbound on 14th Street near its intersection with Wentworth Avenue, lost control of the car and crashed into a brick building. Plaintiffs alleged that the accident was caused by the presence of a construction hole in the middle of 14th Street, which the City had created while performing repairs.
In
Wade II
, testimony previously given under oath by Raymond Rossi, who was unavailable to testify, was read into the record. At the time of the accident, Rossi was the superintendent of the City's water department. Department workers had been assigned to restore water service to an occupied building on 14th Street. A hole was dug in the street, which was subsequently backfilled with gravel two to three inches above the pavement. Workers surrounded the hole with three barricades, the tops of which displayed battery-operated lights. Rossi testified that the batteries could last for more than a month, although in previous deposition testimony he said they last only three to seven days. Rossi did not receive authority from the Illinois Department of Transportation to effect the repairs. No warnings other than the barricades were placed near the hole.
Harry testified that at the time of the accident, he had been working for the Ford Motor Company for 18 years. On May 18, 1982, Harry worked the third shift, 3:30 p.m. to 11:30 p.m., at the end of which he drove to a friend's house in Gary, Indiana. They watched boxing matches for a few hours. Harry left at around 2:30 or 3:00 a.m., drove south on Calumet Expressway, exited at Route 30, also known as 14th Street, and turned west. Harry drove through two traffic lights, stopping temporarily at the second light before it turned green. He encountered a construction zone about 200 yards west of that intersection, where barrels barricaded several lanes and lights and signs guided motorists, requiring him to change lanes constantly, in a zigzag pattern, for about one mile and one-half, as the four-lane highway became a two-lane road. The construction ended one-quarter of a mile before the State Street intersection, where Harry stopped for a traffic light. When the light changed, he continued driving west on 14th Street and next remembered waking up six weeks later at the hospital.
Henry Rice, Jr., a City police officer on May 19, 1982, investigated the accident at 3:51 a.m. and prepared a report. He found Harry unconscious in his car, which had extensive damage to the driver's side, and was against the east wall of a building located at the northeast corner of 14th Street and Wentworth. While patrolling the area earlier, Officer Rice observed a hole in the road near the intersection of 14th Street and Wentworth, which was filled in and surrounded by three barricades. At least two of the three lights on the barricades, and possibly the third, were working, and could be seen from 200 feet away, but after the accident, they had been knocked down, were heavily damaged, and were scattered around the scene, between 15 and 25 feet away from the hole. At least one light on one of the barricades was still flashing. There were tire marks leading from the site of the construction area to the car's final position against the building. His report concluded, "[d]river apparently lost control after striking the barricade 50 feet east of building which he struck."
Gerald Lindgren, a licensed professional engineer, testified for plaintiffs that the City failed to comply with applicable State standards found in the Manual on Uniform Traffic Control Devices (Manual), which discussed traffic safety rules for road work performed within the State. Specifically, the City did not meet the requirements for construction, warning, channelization, and overall safety in performing the construction project. In addition, the barricades used around the construction site were insufficient under the circumstances. Lindgren believed that the City's failure to use warning signs and channel traffic caused Harry to hit the barricades and the hole, and ultimately to collide with the building.
Dr. Robert Clinton Watkins, Jr. testified that he was Harry's family physician, having treated him since 1975. Before the accident, Harry was in good mental and physical health. In May 1982, after the accident, Dr. Watkins examined Harry upon his admission to the hospital. Harry's left eye was severely swollen and was bleeding. A CAT scan revealed a contusion of the brain and brain tissue. After regaining consciousness, Harry complained of persistent headaches. An optic neurologist concluded that Harry was suffering from left optic neuritis, or a degeneration of the optic nerve. Dr. Watkins and other specialists treated Harry at the hospital. Harry regained consciousness by the second hospital day, but was very confused and did not know what had happened. The level of confusion was so unusual that a psychiatrist was called in and, occasionally, restraints were employed. Harry later was sent to the psychiatric unit of a nearby hospital. Dr. Watkins continued to treat Harry until just before the Wade family moved to Nashville. During that time, Harry continued to suffer from headaches and had problems with his vision. Three other doctors examined Harry before trial and offered testimony regarding the serious nature of Harry's brain, vision and psychological injuries. An economist testified about Harry's pecuniary losses since the accident, which would continue in the future.
The videotaped evidentiary deposition of Thomas Cabello was presented to the jury. Cabello owned a dry cleaning and tailoring business located on 14th Street near the scene of the accident. In May 1982, Cabello observed the construction being performed on 14th Street. The hole created by the construction was present for at least "a couple of weeks," and was surrounded by barricades. Although lights were erected on the barricades, they quickly grew weaker and stopped working after three days. Cabello was at the store when the accident occurred, having slept at the store overnight. Two of the barricades were knocked over after the accident, but the third remained standing. The hole was filled and the barriers taken away the day after the accident.
Marea Wade Foster, Harry's daughter, and plaintiff Joann Wade, Harry's ex-wife, testified regarding the extreme changes in Harry's behavior after the accident, and the harsh effect of those changes on their lives. Joann divorced Harry in 1993 after he became physically violent with her on several occasions; before the accident they had a "beautiful relationship."
After the close of plaintiffs' case, the City attempted to introduce evidence that Harry had been drinking alcohol before the accident. The admission of this evidence also was a significant issue during the first trial. See
Wade I
, 216 Ill. App. 3d at 423-28. The circuit court granted plaintiffs' motions
in
limine
on this issue before the second trial, barring any evidence or reference to Harry's alleged consumption of alcohol, or of a blood alcohol test taken at the hospital, unless the City established a proper foundation for the evidence, at which time the City could move to vacate and reconsider the court's decision. Before trial, the City unsuccessfully moved for reconsideration of this order. Dr. Michael J. Chambliss, a forensic pathologist, testified in an evidence deposition for the purpose of making an offer of proof and establishing a foundation for evidence of alcohol use. Out of 3,000 to 4,000 autopsies he performed at the Cook County Medical Examiner's Office, several hundred involved alcohol-related deaths, and he also performed autopsies in private practice, many of which were alcohol related. He reviewed Harry's medical records, including a blood alcohol test that revealed Harry's blood alcohol level was .208, and concluded that a person at this level was under the influence of alcohol, adjudged that Harry was intoxicated and could have suffered a loss of critical judgment, impairment of perception, and a loss of attention span.
With regard to the blood alcohol test, the parties submitted the following evidence in support of their respective offers of proof. Hospital records indicated that Harry's blood could have been tested by either of two hospital employees with the initials MNT and TAD. The City subpoenaed Thaddeus Dominick, alleging that he had taken and analyzed the blood. In a sworn statement, Dominick testified that neither he nor Marcus Trevino, the other hospital employee, were licensed phlebotomists. In 1982, there was no special license for phlebotomists. Dominick worked the night shift at the hospital in May 1982. He did not know if he or Trevino drew blood from Harry. He could not tell who drew the blood. Dominick also testified regarding the procedures used by the hospital at that time for drawing blood.
The circuit court refused to admit this evidence, and the City rested. The jury returned a verdict in favor of plaintiffs, as first noted. The City appeals, raising the issues earlier set forth. For the reasons which follow, we affirm in part, reverse in part, and remand for a new trial.
I
The City first argues that the circuit court erred in denying its motion for a directed verdict and judgment notwithstanding the verdict because plaintiffs failed to prove the element of causation as a matter of law. A directed verdict or judgment notwithstanding the verdict may be granted when the evidence, viewed in the light most favorable to the opponent, so overwhelmingly favors the moving party that no contrary verdict could stand.
Maple v. Gustafson
, 151 Ill. 2d 445, 453, 603 N.E.2d 508 (1992);
Pedrick v. Peoria & Eastern Railroad Co.
, 37 Ill. 2d 494, 510, 229 N.E.2d 504 (1967). The court may not enter a judgment notwithstanding the verdict if the evidence, together with reasonable inferences to be drawn from it, demonstrates a substantial factual dispute, or the determination regarding conflicting evidence is decisive to the outcome.
Maple
, 151 Ill. 2d at 454.
The City raised the same argument regarding proximate cause in
Wade I
. There, this court held that evidence presented at trial suggested that
"Harry's accident could have been proximately caused by his vehicle's coming into contact with the backfilled hole in the alleged manner, to an extent authorizing the submission of the question to the jury."
Wade I
, 216 Ill. App. 3d at 442.
The law of the case doctrine provides that where the evidence on a subsequent appeal is the same, or substantially the same, as that on the previous appeal, the adjudications of the prior appeal become the law of the case.
Therefore, questions of law decided on the first appeal are binding upon the circuit court on remand and the appellate court on a subsequent appeal.
Martin v. Federal Life Insurance Co.
, 268 Ill. App. 3d 698, 701, 644 N.E.2d 42 (1994);
Dotson v. Sears, Roebuck & Co.
, 199 Ill. App. 3d 526, 528, 557 N.E.2d 392 (1990). We held that the evidence was sufficient to allow the jury to decide the proximate cause question. In the second trial, the same witnesses testified, offering substantially similar testimony. Under the law of the case doctrine, the issue of proximate cause was properly submitted to the jury.
Strasma v. Rager
, 167 Ill. App. 3d 212, 213, 521 N.E.2d 139 (1988).
The two principal cases cited by the City on this issue,
Geelan v. City of Kankakee
, 239 Ill. App. 3d 528, 530, 605 N.E.2d 1015 (1992), and
Monaghan v. Di Paulo Construction Co.
, 140 Ill. App. 3d 921, 489 N.E.2d 409 (1986), are distinguishable from the present case. In
Geelan
, plaintiff's decedent was driving a car that collided with an underpass pier. Plaintiff claimed defendant was negligent in failing to provide adequate lighting and illumination.
Geelan
, 239 Ill. App. 3d at 529. The court ruled that plaintiff could not establish that defendant's alleged negligence proximately caused the accident, in that it was purely speculative whether poor lighting caused the collision. 239 Ill. App. 3d at 530-31. In
Monaghan
, plaintiff had no recollection of the accident, but alleged that his motorcycle struck a median strip. The
Monaghan
court similarly concluded that it was purely speculative whether the motorcycle hit the strip.
Monaghan
, 140 Ill. App. 3d at 924.
Although plaintiffs' evidence in this case was not overwhelming on the proximate cause issue, they did demonstrate that the presence of the hole and barricades could have proximately caused the collision. Evidence from Officer Rice and Cabello established that the barricades were up before the accident, and after the accident they were lying on the ground with evidence of damage. Further, tire marks were seen extending from the site of the construction hole to the car's resting spot. In addition, in contrast to
Geelan
and
Monaghan
, plaintiffs presented evidence that the City violated applicable statutes and regulations in drilling the hole and erecting the barrier. Plaintiffs established a sufficient causal connection between the City's negligent acts, and the injuries suffered as a result of the collision, to allow the issue to be decided by the jury.
Filipetto v. Village of Wilmette
, 254 Ill. App. 3d 461, 470-71, 627 N.E.2d 60 (1993).
The City argues that the circuit court essentially ruled in its favor when presented with the City's motion for a directed verdict. In denying the motion, the court maintained that "[i]f this matter had been a bench trial, it would go no further than it has, because in my mind the plaintiff hasn't sustained a burden of proof if I was the trier of fact." As the court explained, however, the jury, not the court, was the trier of fact in this case. As the trier of fact, the jury was responsible for resolving any conflicts in the evidence or inferences to be drawn from the evidence. The court did not err in denying the City's motion for a directed verdict or judgment notwithstanding the verdict.
II
The City next argues that Lindgren should not have been permitted to offer his opinion on the causation issue because he was not an accident reconstruction expert, and he improperly based his opinion on conclusive allegations contained in Officer Rice's police report. The parties do not dispute that Lindgren, a traffic engineer, was qualified to give an opinion regarding appropriate safety standards to be used during road construction, and the City's violation of those standards. The City argues, however, that Lindgren could have offered his opinion on that issue without discussing causation. The City further contends that because the causation issue was not complicated or outside the knowledge and understanding of the average person, Lindgren could not offer his opinion on the causation issue without usurping the province of the jury.
There no longer exists an absolute prohibition against the admission of expert opinion testimony on an ultimate fact or issue.
Zavala v. Powermatic, Inc.
, 167 Ill. 2d 542, 545, 658 N.E.2d 371 (1995);
Arnold N. May Builders, Inc. v. Bruketta
, 60 Ill. App. 3d 926, 930, 377 N.E.2d 579 (1978). Such testimony does not intrude on the jury's role as factfinder because the jury is not required to accept the expert's conclusion.
Zavala
, 167 Ill. 2d at 545;
Pyskaty v. Oyama
, 266 Ill. App. 3d 801, 820, 641 N.E.2d 552 (1994). The test for the admissibility of expert testimony is whether the expert is qualified to testify, and whether it would aid the jurors' understanding of the facts.
Zavala
, 167 Ill. 2d at 546;
Reuter v. Korb
, 248 Ill. App. 3d 142, 158, 616 N.E.2d 1363 (1993). Factors to consider in determining the latter issue include the complexity of the subject involved, the purpose for which the opinion is offered, its relation to the ultimate issue to be determined, and the danger of undue prejudice.
Pyskaty
, 266 Ill. App. 3d at 820;
Arnold
, 60 Ill. App. 3d at 930. The complexity of the issue is a significant factor; the trend is to permit expert testimony in matters that are complicated and outside the knowledge and understanding of the average person.
Pyskaty
, 266 Ill. App. 3d at 820, quoting
Arnold
, 60 Ill. App. 3d at 933. Expert testimony therefore is proper if the evidence offers "knowledge and application of principles of science beyond the ken of the average juror."
Zavala
, 167 Ill. 2d at 546.
Defendant insists that Lindgren was not qualified to give his opinion as an accident reconstruction expert. Reconstruction testimony attempts to recreate the accident.
Stricklin v. Chapman
, 197 Ill. App. 3d 385, 389, 554 N.E.2d 658 (1990). Here, Lindgren did not attempt to recreate the accident and, therefore, did not have to qualify as an accident reconstruction expert in order to give an opinion on the causation issue.
Tuttle v. Fruehauf Division of Fruehauf Corp.
, 122 Ill. App. 3d 835, 841, 462 N.E.2d 645 (1984). Lindgren's testimony instead focused on the City's alleged failure to comply with applicable state regulations when it erected the barricades on Fourteenth Street. Lindgren stated that the Motor Vehicle Code required the City to comply with standards promulgated in the Manual, which sets forth specific requirements for the construction and maintenance of streets and highways. He determined that the City deviated from these standards, and explained the steps the City should have taken to comply with the standards. He concluded that the failure to use devices such as warning signs and channelization devices proximately caused the accident, and the use of these devices would have prevented the accident.
Lindgren's testimony involved complex issues regarding the difficulty of repairing streets and highways while maintaining certain safety standards for motorists traveling on those roads during their construction. His testimony focused on the City's failure to comply with those standards when it conducted repairs of the water lines under 14th Street, and the subsequent dangers the construction site posed for motorists, information that was beyond the knowledge of the average person and was admissible at trial.
The City argues that the circuit court should not have admitted the testimony because Lindgren improperly relied on Officer Rice's police report in reaching his conclusions, as Officer Rice was not qualified to render an opinion. The admission of evidence rests within the sound discretion of the circuit court and will not be reversed absent clear abuse.
Pyskaty
, 266 Ill. App. 3d at 808;
Reuter
, 248 Ill. App. 3d at 158. The City did not object to the admission of Officer Rice's report at trial; instead, the City introduced that evidence during its cross-examination of Officer Rice. In cases cited by the City, where the officer was held to be unqualified to state an opinion about the cause of the accident, the officer was inexperienced. In
Thurmond v. Monroe
, 159 Ill. 2d 240, 249, 636 N.E.2d 544 (1994), the officer had been with the department for one year at the time of the accident and had investigated fewer than 20 cases.
Thurmond
, 159 Ill. 2d at 249. In
Stricklin
, the officer had worked for the department for four months when investigating the case, and was asked to recreate the events of the accident beyond his own observations.
Stricklin
, 197 Ill. App. 3d at 389. In contrast, Officer Rice was a 23-year veteran of his department at the time of the accident, and based his conclusions regarding the point of impact on physical evidence found at the scene. Lindgren's testimony also is distinguishable from
Reuter
, where the expert based his opinion on assumptions that were inconsistent with the testimony of other witnesses.
Reuter
, 248 Ill. App. 3d at 159. Here, Lindgren relied on competent evidence contained in the record.
The circuit court did not abuse its discretion in admitting Lindgren's testimony on the causation issue.
III
The City next argues that it should have been permitted to introduce evidence that Harry consumed alcohol on the night of the accident. Plaintiffs argue that this evidence was inadmissible for the following reasons: (1) the City failed to establish that the blood alcohol test was taken in compliance with required procedures; (2) the City failed to establish the necessary foundation for admitting the lab report containing the test results; and (3) Dr. Chambliss relied on the inadmissible test in offering his opinion regarding Harry's level of intoxication, rendering his testimony inadmissible.
The City sought the admission of Harry's blood alcohol level as evidence of Harry's alcohol consumption and intoxication at the time of the accident, in order to establish contributory negligence. The City also submitted jury instructions that would allow the jury to consider whether Harry violated several provisions of the Motor Vehicle Code (Ill. Rev. Stat. 1987, ch. 95 1/2, par. 11-100
et
seq.
), and whether this violation constituted
prima
facie
evidence of negligence, or required that Harry be presumed to have been under the influence of alcohol.
Section 11-501(a) of the Code prohibits a person from driving a vehicle in this State if the concentration of alcohol in the person's blood was greater than .10, or if the person was under the influence. Ill. Rev. Stat. 1987, ch. 95 1/2, par. 11-501(a)(1), (2) (section 11-501). Section 11-501.2(b)(3) states when it shall be presumed that a person was driving under the influence of alcohol, providing that if "the concentration of alcohol in the person's blood or breath *** was at that time an alcohol concentration of 0.10 or more, it shall be presumed that the person was under the influence of alcohol." Ill. Rev. Stat. 1987, ch. 95 1/2, par. 11-501.2(b)(3).
Plaintiffs argue that evidence of Harry's blood alcohol test in this case is inadmissible because the City failed to comply with prerequisites for admissibility contained in section 11-501.2(a). Plaintiffs base their argument on
People v. Solis
, 275 Ill. App. 3d 346, 655 N.E.2d 954 (1995), a criminal case cited by the circuit court, which involves a recently enacted provision of the Code that is inapplicable to this case.
Section 11-501.2(a) lists detailed requirements that must be met before "evidence of the concentration of alcohol *** in a person's blood or breath" will be introduced "in the trial of any civil or criminal action or proceeding arising out of an arrest for an offense as defined in Section 11-501." Ill. Rev. Stat. 1983, ch. 95 1/2, par. 11-501.2(a). The City acknowledged before the circuit court that it could not comply with the section 11-501.2(a) requirements, but contends that it was not required to do so in this case.
The supreme court recognized the limiting language of section 11-501.2(a) in
People v. Murphy
, 108 Ill. 2d 228, 234-36, 483 N.E.2d 1288 (1985), where the court held that the provision applied only to the offense of driving under the influence, not reckless homicide, and the test results of defendant's blood alcohol level were admissible under ordinary standards governing the admission of evidence. Several appellate decisions have extended the
Murphy
rule, holding that the requirements in section 11-501.2(a) did not apply to blood alcohol tests admitted in civil proceedings.
Burris v. Madison County
, 154 Ill. App. 3d 1064, 1069, 507 N.E.2d 1267 (1987);
Thomas v. Brandt
, 144 Ill. App. 3d 95, 100-01, 493 N.E.2d 1142 (1986);
Mulhern v. Talk of the Town
, 138 Ill. App. 3d 829, 833, 486 N.E.2d 383 (1985).
Utilizing ordinary standards of admissibility to determine whether the circuit court improperly excluded evidence of Henry's blood alcohol level and other evidence of intoxication, the fact that the technician who drew the blood was not certified does not preclude admission of the test results.
Mulhern
, 138 Ill. App. 3d at 833, citing
Murphy
, 108 Ill. 2d at 236. Testimony concerning procedures used to test a person's blood alcohol go to the weight to be accorded the evidence, not its admissibility.
Thomas
, 144 Ill. App. 3d at 98, 101.
Evidence of alcoholic consumption is highly probative; however, it also is so prejudicial that more than mere drinking must be shown; actual intoxication must be established.
Reuter
, 248 Ill. App. 3d at 156;
Marshall v. Osborn
, 213 Ill. App. 3d 134, 140, 571 N.E.2d 492 (1991);
Sandburg-Schiller v. Rosello
, 119 Ill. App. 3d 318, 331, 456 N.E.2d 192 (1983). Previously, a distinction was identified between evidence of alcoholic consumption and intoxication where a party is trying to prove a violation of section 11-501(a).
Wade I
, 216 Ill. App. 3d at 430. In contrast to the first trial, in
Wade II
the City attempted to submit evidence not only of Harry's blood alcohol level, and testimony that he consumed several alcoholic drinks, but also expert testimony regarding the effect of that particular amount of alcohol on a person's ability to drive the vehicle. The testimony of Dr. Chambliss and evidence from the blood alcohol test were admissible to establish intoxication. See
Marshall
, 213 Ill. App. 3d at 141 (holding that the circuit court did not err in admitting evidence of defendant's intoxication through his blood alcohol test and expert testimony).
Plaintiffs next argue that the City failed to establish the proper foundation for admitting the blood alcohol test as a business record. Supreme Court Rule 236 (134 Ill. 2d R. 236(a)) permits the admission of a business record if it was made in the regular course of business. Under this rule, any alterations made to the record affect the probative weight to be given to the documents, not their admissibility.
Progress Printing Corp. v. Jane Byrne Political Committee
, 235 Ill. App. 3d 292, 306, 601 N.E.2d 1055 (1992). Before 1992, hospital records were excluded from this rule. 107 Ill. 2d R. 236(b). The cases cited by plaintiffs regarding the admissibility of hospital records predate the 1992 amendment and therefore are not applicable to this case. The City should have been given the opportunity to establish a foundation for the admission of this evidence in accordance with Rule 236, not section 11-501.2(a). The testimony of Thaddeus Dominick, the medical technician at the hospital, regarding the procedures used to handle blood alcohol tests performed in the hospital's laboratory, and whether the test was conducted in the ordinary course of business, was relevant to this issue even if Dominick himself did not conduct the test.
Evidence of Harry's blood alcohol level at the time of the accident is relevant and highly probative on the issue of whether Harry was intoxicated or under the influence of alcohol at the time of the collision. The circuit court's refusal to admit this evidence deprived the City of the opportunity to prove its theory of the case, that the accident resulted from Harry's own negligence in driving a vehicle while under the influence of alcohol. This error requires that the case be reversed and remanded for a new trial.
The City also claims that it was entitled to jury instructions containing language from sections 11-501(a) and 11-501.2(b). Plaintiffs argue that if section 11-501.2(a) is inapplicable to the present case, section 11-501.2(b) also should not be applied. We discussed the applicability of section 11-501.2(a) in the context of the admissibility of a blood alcohol test. Our analysis of section 11-501.2(b) relates to whether the City was entitled to jury instruction that a violation of the Motor Vehicle Code could be considered as evidence of negligence.
The City proposed the submission of similar jury instructions in
Wade I
. There, instruction No. 7 stated the provisions of IPI Civil 2d No. 60.01, as modified by the inclusion of section 11-501(a)(1) language, whereas instruction No. 8 contained the language of IPI Civil 2d No. 60.01 and the presumption stated in section 11-501.2(b)(3).
Wade I
, 216 Ill. App. 3d at 431. We held that instruction No. 7 should have been given to the jury, and the failure to do so constituted reversible error. 216 Ill. App. 3d at 438. Instruction No. 8 would have been proper only if it had been used together with or in reference to section 11-501(a)(2). 216 Ill. App. 3d at 433-34.
During the instant trial, the City proposed that three instructions containing the language of IPI Civil 2d No. 60.01 be submitted to the jury. Instruction No. 8 included section 11-501(a)(2) language; instruction No. 9 incorporated language from section 11-501(a)(1). These two instructions would have permitted the jury to determine whether Harry violated either provision of the Code, and whether to consider such violations as evidence of negligence. See
Wade I
, 216 Ill. App. 3d at 438. Instruction No. 10 stated the section 11-501.2(b)(3) presumption. The circuit court refused to tender these instructions, as no evidence of alcohol use or intoxication was permitted to be introduced at trial.
As explained in
Wade I
, applicable here, had this evidence been admitted, as it should have been in this case, by refusing to tender these instructions the court "deprived the jury from considering the significance of that blood-alcohol level and its possible relationship to Harry's driving and the accident."
Wade I
, 216 Ill. App. 3d at 427.
IV
Lastly, the City argues that the circuit court erred in denying its motion for a mistrial after a juror revealed that he independently visited the scene of the accident.
Generally, a jury's verdict cannot be impeached by the testimony of the jurors. A juror may, however, testify regarding whether extraneous, prejudicial information was brought to the jury's attention, or whether an outside influence improperly was brought to bear upon any juror.
Birch v. Township of Drummer
, 139 Ill. App. 3d 397, 408, 487 N.E.2d 798 (1985);
Haight v. Aldridge Electric Co., Inc.
, 215 Ill. App. 3d 353, 369, 575 N.E.2d 243 (1991). Reversal is not required whenever extraneous or unauthorized information reaches the jury; only when the information prejudices the losing party is reversal mandated.
Birch
, 139 Ill. App. 3d at 408;
Brown v. Johnson
, 92 Ill. App. 3d 1095, 1100, 416 N.E.2d 799 (1981). The losing party need not prove actual prejudice, but need demonstrate only that the unauthorized information relates directly to an issue in the case and might have improperly influenced the verdict.
Frede v. Downs
, 101 Ill. App. 3d 812, 816, 428 N.E.2d 1035 (1981);
Birch
, 139 Ill. App. 3d at 409. Unauthorized visits to the scene of the accident are presumptively prejudicial.
Brown
, 92 Ill. App. 3d at 1100.
During jury deliberations in this case, the circuit court learned that one of the jurors, Frank Houghee, visited the scene of the accident. The court conducted a voir dire of Houghee, who stated that he drove down 14th Street, stopped for a traffic light at the Wentworth intersection, and looked around. Houghee noticed the proximity of the Ford plant, and concluded that Harry must have known the barricades were present because he must have driven past that location several times previously. The court conducted a voir dire of the other jurors, who said that the extraneous information would not affect their ability to be fair and impartial. Several jurors stated that they believed Houghee had changed his mind about the case after viewing the accident scene.
Houghee's visit to the accident scene was prejudicial to the City. The circumstances present at the accident scene were directly related to one of the core issues of the case, namely whether the barricades were visible to Harry, such that he could have avoided the collision. Houghee's investigation of the scene also may have led him to change his mind about the verdict, and therefore may have improperly influenced the verdict. The circuit court therefore erred in denying the City's motion for a mistrial.
For the reasons set forth, the circuit court's rulings on proximate cause and expert testimony are affirmed, its rulings on alcohol consumption and jury instructions related thereto were reversible error, the jury's verdict in favor of plaintiffs is reversed, and the cause is remanded to the circuit court for a new trial.
Affirmed in part, reversed in part, and remanded for a new trial, with directions.
HOFFMAN, P.J., and HOURIHANE, J., concur.
|
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TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-11-00707-CV
Travis Central Appraisal District, Appellant
v.
Wells Fargo Bank Minnesota, N.A., Appellee
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 201ST JUDICIAL DISTRICT
NO. D-1-GN-08-000025, HONORABLE GISELA D. TRIANA-DOYAL, JUDGE PRESIDING
O P I N I O N
Appellant Travis Central Appraisal District ("TCAD") appeals a trial court order
imposing $337,956 in sanctions against it for allegedly failing to comply with the court's prior
summary-judgment order, which required TCAD to apply a pollution-control exemption to the
ad valorem property valuation of property owned by Wells Fargo Bank Minnesota, N.A. ("Wells
Fargo"). See Tex. Tax Code Ann. § 11.31 (West 2008) (providing tax exemption for real and
personal property used for pollution control); see also Tex. Const. art. VIII, § 1-l (authorizing
Legislature to enact ad valorem tax exemption for pollution-control property). We hold that the trial
court lacked jurisdiction to impose sanctions for TCAD's alleged failure to properly apply the tax
exemption for tax years 2008, 2009, and 2010 based on the prior summary-judgment order, which
was rendered in connection with Wells Fargo's protest of the property's 2007 assessed value. We
therefore vacate the trial court's order and dismiss the appeal for want of jurisdiction.
FACTUAL AND PROCEDURAL BACKGROUND
The trial court assessed monetary sanctions against TCAD for failing to comply with
a summary-judgment order issued in July 2008 in the underlying case, which was a suit for judicial
review of Wells Fargo's protest of the 2007 assessed value of property it owned that housed a
residential apartment building. The property had formerly been used as a landfill, and Wells Fargo
had claimed a partial pollution-control exemption based on a positive-use determination by the Texas
Commission on Environmental Quality ("TCEQ"). See Tex. Tax Code Ann. § 11.31. TCAD
interpreted the TCEQ's use determination to exempt only the portion of the land value attributable
to storm-water retention ponds on the property that were identified by the TCEQ as having a
"positive use" determination, but not to exempt any part of the improvement value of the apartment
building, citing (1) the language used in the TCEQ's use determination of a "negative determination
for the 594,208 sq. ft. of real estate which is being used to house a commercial apartment complex,"
and (2) a statutory exclusion making property used for residential purposes ineligible for the
exemption. (1) See id. § 11.31(a) ("Property used for residential purposes . . . is ineligible for an
exemption under this section."). After paying its 2007 taxes under protest, Wells Fargo appealed
TCAD's determination to the Travis Appraisal Review Board, contending that the use determination
also exempted the value of the first floor apartment units in which pollution control devices were
installed. See id. § 41.41(a)(4) (West 2008). When the Board upheld TCAD's determination, Wells
Fargo filed the underlying suit for judicial review.
While the matter was pending in the trial court, TCAD issued the 2008 notice of
assessed value for Wells Fargo's property, which applied the exemption for the 2008 tax year in the
same manner as it had for the 2007 tax year. However, Wells Fargo did not protest the 2008
assessment, did not pay the taxes for that year under protest, did not amend its petition to include the
2008 assessment, and did not independently file suit with regard to the 2008 assessment. See id.
§§ 41.41 (right to protest), .411 (protest of failure to give notice), .44 (prescribing deadlines for filing
notice of protest); 42.209 (remedies under tax code are taxpayer's exclusive remedies), .21
(prescribing procedures in suit for judicial review) (West 2008 & Supp. 2012). Shortly after the
deadline for protesting the 2008 assessment had passed, the trial court granted Wells Fargo's motion
for summary judgment in the pending action and ordered TCAD to apply the pollution-control use
determination issued by the TCEQ in a manner consistent with Wells Fargo's interpretation. The
summary-judgment order was not appealed and became final.
Interpreting the pollution-control use determination to exclude any part of the
apartment complex building, TCAD continued, in the face of the summary-judgment order, to apply
the exemption only to the portion of the property on which there were storm-water retention ponds.
See generally Travis Cent. Appraisal Dist. v. Wells Fargo Bank Minn., N.A., No. 03-09-00013-CV,
2010 WL 983924 (Tex. App.--Austin Mar. 19, 2010, no pet.) (mem. op.). Wells Fargo filed a
motion for sanctions, contending that the TCEQ's use determination--and thus the pollution-control
exemption--also applied to the units on the first floor of the apartment building, that the trial court
had necessarily so held in granting summary judgment in its favor, and that TCAD was not
complying with the court's order to apply the pollution-control use determination the TCEQ issued.
Id. at *3. The trial court granted Wells Fargo's motion and ordered that Wells Fargo recover as a
sanction the portion of the ad valorem tax assessed on the first-floor units, which Wells Fargo had
paid under protest for the 2007 tax year. Id.
TCAD appealed that sanctions order to this Court. We affirmed, holding that the trial
court did not abuse its discretion in sanctioning TCAD for failing to comply with the
summary-judgment order because by granting Wells Fargo's motion for summary judgment, it was
sufficiently clear to TCAD that the summary-judgment order required TCAD to downwardly adjust
the property-tax assessment for the 2007 tax year, and the evidence was undisputed that it had failed
to do so. Id. at *5.
In the meantime, while the prior appeal was pending in this Court, TCAD issued the
2009 notice of assessed value for Wells Fargo's property, which applied the pollution-control
exemption in essentially the same manner as the 2007 and 2008 tax years. Wells Fargo did not
protest the 2009 assessment, did not pay the taxes under protest, did not amend its petition in the
underlying lawsuit, and did not independently file suit against TCAD in regard to the 2009
assessment. After we issued our March 2010 opinion affirming the prior sanctions order, it is
undisputed that TCAD applied the tax exemption to the first-floor apartments for the 2007 tax year.
TCAD did not, however, retroactively revise the 2008 and 2009 tax assessments, for which no
protest had been filed. TCAD similarly applied only a partial exemption in the 2010 notice of
assessed value, which was issued after we handed down our opinion. Wells Fargo did protest the
2010 assessed value but subsequently executed a settlement agreement with TCAD, withdrew its tax
protest, and waived the right to any further proceedings related to the 2010 assessment. (2)
Although Wells Fargo had not protested the 2008 or 2009 assessed values and had
settled its protest of the 2010 assessed value, Wells Fargo filed in the trial court a second motion
for sanctions in which it claimed that TCAD had willfully failed to comply with the 2008
summary-judgment order and sought to recover the excess taxes and penalties it had paid for those
three tax years. Wells Fargo asserted that the 2008 summary-judgment order required TCAD to
apply the exemption and adjust the assessed value in all future tax periods, regardless of whether
Wells Fargo had protested valuation in those years, because the tax code provides that once a
taxpayer qualifies for the pollution-control exemption, the property owner need not claim it in
subsequent years (subject to certain exceptions not asserted to be applicable in this case). See Tex.
Tax Code Ann. § 11.43(c). Wells Fargo argued that, following the 2008 summary-judgment order,
TCAD's implementation of the exemption to all prospective tax periods was a ministerial task,
TCAD had no discretion in applying it, and TCAD had contumaciously failed to comply with the
trial court's order requiring its application. See id. § 11.31(i) ("The chief appraiser shall accept a
final determination by the executive director as conclusive evidence that the facility, device, or
method is used wholly or partly as pollution control property.").
TCAD opposed the sanctions motion, contending that the trial court lacked
jurisdiction to impose sanctions for any tax year after 2007 because the summary-judgment order
was silent as to subsequent tax years and because Wells Fargo had failed to utilize the exclusive
remedies provided in the tax code for protesting the 2008 and 2009 tax-year assessments, had
expressly waived its right to protest the 2010 assessment, and had not amended the petition in the
underlying lawsuit to include any subsequent tax years. TCAD further asserted that it had not failed
to apply the exemption but rather had applied it to part of the property based on a reasonable
interpretation of the TCEQ's use determination.
The sanctions motion was tried on stipulated facts, and the trial court ruled that the
2008 summary-judgment order applied to tax years subsequent to 2007, observing that the order
was not expressly limited to the 2007 tax period and stating that the tax code does not require a
taxpayer to reapply for the pollution-control exemption once granted. See id. § 11.43(c). After
hearing evidence from Wells Fargo regarding the extent to which it was denied the benefit of the
pollution-control exemption in 2008, 2009, and 2010, the trial court granted the motion for sanctions
and assessed $337,956 against TCAD. The amount of the sanctions award was based on the full
amount Wells Fargo claimed to have overpaid for property taxes in 2008, 2009, and 2010, plus
assessed penalties. The trial court further granted Wells Fargo attorney's fees in the event of appeal,
but otherwise denied Wells Fargo's request for attorney's fees.
On appeal, TCAD reasserts its contention that the trial court lacked jurisdiction to
impose sanctions for the 2008, 2009, and 2010 tax years. In the alternative, it contends that the trial
court abused its discretion in imposing sanctions because TCAD did not act in bad faith and because
the amount awarded was excessive.
DISCUSSION
The trial court signed the second sanctions order almost sixteen months after this
Court's mandate was issued in the earlier appeal. Thus, unless the 2008 summary-judgment order
applied to tax years beyond 2007, TCAD's actions as to subsequent tax years were outside the scope
of the 2008 summary-judgment order and would not support the trial court's second sanctions order.
Accordingly, the critical jurisdictional inquiry in this case is the proper scope of the 2008
summary-judgment order. For the reasons that follow, we hold that the trial court's construction of
the underlying summary-judgment order as applying to assessments in tax years subsequent to 2007
is inconsistent with the scope of Wells Fargo's petition, the statutory provisions concerning
exhaustion of administrative remedies, and relevant case law.
When Wells Fargo filed the underlying suit for judicial review, its petition was
limited to a complaint about the assessment for tax year 2007. The petition did not reference
subsequent tax years specifically or generally. In granting the second sanctions order, however, the
trial court construed the 2008 summary-judgment order as applying to subsequent tax years,
apparently based on the following two facts: (1) the summary-judgment order did not include
language expressly limiting its scope to the 2007 tax period, and (2) the tax code states that a
taxpayer need only apply for the pollution-control exemption once and need not claim it in
subsequent years unless the property's use or ownership changes. See id. § 11.43(c). We conclude
that the trial court's determination ignores the limited scope of Wells Fargo's petition and is contrary
to case law establishing that courts lack jurisdiction to adjudicate disputed tax assessments for tax
years not included in a petition requesting relief as well as those for which administrative remedies
were not exhausted.
In Atascosa County Appraisal District v. Tymrak, 858 S.W.2d 335 (Tex. 1993), the
Texas Supreme Court outlined in detail the steps that must be followed to challenge an assessment
for subsequent years. Id. at 336-37. To challenge any assessment, a taxpayer must timely file a
notice of protest and appear (personally, by affidavit, or by representative) at a protest hearing. Id.
at 336; see also Tex. Tax Code Ann. §§ 41.44, .45 (West Supp. 2012). If these steps are timely
completed without a satisfactory resolution, the taxpayer must then timely file its petition in the trial
court; this "appeal" of the appraisal review board's order concerns the current tax year only. Tymrak,
858 S.W.2d at 337; see also Tex. Tax Code Ann. § 42.21 (West Supp. 2012). If an appeal of a prior
year's protest is pending when the appraisal review board issues its order, the tax code provides the
taxpayer with two options: (1) amend the petition for the pending appeal to include the grounds for
appealing the subsequent order, or (2) appeal the board's order independently of the pending appeal.
Tex. Tax. Code Ann. § 42.21(c). As the supreme court in Tymrak observed,
Since taxpayer appeals are usually filed at the end of the year, most cases are
still pending when the appraisal district delivers notices of appraised value for the
next tax year. At that time, the taxpayer makes the decision whether to begin the task
of exhausting its administrative remedies in order to correct an improper appraisal
of its property for that tax year. The taxpayer must complete these steps for each year
that it desires to challenge the valuation because the completion of all the
administrative requirements, the filing of a timely petition in the trial court, and the
prosecution of the lawsuit to its final disposition affects only the appraised value of
the property for that one tax year. Unless a property owner repeats this almost
year-long administrative process and files another petition in a separate lawsuit or
files an amended petition in a pending lawsuit filed appealing from an appraisal
review board order issued in a previous year, the taxpayer loses its right to litigate the
appraised value for the subsequent year, even when a lawsuit challenging
the appraised value of the same property for a previous year is pending. Tex. Tax
Code § 42.21(c).
Tymrak, 858 S.W.2d at 337; see also Tex. Tax Code Ann. § 42.09 (tax code procedures for
protesting assessment are taxpayer's exclusive remedies). It is undisputed that Wells Fargo did not
comply with these procedures for tax years 2008 and 2009 and that it settled and waived its protest
for 2010 without ever having sought judicial review of the assessed value. Nonetheless, it now seeks
to avoid the consequences of its failure to follow mandatory tax-code procedures, not by protesting
the assessed values for those years but by seeking sanctions and claiming that the summary-judgment
order in a suit pertaining only to the assessment for the 2007 tax year necessarily governed
assessment protests for all subsequent tax periods merely because Wells Fargo was not required to
reapply for the exemption once it was granted. We disagree.
In Henderson County Appraisal District v. HL Farm Corp., 956 S.W.2d 672 (Tex.
App.--Eastland 1997, no pet.), the court considered Tymrak in connection with a dispute regarding
the taxpayer's entitlement to an open-space land designation for several tax periods. Id. at 673; see
also Tex. Tax Code Ann. §§ 23.51, .52, .54 (West 2008 & Supp. 2012). Like the pollution-control
exemption at issue in this case, a taxpayer claiming an open-space land designation for purposes of
ad valorem tax valuation is entitled to retain the designation in subsequent tax years without filing
a new application unless use or ownership changes. Tex. Tax Code Ann. § 23.54(e) (West 2008).
In its tax-protest suit, the taxpayer had expressly challenged the taxing authority's denial of the open-space land designation for "1988 and all subsequent years," and the trial court rendered judgment
in its favor for a six-year period--1988 through 1993. HL Farm, 956 S.W.2d at 673. The taxpayer,
however, had only exhausted its administrative remedies as to 1988, 1989, and 1992. See id. at 675.
Applying Tymrak, the court of appeals held that the taxpayer was only entitled to the open-space land
designation for the years included in the taxpayer's petition and for which administrative remedies
had been exhausted. Id. at 674-75. Because the taxpayer had exhausted its administrative remedies
for the years 1988, 1989, and 1992, the court held that the trial court did not err in finding that HL
Farm was entitled to the open-space land designation in those years. Id. at 675. Significantly,
however, the court determined that successful litigation of the designation issue as to those specific
years did not extend to subsequent years for which HL Farm had not exhausted its administrative
remedies: "We hold that HL Farm was required to exhaust its administrative remedies for each year
at issue in this appeal and that the trial court did not have jurisdiction to consider the issue of HL
Farm's entitlement to open-space land designation in 1990, 1991, and 1993." Id.
In the present case, Wells Fargo neither requested relief for the 2008, 2009, and 2010
tax years nor exhausted its administrative remedies as to those years. The tax code and case law
make it clear that these failures would be fatal to a taxpayer's claim for a refund. Wells Fargo
nevertheless asserts two reasons why we must construe the 2008 summary-judgment order to apply
to subsequent tax years and allow it to obtain relief through the back door (sanctions) that it could
not obtain through the front door (refund after protest). The first is that application of the pollution-control exemption to one tax year relieves the taxpayer of the obligation to apply for it in subsequent
tax years, and Wells Fargo was entitled to the exemption for the 2007 tax year by virtue of the 2008
summary-judgment order. As HL Farms demonstrates, however, even if the 2008 summary-judgment order obviated the need for Wells Fargo to reapply each year for the pollution-control
exemption, it did not obviate the need for Wells Fargo to follow tax-code procedures for protesting
assessed values in subsequent years in accordance with the procedures mandated by the tax code.
Because Wells Fargo failed to follow those procedures, the trial court lacked authority to award any
relief for those subsequent years in the 2008 summary-judgment order.
Anticipating that the failure to exhaust administrative remedies would be problematic,
Wells Fargo further contends that it need not have exhausted its remedies in order to challenge the
2008, 2009, and 2010 assessments because certain exceptions to the exhaustion requirement apply
under the facts of this case. That may or may not be true, but it is beside the point. Wells Fargo is
not challenging the 2008, 2009, and 2010 assessments in a tax-protest suit; it is seeking sanctions
based on the 2008 summary-judgment order rendered in a suit that challenged the assessed value
only for the 2007 tax year. We need not decide in this case whether Wells Fargo could have asserted
claims for subsequent years without first exhausting its administrative remedies; the pertinent
jurisdictional inquiry in this case is whether it did. On that point, we conclude that the 2008
summary-judgment order cannot properly be construed as applying to subsequent tax years that were
not included within the scope of the underlying lawsuit because no relief was requested for those
years, the failure to exhaust statutory prerequisites to suit indicates that those tax years were not
placed at issue in the underlying lawsuit, and case law makes it clear that litigation of a tax dispute
as to one tax period does not apply to subsequent tax periods. Although neither Tymrak nor HL
Farms is a sanctions case, those cases are instructive as to the proper construction of the relief
granted in the 2008 summary-judgment order because they demonstrate why that order could not
have granted relief beyond the 2007 tax year--the only tax year for which relief was requested and
administrative remedies had been exhausted. The trial court's contrary determination in its second
sanctions order is inconsistent with the language in Wells Fargo's petition, the governing statutes,
and relevant case law.
We hold that the trial court exceeded its jurisdiction when it sanctioned TCAD in
relation to the 2008, 2009, and 2010 tax assessments, which were not part of the proceedings before
the court when it granted summary judgment in 2008 and therefore could not have been covered by
the 2008 summary-judgment order.
CONCLUSION
For the reasons stated, we vacate the trial court's sanctions order and dismiss the
appeal for want of jurisdiction.
_________________________________________
J. Woodfin Jones, Chief Justice
Before Chief Justice Jones, Justices Rose and Goodwin
Vacated and Dismissed for Want of Jurisdiction
Filed: October 12, 2012
1. The TCEQ's final determination as to the property stated as follows:
A positive use determination for 100% of the two stormwater retention ponds real
estate (1,224 sf + 65,586 sf); continuous emission monitors; liners over landfill;
semi-active gas extraction system; methane monitoring & control equipment; two
stormwater containment ponds; sloping of concrete surfaces for leachate collection
and removal; landfill final cover system; groundwater monitoring wells; fugitive
emissions containment structures; and building for active gas extraction system. A
negative determination for the 594,208 sq. ft. of real estate which is being used to
house a commercial apartment complex.
2. Curiously, in the "reasons for your protest" section of Wells Fargo's notice of protest for
the 2010 tax year, Wells Fargo checked the boxes for "value is over market value" and "value is
unequal compared with other properties." Wells Fargo did not select the option on the protest form
for "[e]xemption was denied, modified or cancelled."
|
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FILED
United States Court of Appeals
Tenth Circuit
October 21, 2010
UNITED STATES COURT OF APPEALS
Elisabeth A. Shumaker
Clerk of Court
TENTH CIRCUIT
FLOYD STRICKLAND,
Petitioner-Appellant,
v. No. 10-8057
EDDIE WILSON, Warden, Wyoming (D.C. No. 2:10-CV-00022-WFD)
Department of Corrections; DAVID (D. Wyo.)
FREUDENTHAL, Wyoming
Governor; JON OZMINT, Director,
South Carolina Department of
Corrections; MARK SANFORD,
South Carolina Governor,
Respondents-Appellees.
ORDER DENYING CERTIFICATE OF APPEALABILITY *
Before BRISCOE, Chief Judge, TACHA, and O’BRIEN, Circuit Judges.
Floyd Strickland seeks a Certificate of Appealability (“COA”) pursuant to
28 U.S.C. § 2253 in order to challenge the district court’s denial of his petition
for a writ of habeas corpus. At the time that Strickland filed his petition, he was
serving sentences in a Wyoming state prison for two arson convictions.
Strickland sought to prevent his potential extradition to South Carolina on an
escape charge and a declaratory judgment that he could not be tried in South
*
This order is not binding precedent, except under the doctrines of law of
the case, res judicata, and collateral estoppel.
Carolina on the escape charge. The district court dismissed Strickland’s petition
pursuant to the doctrine of Younger v. Harris, 401 U.S. 37 (1971), which
generally prohibits federal courts from interfering with ongoing state criminal
proceedings. While his application for a COA was pending, Strickland was
extradited to South Carolina, where he is currently in custody. Because
Strickland has not made the required showing for a COA to issue, his application
for a COA is denied.
I
On September 24, 1969, and again on October 8, 1969, in South Carolina,
Strickland was convicted of receiving stolen goods. ROA at 136, 138. Also on
October 8, 1969, Strickland was convicted of escaping from the Horry County,
South Carolina jail. Id. at 160, 163. He was sentenced to prison, and
subsequently paroled on November 3, 1971. Id. at 140.
On April 19, 1972, in South Carolina, Strickland pled guilty to the charges
of housebreaking and larceny, and was sentenced to three years’ imprisonment.
On May 13, 1972, Strickland escaped from prison. On June 7, 1978, Strickland’s
parole on the 1969 sentences was revoked. Id. at 144.
At some point after he escaped from the South Carolina prison, Strickland
was convicted in North Carolina of safecracking, for which he received a sentence
of twenty to thirty years’ imprisonment. See id. at 146, 150, 160. On July 25,
1973, the South Carolina Probation, Parole and Pardon Board elected to allow
2
Strickland to serve his South Carolina revoked parole sentences concurrently with
his North Carolina sentence. 1 Id. at 130. On August 15, 1976, the United States
District Court for the Eastern District of North Carolina issued a writ of habeas
corpus, and Strickland was released from North Carolina’s custody.
A South Carolina arrest warrant was issued on charges relating to the 1972
escape on December 17, 1986, and a similar North Carolina arrest warrant was
subsequently issued. On February 2, 1987, Strickland made an appearance on a
fugitive charge in North Carolina court. It appears that the fugitive charge was
dismissed by the prosecutor on June 4, 1987. Id. at 158.
Almost fourteen years later, in Wyoming, Strickland was convicted of first
and second degree arson, and sentenced on September 10, 2001 to 120-215
months’ imprisonment and 60-108 months’ imprisonment, to run concurrently.
On January 30, 2007, South Carolina requested that Wyoming place a
detainer on Strickland for the offenses of housebreaking and larceny and escape.
On April 4, 2008, the Wyoming State Board of Parole granted Strickland parole to
the South Carolina detainer, upon completion of his minimum sentence. Id. at 89.
Strickland’s earliest possible parole eligibility date was July 3, 2008. However,
that date was extended “for some time” due to “disciplinary infractions and
1
Contrary to Strickland’s assertion, the South Carolina Probation, Parole,
and Pardon Board’s decision related only to his revoked parole on the 1969
sentences. There is no evidence that this decision affected the unserved portion
of Strickland’s sentence on the 1972 housebreaking conviction.
3
resultant good time losses.” Id. at 91.
Strickland filed a habeas petition in the United States District Court for the
District of Wyoming, challenging the detainer. The district court dismissed the
petition based on Younger abstention, failure to exhaust state remedies, and
failure to state a claim upon which relief could be granted. 2 Id. at 57-66
(Findings of Fact, Conclusions of Law, and Order Dismissing Petition for Writ of
Habeas Corpus dated April 21, 2008).
Strickland then filed a petition for writ of habeas corpus in Wyoming state
court. The petition was denied, but the Wyoming state district court subsequently
entered an order granting Strickland’s motion to reconsider. The order stated:
[T]he Court considers Petitioner’s Petition for Writ of Habeas Corpus
as evidence that he wishes to test the legality of his arrest pursuant to
South Carolina’s requested detainer and extradition in accord with
Wyo. Stat. § 7-3-210. . . . The Court accepts Petitioner’s Petition for
Writ of Habeas Corpus as . . . fulfilling Petitioner’s obligation to
apply for a writ of habeas corpus. In that regard, the Court will grant
Petitioner’s Motion to Reconsider and will allow Petitioner to test the
legality of his arrest and extradition through his Petition for Writ of
Habeas Corpus. Similarly, pursuant to Wyo. Stat. § 7-3-210 the
Court shall by separate order set a hearing on this matter. 3
Id. at 84-85 (Order Granting Petitioner’s Motion to Reconsider Order Denying
Petition for Writ of Habeas Corpus and Motion for Appointment of Counsel dated
2
For some reason which is not evident, the district court did not enter a
judgment until almost a year later. ROA at 82 (Judgment dated Mar. 20, 2009).
3
The Wyoming court did not, as Strickland contends, grant his habeas
petition. It merely granted his motion to reconsider the denial of the petition.
4
Dec. 9, 2008).
On April 1, 2009, a Governor’s Warrant for Strickland’s arrest and
transport to South Carolina was issued pursuant to a Requisition from the
Governor of South Carolina. Id. at 93. The Requisition stated that Strickland
was charged with escape in South Carolina, and attached copies of the indictment,
plea, and sentence on the housebreaking and larceny charge and the arrest warrant
on the escape charge. Id. at 94-104.
Strickland then filed a habeas petition in South Carolina state court. On
October 2, 2009, the Clerk of Court sent Strickland a letter informing him that his
application for filing in forma pauperis was denied, and that “the $150.00 filing
fee will be required to get this action on file.” Id. at 111. The record does not
contain evidence of any further proceedings on Strickland’s South Carolina
petition. Strickland also filed a request for the South Carolina Supreme Court to
entertain original jurisdiction over his petition, which was denied.
Strickland filed the instant habeas petition in the United States District
Court for the District of Wyoming on February 9, 2010. His statement of the
issues presented for review is:
A. Does papers in requisition support the requirements of the
Uniform Criminal Extradition Act and whether Governor’s Warrant
and supporting papers set aside formal requirements of statute?
B. Is the petitioner a fugitive from justice as alleged in the papers in
the Governor’s warrant or plausibly show that he is person actually
sought and was he in demanding jurisdiction at time of commission
5
of alleged offense?
Id. at 18 (Petition for a Writ of Habeas Corpus dated Feb. 9, 2010). He seeks the
following relief:
Petitioner moves this Court to grant this Petition for Writ of Habeas
Corpus and Order this Governor’s Warrant and Detainer removed
from his prison file and order it to be without force or effect. To
issue a Declaratory Judgment Action against the South Carolina
Department of Corrections with a declaration that this three (3) year
prison sentence was consumed by the North Carolina Sentence
through the orders of the South Carolina Probation, Parole and
Pardon Board, Director J.C. Moore, in July 25, 1973.
Id. at 41. The district court treated Strickland’s petition as a challenge to the
South Carolina proceedings and dismissed the petition on the basis of Younger
abstention. Id. at 493-99 (Order Granting Respondents’ Motions to Dismiss dated
May 10, 2010). The district court did not address Strickland’s claim that the
extradition proceedings in Wyoming were improper. Id. Strickland subsequently
filed a Motion to Alter or Amend Judgment, essentially arguing that Younger
abstention was inappropriate because he was challenging the Wyoming
extradition and not the South Carolina criminal proceedings. The district court
denied the motion.
After filing a notice of appeal, Strickland filed an Emergency Motion for
Stay of Execution or State Judgment and Order in this court, Doc. No. 9796269,
which was denied. Attached to the motion are copies of court records showing
that Strickland’s Wyoming state court petition was dismissed on July 12, 2010,
6
for lack of prosecution, and that the Second Judicial Circuit Court of Wyoming
held an extradition hearing on July 30, 2010, which Strickland attended by
teleconference. An Order of Extradition was entered by the Second Judicial
Circuit Court of Wyoming on August 12, 2010. Doc. No. 9796645, at 2. On
October 6, 2010, Strickland submitted a Motion to Submit Newly Discovered
Evidence, in which he represents that he was transported to a South Carolina
prison facility. Doc. No. 9804220.
II
A petitioner must obtain a COA in order to appeal a district court’s denial
of a habeas petition. 4 28 U.S.C. § 2253. We construe Strickland’s Notice of
Appeal as an application for a COA. Fed. R. App. P. 22(b)(2). A COA may be
issued only upon a “substantial showing of the denial of a constitutional right.”
28 U.S.C. § 2253(c)(2). When the district court denies a habeas petition on
procedural grounds 5 and does not reach the prisoner’s underlying constitutional
claims, a COA may issue only when “the prisoner shows, at least, that jurists of
reason would find it debatable whether the petition states a valid claim of the
4
Strickland’s petition has aspects of a 28 U.S.C. § 2241 petition and a §
2254 petition. The COA requirement applies equally to § 2241 and § 2254
petitions. Montez v. McKinna, 208 F.3d 862, 867 (10th Cir. 2000). Thus, we
need not parse which statute corresponds to which claims.
5
The district court’s dismissal based on Younger abstention is properly
considered a dismissal on procedural grounds for COA purposes because the
district court did not reach the merits of Strickland’s underlying claims.
7
denial of a constitutional right and that jurists of reason would find it debatable
whether the district court was correct in its procedural ruling.” Slack v.
McDaniel, 529 U.S. 473, 484 (2000).
We review de novo a district court’s decision to abstain under Younger.
Roe No. 2 v. Ogden, 253 F.3d 1255, 1232 (10th Cir. 2001). Based on our
independent review of the record and Strickland’s submissions, and construing
Strickland’s pleadings liberally, Haines v. Kerner, 404 U.S. 519, 520-21 (1972),
we conclude that Strickland has not demonstrated that reasonable jurists would
find it debatable whether his petition states a valid claim of the denial of a
constitutional right or whether the district court was correct in its procedural
ruling. Therefore, we deny Strickland’s application for a COA.
III
Challenge to Wyoming Extradition Proceedings
The district court did not consider Strickland’s challenge to the Wyoming
extradition proceedings. The district court erred by focusing on the South
Carolina proceedings only. However, this error does not entitle Strickland to a
COA because the extradition claim is not a basis for habeas relief against South
Carolina, and the district court could not have entertained the claim for relief
against Wyoming.
A prisoner cannot challenge his pretrial detention on the basis that he was
illegally extradited to the detaining state.
8
Before a fugitive in custody is extradited to the demanding state, he
may challenge the authority of the asylum state by seeking a federal
writ of habeas corpus. Yet ‘once the prisoner has been returned to
the demanding state, the writ of habeas corpus is no longer available
to challenge his confinement upon grounds arising in the asylum
state.’
Gee v. State of Kansas, 912 F.2d 414, 416 (10th Cir. 1990) (quoting Frisbie v.
Collins, 342 U.S. 519, 522 (1952)) (internal citations omitted). Since filing his
petition, Strickland was extradited to South Carolina, pursuant to a Wyoming
extradition order. To the extent that Strickland seeks to challenge his pretrial
detention in South Carolina based on his allegedly illegal extradition to that state,
such a claim cannot be pursued in a habeas petition. Illegal extradition does not
deprive the receiving state of jurisdiction, nor does it deprive a defendant of due
process in the receiving state. See id.; see also Remeta v. Singletary, 85 F.3d
513, 518-19 (11th Cir. 1996) (asylum state’s failure to provide pre-extradition
hearing does not deprive receiving state of jurisdiction); Eckert v. Tansy, 936
F.2d 444, 450 (9th Cir. 1991) (defendant “cannot be granted habeas relief on the
ground of illegal extradition”); Shack v. Attorney General, 776 F.2d 1170, 1172
(3d Cir. 1985) (defects in the extradition process do not justify collateral attack
on conviction in receiving state). Therefore, Strickland’s alleged illegal
extradition is not a proper basis for a habeas claim against South Carolina.
Even before he was extradited, the district court lacked jurisdiction to
consider Strickland’s challenge to the Wyoming extradition proceedings because
9
the claim was not exhausted. Exhaustion of available state remedies is a
prerequisite to habeas relief under 28 U.S.C. §§ 2241 and 2254. See Garza v.
Davis, 596 F.3d 1198, 1204 (10th Cir. 2010) (requiring exhaustion before a §
2241 petition may be brought); 28 U.S.C. § 2254(b)(1). Strickland’s Wyoming
state court challenge to the extradition proceedings was pending at the time he
filed the instant federal habeas petition. Thus, Strickland had not exhausted his
state court remedies at the time he filed the instant petition.6
Although the district court did not address Strickland’s challenge to the
Wyoming extradition proceedings, the district court would have been required to
dismiss such a challenge. Therefore, Strickland is not entitled to a COA on his
claim that the Wyoming extradition proceedings were improper.
Challenge to South Carolina Proceedings
Strickland also requests a declaration that South Carolina cannot prosecute
him for escape or require him to serve the remainder of his 1972 housebreaking
and larceny sentences. The district court dismissed Strickland’s petition on the
basis of Younger abstention. Reasonable jurists could not debate the district
court’s conclusion that Younger required the district court to abstain from
6
This is not a case where exhaustion would be futile because the petitioner
is unable to challenge his extradition in state court. Strickland’s challenge to the
detainer and Governor’s Warrant was accepted for consideration by the Wyoming
court, but subsequently dismissed for failure to prosecute. Further, Strickland did
not attempt to appeal the extradition order.
10
entertaining Strickland’s challenge to the South Carolina proceedings.
A federal court may not intervene in ongoing state criminal proceedings,
absent unusual circumstances. Younger, 401 U.S. 37. A federal court must
abstain under Younger when:
(1) there is an ongoing state criminal, civil, or administrative
proceeding, (2) the state court provides an adequate forum to hear the
claims raised in the federal complaint, and (3) the state proceedings
involve important state interests, matters which traditionally look to
state law for their resolution or implicate separately articulated state
policies.
Amanatullah v. Colo. Bd. of Med. Exam’rs, 187 F.3d 1160, 1163 (10th Cir.
1999). However, the doctrine is inapplicable where extraordinary circumstances,
such as irreparable injury, can be shown. See Weitzel v. Div. of Occupational
and Prof’l Licensing, 240 F.3d 871, 876 (10th Cir. 2001) (finding that plaintiff
had not established extraordinary circumstances involving irreparable injury).
Reasonable jurists could not debate that the three requirements of Younger
are met here. The South Carolina criminal proceedings are ongoing because
Strickland is currently detained pending prosecution on the escape charges and
the completion of his 1972 sentences. Also, Strickland may argue in the South
Carolina court that he cannot be tried on the escape charge and that his 1972
sentences have been discharged. Finally, the pending South Carolina proceedings
involve important state interests — namely, the enforcement of state criminal
laws and completion of state criminal sentences.
11
In Walck v. Edmondson, we held that Younger abstention is unwarranted
“where a criminal accused presents a colorable claim that a forthcoming second
state trial will constitute a violation of her double jeopardy rights.” 472 F.3d
1227, 1234 (10th Cir. 2007). Although Strickland’s petition could be construed
as raising a double jeopardy claim, such a claim is not colorable. Strickland has
presented no evidence suggesting that a trial on the escape charge was ever
concluded; he has produced evidence showing only that the prosecutor, at one
time, dismissed the charges. Likewise, Strickland has produced no evidence that
he was allowed to serve his 1972 sentences concurrently with his North Carolina
sentence; he has produced evidence showing only that he was allowed to serve his
revocation sentences on the 1969 convictions concurrently with his North
Carolina sentence.
Reasonable jurists would agree that the district court was correct in its
procedural ruling and that Strickland’s petition does not state a valid claim of the
denial of a constitutional right. Strickland’s request for a COA is DENIED and
the matter is DISMISSED.
Entered for the Court
Mary Beck Briscoe
Chief Judge
12
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163 Ariz. 374 (1989)
788 P.2d 107
Lynn HAMILTON, an attorney licensed to practice law in the State of Arizona, Plaintiff/Appellant,
v.
The MUNICIPAL COURT OF THE CITY OF MESA; the Honorable Harold Reeb, a judge thereof, Defendant/Appellee.
No. 1 CA-CV 88-285.
Court of Appeals of Arizona, Division 1, Department A.
November 16, 1989.
As Corrected February 26, 1990.
Review Denied March 29, 1990.
*375 Burch & Cracchiolo, P.A. by David G. Derickson and William Foreman, Phoenix, for plaintiff/appellant.
Richard M. Gerry, P.C. by Richard M. Gerry, Phoenix, for defendant/appellee.
OPINION
ROLL, Judge.
Attorney Lynn Hamilton appeals from a superior court judgment in a special action which affirmed her conviction for one count of indirect criminal contempt of court by the Honorable Harold Reeb, Presiding City Magistrate of the City Court of Mesa. Judge Reeb sentenced Hamilton to 120 consecutive hours in jail and imposed a fine of $290 for her failure to appear as defense counsel at the commencement of a city court trial. For the reasons set forth below, we affirm the finding of contempt but vacate that portion of her sentence requiring incarceration.
FACTS
Lynn Hamilton represented Sharon Snow in a domestic relations matter scheduled for trial on February 4, 1987, at 10:00 a.m. in the southeast judicial district of Maricopa County Superior Court. Hamilton was also scheduled to appear as counsel for Scott Kolsrud in a misdemeanor trial set for February 5, 1987, at 8:30 a.m. in Mesa City Court before Judge Reeb. When Hamilton arrived for the superior court trial on February 4, she was informed that the Snow case had been reassigned to Judge Linda Scott and was reset for 1:30 p.m. Hamilton and opposing counsel met with Judge Scott at 1:30 p.m. and the trial began around 3:30 p.m.
Hamilton had anticipated that the Snow matter would take approximately one hour. When it became apparent that the trial would not be concluded that day, she requested a recess in order to advise the Mesa City Court that she would be unable to appear the next morning for the Kolsrud trial. During the recess, Hamilton called her secretary to request her assistance in calling the city prosecutor and Judge Reeb in order to request a continuance of the Kolsrud trial. Hamilton personally called the city prosecutor's office to speak to Rose Gavin, the assistant city prosecutor assigned to the Kolsrud matter. Hamilton was unable to reach her, but informed Gavin's secretary of Hamilton's conflicting court schedule. Hamilton then called her own secretary back and learned that a member of Judge Reeb's staff had stated that the city prosecutor opposed any motion to continue. Hamilton then made a second unsuccessful attempt to contact the assistant city prosecutor personally because she believed that there must have been a miscommunication.
The Snow trial recessed at approximately 5:15 p.m., whereupon Judge Scott scheduled testimony to resume at 9:00 a.m. the following morning. Hamilton did not inform Judge Scott that she had been unable to get the Kolsrud trial continued.
Hamilton arrived at her office at approximately 8:00 a.m. on February 5, 1987, and dictated a motion to continue the Kolsrud trial. However, Hamilton's secretary did not usually arrive until 8:30 a.m. Hamilton was also unsuccessful in her attempts to reach prosecutor Gavin and Judge Reeb by phone. Hamilton did speak to Judge Reeb's court clerk and stated that she would be compelled to attend the ongoing trial in superior court. Judge Reeb was informed of Hamilton's message.
Judge Reeb directed his clerk to contact Hamilton's office and inform Hamilton that *376 if she was not in his court by 9:00 a.m., he would hold her in contempt. Hamilton's secretary received this message at approximately 8:30 a.m.
At 8:30 a.m., Judge Reeb took the bench to start the Kolsrud trial. The prosecutor, the civilian witnesses, the jury panel, and defendant Kolsrud were present. Kolsrud was unaware of Hamilton's trial conflict.
Hamilton arrived at superior court at approximately 8:30 a.m., where she met with opposing counsel and the respective clients and tried unsuccessfully to reach a settlement. At approximately 8:45 a.m., Judge Scott called the parties and counsel into chambers to determine whether the matter would be settled. The conference was interrupted by a telephone call from Judge Reeb to Hamilton. Hamilton talked to Judge Reeb in Judge Scott's chambers and explained her prior unsuccessful attempts to contact his court and the prosecutor. She requested that Judge Reeb speak with Judge Scott to reconcile the conflicting trial schedules. Judge Reeb refused to speak to Judge Scott and no resolution was reached during his telephone conversation with Hamilton.
The Snow trial resumed at 9:00 a.m. and was concluded at approximately 10:10 a.m., at which time Hamilton contacted the prosecutor, Gavin. Gavin informed Hamilton that she had requested that Hamilton be held in contempt of court for her failure to appear.
On February 9, 1987, Judge Reeb signed an allegation of indirect criminal contempt and notice of hearing which directed Hamilton to show cause why she should not be held in contempt for "willful disobedience of a lawful court order, to wit: for failure to appear as attorney of record for and in [sic] behalf of the defendant ... on February 5, 1987 at 8:30 a.m...."
The Mesa City Prosecutor's office later decided not to prosecute Hamilton. Judge Reeb, however, requested and obtained from the Mesa City Council appointment of a special prosecutor to pursue the contempt charge against Hamilton. Hamilton attempted to disqualify Judge Reeb from hearing the matter by filing a motion for change of judge for cause pursuant to Rule 10.1, Ariz.R.Crim.P., 17 A.R.S. After a hearing on Hamilton's motion, Judge Rebecca Standage ruled that Judge Reeb could preside over Hamilton's criminal contempt trial.
Following a trial, Judge Reeb found Hamilton guilty of indirect criminal contempt of court pursuant to Rule 33, Ariz.R. Crim.P., 17 A.R.S., and scheduled a sentencing hearing.
At the sentencing hearing, three witnesses, including a superior court judge and a city magistrate pro tempore, appeared on Hamilton's behalf. Hamilton spoke on her own behalf. Uncontroverted testimony established that Hamilton is a conscientious and diligent attorney. No evidence was presented that she had ever been dilatory in court appearances or that she had ever been disciplined for unprofessional conduct. The magistrate pro tempore opined that a fine of approximately $200 would cover costs incurred in connection with the calling of the Kolsrud jury. Judge Reeb sentenced Hamilton to serve 120 consecutive hours in jail and to pay a fine of $290.
Hamilton's sentence was stayed by the superior court pending review of Hamilton's special action petition. During the pendency of the special action petition, Hamilton filed a supplemental special action alleging that Judge Reeb was a Utah resident and lacked jurisdiction to enter judgment against her.
The superior court accepted jurisdiction of both the initial and supplemental special action complaints and denied relief. Hamilton filed a notice of appeal to this court.[1]
ISSUES ON APPEAL
On appeal, Hamilton argues that her conduct was not contumacious and that, in any event, the sentence imposed was impermissibly harsh.
*377 When a special action initiated in superior court is appealed to this court, we must conduct a bifurcated review to consider first, the superior court's acceptance or refusal of jurisdiction, and second, its decision on the merits. Bilagody v. Thorneycroft, 125 Ariz. 88, 92, 607 P.2d 965, 969 (App. 1979). In the instant case, the superior court accepted the special action jurisdiction and neither party contends that the trial court abused its discretion in so doing. Accordingly, we consider only the court's decision to deny relief.
In reviewing a trial court's decision to grant or deny special action relief, this court does not sit de novo. We do not determine whether this court would have granted special action relief, but rather whether the superior court abused its discretion. Arizona Corporation Commission v. Pacific Motor Trucking Co., 97 Ariz. 157, 160, 398 P.2d 114, 116 (1964).
Indirect Criminal Contempt
Criminal contempt is defined as follows:
Any person who wilfully disobeys a lawful writ, process, order, or judgment of a court by doing or not doing an act or thing forbidden or required, or who engages in any other wilfully contumacious conduct which obstructs the administration of justice, or which lessens the dignity and authority of the court, may be held in contempt of court.
Rule 33.1, Ariz.R.Crim.P., 17 A.R.S. Indirect contempt occurs outside the presence of the court. Ong Hing v. Thurston, 101 Ariz. 92, 98, 416 P.2d 416, 422 (1966).
Failure of counsel to be present in court as required by the court may constitute both a breach of professional duty and a disruption of the judicial process punishable as criminal contempt. In re Siracusa, 458 A.2d 408, 410 (D.C.App. 1983). However, defendant's acts must be wilful in order to constitute criminal contempt. Riley v. Superior Court, 124 Ariz. 498, 499, 605 P.2d 900, 901 (App. 1979). Noncompliance with a court order to appear at a given time is not in itself criminal contempt unless the failure to appear was wilful. See In re Siracusa, 458 A.2d at 410; McMullin v. Sulgrove, 459 S.W.2d 383, 386 (Mo. 1970). See generally Annot., Attorney's Failure to Attend Court or Tardiness as Contempt, 13 A.L.R. 4th 122, 129-42 (1983). The superior court's finding that sufficient evidence supported Judge Reeb's decision that Hamilton wilfully disobeyed his orders must be affirmed absent abuse of discretion.
The superior court determined that the evidence supported a finding that Hamilton knew she was ordered to appear in Judge Reeb's court at 8:30 a.m. and that she was not required to appear in Judge Scott's court until 9:00 a.m. The court further found that she wilfully substituted her judgment as to the priorities in handling non-conflicting court matters. In doing so she chose not to appear in Judge Reeb's court at 8:30 a.m. or to take further reasonable steps to resolve her problem.
The record before the superior court included substantial direct and circumstantial evidence presented to Judge Reeb that Hamilton knew that she had an order to appear at 8:30 a.m. in Judge Reeb's court. Although she testified that Judge Scott had ordered counsel to be at superior court at 8:30 a.m. prior to the 9:00 a.m. resumption of the Snow trial, there was no corroborating evidence from Judge Scott or the opposing counsel in that case. The trial court is not bound to accept as true the uncontroverted testimony of an interested party. Aries v. Palmer Johnson, Inc., 153 Ariz. 250, 261, 735 P.2d 1373, 1384 (App. 1987). Testimony established that it was a 10- to 15-minute drive from Mesa City Court to the southeast judicial district court where the Snow trial was conducted. Thus, it is possible to conclude that there was no direct conflict between Judge Reeb's and Judge Scott's orders to appear.
The special prosecutor argues that wilfulness was demonstrated because Hamilton did not appear in person before Judge Reeb, did not obtain substitute counsel, and did not timely file a written motion for a continuance. Hamilton counters that she was required to be in superior court at 8:30 a.m. the morning that the Kolsrud trial was *378 to commence, she could not have obtained substitute counsel to try the Kolsrud matter on less than 24 hours' notice, and she prepared a motion to continue at the first opportunity.
Hamilton also suggests that because Judge Reeb instructed his secretary to inform Hamilton that if she failed to appear in his court by 9:00 a.m. he would hold her in contempt, she was subject to directly conflicting court orders for 9:00 a.m. We disagree. Judge Reeb found Hamilton in contempt of his order to appear at 8:30 a.m., not in contempt of a "modified order" requiring her to appear at 9:00 a.m.
Hamilton had been informed that the Kolsrud matter was a firm trial setting, both parties were concerned with problems involving the attendance of witnesses, and she was aware that due to his living arrangements, she could not contact her client to inform him of any possible delay in his criminal trial. She did not discuss with Judge Scott the possibility of somehow accomodating her city court conflict. Hamilton also failed to inform Judge Reeb that resumption of testimony in the Snow trial the morning of February 5 would be relatively brief and that the Kolsrud trial could probably be reset for that afternoon.
Were we the trier of fact, we might well conclude that Hamilton's actions constituted merely poor judgment rather than wilfully contumacious conduct. However, our function is not to weigh the evidence but merely to decide whether substantial evidence exists to support the decision of the trial court. Pugh v. Cook, 153 Ariz. 246, 247, 735 P.2d 856, 857 (App. 1987). We find that the superior court did not abuse its discretion in finding sufficient evidence to affirm the conviction.
Excessive Sentence
Hamilton also contends that it was an abuse of discretion for the superior court to refuse to set aside the sentence. She points out that evidence during her mitigation hearing established that she is an attorney of high esteem and well-regarded within the legal community. Also, there was no evidence to indicate that she had ever missed a court appearance or failed to follow a court order. Hamilton argues that when viewed in conjunction with the scheduling conflict confronting her, the sentence of incarceration is unjustified.
In addition to evidence that was presented to mitigate the sentence, the city court also had the opportunity to observe Hamilton's demeanor during the proceeding and to assess whether she was remorseful for her conduct. It is clear from the record that Judge Reeb took into consideration Hamilton's intemperate statement during the sentencing hearing.[2] The court apparently *379 concluded that Hamilton did not regret her conduct and that she was unwilling to recognize that her actions were disruptive of the court's business.
Criminal contempt may be punished by imprisonment not longer than six months, a fine not greater than $300, or both, unless the defendant has been found guilty of contempt by a jury or has waived the right to a trial by jury. Rule 33.4, Ariz.R.Crim.P., 17 A.R.S. Sentencing is within the sound discretion of the trial court and will not be modified or reduced absent an abuse of that discretion. State v. Day, 148 Ariz. 490, 498-99, 715 P.2d 743, 751 (1986). This court has authority to reduce a sentence if, under the circumstances of the case, the punishment imposed is excessive. A.R.S. § 13-4037(B); State v. Bandy, 3 Ariz. App. 456, 457, 415 P.2d 470, 471 (1966). The power to reduce the sentence under § 13-4037(B) has been used with great caution and is only exercised when it clearly appears that the sentence is too severe. State v. Stanley, 123 Ariz. 95, 107, 597 P.2d 998, 1010 (App. 1979). In reviewing the severity of the punishment, this court examines the circumstances of the offense charged and the moral character and past conduct of the defendant. Id. See also State v. Mulalley, 127 Ariz. 92, 96, 618 P.2d 586, 590 (1980) overruled on other grounds, State v. Noble, 152 Ariz. 284, 731 P.2d 1228 (1987) (evaluating the proportionality of a criminal sanction).
Our review of how Arizona and other jurisdictions have punished attorneys who failed to appear for court hearings indicates that most jurisdictions have consistently levied only fines for such conduct. Only courts in California, Texas, and Illinois have incarcerated attorneys, and then only under circumstances more egregious than in the instant case.
The facts of several Arizona cases are instructive. In Haggard v. Superior Court of Maricopa County, 26 Ariz. App. 162, 547 P.2d 14 (1976), an attorney failed to appear for pretrial hearings on a pending criminal prosecution and was fined. In Rogers v. Superior Court of Pima County, 4 Ariz. App. 170, 418 P.2d 416 (1966), an attorney failed to appear at a court hearing and was fined $100. In Van Baalen v. Superior Court of Maricopa County, 19 Ariz. App. 512, 508 P.2d 771 (1973), an attorney failed to appear at the jury trial in a criminal case and was fined $312. These cases are consistent with sentences imposed by most jurisdictions. E.g., United States v. Smith, 436 F.2d 1130 (9th Cir.1970) ($2000 fine; attorney lied to the court regarding his failure to appear; endangered client's right to appeal); In re Shorter, 236 A.2d 318 (D.C. 1967) ($50 fine or one day; attorney excused to attend another court for few hours; never returned); Appeal of Gregory, 387 A.2d 720 (D.C. 1978) ($100 fine, three-day suspended sentence; after trial was continued at attorney's request attorney arrived two and one-half hours late because he was tending to personal matters); In re Evans, 450 A.2d 443 (D.C. 1982) ($300 fine; attorney failed to appear on three occasions for scheduled court appearances); Pashley v. State, 168 Ga. App. 813, 310 S.E.2d 566 (1983) (suspended fine; attorney failed to appear when case called; never contacted court); People v. Adam, 15 Ill. App.3d 669, 304 N.E.2d 711 (1973) ($100 fine; attorney failed to appear for trial; the attorney was involved in another trial in same building but never contacted the court regarding the conflict); Murphy v. State, 46 Md. App. 138, 416 A.2d 748 (1980) ($1000 fine; attorney failed to appear at pretrial and at trial; notified court of a conflict 40 minutes before trial but had known of conflict for several days); In re Yengo, 84 N.J. 111, 417 A.2d 533 (1980), cert. denied, 449 U.S. *380 1124, 101 S.Ct. 941, 67 L.Ed.2d 110 (1981) ($500 fine; attorney left in the middle of trial to attend to other business in Bermuda); Commonwealth v. Marcone, 487 Pa. 572, 410 A.2d 759 (1980) ($400 fine; attorney missed weekly call at criminal trial list; had prior no shows and prior discipline).
Only California, Illinois, and Texas courts have affirmed incarceration of an attorney for contempt of court. Lyons v. Superior Court of Los Angeles County, 43 Cal.2d 755, 278 P.2d 681, cert. denied, 350 U.S. 876, 76 S.Ct. 121, 100 L.Ed. 774 (1955) (an attorney was sentenced to five days' incarceration when he returned late to a criminal trial because he had fallen asleep in his office); People v. McDonnell, 377 Ill. 568, 37 N.E.2d 159 (1941) (an attorney received a $25 fine and a five-day sentence when, in the middle of a trial he was excused for another matter, then failed to return to the trial); Ex Parte Murphy, 669 S.W.2d 320 (Tex. Crim. App. 1983), cert. denied, 469 U.S. 823, 105 S.Ct. 99, 83 L.Ed.2d 44 (1984) ($450 fine and one day sentence; attorney failed to show for pretrial and trial; no excuse offered). See also In re Karpf, 10 Cal. App.3d 355, 88 Cal. Rptr. 895 (2d Dist. 1970); Vaughn v. Municipal Court of Los Angeles Judicial District, 252 Cal. App.2d 348, 60 Cal. Rptr. 575 (1967), cert. denied, 393 U.S. 856, 89 S.Ct. 125, 21 L.Ed.2d 126 (1968); Arthur v. Superior Court of Los Angeles County, 62 Cal.2d 404, 398 P.2d 777, 42 Cal. Rptr. 441 (1965).
We conclude that a sentence for indirect criminal contempt requiring an attorney to be incarcerated 120 consecutive hours is excessive where, as here, the lawyer has an unblemished professional record, has been found in contempt as a result of a perceived scheduling conflict, and has been required to pay a fine commensurate with court administration costs incurred.
We affirm the conviction and imposition of a $290 fine but modify the sentence by vacating the incarceration portion.
CONTRERAS, P.J., and SHELLEY, J., concur.
Note: The Honorable JOHN M. ROLL, Court of Appeals, Division Two, was authorized to participate in the disposition of this matter by the Chief Justice of the Arizona Supreme Court pursuant to Ariz. Const. art. VI, § 3.
NOTES
[1] Hamilton has not appealed the superior court's denial of relief regarding the supplemental special action.
[2] I feel that this entire contempt matter is a matter designed by yourself, not so much aimed at me as my former husband, Lowell Hamilton. I believe you orchestrated this deliberately to cause embarrassment to him and embarrassment to myself. In this particular matter, I believe that there has been ethical misconduct in the way this case was handled. I believe there has been ethical misconduct in the fact that you hired your own attorney to prosecute me, and that that attorney then failed to exercise then failed to exercise independent judgment to determine a just and appropriate handling of this charge and to see that justice is done as required by the Canons of Ethics. I believe you directed him at every step of the way, and you told him what to do, and he failed to exercise independent professional judgment in this matter. I believe in this matter that it was brought to your attention through motion practice that Mr. Gerry could not serve as a prosecutor in this case. You chose to ignore former ethics opinions directly on point.... You have again chosen to ignore that. I consider that ethical misconduct which establishes in my mind the bias you have against me, and that I did not get a fair trial in this matter. Lastly, I believe that any inconvenience that was caused to the court was slight. I believe that any inconvenience that was caused to the court by myself was adequately handled when I returned the next day and apologized to you personally, and said I was very sorry for any inconvenience that may have occurred in this matter. You rejected my apology and instead you proceeded in this manner. I have seen on numerous occasions in this court other attorneys come here and announce that they were unprepared after numerous, numerous trial settings, and you have never handled any other attorney in a manner that you have handled my case. I have never seen you zing shall we say another attorney for similar conduct. I have seen much grosser misconduct before you and I have seen you dismiss it lightly as if it were nothing. This also substantiates my belief that what you're doing here is not so much directed at me as it is my former husband. On prior occasions, you have solicited my opinion trying to get me to bad mouth my former husband who is the city prosecutor and I would not do that. Mr. Hamilton and I, although we are divorced, share a mutual respect for one another, a respect that I stand by today, and I will not bad mouth him just because you don't like him. I think all things considered, that this has cost everyone in this case quite a bit, and I don't think any penalty is appropriate."
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46 B.R. 214 (1985)
MICHIGAN MILK PRODUCERS ASSOCIATION, Plaintiff,
v.
John J. HUNTER, Trustee, Defendant.
No. C 85-7075.
United States District Court, N.D. Ohio, W.D.
January 23, 1985.
Julian Kaplan, Toledo, Ohio, for plaintiff.
Thomas Schank, Toledo, Ohio, for defendant.
MEMORANDUM AND ORDER
WALINSKI, District Judge.
This matter is before the Court on a motion for withdrawal of reference filed pursuant to 28 U.S.C. § 157(d) by defendant John J. Hunter, Trustee of the Estate of Babcock Dairy Company of Ohio, Inc. ("Babcock"), a Chapter 7 debtor in the bankruptcy court. Plaintiff Michigan Milk Producers Association ("MMPA") has filed a memorandum in opposition to the motion *215 for withdrawal of reference. MMPA is a secured creditor of Babcock with a claim in excess of $3,000,000.00. On May 8, 1984, MMPA filed an adversary complaint in bankruptcy court against the Trustee for determination of MMPA's rights as a secured creditor in the accounts receivable, equipment and other property of Babcock. The amended answer and counterclaims filed by the Trustee on January 16, 1985 alleged that a supply agreement entered into between MMPA and Babcock was in violation of the Sherman Antitrust Act, 15 U.S.C. § 1. The Court retains jurisdiction over this matter pursuant to 28 U.S.C. § 1334.
On January 17, 1985, the Trustee filed the instant motion for withdrawal of reference. The Trustee argues that the Bankruptcy Amendments and Federal Judgeship Act of 1984 ("the Amendments") requires the district court to withdraw reference of this litigation from the bankruptcy court because of the presence of the antitrust counterclaim. The Trustee relies on the language of 28 U.S.C. § 157(d). This subsection permits the district court to withdraw either core or non-core proceedings from the bankruptcy court on its own motion or upon motion by a party, and sets forth circumstances under which such withdrawal is compelled. The provision states:
The district court shall, on timely motion of a party, so withdraw a proceeding if the court determines that resolution of the proceeding requires consideration of both Title 11 and other laws of the United States regulating organizations or activities affecting interstate commerce.
28 U.S.C. § 157(d). Unfortunately, the legislative history of § 157(d) provides only limited guidance as to the appropriate reading of this subsection. See In re White Motor Corp., 42 B.R. 693, 699-700 (N.D. Ohio 1984).
MMPA raises three arguments in opposition to the motion to withdraw reference. It contends first that for withdrawal of reference to be proper under § 157(d), the motion for withdrawal must be timely. MMPA argues that under the facts and circumstances of the case, the Trustee's motion, made eleven days before the January 28, 1985 trial in bankruptcy court, is not timely. The Court agrees with MMPA that under the express language of the Amendments a motion to withdraw reference must be timely made. Upon review of the facts and circumstances of the instant case, the Court concludes that the Trustee's motion was timely filed. Although the Trustee may have been aware of the terms and conditions of the supply agreement as early as a July 11, 1984 deposition, the record indicates that he moved for leave to add the counterclaim for an alleged antitrust violation on November 16, 1984. On January 16, 1985, the bankruptcy court granted the motion for leave to file an amended answer and counterclaims. The following day the motion, sub judice, was filed. Under these facts notwithstanding the trial date, the Trustee's filing cannot be deemed untimely.
MMPA's second argument focuses on the Congressional intent to construe the § 157(d) directives narrowly. The Court's attention is directed towards the following statement made during the Senate debate mandating a narrow reading of § 157(d):
This provision concerns mandatory withdrawal of proceedings from the bankruptcy judge where the district court determines that resolution of the proceeding requires consideration of both title 11 and other laws of the United States regulating organizations or activities affecting interstate commerce. The district court should withdraw such proceedings only if the court determines that the assertion that other laws regulating organizations or activities affecting interstate commerce are in fact likely to be considered, and should not allow a party to use this provision to require withdrawal where such laws are not material to resolution of the proceeding. The district court should refuse withdrawal if withdrawal would unduly delay administration of the case, considering the status of the case, the importance of the proceeding to the case, and the relative *216 caseloads of the district court and bankruptcy judge.
130 Cong.Rec. § 6081 (daily ed. June 19, 1984). The plaintiff also notes the relative caseloads of the district court and the bankruptcy court in this division. Further, MMPA argues that granting the trustee's motion would encourage forum shopping. (Pl.Memo, at 5). Again, the Court is in complete agreement with the equities of MMPA's contentions. None of these arguments, however, persuade the Court that a restrictive construction of the plain language of § 157(d) would dictate or even allow denial of the withdrawal motion in the above captioned case.
The third argument raised by MMPA is that the Trustee's counterclaim does not involve "substantial and material consideration" of federal antitrust provisions. The plaintiff refers the Court to In re White Motor Corp., 42 B.R. 693 (N.D.Ohio 1984) in which a district court for the Northern District of Ohio, Eastern Division, denied withdrawal of a proceeding involving provisions of the Employment Retirement Income Security Act of 1974 and the Internal Revenue Code. In reviewing the legislative history the court concluded that withdrawal was not mandatory in every case where non-bankruptcy federal statutes were to be considered in the disposition of the case. Judge Aldrich found that: "Section 157(d) must therefore be read to require withdrawal not simply whenever noncode federal statutes will be considered but rather only when such consideration is necessary for the resolution of a case or proceedings." Id. at 703. The court concluded that the factual record was speculative about whether ERISA and IRC issues would arise or be germane to the resolution of the core Code proceeding. Id. at 705. The court held that the record did not support an affirmative determination that resolution of the claims would require substantial and material consideration of ERISA and IRC.
Applying the standard articulated in White Motor, the Court must conclude that withdrawal of reference is appropriate in this case. Notwithstanding the fact that the Trustee raised the federal antitrust counterclaim among various defenses and five other counterclaims which do not involve non-bankruptcy federal statutes, resolution of these proceedings will require substantial and material consideration of federal antitrust claim. The Trustee's counterclaim alleges that a supply agreement made between MMPA and Babcock for restraint of interstate competition, production and sale of milk and milk by-products in violation of 15 U.S.C. § 1. As a result of the alleged antitrust violation, the Trustee contends that the agreement upon which MMPA asserts its claimed security interest is void. Therefore, it is necessary to consider the Trustee's antitrust counterclaim for complete resolution of the instant adversary action brought to test MMPA's rights as secured creditor. Accordingly, this record supports an affirmative determination that resolution of the instant adversary proceeding would require consideration of both Title 11 and non-bankruptcy federal statutes regulating organizations or activities affecting interstate commerce. Withdrawal of reference is, therefore, mandatory under 28 U.S.C. § 157(d). The Trustee's motion to withdraw reference from bankruptcy court is well taken and therefore granted.
For the foregoing reasons, it is
ORDERED that defendant's motion for withdrawal of reference is granted.
FURTHER ORDERED that this cause is set for PRETRIAL MONDAY, FEBRUARY 4, 1985 at 3:15 P.M.
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690 F.Supp. 728 (1988)
DRAPER AND KRAMER, INCORPORATED, an Illinois corporation, and LaSalle National Bank, as Trustee under Trust No. 104086 dated June 15, 1981, Plaintiffs,
v.
BASKIN-ROBBINS, INC., a foreign corporation, Defendant.
BASKIN-ROBBINS, INC., a foreign corporation, Counterplaintiff,
v.
DRAPER AND KRAMER, INCORPORATED, an Illinois corporation, Counterdefendant.
No. 86 C 4368.
United States District Court, N.D. Illinois, E.D.
August 10, 1988.
*729 Kathy P. Saxton, Wildman, Harrold, Allen & Dixon, Chicago, Ill., for plaintiffs.
Michael R. Levinson, Mark A. Orloff, Alexander, Unikel, Zalewa & Tenenbaum, Ltd., Chicago, Ill., for defendant.
MEMORANDUM OPINION
BRIAN BARNETT DUFF, District Judge.
What are soda fountain items? Defendant says, "sodas, sundaes, and cones." Plaintiffs say, "ice cream sodas, ice cream sundaes, and ice cream cones." (The court thinks of chickens, but more on that later.)
FACTS
Defendant Baskin-Robbins, Inc. ("Baskin-Robbins") sells "31 flavors" of hard ice cream. On December 31, 1979, Baskin-Robbins leased commercial property in the Brettwood Village Shopping Center ("Brettwood") in Decatur, Illinois, from L.E.G., Inc. ("L.E.G.") "for the purpose of use as a store for the sale, at retail, of ice cream, ice milk, sherbet, soda fountain items, foods, soft drinks, candy, confectionary products and similar or related goods for consumption on and off the premises." The L.E.G./Baskin-Robbins lease ("the 31 Flavors Lease") contained an exclusive use provision:
Lessor hereby agrees and covenants that no other premises of the building, or group of the buildings, owned or controlled by Lessor, of which the leased premises are a part, shall be leased or used for the business of selling "hand packed ice cream," ice cream cones, or soda fountain items. It is the specific understanding of the parties hereto that Lessee shall have the exclusive right to sell "hand-packed ice cream," ice cream cones, or soda fountain items in the building, or group of adjoining buildings, owned or otherwise controlled by Lessor, except that this restriction shall not apply to co-tenants who have executed leases prior to February 28, 1968.
At the time the parties executed the 31 Flavors Lease, a Dairy Queen, Inc. ("Dairy Queen") had been leasing a store at Brettwood since early 1968. Dairy Queen sells soft ice cream, ice cream cones and soda fountain items. Baskin-Robbins never objected that the Dairy Queen violated the exclusive use provision of the 31 Flavors Lease.
In late 1981, LaSalle National Bank ("LaSalle"), as Trustee under Trust No. 104086, dated June 15, 1981, succeeded L.E.G. as landlord at Brettwood. LaSalle subsequently engaged Draper & Kramer to manage its property.
In February, 1986, LaSalle and Draper and Kramer (collectively "LaSalle") entered into a commercial lease with the S.J. Burns Company, Inc. ("S.J. Burns") for the operation of a retail yogurt store at Brettwood to be called The Country's Best Yogurt ("TCBY").
In March, attorneys for Baskin-Robbins and LaSalle exchanged correspondence regarding LaSalle's lease with S.J. Burns. Baskin-Robbins asserted that because TCBY would sell soda fountain items it would violate the exclusive use provision of the 31 Flavors Lease. LaSalle conceded that TCBY would offer soda fountain items, but opined that these soda fountain items would not violate the 31 Flavors Lease because Baskin-Robbins' "protection is limited to those [soda fountain items] made with ice cream." Baskin-Robbins continued to object to TCBY, and did not change its position when LaSalle sought and obtained from S.J. Burns an amendment to its lease providing that TCBY *730 "shall not sell soda fountain items or carbonated beverages made with ice cream."
In May, 1986, LaSalle filed suit in the Circuit Court of Cook County, Illinois, Draper & Kramer v. Baskin-Robbins, Inc., 86 CH 4645, seeking both a declaratory judgment that TCBY's lease did not violate the 31 Flavors Lease and reasonable attorneys fees. Baskin-Robbins removed to this court, invoking the court's removal and diversity jurisdiction. 28 U.S.C. § 1441; 28 U.S.C. § 1332(a)(1). Baskin-Robbins then counterclaimed for declaratory and compensatory relief, and reasonable attorneys fees, arising out of LaSalle's alleged breach of the exclusive use provision of the 31 Flavors Lease.
After replying to the counterclaim, LaSalle moved for judgment on the pleadings. Baskin-Robbins, in turn, moved for partial summary judgment on the issue of liability. The parties agree that there remain no genuine issues of material fact and that this court can construe the 31 Flavors Lease as a matter of law. (See Mazanek v. Rockford Drop Forge Co., 98 Ill.App.3d 956, 957, 54 Ill.Dec. 368, 424 N.E.2d 1271 (1981); Chicago Investment Corp. v. Dolins, 93 Ill.App.3d 971, 974, 49 Ill.Dec. 415, 418 N.E.2d 59 (1981).) For the reasons set forth below, this court will deny LaSalle's motion for judgment on the pleadings and grant Baskin-Robbins' motion for partial summary judgment.
DISCUSSION
In the oft-cited case Frigaliment Importing Co., Inc. v. B.N.S. International Sales Corp., Judge Friendly began:
The issue is, what is a chicken? Plaintiff says "chicken" means a young chicken, suitable for baking and frying. Defendant says "chicken" means any bird of that genus that meets certain specifications on weight and quality, including what it calls stewing chicken and plaintiff perjoratively calls "fowl." Dictionaries give both meanings, as well as some others not relevant here. To support its, plaintiff sends a number of volleys over the net; defendant essays to return them and adds a few serves of its own. Assuming that both parties were acting in good faith, the case nicely illustrates Holmes' remark that "the making of a contract depends not on the agreement of two minds in one intention, but on the agreement of two sets of external signsnot on the parties having meant the same thing, but on their having said the same thing." The Path of the Law, in Collected Legal Papers, p. 178. I have concluded that plaintiff has not sustained its burden of persuasion that the contract used "chicken" in the narrower sense.
190 F.Supp. 116, 117 (S.D.N.Y.1960).
The issue here is, what are soda fountain items? LaSalle says that, at least with respect to the 31 Flavors Lease, soda fountain items are frozen desserts such as sundaes, sodas and cones made with ice cream. Baskin-Robbins agrees that soda fountain items include sodas, sundaes and cones, but insists that they need not be made with ice cream. To Baskin-Robbins, sodas, sundaes and cones made with yogurt are just as much soda fountain items as are ice cream sodas, sundaes and cones, so when TCBY sells yogurt sodas, sundaes and cones it falls within the exclusive use provision of the 31 Flavors Lease.
Although in Illinois restrictive convenants must be narrowly construed, Gatton v. Page, 44 Ill.App.3d 559, 3 Ill.Dec. 287, 358 N.E.2d 685 (1976), and though the parties could have contracted to protect Baskin-Robbins against competition only from other ice cream stores, this court must construe the 31 Flavors Lease on the basis of the words it contains and the circumstances surrounding its execution. See Vigilante v. National Bank of Austin, 106 Ill.App.3d 820, 62 Ill.Dec. 626, 436 N.E.2d 652 (1982); Chicago Investment Corp. v. Dolins, 93 Ill.App.3d at 975. The lease says "`hand-packed ice cream,' ice cream cones, or soda fountain items." (Emphasis added.) Like the contract in Judge Friendly's case, it does not limit the meaning of the operative term, and this court finds nothing in the parties' agreement which requires such limitation. A soda fountain is a soda fountain. It makes ice cream *731 banana splits, yogurt banana splits, ice cream soda, yogurt sodas, cherry cokes, vanilla cokes, chocolate cokes, and all the varieties of carbonated drinks which are essentially found in soda fountains. Soda fountain items are soda fountain items, not soda fountain items made with ice cream. LaSalle's efforts to prove otherwise are not in good taste.
LaSalle first argues that the 31 Flavors Lease specifically uses the adjective "hard" to differentiate between Baskin-Robbins' ice cream and other ice cream and related products. This would be a delicious argument, if only the lease actually used that term. In fact, the lease says nothing whatever about "hard" ice cream; it refers to "hand-packed ice cream" to describe a form in which the ice cream may be sold i.e., in containers. Either LaSalle cannot read, or it does not think that this court can. An "n" is not an "r", and LaSalle's effort to make it one demonstrates either neglect, bad faith or an overdose of sweets.
LaSalle next points to the grandfather clause in the exclusive use provisionthe provision "shall not apply to co-tenants who have executed leases prior to February 28, 1968"as demonstrating that the 31 Flavors Lease does distinguish between the "hard" ice cream Baskin-Robbins sells and the "soft" ice cream offered by Dairy Queen. This argument offends logic. If Dairy Queen's soda fountain items made with soft ice cream did not violate the 31 Flavors Lease, then the grandfather clause would not have been necessary. The inclusion of the clause supports Baskin-Robbins' position that any soda fountain items those made with hard ice cream and those made with other frozen cream productsfall within the proscription of the exclusive use provision.
LaSalle further argues that caselaw and dictionaries establish a difference between ice cream and yogurt. The court agrees that these products differ, but fails to see how the difference bears on this case. The exclusive use provision protects Baskin-Robbins not merely from stores selling ice cream, but from any operation competing with itthat is, retail stores offering "hand-packed ice cream," ice cream cones, or soda fountain items. TCBY sells ice cream cones and soda fountain items, and nothing in LaSalle's argument suggests that it will not compete with Baskin-Robbins.
Finally, LaSalle notes that five other operations at Brettwoodfour restaurants and a donut shopsell ice cream and other soda fountain items, yet Baskin-Robbins has never asserted that they violate the 31 Flavors Lease. Again, this court fails to see the point of LaSalle's argument. Whether Baskin-Robbins chose not to object to these operations because of the lease's reference to "premises ... used for the business of selling `hand-packed ice cream,' ice cream cones, or soda fountain items," or instead because it generously opted to avoid unnecessary confrontations, is irrelevant: Its position on these co-tenants has no impact whatever on its right to invoke the exclusive use provision against TCBY.
Indeed, this court feels compelled to note the irony in LaSalle's effort to use Baskin-Robbins' non-objections against it. In LaSalle's brief opposing Baskin-Robbins' summary judgment motion, LaSalle attacked Baskin-Robbins' reference to LaSalle's amendment of its lease with S.J. Burns. Baskin-Robbins had argued that the amendment demonstrates LaSalle's understanding of the difference between "soda fountain items" and "soda fountain items made with ice cream." LaSalle responded sharply that, whatever the amendment might mean, it has nothing whatever to do with the proper construction of the 31 Flavors Lease. Then, three pages later, LaSalle presented its argument that Baskin-Robbins' failure to object to LaSalle's lease with five other co-tenants informs the construction of the 31 Flavors Lease. The court is reminded of the pot calling the kettle black.
Although LaSalle's arguments are at an end, this court's ruling unfortunately is not. In the process of contesting Baskin-Robbins' construction of the 31 Flavors Lease, LaSalle employed a litigation tactic that has become all too familiar in recent *732 years: It accused Baskin-Robbins of violating Rule 11. That was a mistake. The adversary system's reliance on zealous advocacy entitled LaSalle's attorneys to vigorously assert LaSalle's strained interpretation of the lease. It did not, however, permit the attorneys to accuse opposing counsel of violating their professional responsibilities.
That LaSalle did not separately move for Rule 11 sanctions, but instead invoked the rule as part of its argument on the merits, makes no difference. This court appreciates that attorneys involved in heated litigation often employ rhetoric stronger than necessary, and the court can tolerate arguments harsher in tone than appropriate. This tolerance ends, however, when arguments turn into accusations of professional misconduct.
Rule 11 is not a toy. A lawyer who transgresses the rule abuses the special role our legal system has entrusted to him. E.g., Dreis & Krump Mfg. Co. v. International Association of Machinists and Aerospace Workers, 802 F.2d 247, 255 (7th Cir.1986). He can suffer severe financial sanctions and, if his misconduct persists, he can find himself before a disciplinary commission. See, e.g., Model Rule of Professional Responsibility 3.1 ("A lawyer shall not bring or defend a proceeding, or assert or controvert an issue therein, unless there is a basis for doing so that is not frivolous."). In short, a Rule 11 violation is a serious thing, and an accusation of such wrongdoing is equally serious.
An unjustly accused attorney who argues a losing position may seek to demonstrate that, although his argument was unsuccessful, his opponents' Rule 11 accusation was frivolous. See Local 106 v. Homewood Memorial Gardens, Inc., 838 F.2d 958 (7th Cir.1988). When the accused attorney actually prevails on his underlying position, his effort to turn the tables on his accuser has particular strength. It will be a rare case indeed in which such an attorney cannot successfully show that the accusation lacked a reasonable basis in fact and law.
Rule 11 forces lawyers to think twice before filing; this mandate applies with equal force when the filing includes a Rule 11 claim. LaSalle's attorneys did not think twice, and they must pay for their error.
Ordinarily, before this court would impose Rule 11 sanctions sua sponte, it would request briefs from counsel on whether sanctions were warranted. In this case, however, such additional briefing would only add to the sanctioned lawyers' costs. Nothing LaSalle's counsel could possibly say could persuade this court that the accusations against Baskin-Robbins' attorneys were reasonably based in law or fact. Accordingly, this court will impose Rule 11 sanctions against LaSalle's attorneys at this time.
The amount of the sanction presents another problem. Because the 31 Flavors Lease expressly allows Baskin-Robbins to recover its (reasonable) attorneys fees in this litigation, Rule 11 will not serve as a cost-shifting sanction here. Instead, this court will order LaSalle's[1] attorneys to pay to the court $500 as a mild but hopefully instructive penalty for frivolously accusing Baskin-Robbins' counsel of violating the rule.
CONCLUSION
Plaintiffs' motion for judgment on the pleadings is denied. Defendant's motion for partial summary judgment on the issue of liability is granted. The court enters Rule 11 sanctions sua sponte against plaintiffs' counsel. The sanctioned lawyers shall tender $500 to the court at their next appearance.
NOTES
[1] As noted earlier, this court has referred to plaintiffs LaSalle and Draper and Kramer collectively as LaSalle. The Rule 11 sanction here shall apply to the lawyers for both plaintiffs.
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NUMBER 13-02-725-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI
____________________________________________________________________
JOHN A. LINDEMANN, M.D., ET AL. , Appellants,
v.
JAMES LAMON AND JOYCE LAMON , Appellees.
____________________________________________________________________
On appeal from the 370th District Court
of Hidalgo County, Texas.
____________________________________________________________________
MEMORANDUM OPINION
Before Justices Rodriguez, Castillo, and Kennedy (1)
Opinion Per Curiam
Appellants, JOHN A. LINDEMANN, M.D., ET AL. , perfected an appeal from a judgment entered by the 370th District
Court of Hidalgo County, Texas, in cause number C-487-02-G-1 . After the notice of appeal was filed, appellants filed a
motion to dismiss the appeal. In the motion, appellants advise that the trial court has entered an order granting a new trial
and that the appeal is now moot. Appellants request that this Court dismiss the appeal.
The Court, having considered the documents on file and appellants' motion to dismiss the appeal, is of the opinion that the
motion should be granted. Appellants' motion to dismiss is granted, and the appeal is hereby DISMISSED.
PER CURIAM
Opinion delivered and filed this
the 6th day of February, 2003 .
1. Retired Justice Noah Kennedy assigned to this Court by the Chief Justice of the Supreme Court of Texas pursuant to
Tex. Gov't Code Ann. § 74.003 (Vernon 1998).
|
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ATTORNEY GRIEVANCE COMMISSION * IN THE
OF MARYLAND * COURT OF APPEALS
* OF MARYLAND
Petitioner *
* Misc. Docket AG
v. *
* No. 16
KAREN JONES MILLER *
* September Term, 2014
Respondent *
>|¢
*>l=>|<*=l==l<>l=>l<*>I=>I<>l<*>l<***>l<>l==|=**=k*>|<**>l=****=l<**>l¢>l<***>|<>l<**=l<*=l<
ORDER
Upon consideration of the Joint Petition for Disbarment By Consent filed herein pursuant
to Maryland Rule 16-772, it is this 25th day of .Iuly , 2014,
ORDERED, by the Court of Appeals of Maryland, that Karen J ones Miller, Respondent,
be, and she hereby is, disbarred by consent from the practice of law in the State of Maryland,
effective irnmediately; and it is further
ORDERED, that the Clerk of this Court, in accordance with Rule l6-772(d), shall strike
the name of Karen J ones Miller from the register of attorneys in this Court and certify to the
Trustees of the Client Protection Fund of the Bar of Maryland and the clerks of all courts in this
State that the name of Karen J ones Miller has been so stricken.
/S/ Glenn T. Harre1l, Jr.
Senior Judge
|
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|
26 So.3d 407 (2009)
TOWN OF MOUNTAINBORO
v.
Treva GRIFFIN and Benny E. Griffin.
Treva Griffin and Benny E. Griffin
v.
Town of Mountainboro and City of Boaz.
1070731 and 1070777.
Supreme Court of Alabama.
January 16, 2009.
Rehearing Denied June 19, 2009.
*408 James H. Anderson and Ryan Wesley Shaw of Beers, Anderson, Jackson, Patty & Fawal, P.C., Montgomery, for appellant/cross-appellee Town of Mountainboro.
Jack Floyd of Floyd Law Firm, LLC, Gadsden, for appellees/cross-appellants Treva Griffin and Benny E. Griffin.
MURDOCK, Justice.
The Town of Mountainboro appeals from a judgment against it and the City of Boaz in an action filed by Treva Griffin and Benny E. Griffin contesting the results of an annexation election. The Griffins cross-appeal. As to Mountainboro's appeal, we reverse and remand; we dismiss the Griffins' cross-appeal.
Facts and Procedural History
On October 30, 2007, an election was held to determine whether the citizens of Mountainboro favored the annexation of their town into Boaz. The declared result of the election was 82 votes in favor of annexation and 81 votes against annexation.
On November 9, 2007, the Griffins, qualified electors in Mountainboro, timely filed in the Etowah Circuit Court a contest of the annexation election. Mountainboro and Boaz were named as the contestees. The Griffins alleged that illegal votes had been cast in favor of annexation. It is undisputed that the Griffins, as qualified electors of Mountainboro, had the legal right to contest the annexation election in this manner. See § 11-42-2(8), Ala.Code 1975.[1]
In response to the Griffins' election contest, Mountainboro and Boaz (sometimes collectively referred to as "the contestees") alleged, among other things, that illegal votes likewise had been cast against annexation and that, if those votes were not considered, the resulting vote totals would favor annexation. The Griffins challenged that response, arguing that "counter-contests can only be commenced by a qualified voter" and that, therefore, the contestees did not have legal standing to defend the pro-annexation election result by challenging *409 the legality of votes cast against annexation.
On December 28, 2007, the trial court held a hearing at which ore tenus evidence was presented. The parties stipulated that one person who had voted against annexation was not a qualified elector of Mountainboro and that her vote should be struck from the total. The Griffins offered testimony and evidence concerning three voters who, according to the Griffins, had cast illegal votes in favor of annexation. Mountainboro offered evidence in rebuttal to the Griffins' evidence. Also, over the objection of the Griffins, Mountainboro presented evidence indicating that some voters had cast illegal votes opposing annexation. The Griffins responded with evidence that those voters were legally entitled to vote and that their votes against annexation were valid.
On February 5, 2008, the trial court entered a judgment in favor of the Griffins and against Mountainboro and Boaz. The court found that two of the three voters challenged by the Griffins had cast illegal votes in favor of annexation and that their votes must be struck from the vote total. Further, the trial court held that neither municipality was a "qualified elector" and, consequently, that neither was entitled to challenge the legality of votes cast against annexation. The trial court's rulings resulted in final vote totals of 80 votes in favor of annexation and 80 votes against annexation. Thus, the annexation was not allowed to proceed.
Mountainboro's Appeal (case no. 1070731)
On appeal, Mountainboro raises a single issue, namely, whether it, as a contestee in the Griffins' annexation-election contest, had standing to submit evidence of allegedly illegal votes cast against the annexation of Mountainboro by Boaz. The trial court held that Mountainboro did not have such standing, and we review that holding de novo. "The issue of standing presents a pure question of law, and the trial court's ruling on that issue is entitled to no deference on appeal." Blue Cross & Blue Shield of Alabama v. Hodurski, 899 So.2d 949, 953 (Ala.2004).
We conclude that the trial court incorrectly reasoned from the fact that the governing statute expressly authorizes "any qualified elector" of Mountainboro to contest the declared outcome of the annexation election on the ground, among others, that illegal votes were cast in favor of the annexation to the conclusion that Mountainboro did not have standing to assert that illegal votes were cast against the annexation.
We begin our analysis with the text of the governing statute, § 11-42-2(8). In pertinent part, § 11-42-2(8) reads: "The result of such [annexation] election may be contested by any qualified elector voting at the election in the manner provided for contest of general municipal elections, making the city or town the contestee." (Emphasis added.)
The initial problem with the trial court's reasoning is that the first clause of § 11-42-2(8), emphasized above, does not say that, in the event of an election contest, the only party to the contest that can challenge the legality of votes cast for one side or the other is a "qualified elector." The first clause and its reference to a "qualified elector" is concerned only with who can challenge the declared outcome of an annexation election, not the grounds upon which a challenge to that outcome may be based or the grounds upon which that outcome may be defended. That is, the first clause of § 11-42-2(8) merely constitutes a legislative grant of authority *410 to "any qualified elector" to initiate and prosecute an election contest.
The trial court conflated the threshold question of who may properly initiate the annexation-election contest itself with the separate and different question of what grounds may be asserted and proven by that contestant in an effort to change the outcome of the election. This in turn led to apparent confusion as to the corollary question of what grounds thereafter may be asserted and proven by a contestee in an effort to prevent a change in the outcome of the election. These latter questions, as well as who may serve as a proper "contestee" in the effort to prevent a change in the outcome of the election, are questions not addressed by the first clause of the first sentence of § 11-42-2(8) and its reference to qualified electors. To answer these latter questions, we turn to the balance of that sentence.
The balance of the first sentence of § 11-42-2(8) expressly provides that a contest of an annexation election is to be conducted "in the manner provided for contest of general municipal elections. . . ." "The contest of general municipal elections" is governed by Chapter 46 of Title 11, Ala.Code 1975. Section 11-46-69 provides that the grounds for contesting an election include the counting of illegal votes in favor of the winning side, see § 11-46-69(a)(3), Ala.Code 1975; the rejection of legal votes in favor of the losing side, see § 11-46-69(a)(4); and/or one or more of three other grounds, see § 11-46-69(a)(1), (2), and (5), Ala.Code 1975. The question before us in this case is whether Mountainboro had the right not only to defend against the attempt by the Griffins, as contestants, to prove that illegal votes were cast in favor of the winning side, which, if deducted from the declared vote total in favor that side, would yield a different outcome in the election, but also to counter whatever success the Griffins may have in proving such illegal votes with evidence of illegal votes in favor of the losing side, which, if deducted from the final vote total for that side, would preserve the declared outcome of the election.
Again, we turn to the text of the statute. Section 11-42-2(8) expressly provides that the contest of an annexation election is to be conducted in the same manner as the contest of a general municipal election. In that regard, we find instructive this Court's analysis in Eubanks v. Hale, 752 So.2d 1113, 1134 (Ala.1999), a case involving a contest of the 1998 election for sheriff of Jefferson County, in which Mike Hale had been declared the winner over Jim Woodward:
"The contestants now argue that the contestee is not entitled to present any evidence because he did not file a cross-contest, but the contestee correctly points out that the statutes do not require that he file an independent `cross-contest.' Section 17-15-1, Ala.Code 1975, provides:
"`The election of any person declared elected to . . . any office which is filled by the vote of a single county. . . may be contested. . . .'
"(Emphasis added [in Eubanks].) Under the language of the statute, then, only the election of a `person declared elected' may be contested. Because Woodward had not been declared the winner of the sheriff's race, the statute did not authorize Hale to file an election contest. Section 17-15-32, Ala.Code 1975, provides:
"`If, on the trial of the contest of any election, . . . it shall appear that any person other than the one whose election is contested, received or would have received, had the ballots intended for him and illegally rejected been received, the highest number of *411 legal votes, judgment must be given declaring such person duly elected. . . .'
"In light of these statutes, we conclude that the contestee is not prohibited from introducing such evidence of votes cast illegally for [the losing side]. Neither are the contestants foreclosed from offering any other evidence of illegal votes that they claimed were cast for [the winning side]."
(Final emphasis added.)
As in Eubanks v. Hale, the applicable statutes in this case §§ 11-42-2(8) and 11-46-69(a), which in all material respects is worded the same as the statute at issue in Eubanks do not require the filing of a cross-contest. As in that case, "we conclude that the contestee is not prohibited from introducing . . . evidence of votes cast illegally for [the losing side]." 752 So.2d at 1134. That is, we conclude that Mountainboro, as a properly named contestee in this case, had standing to try to preserve the declared outcome of the election both by rebutting the evidence of illegal votes cast in favor of the proposed annexation offered by the contestants and by submitting evidence of illegal votes cast against the proposed annexation.
Our conclusion finds support in common sense, reason, and fairness. As was stated in Ex parte Hayes, 405 So.2d 366, 370 (Ala.1981) (quoting State v. Calumet & Hecla Consol. Copper Co., 259 Ala. 225, 233-34, 66 So.2d 726, 731 (1953)): "`If a statute is susceptible of two constructions, one of which is workable and fair and the other unworkable and unjust, the court will assume that the legislature intended that which is workable and fair.'" Our understanding of the statutory scheme created by the legislature for contesting annexation elections avoids a construction that is unworkable and unjust in favor of one that is workable and just. It avoids a construction whereby one side in an election contest can have removed from the vote totals illegal ballots cast against it but the other side cannot and thus recognizes the fundamental importance of the right to vote and is consistent with fundamental principles regarding the integrity of elections.[2]
Moreover, we cannot conclude that the legislature, in adapting § 11-46-69 to an annexation election in § 11-42-2(8), intended to establish a process by which a contestant can obtain a binding judgment from a court of law establishing the legality or illegality of an annexation election by naming someone as a "contestee," or defendant, who cannot fully defend the outcome of that election.[3] If the otherwise properly named defendants in such a proceeding lack the necessary standing to fully and fairly defend the outcome of the election, one may question not only the integrity of the outcome achieved in such a proceeding but, indeed, whether the proceeding enjoys the necessary adverseness of parties to make for a "case" over which the court has subject-matter jurisdiction in the first place. Cf. Ex parte State ex rel. James, 711 So.2d 952, 960 (Ala.1998) ("`The absence of adversary or the correct adversary parties is in principle fatal'" to justiciability and thus to subject-matter jurisdiction. (emphasis omitted; emphasis *412 added) (quoting Rogers v. Alabama Bd. of Educ. 392 So.2d 235, 237 (Ala.Civ.App. 1980))).
We therefore conclude that the judgment of the trial court is due to be reversed. The cause is remanded for the trial court to evaluate, consistent with this opinion, the evidence introduced at trial by Mountainboro of the illegality of certain votes cast against annexation and to enter a new judgment that takes that evaluation into consideration.
The Griffins' Cross-Appeal (case no. 1070777)
In their cross-appeal, the Griffins complain that the record contains no evidence indicating that a prior annexation into Mountainboro of an area known as Skyland subdivision had ever been "precleared" by the Justice Department under § 5 of the Voting Rights Act, 42 U.S.C. § 1973c. Therefore, according to the Griffins, voters who reside in that area should not have been included in the current election. The Griffins also complain that there had been no Justice Department preclearance of a strip of land previously annexed into Boaz that physically connects Mountainboro with Boaz, establishing the connection necessary for the annexation. Mountainboro responds by pointing out that the Griffins did not include their objection to these votes in their complaint in the election contest and did not make these arguments at trial, raising them for the first time in a posttrial motion.
In any event, according to Mountainboro, the trial court was without jurisdiction to entertain a case involving an interpretation and application of the federal Voting Rights Act. It cites Singer v. City of Alabaster, 821 So.2d 954, 957 (Ala. 2001) (quoting Mitchell v. City of Prichard, 538 So.2d 1, 2 (Ala.1988), which involved a disputes over the validity of certain purported municipal annexations and de-annexations), for the proposition that "`cases involving the interpretation of the preclearance requirements of Section 5 of the federal Voting Rights Act are within the exclusive jurisdiction of the federal courts.'" Based on Singer and Mitchell, the Griffins cross-appeal is due to be dismissed. Any relief the Griffins may seek under § 5 of the Voting Rights Act should be pursued in federal court.
1070731 REVERSED AND REMANDED WITH INSTRUCTIONS.
1070777 APPEAL DISMISSED.
COBB, C.J., and SEE, SMITH, and PARKER, JJ., concur.
LYONS, J., concurs specially.
WOODALL, STUART, and BOLIN, JJ., dissent.
LYONS, Justice (concurring specially).
When the legislature dictates that a statute applicable to one circumstance shall apply to a different circumstance, we are confronted with challenging issues of statutory construction. Although I am not unmindful of our obligation to construe strictly laws governing election contests, I am satisfied that the main opinion correctly adheres to legislative intent.
Section 11-42-2(8), Ala.Code 1975, expressly provides that the town or city seeking to annex the property is properly named as the "contestee" in a contest of an annexation election. Section 11-42-2(8) also contemplates that the contest is to be conducted in the same manner as the contest of a general municipal election.
I consider the legislature's use of the word "contestee" in § 11-42-2(8), when coupled with the incorporation of procedures governing general municipal elections, as sufficient indicia of intent to confer *413 upon a municipality named in a contest of an annexation election the same prerogative of challenging illegal votes as enjoyed by a party also described as a "contestee" in several instances in Title 17, Chapter 16, Ala.Code 1975, who, as a candidate for office, is of necessity a qualified elector. Had the legislature been disinclined to permit a municipality the prerogative available to a contestee under the general-election-contest statute, then it could easily have phrased § 11-42-2(8), in which the general-municipal-election-contest statute is made applicable, without describing the municipality as a "contestee."
WOODALL, Justice (dissenting).
"This Court has been unequivocal in stating that elections normally do not fall within the scope of judicial review." Sears v. Carson, 551 So.2d 1054, 1056 (Ala.1989). "An election contest is a statutory matter, and the statute governing the election must be strictly observed and construed." Long v. Bryant, 992 So.2d 673, 680 (Ala. 2008). "`An election contest being purely statutory, the courts are limited in their investigation to such subjects as are specified in the statutes.'" Longshore v. City of Homewood, 277 Ala. 444, 446, 171 So.2d 453, 455 (1965)(quoting 29 C.J.S. Elections § 247). In my opinion, the Court has ignored these well established principles; consequently, I respectfully dissent.
The Court holds that Mountainboro, the municipality that conducted the annexation election, has the legal right to challenge the legality of certain votes cast in the election. However, this holding is not supported by the applicable statutes. Having considered the unambiguous language in both § 11-42-2(8), Ala.Code 1975, and § 11-46-69(a)(3), Ala.Code 1975, it is clear to me that only a "qualified elector" has standing to challenge the legality of votes cast in an annexation election. Any other conclusion violates the principle that "the statute[s] governing the election must be strictly observed and construed."
I disagree with the Court's conclusion that the analysis in Eubanks v. Hale, 752 So.2d 1113 (Ala.1999), is instructive in this case. In its judgment, the trial court stated:
"Hale held that once a contest is filed, it is not necessary for the contestees to file an independent `cross-contest' in order to challenge votes themselves. In Hale, however, the contestant and the respondent/contestee were both `qualified electors.' So, Hale is not instructive on the key issue of [Mountainboro's] standing in the case at bar."
The trial court correctly distinguished Hale, and that case does not support today's holding.
For the foregoing reasons, I would affirm the judgment of the trial court in Mountainboro's appeal. The Griffins in their cross-appeal, of course, have argued that the judgment is due to be affirmed. Consequently, I would dismiss their cross-appeal as moot.
STUART and BOLIN, JJ., concur.
NOTES
[1] Section 11-42-2(8) provides:
"Whenever the council [of a city or town] shall pass a resolution to the effect that the public health or public good requires that certain territory . . . shall be brought within the limit of the city or town:
". . . .
"(8) The result of such election may be contested by any qualified elector voting at the election in the manner providing for contest of general municipal elections, making the city or town the contestee."
No party disputes that both Boaz and Mountainboro were properly named by the Griffins as contestees in this case.
[2] We have not been presented in this case with the issue whether an election-contest procedure whereby one side can have removed from the vote totals illegal ballots cast against it but the other side cannot would raise equal-protection or due-process concerns.
[3] Mountainboro argues in its brief that to hamstring the contestee in the manner proposed by the Griffins "defies logic."
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541 F.2d 275
U. S.v.Caprice
No. 75-1970
United States Court of Appeals, Third Circuit
8/23/76
1
D.N.J.
REMANDED
|
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969 F.2d 877
22 Envtl. L. Rep. 21,483
The STATE of Wyoming, ex rel., Mike SULLIVAN as Governor andJoseph B. Meyer as Attorney General, Plaintiffs-Appellants,v.Manuel LUJAN, in his official capacity as Secretary of theUnited States Department of the Interior; and the UnitedStates Department of the Interior; Laurance S. Rockefeller,an individual; The Sloan-Kettering Institute for CancerResearch, a non-profit New York corporation; and ReserveCoal Properties Company, a Delaware corporation, Defendants-Appellees.
No. 91-8019.
United States Court of Appeals,Tenth Circuit.
July 7, 1992.
Vicci M. Colgan, Sr. Asst. Atty. Gen. (Joseph B. Meyer, Atty. Gen., with her on the brief), Cheyenne, Wyo., for plaintiffs-appellants.
Ellen J. Durkee, Attorney, Environment & Natural Resources Div., U.S. Dept. of Justice, Washington, D.C. (Richard B. Stewart, Asst. Atty. Gen., Washington, D.C., Richard A. Stacy, U.S. Atty., Carol A. Statkus and Maynard Grant, Asst. U.S. Attys., Cheyenne, Wyo., Fred R. Wagner and Martin W. Matzen, Attorneys, Environment & Natural Resources Div., U.S. Dept. of Justice, Mark D. Etchart, Office of the Solicitor, Dept. of the Interior, Washington, D.C., Lyle K. Rising, Office of the Regional Solicitor, Dept. of the Interior, Denver, Colo., with her on the brief), for defendants-appellees Manuel Lujan, in his official capacity as Secretary of the U.S. Dept. of the Interior, and the U.S. Dept. of the Interior.
Richard M. Davis, Jr. (Kate M. Fox, with him on the brief), of Burgess, Davis, Carmichael & Cannon, Sheridan, Wyo., for defendant-appellee Reserve Coal Properties Co.
Gaines Gwathmey, III, of Paul, Weiss, Rifkind, Wharton & Garrison, New York City (Steven B. Rosenfeld and Daniel G. Cort, of Paul, Weiss, Rifkind, Wharton & Garrison, New York City, Marcelle Shoop and Jack D. Palma, II, of Holland & Hart, Cheyenne, Wyo., with him on the brief), for defendant-appellee The Sloan-Kettering Institute for Cancer Research.
Henry L. Diamond and Christopher W. Mahoney, of Beveridge & Diamond, Washington, D.C., and Carl L. Lathrop and J. Kent Rutledge, of Lathrop & Rutledge, Cheyenne, Wyo., filed a brief, for defendant-appellee Laurance S. Rockefeller.
SEYMOUR, SETH and ALDISERT,* Circuit Judges.
ALDISERT, Circuit Judge.
1
The State of Wyoming appeals the district court's determination that it lacked standing to challenge the Secretary of the Interior's completed exchange of federally owned coal in the Ash Creek and Youngs Creek federal coal tracts in Sheridan County, Wyoming, for the JY Ranch conservation easement in the Grand Teton National Park.
2
This court is no stranger to litigation involving the Ash Creek tract. In Ash Creek Mining Co. v. Lujan, 934 F.2d 240, 243-44 (10th Cir.1991) (Ash Creek I ), Ash Creek Mining Company challenged the Secretary's decision to set aside the Ash Creek Coal Leasing Tract from competitive coal leasing and to designate it for exchange for the Whitney Benefits Tract. We held that Ash Creek's claim was not ripe for decision because Ash Creek had failed to show that the Department's proposed exchange constituted "final agency action" under the Administrative Procedure Act, 5 U.S.C. § 704. We did not reach the question of standing.
3
In a companion case filed this date, however, we did meet the question. We held that in a challenge to a completed exchange of federal coal filed in the district court as a companion action to the within proceedings, Ash Creek Mining Company lacked Article III standing to oppose the completed exchange. Ash Creek Mining Co. v. Lujan, 969 F.2d 868 (10th Cir.1992) (Ash Creek II ). We reach the same conclusion in this appeal and affirm the judgment of the district court.
4
The district court had subject matter jurisdiction based on 28 U.S.C. § 1331. We have appellate jurisdiction under 28 U.S.C. § 1291. The appeal was timely filed under Rule 4(a), Fed.R.App.P.
5
The district court held that the State of Wyoming lacked Article III standing to challenge the exchange of federal coal located in Sheridan County for the JY Ranch conservation easement. Our task on review is to decide whether the court erred as a matter of law. Other issues presented involve prudential limitations on a federal court's exercise of judicial power and raise questions as to the State of Wyoming's standing to assert claims under the National Environmental Policy Act and the Federal Land Policy and Management Act.
6
We review de novo the grant of a motion to dismiss for lack of standing. Riggs v. City of Albuquerque, 916 F.2d 582, 584 (10th Cir.1990), cert. denied, --- U.S. ----, 111 S.Ct. 1623, 113 L.Ed.2d 720 (1991). A motion to dismiss is properly granted when it appears beyond doubt that the plaintiff could prove no set of facts entitling it to relief. Huxall v. First State Bank, 842 F.2d 249, 251 (10th Cir.1988). We must construe the complaint in favor of the plaintiff, accepting as true all material allegations. American Mining Congress v. Thomas, 772 F.2d 640, 650 (10th Cir.1985) (citing Warth v. Seldin, 422 U.S. 490, 501, 95 S.Ct. 2197, 2206-07, 45 L.Ed.2d 343 (1975)), cert. denied, 476 U.S. 1158, 106 S.Ct. 2276, 90 L.Ed.2d 718 (1986).
I.
7
The facts are undisputed. On August 9, 1985, Laurance S. Rockefeller agreed to exchange a conservation easement on his ranch, known as the JY Ranch, located within the Grand Teton National Park in Northeast Wyoming, for federal coal owned by the Department of the Interior. In December 1987, Rockefeller donated the JY Ranch conservation easement to The Sloan-Kettering Institute for Cancer Research, a non-profit organization, which then became the exchange proponent.
8
The Bureau of Land Management (hereinafter "the Bureau") subsequently prepared an environmental assessment of the proposed exchange. The Bureau concluded that the exchange presented no significant environmental impact and determined that an environmental impact statement was not necessary. On November 3, 1989, the Bureau published a Notice of Realty Action in the Federal Register outlining the proposed exchange of 2,560 acres of federal coal located in the Ash Creek and Youngs Creek federal coal tracts in Sheridan County, Wyoming, for 1106.49 acres of the JY Ranch conservation easement. The Notice provided for public comment/protest within 45 days.
9
The State of Wyoming and others filed oral and written protests to the exchange. On May 10, 1990, Sloan-Kettering conveyed the JY Ranch conservation easement to the United States by warranty deed. On May 11, 1990, the Assistant Secretary of the Interior for Land and Minerals Management dismissed the protests filed in response to the Notice. On the same date, the Bureau accepted title to the conservation easement on behalf of the National Park Service and issued Sloan-Kettering a patent granting title to the coal. Sloan-Kettering subsequently sold the coal rights to Reserve Coal Properties Company.
A.
10
On July 10, 1990, the State of Wyoming, ex rel., Mike Sullivan as Governor and Joseph B. Meyer as Attorney General (hereinafter "the State"), filed a four-count complaint in federal district court against the Secretary of the Interior, the Department of the Interior, Rockefeller, Sloan-Kettering, Consolidation Coal Company and Reserve Coal Properties seeking judicial review of the Secretary's action and requesting that the exchange be voided. The first three counts alleged violations of the Federal Land Policy and Management Act (FLPMA), 43 U.S.C. § 1701, et seq., based on the Secretary's failure (1) to act in the public interest, (2) to satisfy the requirement that the exchanged lands be of equal value and (3) to follow the Bureau's internal guidelines respecting land exchanges. The fourth count alleged that the Secretary had violated the National Environmental Policy Act (NEPA), 42 U.S.C. § 4321, et seq., because the environmental assessment was inadequate and because an impact statement should have been prepared.
11
The State alleged that it had been injured by the removal of the coal from its "coal bank." It claimed that if the coal properties had been leased through the competitive leasing system, the Mineral Leasing Act (MLA), 30 U.S.C. §§ 191, 207(a), would have entitled the State to one-half of the royalty payment on the lease, the payment to be no less than 12.5% of the coal's value. The State asked for an order setting aside the patent and voiding the transfer of the coal from Sloan-Kettering to Reserve Coal Properties.
B.
12
All defendants moved to dismiss the complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure, and on March 15, 1991, the district court dismissed the action for lack of standing. The court determined that it could "fashion no order which would redress the injuries claimed by plaintiff; there is no 'substantial nexus between the relief requested and the elimination of the plaintiff's injury.' " Dist.Ct.Order at 6, 1991 WL 352420 (quoting Glover River Org. v. United States Dep't of Interior, 675 F.2d 251, 255 (10th Cir.1982) (footnote omitted)). The court observed that "[i]t is far from 'concrete and certain', that, if the decision of the Secretary were to be reversed, the coal would ever be open to competitive leasing." Id. at 6-7 (citation omitted).
13
As an additional ground for rejecting the claim under the Environmental Policy Act, the district court determined that the State's interest did not fall within the statute's "zone of interests." The State alleged that the monies lost by the Secretary's failure to lease the coal would have gone to roads, highways and other public facilities, necessarily resulting in an impact on the environment. The court rejected this purported injury, noting that such an environmental impact would have resulted from state law and not from the Secretary's actions. Id. at 7. The court also determined that neither the Land Policy and Management Act, nor the Mineral Leasing Act, nor any other statute grants the State a right to contest the Secretary's disposal of federal coal in a manner affecting the statutory royalty sharing agreement. Id. The State then filed this appeal.
II.
14
In Ash Creek II, filed this date, we summarized the precepts controlling constitutional standing. We repeat them here. Article III of the Constitution limits the "judicial power" of federal courts to the resolution of "cases" and "controversies." Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 471, 102 S.Ct. 752, 757-58, 70 L.Ed.2d 700 (1982). One of the requirements of a "case" or "controversy" is that the plaintiff have "standing" to challenge the action sought to be adjudicated in the lawsuit. Id.
15
The Court has recently summarized the requirements for standing:
16
Over the years, our cases have established that the irreducible constitutional minimum of standing contains three elements: First, the plaintiff must have suffered an "injury in fact"--an invasion of a legally-protected interest which is (a) concrete and particularized; and (b) "actual or imminent, not 'conjectural' or 'hypothetical,' " Whitmore [v. Arkansas, 495 U.S. 149, 155, 110 S.Ct. 1717, 1723, 109 L.Ed.2d 135 (1990) ] (quoting Los Angeles v. Lyons, 461 U.S. 95, 102 [103 S.Ct. 1660, 1665, 75 L.Ed.2d 675] (1983)). Second, there must be a causal connection between the injury and the conduct complained of--the injury has to be "fairly ... trace[able] to the challenged action of the defendant, and not ... th[e] result [of] the independent action of some third party not before the court." Simon v. Eastern Kentucky Welfare Rights Org., 426 U.S. 26, 41-42 [96 S.Ct. 1917, 1926, 48 L.Ed.2d 450] (1976). Third, it must be "likely," as opposed to merely "speculative," that the injury will be "redressed by a favorable decision." Id. at 38, 43 [96 S.Ct. at 1924, 1926-27].
17
The party invoking federal jurisdiction bears the burden of establishing these elements. Since they are not mere pleading requirements but rather an indispensable part of the plaintiff's case, each element must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation.
18
Lujan v. Defenders of Wildlife, --- U.S. ----, ----, 112 S.Ct. 2130, 2136, 119 L.Ed.2d 351 (1992) (citations omitted) (footnote omitted).
19
Thus, as a constitutional minimum, "the plaintiff must allege some concrete injury, whether actual or threatened, and some chain of causation linking that injury to the challenged actions of the defendant." Glover River, 675 F.2d at 253 (footnote omitted). The plaintiff may not convert the federal courts into "publicly funded forums for the ventilation of public grievances." Valley Forge, 454 U.S. at 473, 102 S.Ct. at 759.
20
To establish "injury in fact," the plaintiff must show "a distinct and palpable injury to itself." Glover River, 675 F.2d at 254. An abstract injury is not enough; " '[t]he injury or threat of injury must be both 'real and immediate,' not 'conjectural' or 'hypothetical.' ' " Id. (quoting O'Shea v. Littleton, 414 U.S. 488, 494, 94 S.Ct. 669, 675, 38 L.Ed.2d 674 (1974)). Although "[a]n asserted right to have the Government act in accordance with law is not sufficient, standing alone, to confer jurisdiction on a federal court," Allen v. Wright, 468 U.S. 737, 754, 104 S.Ct. 3315, 3326, 82 L.Ed.2d 556 (1984), courts generally will find injury in fact if the plaintiff can demonstrate a plausible benefit. In Watt v. Energy Action Educ. Found., 454 U.S. 151, 102 S.Ct. 205, 70 L.Ed.2d 309 (1981), for example, the Court held that the State of California had standing to challenge the Secretary of the Interior's failure to comply with a statute requiring it to experiment with different royalty systems in leasing offshore gas and oil production rights. Although a judgment would require the Secretary only to perform the experiments and would not guarantee the State any royalties, the Court determined that the State's loss of an opportunity for benefit constituted injury in fact. Id. at 160-62, 102 S.Ct. at 212-13.
21
To satisfy the "redressability" prong of the standing test, the plaintiff must demonstrate that a " 'substantial likelihood' [exists] that the relief requested will redress the injury claimed." Duke Power Co. v. Carolina Envtl. Study Group, Inc., 438 U.S. 59, 75 n. 20, 98 S.Ct. 2620, 2631 n. 20, 57 L.Ed.2d 595 (1978); Glover River, 675 F.2d at 254.
III.
22
The district court determined that the State lacked Article III standing because it had failed to satisfy both the injury in fact and redressability prongs of the test. The appellees argue that the State has not demonstrated an injury in fact because, at most, it has lost an opportunity to receive royalties from the Sheridan County federal coal--a "conjectural" or "hypothetical" injury insufficient to confer standing. The appellees also argue that even if the court grants the State's requested relief and sets aside the exchange, there is no guarantee that the Secretary ever will exercise his discretion to offer the coal for competitive leasing, especially now that the coal market is completely glutted.
23
As we stated in Ash Creek II, this court is no stranger to matters involving Article III standing. In Glover River, the plaintiffs challenged the Secretary's listing of the leopard darter as an endangered species. They claimed that this listing precluded them from promoting a flood control project on an Oklahoma river. 675 F.2d at 252-53. The plaintiffs sought an injunction requiring the Secretary to prepare an environmental impact statement and an order staying the listing until the statement was completed. We held that the plaintiffs had demonstrated injury in fact but had failed to meet the causation and redressability requirements for standing because "[e]ven if the preparation of [the statement] should lead to removal of the leopard darter from the threatened species list, this would not ensure the funding or construction of the projects" they desire. Id. at 255.
24
In Oklahoma Hosp. Ass'n v. Oklahoma Publishing Co., 748 F.2d 1421 (10th Cir.1984), cert. denied, 473 U.S. 905, 105 S.Ct. 3528, 87 L.Ed.2d 652 (1985), a publishing company sought access to documents subject to protective orders entered in a separate action between the Oklahoma Hospital Association and the Oklahoma Department of Human Services. We determined that the publishing company lacked standing because its injuries might not be redressed by a favorable court ruling. We explained that even if the protective orders were removed, the parties to the original lawsuit may exercise their discretion not to reveal those documents to the publishing company. Id. at 1424-25.
25
As stated by the court in National Wildlife Fed'n v. Hodel, 839 F.2d 694, 703-04 (D.C.Cir.1988), "[s]tanding jurisprudence is a highly case-specific endeavor, turning on the precise allegations of the parties seeking relief." Based on the facts of this case, as well as on the principles set forth in Glover River and Oklahoma Hospital, we are persuaded to affirm the district court's ruling that the State lacked standing to challenge the JY Ranch exchange.
IV.
26
Although the State arguably has shown a plausible benefit sufficient to demonstrate injury in fact, see Watt, 454 U.S. at 160-62, 102 S.Ct. at 212-13, we conclude that the relief requested will not redress the threatened loss of royalties. The State's case is a conjecture based on speculation that is bottomed on surmise. It ostensibly asserts public policy concerns, but on final analysis, the State's interest begins and ends with the royalties it expected to receive had the Secretary chosen to offer the coal for competitive leasing. This interest founders on too many contingencies for us to conclude that it meets the constitutional requirement of redressability.
27
The conjecture is that if this exchange is upset, somehow the Secretary will exercise his discretion and release these lands for competitive leasing. The federal courts do not have the power to order competitive leasing. By law, that discretion is vested absolutely in the federal government's executive branch and not in its judiciary. A favorable ruling in this case will not guarantee the State one nickel of coal leasing royalties from these lands. There is only speculation and surmise that the State ever will receive any such royalties.
28
Assuming that the State has demonstrated some actual or threatened injury that is fairly traceable to the challenged action, it has not shown, and indeed cannot show, that the injury is " 'likely to be redressed by a favorable decision' " in this case. Valley Forge, 454 U.S. at 472, 102 S.Ct. at 758-59 (quoting Simon v. Eastern Ky. Welfare Rights Org., 426 U.S. 26, 38, 96 S.Ct. 1917, 1924, 48 L.Ed.2d 450 (1976)). We conclude, therefore, that the State has not established Article III standing to assert an economic loss claim under the Land Policy and Management Act and the Environmental Policy Act. We need not reach the question of prudential limitations on a federal court's exercise of its judicial power with respect to the Environmental Policy Act claim.
V.
29
In addition to the claimed injuries flowing from the threatened loss of royalty income, the State argues that it has been deprived of an alleged statutory right to have the interests of "state and local people" considered when the Secretary determines whether a land exchange proposal is in the public interest. We are not at all certain that this particular Federal Land Policy and Management Act claim falls within the rubric of constitutional or prudential standing. Assuming Article III standing on this issue, however, we conclude that the State has failed to surmount the prudential limitations on a federal court's exercise of judicial power.
30
We agree with the appellees that the State lacks prudential standing under 43 U.S.C. § 1716(a) to advance the interests of "state and local people" because (1) the State must assert its own legal rights and interests, and not those of third parties, and (2) the State's complaint does not fall within the "zone of interests" the Act seeks to protect. See Valley Forge, 454 U.S. at 474-75, 102 S.Ct. at 759-60.
31
The federal appellees contend, and we agree, that the State does not have standing as a parens patriae to bring an action on behalf of its citizens against the federal government because the federal government is presumed to represent the State's citizens. In Alfred L. Snapp & Son, Inc. v. Puerto Rico ex rel. Barez, 458 U.S. 592, 102 S.Ct. 3260, 73 L.Ed.2d 995 (1982), the Supreme Court observed that a state may sue as a parens patriae on behalf of its citizens when it "has a quasi-sovereign interest in the health and well-being--both physical and economic--of its residents in general," as long as the state is more than a nominal party. Id. at 607-08, 102 S.Ct. at 3269. This means that a state may sue "under federal statutes creating benefits or alleviating hardships." Id. at 608, 102 S.Ct. at 3269. The "State does have an interest, independent of the benefits that might accrue to any particular individual, in assuring that the benefits of the federal system are not denied to its general population." Id.
32
The Court stated in a footnote, however, that "[a] State does not have standing as parens patriae to bring an action against the Federal Government." Id. at 610 n. 16, 102 S.Ct. at 3270 n. 16 (citing Massachusetts v. Mellon, 262 U.S. 447, 485-86, 43 S.Ct. 597, 600-01, 67 L.Ed. 1078 (1923)). Courts also have recognized that a " 'generalized grievance that the [government] is not acting in a way in which [the State] maintains is in accordance' with federal laws ... is insufficient to demonstrate standing." Nevada v. Burford, 918 F.2d 854, 857 (9th Cir.1990) (quoting Nevada v. Burford, 708 F.Supp. 289, 295 (D.Nev.1989)), cert. denied, --- U.S. ----, 111 S.Ct. 2052, 114 L.Ed.2d 458 (1991).
33
The State responds that the parens patriae doctrine is inapplicable here because the Act specifically confers standing. It argues that section 206(a) of the Act, 43 U.S.C. § 1716(a), authorizes the Secretary to exchange tracts of land or interests in land where the Secretary "determines that the public interest will be well served by making that exchange." Id. (emphasis added).
34
We are not persuaded that Congress intended that the State become an express beneficiary under the Act, ousting the Secretary of the Interior from his authority and responsibility to define the contours of "public interest." The statute allocates to the Secretary, and not to the State of Wyoming, for itself or for its citizens, the authority and responsibility of determining whether "the public interest will be well served by making that exchange." We accept the argument advanced by the federal appellees that under the principles announced in Snapp, the State is not the appropriate party to protect that interest. Thus, to the extent that the State attempts to assert the interests of "state and local people," it lacks prudential standing under the Federal Land Policy and Management Act.
VI.
35
We have considered all of the appellees' contentions, and for the foregoing reasons, the judgment of the district court is
36
AFFIRMED.
*
Ruggero J. Aldisert, Senior Judge, United States Court of Appeals for the Third Circuit, sitting by designation
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138 P.3d 589 (2006)
SORGE v. AG.
No. 20060163.
Supreme Court of Utah.
May 19, 2006.
Petition for certiorari denied.
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624 F.2d 770
105 L.R.R.M. (BNA) 3419, 89 Lab.Cas. P 12,354
NATIONAL LABOR RELATIONS BOARD, Petitioner,v.TOPINKA'S COUNTRY HOUSE, INC., Respondent.
No. 78-1213.
United States Court of Appeals,Sixth Circuit.
July 1, 1980.
Elliott Moore, William Wachter, Deputy Associate Gen. Counsel, Corinna Metcalf, N.L.R.B., Washington, D. C., Bernard Gottfried, Director, Region 7, N.L.R.B., Detroit, Mich., for petitioner.
Bernard J. Fieger, Fieger, Golden & Cousens, Southfield, Mich., for respondent.
Before ENGEL, MERRITT and MARTIN, Circuit Judges.
ORDER
1
The National Labor Relations Board has applied to this court for enforcement of its order issued on March 13, 1978, against respondent Topinka's Country House, Inc., (reported at 235 NLRB No. 18). The Board found that Topinka's violated sections 8(a)(5) and (1) of the National Labor Relations Act by refusing to adhere to the terms of a collective bargaining agreement to which it was a party. Topinka's contends that the sale of all of the corporation stock, accompanied by the transfer of the corporation's Michigan liquor license, makes the corporation a new employer which is not bound by the collective bargaining agreement executed before the stock transfer. Upon due consideration, we conclude that the Board's decision is supported by substantial evidence. Accordingly,
2
IT IS ORDERED that the Board's application for enforcement of its order be and it is hereby granted.
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527 U.S. 263 (1999)
STRICKLER
v.
GREENE, WARDEN
No. 98-5864.
United States Supreme Court.
Argued March 3, 1999.
Decided June 17, 1999.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT
*264 *265 Stevens, J., delivered the opinion of the Court, in which Rehnquist, C. J., and O'Connor, Scalia, Ginsburg, and Breyer, JJ., joined in full, in which Kennedy and Souter, JJ., joined as to Part III, and in which Thomas, J., joined as to Parts I and IV. Souter, J., filed an opinion concurring in part and dissenting in part, in which Kennedy, J., joined as to Part II, post, p. 296.
Miguel A. Estrada argued the cause for petitioner. With him on the briefs were Barbara L. Hartung, Mark E. Olive, and John H. Blume.
Pamela A. Rumpz, Assistant Attorney General of Virginia, argued the cause for respondent. With her on the brief was Mark L. Earley, Attorney General.[*]
Justice Stevens delivered the opinion of the Court.[]
The District Court for the Eastern District of Virginia granted petitioner's application for a writ of habeas corpus and vacated his capital murder conviction and death sentence on the grounds that the Commonwealth had failed to disclose important exculpatory evidence and that petitioner had not, in consequence, received a fair trial. The Court of Appeals for the Fourth Circuit reversed because petitioner had not raised his constitutional claim at his trial or in state collateral proceedings. In addition, the Fourth Circuit concluded that petitioner's claim was, "in any event, without merit." App. 418, n. 8.[1] Finding the legal question presented by this *266 case considerably more difficult than the Fourth Circuit, we granted certiorari, 525 U. S. 809 (1998), to consider (1) whether the Commonwealth violated Brady v. Maryland, 373 U. S. 83 (1963), and its progeny; (2) whether there was an acceptable "cause" for petitioner's failure to raise this claim in state court; and (3), if so, whether he suffered prejudice sufficient to excuse his procedural default.
I
In the early evening of January 5, 1990, Leanne Whitlock, an African-American sophomore at James Madison University, was abducted from a local shopping center and robbed and murdered. In separate trials, both petitioner and Ronald Henderson were convicted of all three offenses. Henderson was convicted of first-degree murder, a noncapital offense, whereas petitioner was convicted of capital murder and sentenced to death.[2]
At both trials, a woman named Anne Stoltzfus testified in vivid detail about Whitlock's abduction. The exculpatory material that petitioner claims should have been disclosed before trial includes documents prepared by Stoltzfus, and notes of interviews with her, that impeach significant portions of her testimony. We begin, however, by noting that, even without the Stoltzfus testimony, the evidence in the record was sufficient to establish petitioner's guilt on the murder charge. Whether petitioner would have been convicted of capital murder and received the death sentence if she had not testified, or if she had been sufficiently impeached, is less clear. To put the question in context, we review the trial testimony at some length.
The Testimony at Trial
At about 4:30 p.m. on January 5, 1990, Whitlock borrowed a 1986 blue Mercury Lynx from her boyfriend, John Dean, *267 who worked in the Valley Shopping Mall in Harrisonburg, Virginia. At about 6:30 or 6:45 p.m., she left her apartment, intending to return the car to Dean at the mall. She did not return the car and was not again seen alive by any of her friends or family.
Petitioner's mother testified that she had driven petitioner and Henderson to Harrisonburg on January 5. She also testified that petitioner always carried a hunting knife that had belonged to his father. Two witnesses, a friend of Henderson's and a security guard, saw petitioner and Henderson at the mall that afternoon. The security guard was informed around 3:30 p.m. that two men, one of whom she identified at trial as petitioner, were attempting to steal a car in the parking lot. She had them under observation during the remainder of the afternoon but lost sight of them at about 6:45.
At approximately 7:30 p.m., a witness named Kurt Massie saw the blue Lynx at a location in Augusta County about 25 miles from Harrisonburg and a short distance from the cornfield where Whitlock's body was later found. Massie identified petitioner as the driver of the vehicle; he also saw a white woman in the front seat and another man in the back. Massie noticed that the car was muddy, and that it turned off Route 340 onto a dirt road.
At about 8 p.m., another witness saw the Lynx at Buddy's Market, with two men sitting in the front seat. The witness did not see anyone else in the car. At approximately 9 p.m., petitioner and Henderson arrived at Dice's Inn, a bar in Staunton, Virginia, where they stayed for about four or five hours. They danced with several women, including four prosecution witnesses: Donna Kay Tudor, Nancy Simmons, Debra Sievers, and Carolyn Brown. While there, Henderson gave Nancy Simmons a watch that had belonged to Whitlock. Petitioner spent most of his time with Tudor, who was later arrested for grand larceny based on her possession of the blue Lynx.
*268 These four women all testified that Tudor had arrived at Dice's at about 8 p.m. Three of them noticed nothing unusual about petitioner's appearance, but Tudor saw some blood on his jeans and a cut on his knuckle. Tudor also testified that she, Henderson, and petitioner left Dice's together after it closed to search for marijuana. Henderson was driving the blue Lynx, and petitioner and Tudor rode in back. Tudor related that petitioner was leaning toward Henderson and talking with him; she overheard a crude conversation that could reasonably be interpreted as describing the assault and murder of a black person with a "rock crusher." Tudor stated that petitioner made a statement that implied that he had killed someone, so the person "wouldn't give him no more trouble." App. 99. Tudor testified that while she, petitioner, and Henderson were driving around, petitioner took out his knife and threatened to stab Henderson because he was driving recklessly. Petitioner then began driving.
At about 4:30 or 5 a.m. on January 6, petitioner drove Henderson to Kenneth Workman's apartment in Timberville.[3] Henderson went inside to get something, and petitioner and Tudor drove off without waiting for him. Workman testified that Henderson had blood on his pants and stated he had killed a black person.
Petitioner and Tudor then drove to a motel in Blue Ridge. A day or two later they went to Virginia Beach, where they spent the rest of the week. Petitioner gave Tudor pearl earrings that Whitlock had been wearing when she was last seen. Tudor saw Whitlock's driver's license and bank card in the glove compartment of the car. Tudor testified that petitioner unsuccessfully attempted to use Whitlock's bank card when they were in Virginia Beach.
When petitioner and Tudor returned to Augusta County, they abandoned the blue Lynx. On January 11, the police identified the car as Dean's, and found petitioner's and Tudor's *269 fingerprints on both the inside and the outside of the car. They also found shoe impressions that matched the soles of shoes belonging to petitioner. Inside the car, they retrieved a jacket that contained identification papers belonging to Henderson.
The police also recovered a bag at petitioner's mother's house that Tudor testified she and petitioner had left when they returned from Virginia Beach. The bag contained, among other items, three identification cards belonging to Whitlock and a black "tank top" shirt that was later found to have human blood and semen stains on it. Tr. 707.
On January 13, a farmer called the police to advise them that he had found Henderson's wallet; a search of the area led to the discovery of Whitlock's frozen, nude, and battered body. A 69-pound rock, spotted with blood, lay nearby. Forensic evidence indicated that Whitlock's death was caused by "multiple blunt force injuries to the head." App. 109. The location of the rock and the human blood on the rock suggested that it had been used to inflict these injuries. Based on the contents of Whitlock's stomach, the medical examiner determined that she died fewer than six hours after she had last eaten.[4]
A number of Caucasian hair samples were found at the scene, three of which were probably petitioner's. Given the weight of the rock, the prosecution argued that one of the killers must have held the victim down while the other struck her with the murder weapon.
Donna Tudor's estranged husband, Jay Tudor, was called by the defense and testified that in March she had told him that she was present at the murder scene and that petitioner did not participate in the murder. Jay Tudor's testimony was inconsistent in several respects with that of other witnesses. For example, he testified that several days elapsed *270 between the time that petitioner, Henderson, and Donna Tudor picked up Whitlock and the time of Whitlock's murder. Anne Stoltzfus' Testimony
Anne Stoltzfus testified that on two occasions on January 5 she saw petitioner, Henderson, and a blonde girl inside the Harrisonburg mall, and that she later witnessed their abduction of Whitlock in the parking lot. She did not call the police, but a week and a half after the incident she discussed it with classmates at James Madison University, where both she and Whitlock were students. One of them called the police. The next night a detective visited her, and the following morning she went to the police station and told her story to Detective Claytor, a member of the Harrisonburg City Police Department. Detective Claytor showed her photographs of possible suspects, and she identified petitioner and Henderson "with absolute certainty" but stated that she had a slight reservation about her identification of the blonde woman. Id., at 56.
At trial, Stoltzfus testified that, at about 6 p.m. on January 5, she and her 14-year-old daughter were in the Music Land store in the mall looking for a compact disc. While she was waiting for assistance from a clerk, petitioner, whom she described as "Mountain Man," and the blonde girl entered.[5]*271 Because petitioner was "revved up" and "very impatient," she was frightened and backed up, bumping into Henderson (whom she called "Shy Guy"), and thought she felt something hard in the pocket of his coat. Id., at 36-37.
Stoltzfus left the store, intending to return later. At about 6:45, while heading back toward Music Land, she again encountered the threesome: "Shy Guy" walking by himself, followed by the girl, and then "Mountain Man" yelling "Donna, Donna, Donna." The girl bumped into Stoltzfus and then asked for directions to the bus stop.[6] The three then left.
At first Stoltzfus tried to follow them because of her concern about petitioner's behavior, but she "lost him" and then headed back to Music Land. The clerk had not returned, so she and her daughter went to their car. While driving to another store, they saw a shiny dark blue car. The driver was "beautiful," "well dressed and she was happy, she was singing . . . ." Id., at 41. When the blue car was stopped behind a minivan at a stop sign, Stoltzfus saw petitioner for the third time.
She testified:
"`Mountain Man' came tearing out of the Mall entrance door and went up to the driver of the van and . . . was just really mad and ran back and banged on back of the backside of the van and then went back to the Mall entrance wall where `Shy Guy' and `Blonde Girl' was standing . . . . [T]hen we left [and before the van and a white pickup truck could turn] `Mountain Man' came out again . . . ." Id., at 42-43.
After first going to the passenger side of the pickup truck, petitioner came back to the black girl's car, "pounded on" the passenger window, shook the car, yanked the door open and jumped in. When he motioned for "Blonde Girl" and "Shy *272 Guy" to get in, the driver stepped on the gas and "just laid on the horn" but she could not go because there were people walking in front of the car. The horn "blew a long time" and petitioner
"started hitting her . . . on the left shoulder, her right shoulder and then it looked like to me that he started hitting her on the head and I was, I just became concerned and upset. So I beeped, honked my horn and then she stopped honking the horn and he stopped hitting her and opened the door again and the `Blonde Girl' got in the back and `Shy Guy' followed and got behind him." Id., at 44-45.
Stoltzfus pulled her car up parallel to the blue car, got out for a moment, got back in, and leaned over to ask repeatedly if the other driver was "O.K." The driver looked "frozen" and mouthed an inaudible response. Stoltzfus started to drive away and then realized "the only word that it could possibly be, was help." Id., at 47. The blue car then drove slowly around her, went over the curb with its horn honking, and headed out of the mall. Stoltzfus briefly followed, told her daughter to write the license number on a "3x4 [inch] index card,"[7] and then left for home because she had an empty gas tank and "three kids at home waiting for supper." Id., at 48-49.
At trial Stoltzfus identified Whitlock from a picture as the driver of the car and pointed to petitioner as "Mountain Man." When asked if pretrial publicity about the murder had influenced her identification, Stoltzfus replied "absolutely not." She explained:
"[F]irst of all, I have an exceptionally good memory. I had very close contact with [petitioner] and he made an *273 emotional impression with me because of his behavior and I, he caught my attention and I paid attention. So I have absolutely no doubt of my identification." Id., at 58.
The Commonwealth did not produce any other witnesses to the abduction. Stoltzfus' daughter did not testify.
The Stoltzfus Documents
The materials that provide the basis of petitioner's Brady claim consist of notes taken by Detective Claytor during his interviews with Stoltzfus, and letters written by Stoltzfus to Claytor. They cast serious doubt on Stoltzfus' confident assertion of her "exceptionally good memory." Because the content of the documents is critical to petitioner's procedural and substantive claims, we summarize their content.
Exhibit 1[8] is a handwritten note prepared by Detective Claytor after his first interview with Stoltzfus on January 19, 1990, just two weeks after the crime. The note indicates that she could not identify the black female victim. The only person Stoltzfus apparently could identify at this time was the white female. Id., at 306.
Exhibit 2 is a document prepared by Detective Claytor some time after February 1. It contains a summary of his interviews with Stoltzfus conducted on January 19 and January 20, 1990.[9] At that time "she was not sure whether she could identify the white males but felt sure she could identify the white female."
*274 Exhibit 3 is entitled "Observations" and includes a summary of the abduction.
Exhibit 4 is a letter written by Stoltzfus to Claytor three days after their first interview "to clarify some of my confusion for you." The letter states that she had not remembered being at the mall, but that her daughter had helped jog her memory. Her description of the abduction includes the comment: "I have a very vague memory that I'm not sure of. It seems as if the wild guy that I saw had come running through the door and up to a bus as the bus was pulling off. . . . Then the guy I saw came running up to the black girl's window. Were those 2 memories the same person?" Id., at 316. In a postscript she noted that her daughter "doesn't remember seeing the 3 people get into the black girl's car . . . ." Ibid.
Exhibit 5 is a note to Claytor captioned "My Impressions of `The Car,' " which contains three paragraphs describing the size of the car and comparing it with Stoltzfus' Volkswagen Rabbit, but not mentioning the license plate number that she vividly recalled at the trial. Id., at 317-318.
Exhibit 6 is a brief note from Stoltzfus to Claytor dated January 25, 1990, stating that after spending several hours with John Dean, Whitlock's boyfriend, "looking at current photos," she had identified Whitlock "beyond a shadow of a doubt."[10]Id., at 318. The District Court noted that by the time of trial her identification had been expanded to include a description of her clothing and her appearance as a college kid who was "singing" and "happy." Id., at 387-388.
Exhibit 7 is a letter from Stoltzfus to Detective Claytor, dated January 16, 1990, in which she thanks him for his "patience with my sometimes muddled memories." She states that if the student at school had not called the police, "I never would have made any of the associations that you helped me make." Id., at 321.
*275 In Exhibit 8, which is undated and summarizes the events described in her trial testimony, Stoltzfus commented:
"So where is the 3x4 card? . . . It would have been very nice if I could have remembered all this at the time and had simply gone to the police with the information. But I totally wrote this off as a trivial episode of college kids carrying on and proceeded with my own full-time college load at JMU. . . . Monday, January 15th. I was cleaning out my car and found the 3x4 card. I tore it into little pieces and put it in the bottom of a trash bag." Id., at 326.
There is a dispute between the parties over whether petitioner's counsel saw Exhibits 2, 7, and 8 before trial. The prosecuting attorney conceded that he himself never saw Exhibits 1, 3, 4, 5, and 6 until long after petitioner's trial, and they were not in the file he made available to petitioner.[11] For purposes of this case, therefore, we assume that petitioner proceeded to trial without having seen Exhibits 1, 3, 4, 5, and 6.[12]
*276 State Proceedings
Petitioner was tried in Augusta County, where Whitlock's body was found, on charges of capital murder, robbery, and abduction. Because the prosecutor maintained an open file policy, which gave petitioner's counsel access to all of the evidence in the Augusta County prosecutor's files,[13] petitioner's counsel did not file a pretrial motion for discovery of possible exculpatory evidence.[14] In closing argument, petitioner's lawyer effectively conceded that the evidence was sufficient to support the robbery and abduction charges, as well as the lesser offense of first-degree murder, but argued that the evidence was insufficient to prove that petitioner was guilty of capital murder. Id., at 192-193.
The judge instructed the jury that petitioner could be found guilty of the capital charge if the evidence established beyond a reasonable doubt that he "jointly participated in the fatal beating" and "was an active and immediate participant *277 in the act or acts that caused the victim's death." Id., at 160-161. The jury found petitioner guilty of abduction, robbery, and capital murder. Id., at 200-201. After listening to testimony and arguments presented during the sentencing phase, the jury made findings of "vileness" and "future dangerousness," and unanimously recommended the death sentence that the judge later imposed.
The Virginia Supreme Court affirmed the conviction and sentence. Strickler v. Commonwealth, 241 Va. 482, 404 S. E. 2d 227 (1991). It held that the trial court had properly instructed the jury on the "joint perpetrator" theory of capital murder and that the evidence, viewed most favorably in support of the verdict, amply supported the prosecution's theory that both petitioner and Henderson were active participants in the actual killing.[15]
In December 1991, the Augusta County Circuit Court appointed new counsel to represent petitioner in state habeas corpus proceedings. State habeas counsel advanced an *278 ineffective-assistance-of-counsel claim based, in part, on trial counsel's failure to file a motion under Brady v. Maryland, 373 U. S. 83 (1963), "to have the Commonwealth disclose to the defense all exculpatory evidence known to itor in its possession." App. 205-206. In answer to that claim, the Commonwealth asserted that such a motion was unnecessary because the prosecutor had maintained an open file policy.[16] The Circuit Court dismissed the petition, and the State Supreme Court affirmed. Strickler v. Murray, 249 Va. 120, 452 S. E. 2d 648 (1995).
Federal Habeas Corpus Proceedings
In March 1996, petitioner filed a federal habeas corpus petition in the Eastern District of Virginia. The District Court entered a sealed, ex parte order granting petitioner's counsel the right to examine and to copy all of the police and prosecution files in the case. Record, Doc. No. 20. That order led to petitioner's counsel's first examination of the Stoltzfus materials, described supra, at 273-275.
Based on the discovery of those exhibits, petitioner for the first time raised a direct claim that his conviction was invalid because the prosecution had failed to comply with the rule of Brady v. Maryland. The District Court granted the Commonwealth's motion to dismiss all claims except for petitioner's contention that the Commonwealth violated Brady, that he received ineffective assistance of counsel,[17] and that he was denied due process of law under the Fifth and Fourteenth Amendments. In its order denying the Commonwealth's motion to dismiss, the District Court found that petitioner had "demonstrated cause for his failure to raise this claim earlier [because] [d]efense counsel had no independent access to this material and the Commonwealth repeatedly withheld it throughout Petitioner's state habeas proceeding." App. 287.
*279 After reviewing the Stoltzfus materials, and making the assumption that the three disputed exhibits had been available to the defense, the District Court concluded that the failure to disclose the other five was sufficiently prejudicial to undermine confidence in the jury's verdict. Id., at 396. It granted summary judgment to petitioner and granted the writ.
The Court of Appeals vacated in part and remanded. It held that petitioner's Brady claim was procedurally defaulted because the factual basis for the claim was available to him at the time he filed his state habeas petition. Given that he knew that Stoltzfus had been interviewed by Harrisonburg police officers, the court opined that "reasonably competent counsel would have sought discovery in state court" of the police files, and that in response to this "simple request, it is likely the state court would have ordered the production of the files." App. 421. Therefore, the Court of Appeals reasoned, it could not address the Brady claim unless petitioner could demonstrate both cause and actual prejudice.
Under Fourth Circuit precedent a party "cannot establish cause to excuse his default if he should have known of such claims through the exercise of reasonable diligence." App. 423 (citing Stockton v. Murray, 41 F. 3d 920, 925 (1994)). Having already decided that the claim was available to reasonably competent counsel, the Fourth Circuit stated that the basis for finding procedural default also foreclosed a finding of cause. Moreover, the Court of Appeals reasoned, petitioner could not fault his trial lawyers' failure to make a Brady claim because they reasonably relied on the prosecutor's open file policy. App. 423-424.[18]
As an alternative basis for decision, the Court of Appeals also held that petitioner could not establish prejudice because *280 "the Stoltzfus materials would have provided little or no help .. . in either the guilt or sentencing phases of the trial." Id., at 425. With respect to guilt, the court noted that Stoltzfus' testimony was not relevant to petitioner's argument that he was only guilty of first-degree murder rather than capital murder because Henderson, rather than he, actually killed Whitlock. With respect to sentencing, the court concluded that her testimony "was of no import" because the findings of future dangerousness and vileness rested on other evidence. Finally, the court noted that even if it could get beyond the procedural default, the Brady claim would fail on the merits because of the absence of prejudice. App. 425, n. 11. The Court of Appeals, therefore, reversed the District Court's judgment and remanded the case with instructions to dismiss the petition.
II
The first question that our order granting certiorari directed the parties to address is whether the Commonwealth violated the Brady rule. We begin our analysis by identifying the essential components of a Brady violation.
In Brady, this Court held "that the suppression by the prosecution of evidence favorable to an accused upon request violates due process where the evidence is material either to guilt or to punishment, irrespective of the good faith or bad faith of the prosecution." 373 U. S., at 87. We have since held that the duty to disclose such evidence is applicable even though there has been no request by the accused, United States v. Agurs, 427 U. S. 97, 107 (1976), and that the duty encompasses impeachment evidence as well as exculpatory evidence, United States v. Bagley, 473 U. S. 667, 676 (1985). Such evidence is material "if there is a reasonable probability that, had the evidence been disclosed to the defense, the result of the proceeding would have been different." Id., at 682; see also Kyles v. Whitley, 514 U. S. 419, 433-434 (1995). Moreover, the rule encompasses evidence "known only to police *281 investigators and not to the prosecutor." Id., at 438. In order to comply with Brady, therefore, "the individual prosecutor has a duty to learn of any favorable evidence known to the others acting on the government's behalf in this case, including the police." Kyles, 514 U. S., at 437.
These cases, together with earlier cases condemning the knowing use of perjured testimony,[19] illustrate the special role played by the American prosecutor in the search for truth in criminal trials. Within the federal system, for example, we have said that the United States Attorney is "the representative not of an ordinary party to a controversy, but of a sovereignty whose obligation to govern impartially is as compelling as its obligation to govern at all; and whose interest, therefore, in a criminal prosecution is not that it shall win a case, but that justice shall be done." Berger v. United States, 295 U. S. 78, 88 (1935).
This special status explains both the basis for the prosecution's broad duty of disclosure and our conclusion that not every violation of that duty necessarily establishes that the outcome was unjust. Thus the term "Brady violation" is sometimes used to refer to any breach of the broad obligation to disclose exculpatory evidence[20]that is, to any suppression of so-called "Brady material"although, strictly speaking, there is never a real "Brady violation" unless the nondisclosure was so serious that there is a reasonable probability that the suppressed evidence would have produced a different verdict. There are three components of a true Brady violation: The evidence at issue must be favorable to the accused, *282 either because it is exculpatory, or because it is impeaching; that evidence must have been suppressed by the State, either willfully or inadvertently; and prejudice must have ensued.
Two of those components are unquestionably established by the record in this case. The contrast between (a) the terrifying incident that Stoltzfus confidently described in her testimony and (b) her initial perception of that event "as a trivial episode of college kids carrying on" that her daughter did not even notice, suffices to establish the impeaching character of the undisclosed documents.[21] Moreover, with respect to at least five of those documents, there is no dispute about the fact that they were known to the Commonwealth but not disclosed to trial counsel. It is the third componentwhether petitioner has established the prejudice necessary to satisfy the "materiality" inquirythat is the most difficult element of the claimed Brady violation in this case.
Because petitioner acknowledges that his Brady claim is procedurally defaulted, we must first decide whether that default is excused by an adequate showing of cause and prejudice. In this case, cause and prejudice parallel two of the three components of the alleged Brady violation itself. The suppression of the Stoltzfus documents constitutes one of the causes for the failure to assert a Brady claim in the state courts, and unless those documents were "material" for Brady purposes, their suppression did not give rise to sufficient prejudice to overcome the procedural default.
III
Respondent expressly disavows any reliance on the fact that petitioner's Brady claim was not raised at trial. Brief *283 for Respondent 17-18, n. 6. He states that the Commonwealth has consistently argued "that the claim is defaulted because it could have been raised on state habeas corpus through the exercise of due diligence, but was not." Ibid. Despite this concession, it is appropriate to begin the analysis of the "cause" issue by explaining why petitioner's reasons for failing to raise his Brady claim at trial are acceptable under this Court's cases.
Three factors explain why trial counsel did not advance this claim: The documents were suppressed by the Commonwealth; the prosecutor maintained an open file policy;[22] and trial counsel were not aware of the factual basis for the claim. The first and second factorsi. e., the nondisclosure and the open file policyare both fairly characterized as conduct attributable to the Commonwealth that impeded trial counsel's access to the factual basis for making a Brady claim.[23] As we explained in Murray v. Carrier, 477 U. S. 478, 488 (1986), it is just such factors that ordinarily establish the existence of cause for a procedural default.[24]
*284 If it was reasonable for trial counsel to rely on, not just the presumption that the prosecutor would fully perform his duty to disclose all exculpatory materials, but also the implicit representation that such materials would be included in the open files tendered to defense counsel for their examination, we think such reliance by counsel appointed to represent petitioner in state habeas proceedings was equally reasonable. Indeed, in Murray we expressly noted that "the standard for cause should not vary depending on the timing of a procedural default." Id., at 491.
Respondent contends, however, that the prosecution's maintenance of an open file policy that did not include all it was purported to contain is irrelevant because the factual basis for the assertion of a Brady claim was available to state habeas counsel. He presses two factors to support this assertion. First, he argues that an examination of Stoltzfus' trial testimony,[25] as well as a letter published in a local newspaper,[26] made it clear that she had had several interviews with Detective Claytor. Second, the fact that the Federal District Court entered an order allowing discovery of the Harrisonburg police files indicates that diligent counsel could *285 have obtained a similar order from the state court. We find neither factor persuasive.
Although it is true that petitioner's lawyersboth at trial and in post-trial proceedingsmust have known that Stoltzfus had had multiple interviews with the police, it by no means follows that they would have known that records pertaining to those interviews, or that the notes that Stoltzfus sent to the detective, existed and had been suppressed.[27] Indeed, if respondent is correct that Exhibits 2, 7, and 8 were in the prosecutor's "open file," it is especially unlikely that counsel would have suspected that additional impeaching evidence was being withheld. The prosecutor must have known about the newspaper articles and Stoltzfus' meetings with Claytor, yet he did not believe that his prosecution file was incomplete.
Furthermore, the fact that the District Court entered a broad discovery order even before federal habeas counsel had advanced a Brady claim does not demonstrate that a state court also would have done so.[28] Indeed, as we understand Virginia law and respondent's position, petitioner would not have been entitled to such discovery in state habeas *286 proceedings without a showing of good cause.[29] Even pursuant to the broader discovery provisions afforded at trial, petitioner would not have had access to these materials under Virginia law, except as modified by Brady.[30] Mere speculation that some exculpatory material may have been withheld is unlikely to establish good cause for a discovery request on collateral review. Nor, in our opinion, should such suspicion suffice to impose a duty on counsel to advance a claim for which they have no evidentiary support. Proper respect for state procedures counsels against a requirement that all possible claims be raised in state collateral proceedings, even when no known facts support them. The presumption, well established by "`tradition and experience,' " that prosecutors have fully "`discharged their official duties,' " United States v. Mezzanatto, 513 U. S. 196, 210 (1995), is inconsistent with the novel suggestion that conscientious defense counsel have a procedural obligation to assert constitutional *287 error on the basis of mere suspicion that some prosecutorial misstep may have occurred.
Respondent's position on the "cause" issue is particularly weak in this case because the state habeas proceedings confirmed petitioner's justification for his failure to raise a Brady claim. As already noted, when he alleged that trial counsel had been incompetent because they had not advanced such a claim, the warden responded by pointing out that there was no need for counsel to do so because they "were voluntarily given full disclosure of everything known to the government."[31] Given that representation, petitioner had no basis for believing the Commonwealth had failed to comply with Brady at trial.[32]
Respondent also argues that our decisions in Gray v. Netherland, 518 U. S. 152 (1996), and McCleskey v. Zant, 499 U. S. 467 (1991), preclude the conclusion that the cause for petitioner's default was adequate. In both of those cases, however, the petitioner was previously aware of the factual basis for his claim but failed to raise it earlier. See Gray, 518 U. S., at 161; McCleskey, 499 U. S., at 498-499. In the context of a Brady claim, a defendant cannot conduct the "reasonable *288 and diligent investigation" mandated by McCleskey to preclude a finding of procedural default when the evidence is in the hands of the State.[33]
The controlling precedents on "cause" are Murray v. Carrier, 477 U. S., at 488, and Amadeo v. Zant, 486 U. S. 214 (1988). As we explained in the latter case:
"If the District Attorney's memorandum was not reasonably discoverable because it was concealed by Putnam County officials, and if that concealment, rather than tactical considerations, was the reason for the failure of petitioner's lawyers to raise the jury challenge in the trial court, then petitioner established ample cause to excuse his procedural default under this Court's precedents." Id., at 222.[34]
There is no suggestion that tactical considerations played any role in petitioner's failure to raise his Brady claim in state court. Moreover, under Brady an inadvertent nondisclosure has the same impact on the fairness of the proceedings as deliberate concealment. "If the suppression of evidence results in constitutional error, it is because of the character of the evidence, not the character of the prosecutor." Agurs, 427 U. S., at 110.
*289 In summary, petitioner has established cause for failing to raise a Brady claim prior to federal habeas because (a) the prosecution withheld exculpatory evidence; (b) petitioner reasonably relied on the prosecution's open file policy as fulfilling the prosecution's duty to disclose such evidence; and (c) the Commonwealth confirmed petitioner's reliance on the open file policy by asserting during state habeas proceedings that petitioner had already received "everything known to the government."[35] We need not decide in this case whether any one or two of these factors would be sufficient to constitute cause, since the combination of all three surely suffices.
IV
The differing judgments of the District Court and the Court of Appeals attest to the difficulty of resolving the issue of prejudice. Unlike the Fourth Circuit, we do not believe that "the Stolzfus [sic] materials would have provided little or no help to Strickler in either the guilt or sentencing phases of the trial." App. 425. Without a doubt, Stoltzfus' testimony was prejudicial in the sense that it made petitioner's conviction more likely than if she had not testified, and discrediting her testimony might have changed the outcome of the trial.
That, however, is not the standard that petitioner must satisfy in order to obtain relief. He must convince us that "there is a reasonable probability" that the result of the trial would have been different if the suppressed documents had been disclosed to the defense. As we stressed in Kyles: "[T]he adjective is important. The question is not whether the defendant would more likely than not have received a different verdict with the evidence, but whether in its absence *290 he received a fair trial, understood as a trial resulting in a verdict worthy of confidence." 514 U. S., at 434.
The Court of Appeals' negative answer to that question rested on its conclusion that, without considering Stoltzfus' testimony, the record contained ample, independent evidence of guilt, as well as evidence sufficient to support the findings of vileness and future dangerousness that warranted the imposition of the death penalty. The standard used by that court was incorrect. As we made clear in Kyles, the materiality inquiry is not just a matter of determining whether, after discounting the inculpatory evidence in light of the undisclosed evidence, the remaining evidence is sufficient to support the jury's conclusions. Id., at 434-435. Rather, the question is whether "the favorable evidence could reasonably be taken to put the whole case in such a different light as to undermine confidence in the verdict." Id., at 435.
The District Judge decided not to hold an evidentiary hearing to determine whether Exhibits 2, 7, and 8 had been disclosed to the defense, because he was satisfied that the "potentially devastating impeachment material" contained in the other five warranted the entry of summary judgment in petitioner's favor. App. 392. The District Court's conclusion that the admittedly undisclosed documents were sufficiently important to establish a violation of the Brady rule was supported by the prosecutor's closing argument. That argument relied on Stoltzfus' testimony to demonstrate petitioner's violent propensities and to establish that he was the instigator and leader in Whitlock's abduction and, by inference, her murder. The prosecutor emphasized the importance of Stoltzfus' testimony in proving the abduction:
"[W]e are lucky enough to have an eyewitness who saw [what] happened out there in that parking lot. [In a] lot of cases you don't. A lot of cases you can just theorize what happened in the actual abduction. But Mrs. Stoltzfus was there, she saw [what] happened." App. 169.
*291 Given the record evidence involving Henderson,[36] the District Court concluded that, without Stoltzfus' testimony, the jury might have been persuaded that Henderson, rather than petitioner, was the ringleader. He reasoned that a "reasonable probability of conviction" of first-degree, rather than capital, murder sufficed to establish the materiality of the undisclosed Stoltzfus materials and, thus, a Brady violation. App. 396.
The District Court was surely correct that there is a reasonable possibility that either a total, or just a substantial, discount of Stoltzfus' testimony might have produced a different result, either at the guilt or sentencing phases. Petitioner did, for example, introduce substantial mitigating evidence about abuse he had suffered as a child at the hands of his stepfather.[37] As the District Court recognized, however, petitioner's burden is to establish a reasonable probability of a different result. Kyles, 514 U. S., at 434.
*292 Even if Stoltzfus and her testimony had been entirely discredited, the jury might still have concluded that petitioner was the leader of the criminal enterprise because he was the one seen driving the car by Kurt Massie near the location of the murder and the one who kept the car for the following week.[38] In addition, Tudor testified that petitioner threatened Henderson with a knife later in the evening.
More importantly, however, petitioner's guilt of capital murder did not depend on proof that he was the dominant partner: Proof that he was an equal participant with Henderson was sufficient under the judge's instructions.[39] Accordingly, the strong evidence that Henderson was a killer is entirely consistent with the conclusion that petitioner was also an actual participant in the killing.[40]
*293 Furthermore, there was considerable forensic and other physical evidence linking petitioner to the crime.[41] The weight and size of the rock,[42] and the character of the fatal injuries to the victim,[43] are powerful evidence supporting the conclusion that two people acted jointly to commit a brutal murder.
We recognize the importance of eyewitness testimony; Stoltzfus provided the only disinterested, narrative account of what transpired on January 5, 1990. However, Stoltzfus' vivid description of the events at the mall was not the only evidence that the jury had before it. Two other eyewitnesses, *294 the security guard and Henderson's friend, placed petitioner and Henderson at the Harrisonburg Valley Shopping Mall on the afternoon of Whitlock's murder. One eyewitness later saw petitioner driving Dean's car near the scene of the murder.
The record provides strong support for the conclusion that petitioner would have been convicted of capital murder and sentenced to death, even if Stoltzfus had been severely impeached. The jury was instructed on two predicates for capital murder: robbery with a deadly weapon and abduction with intent to defile.[44] On state habeas, the Virginia Supreme Court rejected as procedurally barred petitioner's challenge to this jury instruction on the ground that "abduction with intent to defile" was not a predicate for capital murder for a victim over the age of 12.[45] That issue is not before us. Even assuming, however, that this predicate was erroneous, armed robbery still would have supported the capital murder conviction.
Petitioner argues that the prosecution's evidence on armed robbery "flowed almost entirely from inferences from Stoltzfus' testimony," and especially from her statement that Henderson had a "hard object" under his coat at the mall. Brief for Petitioner 35. That argument, however, ignores the fact that petitioner's mother and Tudor provided direct evidence that petitioner had a knife with him on the day of the crime. *295 In addition, the prosecution contended in its closing argument that the rocknot the knifewas the murder weapon.[46] The prosecution did advance the theory that petitioner had a knife when he got in the car with Whitlock, but it did not specifically argue that petitioner used the knife during the robbery.[47]
Petitioner also maintains that he suffered prejudice from the failure to disclose the Stoltzfus documents because her testimony impacted on the jury's decision to impose the death penalty. Her testimony, however, did not relate to his eligibility for the death sentence and was not relied upon by the prosecution at all during its closing argument at the penalty phase.[48] With respect to the jury's discretionary decision to impose the death penalty, it is true that Stoltzfus described petitioner as a violent, aggressive person, but that portrayal surely was not as damaging as either the evidence that he spent the evening of the murder dancing and drinking at Dice's or the powerful message conveyed by the 69pound *296 rock that was part of the record before the jury. Notwithstanding the obvious significance of Stoltzfus' testimony, petitioner has not convinced us that there is a reasonable probability that the jury would have returned a different verdict if her testimony had been either severely impeached or excluded entirely.
Petitioner has satisfied two of the three components of a constitutional violation under Brady: exculpatory evidence and nondisclosure of this evidence by the prosecution. Petitioner has also demonstrated cause for failing to raise this claim during trial or on state postconviction review. However, petitioner has not shown that there is a reasonable probability that his conviction or sentence would have been different had these materials been disclosed. He therefore cannot show materiality under Brady or prejudice from his failure to raise the claim earlier. Accordingly, the judgment of the Court of Appeals is Affirmed. Justice Souter, with whom Justice Kennedy joins as to Part II, concurring in part and dissenting in part.
I look at this case much as the Court does, starting with its view in Part III (which I join) that Strickler has shown cause to excuse the procedural default of his Brady claim. Like the Court, I think it clear that the materials withheld were exculpatory as devastating ammunition for impeaching Stoltzfus.[1] See ante, at 282. Even on the question of prejudice *297 or materiality,[2] over which I ultimately part company with the majority, I am persuaded that Strickler has failed to establish a reasonable probability that, had the materials withheld been disclosed, he would not have been found guilty of capital murder. See ante, at 292-296. As the Court says, however, the prejudice enquiry does not stop at the conviction but goes to each step of the sentencing process: the jury's consideration of aggravating, death-qualifying facts, the jury's discretionary recommendation of a death sentence if it finds the requisite aggravating factors, and the judge's discretionary decision to follow the jury's recommendation. See ante, at 294-296. It is with respect to the penultimate step in determining the sentence that I think Strickler has carried his burden. I believe there is a reasonable probability (which I take to mean a significant possibility) that disclosure of the Stoltzfus materials would have led the jury to recommend life, not death, and I respectfully dissent.
I
Before I get to the analysis of prejudice I should say something about the standard for identifying it, and about the unfortunate phrasing of the shorthand version in which the standard is customarily couched. The Court speaks in terms of the familiar, and perhaps familiarly deceptive, formulation: whether there is a "reasonable probability" of a different outcome if the evidence withheld had been disclosed. The Court rightly cautions that the standard intended *298 by these words does not require defendants to show that a different outcome would have been more likely than not with the suppressed evidence, let alone that without the materials withheld the evidence would have been insufficient to support the result reached. See ante, at 289-290; Kyles v. Whitley, 514 U. S. 419, 434-435 (1995). Instead, the Court restates the question (as I have done elsewhere) as whether "`the favorable evidence could reasonably be taken to put the whole case in such a different light as to undermine confidence' " in the outcome. Ante, at 290 (quoting Kyles, supra, at 435).
Despite our repeated explanation of the shorthand formulation in these words, the continued use of the term "probability" raises an unjustifiable risk of misleading courts into treating it as akin to the more demanding standard, "more likely than not." While any short phrases for what the cases are getting at will be "inevitably imprecise," United States v. Agurs, 427 U. S. 97, 108 (1976), I think "significant possibility" would do better at capturing the degree to which the undisclosed evidence would place the actual result in question, sufficient to warrant overturning a conviction or sentence.
To see that this is so, we need to recall Brady `s evolution since the appearance of the rule as originally stated, that "suppression by the prosecution of evidence favorable to an accused upon request violates due process where the evidence is material either to guilt or to punishment, irrespective of the good faith or bad faith of the prosecution." Brady v. Maryland, 373 U. S. 83, 87 (1963). Brady itself did not explain what it meant by "material" (perhaps assuming the term would be given its usual meaning in the law of evidence, see United States v. Bagley, 473 U. S. 667, 703, n. 5 (1985) (Marshall, J., dissenting)). We first essayed a partial definition in United States v. Agurs, supra, where we identified three situations arguably within the ambit of Brady and said that in the first, involving knowing use of perjured testimony, *299 reversal was required if there was "any reasonable likelihood" that the false testimony had affected the verdict. Agurs, supra, at 103 (citing Giglio v. United States, 405 U. S. 150, 154 (1972), in turn quoting Napue v. Illinois, 360 U. S. 264, 271 (1959)). We have treated "reasonable likelihood" as synonymous with "reasonable possibility" and thus have equated materiality in the perjured-testimony cases with a showing that suppression of the evidence was not harmless beyond a reasonable doubt. Bagley, supra, at 678-680, and n. 9 (opinion of Blackmun, J.). See also Brecht v. Abrahamson, 507 U. S. 619, 637 (1993) (defining harmless-beyond-areasonable-doubt standard as no "`reasonable possibility' that trial error contributed to the verdict"); Chapman v. California, 386 U. S. 18, 24 (1967) (same). In Agurs, we thought a less demanding standard appropriate when the prosecution fails to turn over materials in the absence of a specific request. Although we refrained from attaching a label to that standard, we explained it as falling between the more-likely-than-not level and yet another criterion, whether the reviewing court's "`conviction [was] sure that the error did not influence the jury, or had but very slight effect.' " 427 U. S., at 112 (quoting Kotteakos v. United States, 328 U. S. 750, 764 (1946)). Finally, in United States v. Bagley, supra, we embraced "reasonable probability" as the appropriate standard to judge the materiality of information withheld by the prosecution whether or not the defense had asked first. Bagley took that phrase from Strickland v. Washington, 466 U. S. 668, 694 (1984), where it had been used for the level of prejudice needed to make out a claim of constitutionally ineffective assistance of counsel. Strickland in turn cited two cases for its formulation, Agurs (which did not contain the expression "reasonable probability") and United States v. Valenzuela-Bernal, 458 U. S. 858, 873-874 (1982) (which held that sanctions against the Government for deportation of a potential defense witness were appropriate only *300 if there was a "reasonable likelihood" that the lost testimony "could have affected the judgment of the trier of fact").
The circuitous path by which the Court came to adopt "reasonable probability" of a different result as the rule of Brady materiality suggests several things. First, while "reasonable possibility" or "reasonable likelihood," the Kotteakos standard, and "reasonable probability" express distinct levels of confidence concerning the hypothetical effects of errors on decisionmakers' reasoning, the differences among the standards are slight. Second, the gap between all three of those formulations and "more likely than not" is greater than any differences among them. Third, because of that larger gap, it is misleading in Brady cases to use the term "probability," which is naturally read as the cognate of "probably" and thus confused with "more likely than not," see Morris v. Mathews, 475 U. S. 237, 247 (1986) (apparently treating "reasonable probability" as synonymous with "probably"); id., at 254, n. 3 (Blackmun, J., concurring in judgment) (cautioning against confusing "reasonable probability" with more likely than not). We would be better off speaking of a "significant possibility" of a different result to characterize the Brady materiality standard. Even then, given the soft edges of all these phrases,[3] the touchstone of the enquiry *301 must remain whether the evidentiary suppression "undermines our confidence" that the factfinder would have reached the same result.
II
Even keeping in mind these caveats about the appropriate level of materiality, applying the standard to the facts of this case does not give the Court easy answers, as the Court candidly acknowledges. See ante, at 289. Indeed, the Court concedes that discrediting Stoltzfus's testimony "might have changed the outcome of the trial," ibid., and that the District Court was "surely correct" to find a "reasonable possibility that either a total, or just a substantial, discount of Stoltzfus' testimony might have produced a different result, either at the guilt or sentencing phases," ante, at 291.
In the end, however, the Court finds the undisclosed evidence inadequate to undermine confidence in the jury's sentencing *302 recommendation, whereas I find it sufficient to do that. Since we apply the same standard to the same record, our differing conclusions largely reflect different assessments of the significance the jurors probably ascribed to the Stoltzfus testimony. My assessment turns on two points. First, I believe that in making the ultimate judgment about what should be done to one of several participants in a crime this appalling the jurors would very likely have given weight to the degree of initiative and leadership exercised by that particular defendant. Second, I believe that no other testimony comes close to the prominence and force of Stoltzfus's account in showing Strickler as the unquestionably dominant member of the trio involved in Whitlock's abduction and the aggressive and moving figure behind her murder.
Although Stoltzfus was not the prosecution's first witness, she was the first to describe Strickler in any detail, thus providing the frame for the remainder of the story the prosecution presented to the jury. From the start of Stoltzfus's testimony, Strickler was "Mountain Man" and his male companion "Shy Guy," labels whose repetition more than a dozen times (by the prosecutor as well as by Stoltzfus) must have left the jurors with a clear sense of the relative roles that Strickler and Henderson played in the crimes that followed Stoltzfus's observation. According to her, when she first saw Strickler she "just sort of instinctively backed up because I was frightened." App. 36. Unlike retiring "Shy Guy," Strickler was "revved up." Id., at 39, 60. Even in describing her first encounter with Strickler inside the mall, Stoltzfus spoke of him as domineering, a "very impatient" character yelling at his female companion, "Blonde Girl," to join him. Id., at 36, 38-39.
After describing in detail how "Mountain Man" and "Blonde Girl" were dressed, Stoltzfus said that "`Mountain Man' came tearing out of the Mall entrance door and went up to the driver of [a] van and . . . was just really mad and ran back and banged on back of the backside of the van" *303 while "Shy Guy" and "Blonde Girl" hung back. Id., at 43. "Mountain Man" approached a pickup truck, then "pounded on" the front passenger side window of Whitlock's car, "shook and shook the car door," "banging and banging on the window" while Whitlock checked to see if the door was locked. Ibid. Finally, "he just really shook it hard and you could tell he was mad. Shook it really hard and the door opened and he jumped in . . . and faced her." Id., at 43-44. While Whitlock tried to push him away, "Mountain Man" "motioned for `Blonde Girl' and `Shy Guy' to come" and the girl did as she was bidden. She "started to jump into the car," but "jumped back" when Whitlock stepped on the gas. Id., at 44. Then "Mountain Man" started "hitting [Whitlock] on the left shoulder, her right shoulder and then . . . the head," finally "open[ing] the door again" so "the `Blonde Girl' got in the back and `Shy Guy' followed and got behind him." Id., at 45. "Shy Guy" passed "Mountain Man" his tan coat, which "Mountain Man" "fiddled with" for "what seemed like a long time," then "sat back up and . . . faced" Whitlock while "the other two in the back seat sat back and relaxed." Ibid. Stoltzfus then claimed that she got out of her car and went over to Whitlock's, whereupon unassertive "Shy Guy" "instinctively jumped, you know, laid over on the seat to hide from me." Id., at 46. Stoltzfus pulled up next to Whitlock's car and repeatedly asked, "[A]re you O.K.[?]," but Whitlock responded only with eye contact; "she didn't smile, there was no expression," and "[j]ust very serious, looked down to her right," suggesting Strickler was holding a weapon on her. Id., at 46, 47. Finally, Whitlock mouthed something, which Stoltzfus demonstrated for the jury and then explained she realized must have been the word, "help." Id., at 47.
Without rejecting the very notion that jurors with discretion in sentencing would be influenced by the relative dominance of one accomplice among others in a shocking crime, I could not regard Stoltzfus's colorful testimony as anything but significant on the matter of sentence. It was Stoltzfus *304 alone who described Strickler as the initiator of the abduction, as the one who broke into Whitlock's car, who beckoned his companions to follow him, and who violently subdued the victim while "Shy Guy" sat in the back seat. The bare content of this testimony, important enough, was enhanced by one of the inherent hallmarks of reliability, as Stoltzfus confidently recalled detail after detail. The withheld documents would have shown, however, that many of the details Stoltzfus confidently mentioned on the stand (such as Strickler's appearance, Whitlock's appearance, the hour of day when the episode occurred, and her daughter's alleged notation of the license plate number of Whitlock's car) had apparently escaped her memory in her initial interviews with the police. Her persuasive account did not come, indeed, until after her recollection had been aided by further conversations with the police and with the victim's boyfriend. I therefore have to assess the likely havoc that an informed cross-examiner could have wreaked upon Stoltzfus as adequate to raise a significant possibility of a different recommendation, as sufficient to undermine confidence that the death recommendation would have been the choice. All it would have taken, after all, was one juror to hold out against death to preclude the recommendation actually given.
The Court does not, of course, deny that evidence of dominant role would probably have been considered by the jury; the Court, instead, doubts that this consideration, and the evidence bearing on it, would have figured so prominently in a juror's mind as to be a fulcrum of confidence. I am not convinced by the Court's reasons.
The Court emphasizes the brutal manner of the killing and Strickler's want of remorse as jury considerations diminishing the relative importance of Strickler's position as ringleader. See ante, at 295-296. Without doubt the jurors considered these to be important factors, and without doubt they may have been treated as sufficient to warrant death. But as the Court says, sufficiency of other evidence and the *305 facts it supports is not the Brady standard, and the significance of both brutality and sangfroid must surely have been complemented by a certainty that without Strickler there would have been no abduction and no ensuing murder.
The Court concludes that Stoltzfus's testimony is unlikely to have had significant influence on the jury's sentencing recommendation because the prosecutor made no mention of her testimony in his closing statement at the sentencing proceeding. See ante, at 295. But although the Court is entirely right that the prosecution gave no prominence to the Stoltzfus testimony at the sentencing stage, the Commonwealth's closing actually did include two brief references to Strickler's behavior in "just grabbing a complete stranger and abducting her," 19 Record 919; see also id., at 904, as relevant to the jury's determination of future dangerousness. And since Strickler's criminal record had no convictions involving actual violence, a point defense counsel stressed in his closing argument, see id., at 913, the jurors may well have given weight to Stoltzfus's lively portrait of Strickler as the aggressive leader of the group when they came to assess his future dangerousness.
What is more important, common experience, supported by at least one empirical study, see Bowers, Sandys, & Steiner, Foreclosed Impartiality in Capital Sentencing: Jurors' Predispositions, Guilt-Trial Experience, and Premature Decision Making, 83 Cornell L. Rev. 1476, 1486-1496 (1998), tells us that the evidence and arguments presented during the guilt phase of a capital trial will often have a significant effect on the jurors' choice of sentence. True, Stoltzfus's testimony directly discussed only the circumstances of Whitlock's abduction, but its impact on the jury was almost certainly broader, as the prosecutor recognized. After the jury rendered its verdict on guilt, for example, the defense moved for a judgment of acquittal on the capital murder charge based on insufficiency of the evidence. In the prosecutor's argument to the court he replied that
*306 "the evidence clearly shows that this man was the aggressor. He was the one that ran out. He was the one that grabbed Leanne Whitlock. When she struggled trying to get away from him . . . , he was the one that started beating her there in the car. And finally subdued her enough to make her drive away from the mall, so you start with the principle that he is the aggressor." 20 Record 15.
Stoltzfus's testimony helped establish the "principle," as the prosecutor put it, that Strickler was "the aggressor," the dominant figure, in the whole sequence of criminal events, including the murder, not just in the abduction. If the defense could have called Stoltzfus's credibility into question, the jurors' belief that Strickler was the chief aggressor might have been undermined to the point that at least one of them would have hesitated to recommend death.
The Court suggests that the jury might have concluded that Strickler was the leader based on three other pieces of evidence: Kurt Massie's identification of Strickler as the driver of Whitlock's car on its way toward the field where she was killed; Donna Tudor's testimony that Strickler kept the car the following week; and Tudor's testimony that Strickler threatened Henderson with a knife later on the evening of the murder. But if we are going to look at other testimony we cannot stop here. The accuracy of both Massie's and Tudor's testimony was open to question,[4] and all of it was subject to some evidence that Henderson had taken a major role in the murder. The Court has quoted the District *307 Court's summation of evidence against him, ante, at 291, n. 36: Henderson's wallet was found near the body, his clothes were bloody, he presented a woman friend with the victim's watch at a postmortem celebration (which he left driving the victim's car), and he confessed to a friend that he had just killed an unidentified black person. Had this been the totality of the evidence, the jurors could well have had little certainty about who had been in charge. But they could have had no doubt about the leader if they believed Stoltzfus.
Ultimately, I cannot accept the Court's discount of Stoltzfus in the Brady sentencing calculus for the reason I have repeatedly emphasized, the undeniable narrative force of what she said. Against this, it does not matter so much that other witnesses could have placed Strickler at the shopping mall on the afternoon of the murder, ante, at 293-294, or that the Stoltzfus testimony did not directly address the aggravating factors found, ante, at 295. What is important is that her evidence presented a gripping story, see E. Loftus & J. Doyle, Eyewitness Testimony: Civil and Criminal 5 (3d ed. 1997) ("[R]esearch redoundingly proves that the story format is a powerful key to juror decision making"). Its message was that Strickler was the madly energetic leader of two morally apathetic accomplices, who were passive but for his direction. One cannot be reasonably confident that not a single juror would have had a different perspective after an impeachment that would have destroyed the credibility of that story. I would accordingly vacate the sentence and remand for reconsideration, and to that extent I respectfully dissent.
NOTES
[*] Gerald T. Zerkin filed a brief for the National Association of Criminal Defense Lawyers et al. as amici curiae urging reversal.
Kent S. Scheidegger filed a brief for the Criminal Justice Legal Foundation as amicus curiae urging affirmance.
[] Justice Thomas joins Parts I and IV of this opinion. Justice Kennedy joins Part III.
[1] The opinion of the Court of Appeals is unreported. The judgment order is reported, Strickler v. Pruett, 149 F. 3d 1170 (CA4 1998). The opinion of the District Court is also unreported.
[2] Petitioner was tried in May 1990. Henderson fled the Commonwealth and was later apprehended in Oregon. He was tried in March 1991.
[3] Workman was calledas a defense witness.
[4] Whitlock's roommate testified that Whitlock had dinner at 6 p.m. on January 5, 1990, just before she left for the mall to return Dean's car.
[5] She testified to their appearances in great detail. She stated that petitioner had "a kind of multi layer look." He wore a grey T-shirt with a Harley Davidson insignia on it. The prosecutor showed Stoltzfus the shirt, stained with blood and semen, that the police had discovered at petitioner's mother's house. He asked if it were the same shirt she saw petitioner wearing at the mall. She replied,"That could have been it." App. 37, 39. Henderson "had either a white or light colored shirt, probably a short sleeve knit shirt and his pants were neat. They weren't just old blue jeans. They may have been new blue jeans or it may have just been more dressy slacks of some sort." Id., at 37. The woman "had blonde hair, it was kind of in a shaggy cut down the back. She had blue eyes, she had a real sweet smile, kind of a small mouth. Just a touch of freckles on her face."Id., at 60.
[6] Stoltzfus stated that the girl caught a button in Stoltzfus' "open weave sweater, which is why I remember her attire." Id., at 39.
[7] "I said to my fourteen[-year-]old daughter, write down the license number, you know, it was West Virginia, NKA 243 and I said help me to remember, `No Kids Alone 243,' and I said remember, 243 is my age." Id., at 48.
[8] These materials were originally attached to an affidavit submitted with petitioner's motion for summary judgment on his federal petition for habeas corpus. Because both the District Court and the Court of Appeals referred to the documents by their exhibit numbers, we have done the same.
[9] As the District Court pointed out, however, it omits reference to the fact that Stoltzfus originally said that she could not identify the victim a fact recorded in his handwritten notes. Id., at 387.
[10] Stoltzfus' trial testimony made no mention of her meeting with Dean.
[11] The prosecutor recalled that Exhibits 2, 7, and 8 had been in his open file, id., at 365-368, but the lawyer who represented Henderson at his trial swore that they were not in the file, id., at 330; the recollection of petitioner's trial counsel was somewhat equivocal. Lead defense counsel was sure he had not seen the documents, id., at 300, while petitioner's other lawyer signed an affidavit to the effect that he does "remember the information contained in [the documents]" but "cannot recall if I have seen these specific documents," id., at 371.
[12] Although the parties have not advanced an explanation for the nondisclosure of the documents, perhaps it was an inadvertent consequence of the fact that Harrisonburg is in Rockingham County and the trial was conducted by the Augusta County prosecutor. We note, however, that the prosecutor is responsible for "any favorable evidence known to the others acting on the government's behalf in the case, including the police." Kyles v. Whitley, 514 U. S. 419, 437 (1995). Thus, the Commonwealth, through its prosecutor, is charged with knowledge of the Stoltzfus materials for purposes of Brady v. Maryland, 373 U. S. 83 (1963).
[13] In the federal habeas proceedings, the prosecutor gave the following sworn answer to an interrogatory requesting him to state what materials were disclosed by him to defense counsel pursuant to Brady: "I disclosed my entire prosecution file to Strickler's defense counsel prior to Strickler's trial by allowing him to inspect my entire prosecution file including, but not limited to, all police reports in the file and all witness statements in the file." App. 368. Petitioner's trial counsel had shared the prosecutor's understanding of the "open file" policy. In an affidavit filed in the state habeas proceeding, they stated that they "thoroughly investigated" petitioner's case. "In this we were aided by the prosecutor's office, which gave us full access to their files and the evidence they intended to present. We made numerous visits to their office to examine these files . . . . As a result of this cooperation, they introduced nothing at trial of which we were previously unaware." Id., at 223.
[14] In its pleadings on state habeas, the Commonwealth explained: "From the inception of this case, the prosecutor's files were open to the petitioner's counsel. Each of the petitioner's attorneys made numerous visits to the prosecutor's offices and reviewed all the evidence the Commonwealth intended to present. . . . Given that counsel were voluntarily given full disclosure of everything known to the government, there was no need for a formal [Brady] motion." Id., at 212-213.
[15] "The Commonwealth's theory of the case was that Strickler and Henderson had acted jointly to accomplish the actual killing. It contended at trial, and argues on appeal, that the physical evidence points to a violent struggle between the assailants and the victim, in which Strickler's hair had actually been torn out by the roots. Although Leanne had been beaten and kicked, none of her injuries would have been sufficient to immobilize her until her skull was crushed with the 69-pound rock. Because, the Commonwealth's argument goes, the rock had been dropped on her head at least twice, while she was on the ground, leaving two bloodstained depressions in the frozen earth, it would have been necessary that she be held down by one assailant while the other lifted the rock and dropped it on her head.
"The weight and dimensions of the 69-pound bloodstained rock, which was introduced in evidence as an exhibit, made it apparent that a single person could not have lifted it and dropped or thrown it while simultaneously holding the victim down. The bloodstains on Henderson's jacket as well as on Strickler's clothing further tended to corroborate the Commonwealth's theory that the two men had been in the immediate presence of the victim's body when the fatal blows were struck and, hence, had jointly participated in the killing." Strickler, 241 Va., at 494, 404 S. E. 2d, at 235.
[16] See n. 14, supra.
[17] Petitioner later voluntarily dismissed this claim. App. 384.
[18] For reasons we do not entirely understand, the Court of Appeals thus concluded that, while it was reasonable for trial counsel to rely on the open file policy, it was unreasonable for postconviction counsel to do so.
[19] See, e. g., Mooney v. Holohan, 294 U. S. 103, 112 (1935) (per curiam); Pyle v. Kansas, 317 U. S. 213, 216 (1942); Napue v. Illinois, 360 U. S. 264, 269-270 (1959).
[20] Consider, for example, this comment in the dissenting opinion in Kyles v. Whitley: "It is petitioner's burden to show that in light of all the evidence, including that untainted by the Brady violation, it is reasonably probable that a jury would have entertained a reasonable doubt regarding petitioner's guilt." 514 U. S., at 460 (opinion of Scalia, J.).
[21] We reject respondent's contention that these documents do not fall under Brady because they were "inculpatory." Brief for Respondent 41. Our cases make clear that Brady `s disclosure requirements extend to materials that, whatever their other characteristics, may be used to impeach a witness. United States v. Bagley, 473 U. S. 667, 676 (1985).
[22] While the precise dimensions of an "open file policy" may vary from jurisdiction to jurisdiction, in this case it is clear that the prosecutor's use of the term meant that his entire prosecution file was made available to the defense. App. 368; see also n. 13, supra.
[23] We certainly do not criticize the prosecution's use of the open file policy. We recognize that this practice may increase the efficiency and the fairness of the criminal process. We merely note that, if a prosecutor asserts that he complies with Brady through an open file policy, defense counsel may reasonably rely on that file to contain all materials the State is constitutionally obligated to disclose under Brady.
[24] "[W]e think that the existence of cause for a procedural default must ordinarily turn on whether the prisoner can show that some objective factor external to the defense impeded counsel's efforts to comply with the State's procedural rule. Without attempting an exhaustive catalog of such objective impediments to compliance with a procedural rule, we note that a showing that the factual or legal basis for a claim was not reasonably available to counsel, see Reed v. Ross, 468 U. S., at 16, or that `some interference by officials,' Brown v. Allen, 344 U. S. 443, 486 (1953), made compliance impracticable, would constitute cause under this standard." Murray, 477 U. S., at 488; see also Amadeo v. Zant, 486 U. S. 214, 221-222 (1988).
[25] Stoltzfus testified to meeting with Claytor at least three times. App. 55-56.
[26] In her letter, which appeared on July 18, 1990 (after petitioner's trial) in the Harrisonburg Daily News-Record, Stoltzfus stated: "It never occurred to me that I was witnessing an abduction. In fact, if it hadn't been for the intelligent, persistent, professional work of Detective Daniel Claytor, I still wouldn't realize it. What sounded like a coherent story at the trial was the result of an incredible effort by the police to fit a zillion little puzzle pieces into one big picture." Id., at 250. Stoltzfus also gave a pretrial interview to a reporter with the Roanoke Times that conflicted in some respects with her trial testimony, principally because she identified the blonde woman at the mall as Tudor. Id., at 373.
[27] The defense could not discover copies of these notes from Stoltzfus herself, because she refused to speak with defense counsel before trial. Id., at 370.
[28] The parties have been unable to provide, and the record does not illuminate, the factual basis on which the District Court entered the discovery order. It was granted ex parte and under seal and furnished broad access to any records relating to petitioner. District Court Record, Doc. No. 20. The Fourth Circuit has since found that federal district courts do not possess the authority to issue ex parte discovery orders in habeas proceedings. In re Pruett, 133 F. 3d 275, 280 (1997). We express no opinion on the Fourth Circuit's decision on this question. However, we note that it is unlikely that petitioner would have been granted in state court the sweeping discovery that led to the Stoltzfus materials, since Virginia law limits discovery available during state habeas. Indeed, it is not even clear that he had a right to such discovery in federal court. See n. 29, infra.
[29] Virginia law provides that "no discovery shall be allowed in any proceeding for a writ of habeas corpus or in the nature of coram nobis without prior leave of the court, which may deny or limit discovery in any such proceeding." Va. Sup. Ct. Rule 4:1(b)(5)(3)(b) (1998); see also Yeatts v. Murray, 249 Va. 285, 289, 455 S. E. 2d 18, 21 (1995). Respondent acknowledges that petitioner was not entitled to discovery under Virginia law. Brief for Respondent 25.
[30] See Va. Sup. Ct. Rule 3A:11 (1998). This rule expressly excludes from defendants "the discovery or inspection of statements made by Commonwealth witnesses or prospective Commonwealth witnesses to agents of the Commonwealth or of reports, memoranda or other internal Commonwealth documents made by agents in connection with the investigation or prosecution of the case, except [for scientific reports of the accused or alleged victim]." The Virginia Supreme Court found that petitioner had been afforded all the discovery he was entitled to on direct review. "Limited discovery is permitted in criminal cases by the Rules of Court. . . . Strickler had the benefit of all the discovery to which he was entitled under the Rules. Those rights do not extend to general production of evidence, except in the limited areas prescribed by Rule 3A:11." Strickler v. Commonwealth, 241 Va. 482, 491, 404 S. E. 2d 227, 233 (1991).
[31] This statement is quoted in full at n. 14, supra. Respondent argues that this representation is not dispositive because it was made in his motion to dismiss and therefore cannot excuse the failure to include a Brady claim in the petitioner's original state habeas pleading. We find the timing of the statement irrelevant, since the warden's response merely summarizes the Commonwealth's "open file" policy, instituted by the prosecution at the inception of the case.
[32] Furthermore, in its opposition to petitioner's motion during state habeas review for funds for an investigator, the Commonwealth argued: "Strickler's Petition contains 139 separate habeas claims. By requesting appointment of an investigator `to procure the necessary factual basis to support certain of Petitioner's claims' (Motion, p. 1), Petitioner is implicitly conceding that he is not aware of factual support for the claims he has already made. Respondent agrees." App. 242.
In light of these assertions, we fail to see how the Commonwealth believes petitioner could have shown "good cause" sufficient to get discovery on a Brady claim in state habeas.
[33] We do not reach, because it is not raised in this case, the impact of a showing by the State that the defendant was aware of the existence of the documents in question and knew, or could reasonably discover, how to obtain them. Although Gray involved a procedurally defaulted Brady claim, in that case, the Court found that the petitioner had made "no attempt to demonstrate cause or prejudice for his default." Gray, 518 U. S., at 162.
[34] It is noteworthy that both of the reasons on which we relied in McCleskey to distinguish Amadeo also apply to this case: "This case differs from Amadeo in two crucial respects. First, there is no finding that the State concealed evidence. And second, even if the State intentionally concealed the 21-page document, the concealment would not establish cause here because, in light of McCleskey's knowledge of the information in the document, any initial concealment would not have prevented him from raising the claim in the first federal petition." 499 U. S., at 501-502.
[35] Because our opinion does not modify Brady, we reject respondent's contention that we announce a "new rule" today. See Bousley v. United States, 523 U. S. 614 (1998).
[36] The District Court summarized the evidence against Henderson. "Henderson's clothes had blood on them that night. Henderson had property belonging to Whitlock and gave her watch to a woman, Simmons, while at a restaurant known as Dice's Inn. Tr. 541. Henderson left Dice's Inn driving Whitlock's car. Henderson's wallet was found in the vicinity of Whitlock's body and was possibly lost during his struggle with her. Significantly, Henderson confessed to a friend on the night of the murder that he had just killed an unidentified black person and that friend observed blood on Henderson's jeans." App. 395.
[37] At sentencing, the trial court discussed the mitigation evidence: "On the charge of capital murder . . . it is difficult . . . to sit here and listen to the testimony of [petitioner's mother] and Mr. Strickler's two sisters and not feel a great, great deal of sympathy for, for any person who has a childhood and a life like Mr. Strickler has had. He was in no way responsible for the circumstances of his birth. He was brutalized from the minute he's, almost from the minute he was born and certainly with his . . . limitations and his ability with which he was born, it would have been extremely difficult for him to, to help himself. And difficult, when you look at a case like that to feel but anything but sympathy for him." Sentencing Hearing, 20 Record 57-58.
[38] As the trial court stated at petitioner's sentencing hearing: "The facts in this case which support this jury verdict are one that Mr. Strickler was . . . in control of this situation. He was in control at the shopping center in Harrisonburg. He was in control when the car went into the field up here on the 340 north of Waynesboro. He was in control thereafter, he ended up with the car. There is no question who . . . was in control of this entire situation." Id., at 22.
[39] The judge gave the following instruction at petitioner's trial: "You may find the defendant guilty of capital murder if the evidence establishes that the defendant jointly participated in the fatal beating, if it is established beyond a reasonable doubt that the defendant was an active and immediate participant in the act or acts that caused the victim's death." Strickler v. Commonwealth, 241 Va., at 493-494, 404 S. E. 2d, at 234-235. The Virginia Supreme Court affirmed the propriety of this instruction on petitioner's direct appeal. Id., at 495, 404 S. E. 2d, at 235.
[40] It is also consistent with the fact that Henderson was convicted of first-degree murder but acquitted of capital murder after his jury, unlike petitioner's, was instructed that they could convict him of capital murder only if they found that he had "`inflict[ed] the fatal blows.' " Henderson's jury was instructed, "`One who is present aiding and abetting the actual killing, but who does not inflict the fatal blows that cause death is a principle [sic] in the second degree, and may not be found guilty of capital murder. Before you can find the defendant guilty of capital murder, the evidence must establish beyond a reasonable doubt that the defendant was an active and immediate participant in the acts that caused the death.' " 2 App. in No. 97-29 (CA4), p. 777.
Henderson's trial took place before the Virginia Supreme Court affirmed the trial instruction, and the "joint perpetrator" theory it embodied, given at petitioner's trial. Strickler v. Commonwealth, 241 Va., at 494, 404 S. E. 2d, at 235. Petitioner's trial judge rejected one of petitioner's proffered instructions, which would have required the Commonwealth to prove that "the defendant was the person who actually delivered the blow that killed Leanne Whitlock." Ibid. Petitioner's trial judge recused himself from presiding over Henderson's trial, indicating that he had already formed his own opinion about what had happened the night of Whitlock's murder. 21 Record 2.
[41] For example, the police recovered hairs on a bra and shirt found with Whitlock's body that "were microscopically alike in all identifiable characteristics" to petitioner's hair. App. 135. The shirt recovered from the car at Strickler's mother's house had human blood on it. Petitioner's fingerprints were found on the outside and inside of the car taken from Whitlock. Id., at 128-129. Tudor testified that petitioner's pants had blood on them, and he had a cut on his knuckle. Id., at 95.
[42] The trial judge thought the shape of the rock so significant to the jury's conclusion that he instructed the lawyers to have "detailed, high quality photographs taken of [the rock] . . . and I want it put in the record of the case." Sentencing Hearing, 20 Record 53.
[43] The Deputy Chief Medical Examiner, who performed the autopsy, testified that the object that produced the fractures in Whitlock's skull caused "severe lacerations to the brain," and any two of the four fractures would have been fatal. App. 112.
[44] The trial court instructed the jury that, to convict petitioner of capital murder, it must find beyond a reasonable doubt that (1) "the defendant killed Leanne Whitlock"; (2) "the killing was willful, deliberate and premeditated"; and (3) "the killing occurred during the commission of robbery while the defendant was armed with a deadly weapon, or occurred during the commission of abduction with intent to extort money or a pecuniary benefit or with the intent to defile or was of a person during the commission of, or subsequent to, rape." Strickler v. Murray, 249 Va. 120, 124 125, 452 S. E. 2d 648, 650 (1995).
[45] In its motion to dismiss petitioner's state habeas petition, the Commonwealth conceded that the instruction on intent to defile was erroneously given in this case as a predicate for capital murder. App. 218.
[46] In his closing argument, the prosecutor stated that there was "really no doubt about where it happened and what the murder weapon was. It was not a gun, it wasn't a knife. It was this thing here, it is to[o] big to be called a rock and to[o] small to be called a boulder." Id., at 167.
[47] The instructions given to the jury defined a deadly weapon as "any object or instrument that is likely to cause death or great bodily injury because of the manner and under the circumstance in which it is used." Id., at 160.
[48] The jury recommended death after finding the predicates of "future dangerousness" and "vileness." Neither of these predicates depended on Stoltzfus' testimony. The trial court instructed the jury, "Before the penalty can be fixed at death, the Commonwealth must prove beyond a reasonable doubt at least one of the following two alternatives. One, that after consideration of his history and background, there is a probability that he would commit criminal acts of violence that would constitute a continuing, continuing serious threat to society or two, that his conduct in committing the offense was outrageously or wantonly vile, horrible or inhuman and that it involved torture, depravity of mind or aggravated battery to the victim beyond the minimum necessary to accomplish the act of murder." Tr. 899-900.
[1] The Court notes that the District Court did not resolve whether all eight of the Stoltzfus documents had been withheld, as Strickler claimed, or only five. For purposes of its decision granting summary judgment for Strickler, the District Court assumed that only five had not been disclosed. See ante, at 290, 279. The Court of Appeals also left the dispute unresolved, see App. 418, n. 8, though granting summary judgment for respondent based on a lack of prejudice would presumably have required that court to assume that all eight documents had been withheld. Because this Court affirms the grant of summary judgment for respondent based on lack of prejudice and because it relies on at least one of the disputed documents in its analysis, see ante, at 282, I understand it to have assumed that none of the eight documents was disclosed. I proceed based on that assumption as well. If one thought the difference between five and eight documents withheld would affect the determination of prejudice, a remand to resolve that factual question would be necessary.
[2] In keeping with suggestions in a number of our opinions, see Schlup v. Delo, 513 U. S. 298, 327, n. 45 (1995); Sawyer v. Whitley, 505 U. S. 333, 345 (1992), the Court treats the prejudice enquiry as synonymous with the materiality determination under Brady v. Maryland, 373 U. S. 83 (1963). See ante, at 282, 288-289, 296. I follow the Court's lead.
[3] Each of these phrases or standards has been used in a number of contexts. This Court has used "reasonable possibility," for example, in defining the level of threat of injury to competition needed to make out a claim under the Robinson-Patman Act, see, e. g., Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U. S. 209, 222 (1993); the standard for judging whether a grand jury subpoena should be quashed under Federal Rule of Criminal Procedure 17(c), see United States v. R. Enterprises, Inc., 498 U. S. 292, 301 (1991); and the debtor's burden in establishing that certain collateral is necessary to reorganization and thus exempt from the Bankruptcy Code's automatic stay provision, see United Sav. Assn. of Tex. v. Timbers of Inwood Forest Associates, Ltd., 484 U. S. 365, 375-376 (1988). We have adopted the standard established in Kotteakos v. United States, 328 U. S. 750 (1946), for determining the harmlessness of nonconstitutional errors on direct review as the criterion for the harmlessness enquiry concerning constitutional errors on collateral review. See Brecht v. Abra- hamson, 507 U. S. 619, 637-638 (1993). We have used "reasonable probability" to define the plaintiff's burden in making out a claim under § 7 of the Clayton Act, see, e. g., Brown Shoe Co. v. United States, 370 U. S. 294, 325 (1962); FTC v. Morton Salt Co., 334 U. S. 37, 55-61 (1948) (Jackson, J., dissenting in part) (contrasting "reasonable possibility" and "reasonable probability" and arguing for latter as appropriate standard under Robinson-Patman Act); the standard for granting certiorari, vacating, and remanding in light of intervening developments, see, e. g., Lawrence v. Chater, 516 U. S. 163, 167 (1996) (per curiam); and the standard for exempting organizations from otherwise valid disclosure requirements in light of threats or harassment resulting from the disclosure, see, e. g., Buckley v. Valeo, 424 U. S. 1, 74 (1976) (per curiam). We have recently used "significant possibility" in explaining the circumstances under which nominal compensation is an appropriate award in a suit under the Longshore and Harbor Workers' Compensation Act, see Metropolitan Stevedore Co. v. Rambo, 521 U. S. 121, 123 (1997), but we most commonly use that term in defining one of the requirements for the granting of a stay pending certiorari. The three-part test requires a "reasonable probability" that the Court will grant certiorari or note probable jurisdiction, a "significant possibility" that the Court will reverse the decision below, and a likelihood of irreparable injury absent a stay. See, e. g., Barefoot v. Estelle, 463 U. S. 880, 895 (1983); Packwood v. Senate Select Comm. on Ethics, 510 U. S. 1319 (1994) (Rehnquist, C. J., in chambers).
[4] Massie's identification was open to some doubt because it occurred at night as one car passed another on a highway. Moreover, he testified that he first saw four people in the car, then only three, and that none of the occupants was black. App. 66-67, 70-73. Tudor, as defense counsel brought out on cross-examination, testified pursuant to a cooperation agreement with the government and admitted that the story she told on the stand was different from what she had told the defense investigator before trial. Id., at 100-101, 103-104.
|
{
"pile_set_name": "FreeLaw"
}
|
519 So.2d 119 (1988)
Lester JACKSON, Individually and as Administrator for the Minor Child Kerick Jackson and Bertha Jackson
v.
Dr. Ta Yu HUANG and Insurance Company of America.
No. 87-C-2794.
Supreme Court of Louisiana.
January 29, 1988.
Denied.
|
{
"pile_set_name": "FreeLaw"
}
|
107 Cal.Rptr.2d 456 (2001)
89 Cal.App.4th 451
Daniel R. SOLIN, Plaintiff and Appellant,
v.
O'MELVENY & MYERS, LLP, Defendant and Respondent, and
Edith Reich et al., Interveners and Respondents.
No. B140076.
Court of Appeal, Second District, Division Five.
May 24, 2001.
Review Denied August 8, 2001.
*458 Blecher & Collins and Maxwell M. Blecher, Los Angeles, for Plaintiff and Appellant.
Irell & Manella, Richard H. Borow, Harry A. Mittleman, and Fernanda K. Lai, for Defendant and Respondent.
Proskauer Rose and Lary Alan Rappaport, Los Angeles, for Interveners and Respondents.
*457 ARMSTRONG, J.
Plaintiff Daniel R. Solin, an attorney, retained O'Melveny & Myers, LLP ("O'Melveny") to obtain advice regarding Solin's representation of Edith Reich and Brigitte R. Jossem (together referred to as the "Clients"). In that regard, Solin disclosed certain privileged and confidential information of the Clients (the "Secrets"), which implicated them in criminal activities.
Solin sued O'Melveny for professional malpractice, alleging that O'Melveny failed to advise him of pertinent legal authority regarding one of the matters on which he retained the law firm. The Clients intervened, seeking dismissal of the suit to avoid the disclosure of the Secrets. The trial court determined that O'Melveny could not effectively defend the action without disclosing the confidences of the Clients, and dismissed the lawsuit. We affirm the judgment of dismissal.
FACTS
In 1993, Solin entered into a five-year agreement to act as outside counsel to the Clients, who were conducting business activities through a corporate entity, International Development and Trade Service, Inc. ("IDTS").
Approximately six years earlier, in 1987, Mrs. Reich had been convicted in federal court in New York of a wire fraud in which she was charged with having fabricated $120,000,000 of fraudulent orders for delivery to the then Soviet Union. She was sentenced to four months in prison.
On March 1, 1998, the 1993 agreement between Solin and the Clients expired. At that time, IDTS and its principals continued to be involved in multiple legal proceedings, and were the subject of a federal grand jury investigation. That normally secret information became public when the Clients asserted the Fifth Amendment privilege against self-incrimination in a civil case in the Southern District of New York involving Russian companies attempting to collect a $209,000,000 judgment against IDTS. In that regard, an affirmation filed by their lawyer, Barry A. Bohrer, became a matter of public record.
In attempting to support his clients' claims of Fifth Amendment privilege, Mr. Bohrer disclosed the fact of the grand jury subpoenas, and asserted that document production and testimony in the civil case might implicate the Clients in the following violations of law: (1) underreporting of federal and state income taxes; (2) destruction, theft or hiding of corporate documents; (3) transfer of IDTS funds to personal or family-owned bank accounts; (4) use of corporate funds for purchase of personal real estate, art, jewelry and/or antiques; and (5) attempts to bribe the arbitration tribunal in Moscow. Mr. Bohrer argued that requiring Mrs. Reich and Ms. Jossem to produce documents and answer questions at depositions "may potentially furnish a link in the chain of evidence (if not itself constitute evidence) of violations of myriad federal and state criminal statutes." Mr. Bohrer identified the following laws as among those which could be implicated by the Clients' testimony or production of documents in the civil action: the Foreign Corrupt Practices Act; the Racketeer Influenced and Corrupt Organizations *459 Act; the Money Laundering Control Act of 1986; the mail and wire fraud statutes; the Travel Act; the federal conspiracy statute; and relevant state and federal tax fraud and tax evasion statutes.
The District Court sustained the Clients' Fifth Amendment privilege claims, ruling that answers to the questions asked at deposition provided Mrs. Reich and Ms. Jossem with "reasonable cause to fear that their answers may furnish a link in the chain of evidence needed to prosecute them for criminal activity." (AAOT Foreign Economic Ass'n (VO) Technostroyexport v. International Development & Trade Services, Inc. (S.D.N.Y. Oct. 25, 1999.) No. 96 Civ. 9056, 1999 WL 970402 at p. * 3, 1999 U.S. Dist. LEXIS 16617.)
In early 1998, Solin and the Clients were negotiating the terms under which Solin would continue in his role as outside counsel. Solin was concerned that his continued representation would implicate him in any criminal proceedings that might be brought against the Clients. Solin consulted with two criminal lawyers, Elkan Abramowitz and Paul Goldberger. The former was current counsel to the Clients, and the latter had formerly represented them. Both Mr. Abramowitz and Mr. Goldberger assured Solin that his conduct was ethical and proper.
Solin raised two additional concerns with Mr. Goldberger. First, in order to induce Solin to continue in his representation of them, the Clients had threatened to sue him for alleged loans which were, in fact, fees. In addition, the Clients were refusing to pay for the five year renewal term in advance, as they had done in 1993, or to provide security for five annual payments. Solin wished to determine the best way to protect himself against a contract dispute developing in the future. Mr. Goldberger told Solin that these questions were not within his expertise, and suggested that he discuss them with Alan Cohen, a criminal lawyer at O'Melveny.
Solin consulted with Mr. Cohen. The basis of this lawsuit concerns which matters the two men discussed. Solin contends that he asked Cohen to provide advice on three subjects: (1) his exposure to personal criminal liability arising out of his continued representation of the Clients; (2) how to deal with his clients' claim that fees paid were a loan; and (3) how to structure a new relationship that would best protect him against a future fee dispute, since the Clients were unwilling to pay fees for the five year renewal term up-front or to provide security for annual payments.
Solin sued O'Melveny based upon Cohen's alleged failure to provide him with competent advice concerning the payment terms of the Clients' renewal agreement. Specifically, Solin claims that O'Melveny's malpractice consisted of failing to call to his attention the New York line of cases permitting "general retainers." Solin avers that, had he known of these cases, he "would have been entitled to hold Ms. Reich and Ms. Jossem responsible for the balance of the fees due for the remaining term of the retainer agreement in an amount of $4,680,000, plus interest."
Cohen, on the other hand, maintains that the parties did not discuss the payment terms of the Clients' renewal retainer agreement except as those terms impacted the criminal law advice rendered by O'Melveny. Thus, the resolution of the dispute between the parties concerns the substance of the discussions between Solin and Cohen concerning the legal advice sought and given in, essentially, a single meeting.
Concerned that prosecution of this lawsuit would result in disclosure of their privileged and confidential information, the *460 Clients, together with Solin and O'Melveny, negotiated and entered into a "Stipulation and Order of Confidentiality," which was presented to and signed by the trial court on January 12, 2000. Several days later, the Clients filed an ex parte application for a protective order postponing Solin's deposition. Subsequently, on February 2, 2000, the Clients moved to dismiss the action or, in the alternative, for a protective order precluding the disclosure of their privileged and confidential information. The Clients argued below that the action must be dismissed because its prosecution and/or defense would necessarily result in the disclosure of the Clients' highly sensitive and privileged information. They maintained that "it is immaterial whether or not Solin needs to disclose Reich and Jossem's secrets and confidences to prove his caseO'Melveny has already stated that it will rely on Reich and Jossem's privileged information to defend itself, and this fact alone obligates Solin to dismiss the instant lawsuit."
The trial court concluded that O'Melveny could not effectively defend itself against Solin's claims of malpractice without reference to and use of the Clients' Secrets. Consequently, the trial court dismissed the action.
DISCUSSION
At the issue in this case is the protection to be accorded the attorney-client privilege. This privilege "has been a hallmark of Anglo-American jurisprudence for almost 400 years. (McCormick, Evidence (2d ed.1972) § 87, pp. 175-179; 8 Wigmore, Evidence (McNaughton rev., 1961) § 2290, pp. 542-545; Pritchard [sic] v. U.S. (6th Cir.1950) 181 F.2d 326, 328, aff'd. (1950) 339 U.S. 974, 70 S.Ct. 1029, 94 L.Ed. 1380; Baird v. Koerner (9th Cir. 1960) 279 F.2d 623, 629.) The privilege authorizes a client to refuse to disclose, and to prevent others from disclosing, confidential communications between attorney and client. (Evid.Code, § 950 et seq.)[1] Clearly, the fundamental purpose behind the privilege is to safeguard the confidential relationship between clients and their attorneys so as to promote full and open discussion of the facts and tactics surrounding individual legal matters. (People v. Flores (1977) 71 Cal.App.3d 559, 563, 139 Cal.Rptr. 546.) In other words, the public policy fostered by the privilege seeks to insure `the right of every person to freely and fully confer and confide in one having knowledge of the law, and skilled in its practice, in order that the former may have adequate advice and a proper defense.' (Baird v. Koerner, supra, 279 F.2d at p. 629.)" (Mitchell v. Superior Court (1984) 37 Cal.3d 591, 599, 208 Cal.Rptr. 886, 691 P.2d 642.)
"[T]he privilege is absolute and disclosure may not be ordered, without regard to relevance, necessity or any particular circumstances peculiar to the case." (Gordon v. Superior Court (1997) 55 Cal. App.4th 1546, 1557, 65 Cal.Rptr.2d 53; see also Shannon v. Superior Court (1990) 217 Cal.App.3d 986, 995, 266 Cal.Rptr. 242.) *461 "In California the privilege has been held to encompass not only oral or written statements, but additionally actions, signs, or other means of communicating information. (Ex Parte McDonough (1915) 170 Cal. 230, 234, 149 P. 566; Estate of Kime (1983) 144 Cal.App.3d 246, 255, 193 Cal. Rptr. 718.) Furthermore, the privilege covers the transmission of documents which are available to the public, and not merely information in the sole possession of the attorney or client. In this regard, it is the actual fact of the transmission which merits protection, since discovery of the transmission of specific public documents might very well reveal the transmitter's intended strategy. (In re Jordan (1974) 12 Cal.3d 575, 580, 116 Cal.Rptr. 371, 526 P.2d 523.) While it is perhaps somewhat of a hyperbole to refer to the attorney-client privilege as `sacred,'[2] it is clearly one which our judicial system has carefully safeguarded with only a few specific exceptions." (Mitchell v. Superior Court, supra, 37 Cal.3d at p. 600, 208 Cal.Rptr. 886, 691 P.2d 642.)
In sum, there can be no balancing of the attorney-client privilege against the right to prosecute a lawsuit to redress a legal wrong. Consequently, as General Dynamics Corp. v. Superior Court (1994) 7 Cal.4th 1164, 32 Cal.Rptr.2d 1, 876 P.2d 487 (hereafter "General Dynamics") teaches, unless a statutory provision removes the protection afforded by the attorney-client privilege to confidential communications between attorney and client, an attorney plaintiff may not prosecute a lawsuit if in doing so client confidences would be disclosed. (General Dynamics, supra, at p. 1190, 32 Cal.Rptr.2d 1, 876 P.2d 487.)
Solin argues that a proper reading of the Supreme Court's decision in General Dynamics requires that we reverse the judgment dismissing his lawsuit. Accordingly, we review the facts of that case in detail.
The plaintiff, Andrew Rose, worked for the defendant, General Dynamics, as an attorney. After 14 years with the company, he was summarily fired. Rose sued his employer for wrongful discharge, alleging that his termination was due to the fact that he spearheaded an investigation into employee drug use, protested the company's failure to investigate the bugging of the office of the chief of security, and advised company officials that the company's salary policy might be in violation of the federal Fair Labor Standards Act. Rose sought recovery under two theories: that his firing, without good cause, violated an implied-in-fact contract, and that his termination in retaliation for the conduct outlined above was in violation of fundamental public policies. General Dynamics demurred to Rose's complaint, contending that because Rose was an attorney he could be fired at any time for any reason, pursuant to our Supreme Court's decision in Fracasse v. Brent (1972) 6 Cal.3d 784, 100 Cal.Rptr. 385, 494 P.2d 9. That opinion held, in turn, that a client who retains an attorney to prosecute a personal injury lawsuit on a contingency fee basis has the right to discharge the attorney at any time and for any reason, subject to the attorney's right to recover the reasonable value of the services rendered up to the time of discharge.
The Supreme Court rejected General Dynamic's contention that Fracasse v. Brent mandated dismissal, cautioning that Fracasse "should not be read as standing for more than its context and rationale will reasonably support." (General Dynamics, supra, 7 Cal.4th at p. 1176, 32 Cal.Rptr.2d *462 1, 876 P.2d 487.) As to Rose's cause of action for breach of an implied-in-fact contract, the court held that "no reason appears why an employer that elects to limit its at-will freedom to terminate the employment relationship with in-house counsel should not be held to the terms of its bargain." (Id. at p. 1178, 32 Cal.Rptr.2d 1, 876 P.2d 487.) The Court noted as well that "implied-in-fact limitations on a client employer's right to discharge in-house counsel are not likely to present issues implicating the distinctive values subserved by the attorney-client relationship. Such suits can thus.for the most part be treated as implied-in-fact claims brought by the nonattorney employee." (Id. at p. 1179, 32 Cal.Rptr.2d 1, 876 P.2d 487.)
The Court also sanctioned in-house counsel suits for retaliatory discharge in limited circumstances. Such lawsuits are permissible when (1) the "retaliatory discharge claims [are] founded on allegations that an in-house attorney was terminated for refusing to violate a mandatory ethical duty embodied in the Rules of Professional Conduct" and (2) when "in-house counsel's nonattorney colleagues would be permitted to pursue a retaliatory discharge claim and governing professional rules or statutes expressly remove the requirement of attorney confidentiality." (General Dynamics, supra, at p. 1188, 32 Cal.Rptr.2d 1, 876 P.2d 487.) The court further explained: "If ... the conduct in which the attorney has engaged is merely ethically permissible, but not required by statute or ethical code, the inquiry facing the court is slightly more complex. Under these circumstances, a court must resolve two questions: First, whether the employer's conduct is of the kind that would give rise to a retaliatory discharge action by a non attorney employee under Gantt v. Sentry Insurance, supra, 1 Cal.4th 1083, 4 Cal. Rptr.2d 874, 824 P.2d 680, and related cases; second, the court must determine whether some statute or ethical rule, such as the statutory exception to the attorney-client privilege codified in the Evidence Code (see id., §§ 956-958) specifically permits the attorney to depart from the usual requirement of confidentiality with respect to the client-employer and engaged in the `nonfiduciary' conduct for which he was terminated." (Id. at p. 1189, 4 Cal.Rptr.2d 874, 824 P.2d 680.) Thus, the Supreme Court made clear that an attorney-plaintiff may pursue an action for retaliatory discharge only if the claims are "grounded in explicit and unequivocal ethical norms embodied in the Rules of Professional Responsibility and statutes" (id. at p. 1189, 4 Cal.Rptr.2d 874, 824 P.2d 680, emphasis in original), or if the claims "are maintainable by the non attorney employee ... under circumstances in which the Legislature has manifested a judgment that the principle of professional confidentiality does not apply." (Ibid.)
The Supreme Court cautioned that "the in-house attorney who publicly exposes the client's secrets will usually find no sanctuary in the courts. Except in those rare instances when disclosure is explicitly permitted or mandated by an ethics code provision or statute, it is never the business of the lawyer to disclose publicly the secrets of the client. In any event, where the elements of a wrongful discharge in violation of fundamental public policy claim cannot, for reasons peculiar to the case, be fully established without breaching the attorney-client privilege, the suit must be dismissed in the interest of preserving the privilege." (General Dynamics, supra, at p. 1190, 32 Cal.Rptr.2d 1, 876 P.2d 487.)
Without reference to the particular factual scenario presented in General Dynamics, Solin cites two passages from that opinion and argues that they mandate *463 reversal of the judgment of dismissal. First, in following up on the statement quoted in the immediately preceding paragraph to the effect that a lawsuit which cannot be prosecuted without divulging privileged information must be dismissed, the Supreme Court stated: "We underline the fact that such drastic action will seldom if ever be appropriate at the demurrer stage of litigation." (General Dynamics, supra, at p. 1190, 32 Cal.Rptr.2d 1, 876 P.2d 487.) Second, Solin relies on the following instructive statement from the Supreme Court in General Dynamics: "[T]he trial courts can and should apply an array of ad hoc measures from their equitable arsenal designed to permit the attorney plaintiff to attempt to make the necessary proof while protecting from disclosure client confidences subject to the privilege. The use of sealing and protective orders, limited admissibility of evidence, orders restricting the use of testimony in successive proceedings, and, where appropriate, in camera proceedings, are but some of a number of measures that might usefully be explored by the trial courts as circumstances warrant. We are confident that by taking an aggressive managerial role, judges can minimize the dangers to the legitimate privilege interests the trial of such cases may present." (Id. at p. 1191, 32 Cal.Rptr.2d 1, 876 P.2d 487.) However, as the Supreme Court put it, a case should "not be read as standing for more than its context and rationale will reasonably support." (General Dynamics, supra., p. 1176, 32 Cal.Rptr.2d 1, 876 P.2d 487.) General Dynamics simply does not support the result that Solin suggests.
As to the first point, O'Melveny did not bring a demurrer to challenge the legal sufficiency to the complaint, nor did the trial court dismiss the action at "the demurrer stage" of litigation. The complaint itself, but three pages long, did not reveal that Solin disclosed to O'Melveny the Clients' Secrets. Because it provided no basis to conclude that the matter could not be litigated without disclosure of privileged information, a demurrer to the complaint would not have been productive.
Contrary to his suggestion that this litigation was dismissed in the "demurrer stage," Solin explains in his opening brief on appeal that "Discovery proceeded along normal lines (documents produced, interrogatories answered, depositions scheduled) until [O'Melveny] disclosed the existence of a handwritten memorandum made by Mr. Cohen contemporaneous with the original Solin meeting (the `Notes')." Also prior to the hearing on the Clients' motion to dismiss, Solin, O'Melveny and the Clients had negotiated and entered into a protective order. At the time that the trial court considered the Clients' motion to dismiss, it was clear that the parties disagreed about the nature of the advice sought by Solin, and that both parties would rely on the testimony of the percipient witnesses to the Solin/O'Melveny consultation, which Solin acknowledges included the disclosure of the Clients' Secrets. Indeed, Solin asserts that this "conflict" concerning what was discussed during the Solin/O'Melveny consultation "is likely to prove outcome determinative before a jury."
In short, the factual underpinnings of Solin's claim and O'Melveny's defense, including the latter's intention to examine witnesses concerning all of the matters discussed in the Solin/O'Melveny consultation and to introduce the Notes into evidence to corroborate Cohen's testimony, had been revealed at the time that the trial court ruled on the Clients' motion to dismiss. This, then, is the more "usual case" described by the Supreme Court in General Dynamics, in which the question of "whether the privilege serves as a bar to the plaintiffs recovery will be litigated and *464 determined in the context of motions for protective orders or to compel further discovery responses, as well as at the time of a motion for summary judgment." (General Dynamics, supra, 7 Cal.4th at p. 1190, 32 Cal.Rptr.2d 1, 876 P.2d 487.)
Solin also cites General Dynamics in support of its contention that the trial court was obliged to use its "equitable arsenal" to permit his lawsuit to proceed. Thus, Solin argues that "the trial judge failed to follow the admonition of the Supreme Court in General Dynamics ... which mandates that in cases brought by a lawyer in which there is a danger of disclosing privileged information, `the trial courts can and should apply an array of ad hoc measures from their equitable arsenal designed to permit the attorney plaintiff to attempt to make the necessary proof while protecting from disclosure client confidences subject to the privilege.' (Id. at p. 1191, 32 Cal.Rptr.2d 1, 876 P.2d 487.)"
Solin fails to take into account the context within which the Supreme Court instructed the trial courts to fashion devices that would permit an attorney plaintiff to pursue legal redress against a former client without doing violence to the attorney-client privilege. In General Dynamics, the plaintiff lawyer alleged in his complaint that, due to the untoward conduct of his employer, he was no longer bound by the attorney-client privilege; thus, he argued that his lawsuit could be fully prosecuted without disclosing confidential information protected by that privilege. The employer disagreed, claiming that the plaintiff continued to be bound by the attorney-client privilege. It was in the context of these facts that the Supreme Court charged the trial court with the responsibility to permit the plaintiff to try to establish that he could in fact prove his case without divulging confidences subject to the attorney-client privilege.
General Dynamics and the other cases cited by the parties all concern a plaintiff who might need to disclose confidential information in order to make his case against a defendant who is the holder of the privilege. As Solin argues, the Supreme Court in General Dynamics cautioned against dismissing such a case prematurely. However, whether or not a lawyer plaintiff can prove his or her case without disclosure of privileged information can be easily tested, by pre-trial proceedings or by a motion for nonsuit after the plaintiff has presented his case-in-chief without the use of the confidential information.
Here, of course, there is no need to resort to the trial court's equitable arsenal to permit Solin to make the necessary proof: Solin claims, and we accept his representation, that he has no need to divulge any privileged information in order to prove his case. Solin then assures us that, contrary to the advice of its trial counsel, O'Melveny also has no need to divulge any privileged information in order to defend against Solin's claim of malpractice. Solin argues: "Because [his] case against [O'Melveny] does not depend at all on what they consulted about on the criminal side, Solin has no need to raise, much less disclose, privileged information. Of course, Solin has acknowledged that he did consult with Mr. Cohen about possible criminal exposure. That fact is not in dispute. Nonetheless, [O'Melveny] argues that it cannot defend this professional negligence case without disclosing privileged evidentiary details revealed by Solin in the course of seeking that advice from Mr. Cohen. The singular issue, therefore, is whether [O'Melveny] will be prejudiced in its defense of this professional malpractice case if it cannot disclose the evidentiary details of the Reich/Jossem privileged matters communicated by Solin to Mr. Cohen *465 in the course of seeking advice as reflected in the Notes."
Defendant does not have the same opportunity to test whether the charges can be successfully defended without the use of the Client Secrets. It may very well be that, were this lawsuit to proceed, a jury would render judgment in favor of O'Melveny even without any testimony from Cohen regarding the "evidentiary details" that Solin disclosed to him when he sought legal advice. In that event, we could say, after the fact, that O'Melveny did not "need" to disclose the Client Secrets in order to defend itself. If, however, O'Melveny is made to defend itself without use of the Client Secrets, and a jury returns a verdict for Solin, we cannot know whether the verdict would have been different had O'Melveny been permitted to present all relevant evidence regarding its consultation with Solin, including the Client Secrets.
Solin's argument must therefore rest on the contention that O'Melveny will not be prejudiced in its defense of the malpractice action if it is prohibited from introducing what Solin refers to as the "evidentiary details" of the conversation between Solin and Cohen. However, Evidence Code section 351 provides that, "Except as otherwise provided by statute, all relevant evidence is admissible." And there can be no doubt that what Solin told O'Melveny in order to obtain legal advice which Solin now claims was faulty is relevant evidence. Thus, the equitable tool that Solin proposes is to preclude O'Melveny's introduction of relevant evidence. Limiting this evidence would give a distorted view of the Solin/O'Melveny consultation, and would keep from the jury the facts that Solin determined that O'Melveny needed to know in order to render a legal opinion, and the facts on which O'Melveny based its legal advice, and would deprive O'Melveny of its right to cross-examine its accuser on the "critical issue" of Solin's credibility. Clearly, O'Melveny would be prejudiced by the presentation to the factfinder of a limited and distorted view of the facts underlying this lawsuit.
In sum, O'Melveny is entitled to present to the jury all relevant information consistent with whatever strategy it determines best serves its interests, regardless of Solin's views of the "necessity" of the evidence. O'Melveny has indicated its intention to elicit full and extensive testimony concerning the substance and details of the discussion between Solin and Cohen, including the Clients' Secrets, and to introduce the Notes to corroborate Cohen's recollection of that consultation. Pursuant to Evidence Code section 955, Solin would be duty-bound to object to any such testimony or other evidence which revealed his Clients' Secrets.[3] The trial court must exclude information subject to a claim of privilege (Evid.Code, § 916), and therefore must sustain the objection. Solin would benefit from the exclusion of evidence that could bolster O'Melveny's defense and its credibility. Thus, solely as a result of his disclosure of his Clients' confidences, Solin would obtain an unfair advantage in his lawsuit against O'Melveny. Nothing in General Dynamics or in any other case cited by Solin countenances this result.
It strikes us as fundamentally unfair for a client to sue a law firm for the advice obtained and then to seek to forbid the attorney who gave that advice from reciting verbatim, as nearly as memory *466 permits, the words spoken by his accuser during the consultation. Simple notions of due process counsel against such a procedure. Evidence Code section 958 codifies this sentiment. It provides: "There is no privilege under this article as to a communication relevant to an issue of breach, by the lawyer or by the client, of a duty arising out of the lawyer-client relationship." This is so because "[i]t would be unjust to permit a client ... to accuse his attorney of a breach of duty and to invoke the privilege to prevent the attorney from bringing forth evidence in defense of the charge ...." (Comment to Evid.Code, § 958; see also Durdines v. Superior Court (1999) 76 Cal.App.4th 247, 255, 90 Cal.Rptr.2d 217 (when an attorney's competence is assailed by a former client, "[i]t is only fair" that the attorney be able to "adequately defend his professional reputation, even if by doing so he relates confidences revealed to him by the client").)
Here, of course, Solin maintains that he is not invoking his attorney-client privilege vis-à-vis O'Melveny. However, the fact that the Clients' Secrets must be protected from disclosure would yield precisely the same result: Solin would be permitted to sue his lawyers for malpractice, yet gag O'Melveny in defending the charge by preventing full disclosure of all matters counseled upon. This result is especially unsatisfactory where, as here, we are faced with this issue only because Solin chose to divulge the "evidentiary details" of his Clients' Secrets rather than withholding those details from his communications to Cohen and presenting a hypothetical scenario that would have permitted him to obtain the legal advice he sought without disclosing client confidences.
Solin also argues that the protective order that he, O'Melveny and the Clients entered into adequately protected the Clients' interests. Thus, he states, "The extensive three-party Confidentiality Order, entered in this case with the consent of the litigants, provided for protection of privileged information during discovery, in court filings, and required notice to Mrs. Reich and Ms. Jossem if either side intended to make disclosure in open court during trial." However, the protective order does not restrict O'Melveny's right to defend itself by using information regarding Solin's criminal concerns and his disclosures of the Clients' Secrets to Cohen. The order states: "This stipulation shall not restrict the use or disclosure of information or documents not obtained as a result of this action...." Thus, under the protective order, Cohen is free to testify fully regarding the disclosures that Solin made to him, and O'Melveny may introduce as evidence the contemporaneous notes that Cohen took during his discussions with Solin.
Solin suggests as well that the trial court could limit discovery, trial testimony and other evidence to matters that Solin refers to as being in the public record. We mentioned above the due process problems presented in precluding O'Melveny's presentation of competent, relevant evidence to defend the malpractice claim. Putting those concerns aside, the proposal lacks merit. It is based on an affirmation filed by another of the Clients' attorneys, Barry Bohrer, in an unrelated New York case. As noted above, the affirmation asserted the Clients' constitutional privilege against self-incrimination. It stated that the Clients had been asked deposition questions about matters pertaining to "potential" criminal activities, and that "any response provided may potentially furnish a link in the chain of evidence (if not itself constitute evidence) of violations of myriad federal and state criminal statutes...." The affirmation did not admit that the Clients were guilty of any crime, or disclose any evidence of *467 wrongdoing, or otherwise waive the attorney-client privilege with respect the matters that the Clients disclosed to Solin in confidence, and that Solin disclosed to O'Melveny.
Lastly, in his reply brief, Solin faults the trial court for failing to review the Notes in camera to determine whether they could be redacted without prejudice to O'Melveny's defense.[4] Solin argues that "when the issue relates to the disclosure of privileged material, in camera review is not only permitted, it is recognized by this Court as the only effective means to process disclosure questions," citing Lipton v. Superior Court (1996) 48 Cal.App.4th 1599, 56 Cal.Rptr.2d 341. This case does not support the procedure belatedly demanded by Solin.
Solin's entire discussion of Lipton v. Superior Court, supra, upon which he relies for the proposition that the trial court erred in failing to review the Notes in camera, is as follows: "The remand order in Lipton directing the trial court to consider redaction and protective orders in its in camera review (id. at 1620, 56 Cal. Rptr.2d 341), is precisely what should have been done here and is exactly what this Court should now order." Lipton stands for no such proposition. The Court of Appeal in Lipton was careful to state that any review of privileged information undertaken by the trial court would be conducted only "to the extent permitted by law or the agreement of the party claiming the privilege, ..." (Lipton v. Superior Court, supra, at p. 1619, 56 Cal.Rptr.2d 341.) The appellate court then noted that "it is generally true that the court cannot compel disclosure of the contents of privileged documents in order to rule on the objection to a discovery request [citations]." (Ibid.) The court indicated that "In this case, it appears that [the defendant and privilege holder] permitted the referee to examine all of the privilege log documents in order to enable him to rule on the objections to [plaintiffs] motion to compel." (Id. at p. 1619, fn. 21, 56 Cal. Rptr.2d 341.)
Here, there is no law permitting an in camera review of the privileged materials, nor did the privilege holder agree to such a procedure. Indeed, the relevant statute, Evidence Code section 915, specifically admonishes that, except in circumstances not here relevant, "the presiding officer may not require disclosure of information claimed to be privileged under this division in order to rule on the claim of privilege; ..."[5] As our Supreme Court stated in reversing a Public Utilities Commission order of an in camera review of privileged documents: "We note that the commission's order is not any less intrusive because it only requires an `in camera' inspection of SoCalGas's privileged documents. The commission's order violates Evidence Code section 915.... [T]he commission's order not only would allow the presiding officer to ... identify whether documents are protected by the attorney-client privilege, but also would permit the commission to consider the relevance of *468 the documents on the merits. There is no statutory or other provision that allows for such an inspection of documents allegedly protected by the attorney-client privilege." (Southern Cal. Gas Co. v. Public Utilities Com. (1990) 50 Cal.3d 31, 45, fn. 19, 265 Cal.Rptr. 801, 784 P.2d 1373.) In short, Lipton provides no authority for the procedure proposed by Solin.
In sum, the central disputed issues in this case center on what Solin disclosed and why, what legal advice O'Melveny rendered to Solin and why, how Solin's disclosures shaped and influenced that legal advice, and how Cohen's criminal law advice affected Solin's decision to structure the retainer agreement with the Clients. Resolution of those issues rests mainly on the credibility of the parties to the Solin/O'Melveny consultation. O'Melveny maintains that in order to defend its representation of Solin, it must be free to recite the precise factual scenario which Solin presented to Cohen, including Solin's concerns about the Clients' involvement in criminal activities. It is only by disclosing exactly what Solin communicated to Cohen as the concerns prompting his retention of O'Melveny that Cohen can cogently explain the reasons that he gave the advice that he did. Thus, while Solin asserts that he consulted O'Melveny principally to obtain contract law advice, that assertion would be undermined by Cohen's testimony regarding Solin's detailed disclosure of privileged information concerning the Clients' alleged criminal conduct. Similarly Cohen's credibility would be enhanced by the admission of his contemporaneous notes of the meeting, which again, according to both parties, contain confidential and privileged information of the Clients which Solin is duty-bound to protect from further disclosure.
We conclude that because this lawsuit "is incapable of complete resolution without breaching the attorney-client privilege, the suit may not proceed." (General Dynamics, supra, 7 Cal.4th at p. 1170, 32 Cal.Rptr.2d 1, 876 P.2d 487.) Accordingly, we affirm the trial court's dismissal of the case.
DISPOSITION
The judgment is affirmed. Respondents to recover costs of appeal.
GRIGNON, Acting P.J., and WILLHITE, J.[*], concur.
NOTES
[1] The privilege is set forth in Evidence Code section 954 as follows:
"Subject to Section 912 and except as otherwise provided in this article, the client, whether or not a party, has a privilege to refuse to disclose, and to prevent another from disclosing, a confidential communication between client and lawyer if the privilege is claimed by:
"(a) The holder of the privilege;
"(b) A person who is authorized to claim the privilege by the holder of the privilege; or
"(c) The person who was the lawyer at the time of the confidential communication, but such person may not claim the privilege if there is no holder of the privilege in existence or if he is otherwise instructed by a person authorized to permit disclosure."
[2] See People v. Kor (1954) 129 Cal.App.2d 436, 447, 277 P.2d 94 (Shinn, J., cone).
[3] Evidence Code section 955 provides: "The lawyer who received or made a communication subject to the privilege under this article shall claim the privilege whenever he is present when the communication is sought to be disclosed and is authorized to claim the privilege under subdivision (c) of Section 954."
[4] While Solin argued in his opening brief on appeal that the Notes could be redacted to omit the evidentiary details, he did not indicate whether the redaction should be conducted by the trial court, the parties, or the Clients. He did not cite as error in his opening brief the trial court's failure to review the notes in camera.
[5] Solin argues that Evidence Code section 915 does apply because he admits that the Notes contained privileged information. This assertion is wholly unsupported by any pertinent authority, and cannot be supported by reason and logic. The clear import of Evidence Code section 915 is that a privilege holder is not required to waive the privilege (by submitting to an in camera procedure) in order to assert the privilege.
[*] Judge of the Los Angeles County Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
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499 F.2d 866
Colleen Therese MILLS et al., Plaintiffs-Appellees,v.Robert TUCKER et al., Defendants, and United States ofAmerica, Defendant-Appellant.Colleen Therese MILLS et al., Plaintiffs-Appellants,v.Robert TUCKER et al., Defendants-Appellees.
Nos. 72-2702, 72-2811.
United States Court of Appeals, Ninth Circuit.
June 10, 1974.
Judith S. Feigin (argued), Walter H. Fleischer, Eloise E. Davies, Civil Div., Dept. of Justice, Washington, D.C., Robert K. Fukuda, U.S. Atty., Honolulu, Hawaii, for the United States.
Burnham H. Greeley, Honolulu, Hawaii (argued), for Colleen Therese Mills et al.
Kenneth S. Robbins (argued), Jeffrey N. Watanabe, Honolulu, Hawaii, Walter S. Kirimitsu, Wahiawa, Hawaii, Hoken Seki, Chicago, Ill., Robert K. Fukuda, U.S. Atty., Honolulu, Hawaii, for Robert Tucker et al.
Before DUNIWAY, CHOY and SNEED, Circuit Judges.
OPINION
PER CURIAM:
1
Griffith Mills was killed in a 1969 traffic accident which occurred on West Loch Access Road on Oahu, Hawaii, a roadway maintained by the United States Navy and adjacent to the West Loch Naval Ammunition Depot. Mills, who was a petty officer in the Navy stationed at Hickam Air Force Base, was riding his motorcycle when he was struck head-on by a car driven by Robert Tucker, which was attempting to pass another automobile. Mills' widow, children and personal representative sued Tucker, the Government for negligently maintaining the road, and Accessory Distributors, the distributor of the helmet Mills was wearing, alleging the helmet was defective and contributed to the severity of the head injuries that caused Mills' death. After a non-jury trial, the district court found both Tucker and the Government liable and apportioned damages of $153,149.91 between them. Accessory Distributors, however, was held not to be liable. The Government has appealed contesting its liability, while the plaintiffs have appealed contending that the damages awarded were inadequate and that it was error to hold the helmet distributor harmless. We affirm.
The Feres Doctrine
2
The Government urges that it was immune under the doctrine of Feres v. United States, 340 U.S. 135, 71 S.Ct. 153, 95 L.Ed. 152 (1950). There, the Court held that the Government is not liable under the Tort Claim Act, 28 U.S.C. 1346(b), 2674, to a military serviceman 'where the injuries arise out of or are in the course of activity incident to service.' Id. at 146.
3
Though the Feres doctrine has been the source of much confusion,1 this case presents no such difficulties. The Government, although sued by a serviceman, is not immune where the 'injuries (are) not caused by (the plaintiff's) service except in the sense that all human events depend upon what has already transpired.' Brooks v. United States, 337 U.S. 49, 52, 69 S.Ct. 918, 920, 93 L.Ed. 1200 (1949); accord, United States v. Brown, 348 U.S. 110, 75 S.Ct. 141, 99 L.Ed. 139 (1954). In the words of the Feres Court, there is no immunity where the injury does not arise out of a course of activity incident to service. In Brooks two servicemen were involved in an accident with an Army truck while on furlough and riding off base in a private vehicle. The Court held the Government could not escape liability.
4
Here, Mills was on furlough on the day of the accident; he was returning from a civilian job, in which he was 'moonlighting' as a fry cook, to his Navy-owned quarters where he was to attend his son's birthday party. He was thus in the same situation as the serviceman in Brooks-- only in the remotest sense subject to military discipline. Compare Callaway v. Garber, 289 F.2d 171 (9th Cir.), cert. denied, 368 U.S. 874, 82 S.Ct. 120, 7 L.Ed.2d 76 (1961) (Government immune where serviceman traveling under orders between duty posts) with Herreman v. United States, 476 F.2d 234 (7th Cir. 1973) and Archer v. United States, 217 F.2d 548 (9th Cir. 1954), cert. denied, 348 U.S. 953, 75 S.Ct. 441, 99 L.Ed. 745 (1955) (both: servicemen's deaths occurred in crashes of military aircraft while decedents were not on duty; Government held immune).
5
True, as the Government correctly argues, the fact that a serviceman was off duty or on leave is not always dispositive. See, e.g., Chambers v. United States, 357 F.2d 224 (8th Cir. 1966); Coffey v. United States, 324 F.Supp. 1087 (S.D.Cal.1971), aff'd per curiam, 455 F.2d 1380 (9th Cir. 1972); Gursley v. United States, 232 F.Supp. 614 (D.Colo.1964). But such cases involve on base accidents where the serviceman is at least subject to ultimate military control. Coffey v. United States, supra at 1088. Here, the roadway was not part of the Naval depot. Bounded on one side by privately owned farmland and fenced off from the base on its other side, the road is publicly used. Drivers need not pass through a gate to reach it, and it connects different civilian areas. This case, thus controlled by Brooks, falls on the other side of the line of Henninger v. United States, 473 F.2d 814, 816 (9th Cir.), cert. denied, 414 U.S. 819, 94 S.Ct. 43, 38 L.Ed.2d 51 (1973). The Feres doctrine does not apply.
Damages
6
The plaintiffs complain that the damages were inadequate in a number of respects. The Hawaii statute applicable to a survivors' action specifies that 'such damages may be given as under the circumstances shall be deemed fair and just compensation, with reference to the pecuniary injury and loss of love and affection . . ..' Haw.Rev.Stat. 663-3 (1968).2 The damages awarded consisted of pain and suffering, loss of love and affection, and loss of support. While the trial judge may not have been entirely accurate in computing retirement benefits, in failing fully to account for inflation and job promotion, and in discounting the award to the date of death instead of judgment,3 it is the total award, not its particulars, which is significant under this statute, and, as the fairness objective of the statute would indicate, the total need only be reasonably certain. Ginoza v. Takai Electric Co., 40 Haw. 691, 704-707 (1955); cf. Nakagawa v. Apana, 52 Haw. 379, 390, 477 P.2d 611, 617-618 (1970); Lima v. Tomasa, 42 Haw. 478, 482-484 (1958). That was precisely this court's holding in United States v. Furumizo, 381 F.2d 965, 970-971 (9th Cir. 1967), a survivors' action governed by the same Hawaii law.
7
We must remember that the ultimate total damage figure awarded is the sum of a series of predictions, none of which involves mathematical certainty, and that it is the reasonableness of the ultimate figure that is really in issue . . ..
8
Id. at 970. As in Furumizo, we cannot say the trial judge clearly erred under this standard.
Liability of Helmet Distributor
9
On this point the district judge concluded, inter alia, that any assumed deficiencies in the helmet were not proximate causes of Mills' injuries. That finding was not clearly erroneous.
10
Affirmed.
1
See Hale v. United States, 416 F.2d 355 (6th Cir. 1969); Garsley v. United States, 232 F.Supp. 614 (D.Colo.1964)
2
State law, of course, controls this point under the Tort Claims Act. See 28 U.S.C. 1346(b), 2674
3
At the same time, income taxes were not deducted from the award. See United States v. Furumizo, 381 F.2d 965, 971 (9th Cir. 1967); but cf. Greene v. Texeira, 54 Haw. 231, 244-246, 505 P.2d 1169, 1177-1178 (1973) (Levinson, J., dissenting)
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418 Mass. 229 (1994)
635 N.E.2d 1192
COMMONWEALTH
vs.
MICHAEL ANDREW OSACHUK.
Supreme Judicial Court of Massachusetts, Middlesex.
March 9, 1994.
July 11, 1994.
Present: LIACOS, C.J., ABRAMS, NOLAN, O'CONNOR, & GREANEY, JJ.
William S. Ahalt for the defendant.
David E. Edmonds, Assistant District Attorney, for the Commonwealth.
LIACOS, C.J.
The defendant, charged with manslaughter, appeals the partial denial of his motion to suppress three written statements which he made to the Lowell police regarding the death of Lisa Amrheim. After a hearing, a judge of the Superior Court allowed the defendant's motion as to *230 one of the written statements (chronologically, the second statement) and denied it as to the others. The defendant sought leave to file an interlocutory appeal, Mass. R. Crim. P. 15 (b) (2), 378 Mass. 884 (1979); a single justice of this court referred the matter back to the motion judge for reconsideration in light of Commonwealth v. Smith, 412 Mass. 823 (1992), just then decided by this court. On reconsideration, the motion judge again denied the motion as to first and third statements, but allowed it as to the second statement. The defendant renewed his application for leave to take an interlocutory appeal. The application was granted by a single justice, who referred the case to the full bench. We agree with the defendant that his third statement must be suppressed.
We summarize the facts as found by the motion judge. On April 25, 1991, the defendant was visited in the early morning by Matthew Dowd and Lisa Amrheim, a recent acquaintance of Dowd's. Throughout the morning the three consumed cocaine and watched videotapes. At around 10 A.M., they drove from the defendant's home in Bolton to the defendant's father's office in Chelmsford. The defendant, who was 38 years old, spent around 30 minutes with his father and obtained some money from him. He, along with Dowd and Amrheim, drove to the apartment of Patricia Jaffe on Highland Street in Lowell. Jaffe, they knew, had access to cocaine and heroin.
That afternoon, at Jaffe's apartment, all four consumed heroin and cocaine, although the defendant did not consume as much as the others. At some point, Amrheim injected herself with a combination of heroin and cocaine, commonly called a "speedball." Shortly after injecting herself, Amrheim began convulsing and lost consciousness. In an effort to revive her, the defendant and Jaffe put Amrheim in a bath of cold water. Amrheim did not appear to respond; the defendant then prepared a mixture of water, salt and cocaine and injected it into Amrheim's arm. He and Jaffe laid Amrheim down on Jaffe's bed, apparently with the expectation that she would sleep off the effects of the speedball. At *231 approximately 3:30 P.M.., the defendant and Dowd drove to the defendant's home, leaving Amrheim on the bed at Jaffe's apartment. She was unconscious when they left.
Dowd and the defendant returned to Jaffe's at approximately 7 o'clock that evening, intending to pick up Amrheim. They found her still in bed. They attempted to awaken her, to no avail. They then drove her to the emergency room at St. Joseph's Hospital in Lowell. She was pronounced dead on arrival.
Inspector Michael Farnum of the Lowell police department received a call directing him to the hospital at about 7:45 P.M.. When he arrived, he went to the emergency room and observed Amrheim's body. The emergency room doctor with whom Farnum conferred would not state the cause of death until he received a toxicology report. Nonetheless, Farnum suspected that she had died of a drug overdose. In the lobby area, Farnum was directed to the defendant and Dowd as the persons who had brought Amrheim to the hospital. He approached the defendant and asked him his name. "Michael" was the defendant's only response. When Farnum asked his last name, the defendant threw a piece of paper to him that bore his full name. Farnum asked the defendant what had happened to Amrheim. The defendant responded that he had found her in a "drug area" of Lowell and driven her to the hospital.[1]
Farnum asked the defendant to accompany him to the police station to file a report. Although he expressed a desire not to be involved, the defendant reluctantly agreed. On the way to the station, Farnum asked the defendant to direct him to the area where he had found Amrheim. The defendant directed him to a location on Spring Street in Lowell.
*232 The first written statement. Once at the station, Farnum and the defendant went into an interview room, where Farnum began to fill out a victim/witness statement form. No Miranda warnings were given at this time. The defendant described the circumstances surrounding Amrheim's death as follows: He, Dowd and Amrheim had gone to Spring Street earlier that evening. The defendant remained in the automobile while Amrheim went into an apartment to purchase heroin and Dowd went into a nearby package store. Dowd returned to the car, and waited with the defendant. When, after about 45 minutes, Amrheim had not returned, they became concerned and began looking for her. The defendant walked down an alley for approximately 100 feet and was approached by an Hispanic male who told him a woman was lying on the ground at the end of the alley. The defendant approached the woman, found that she was Amrheim, and went to retrieve the automobile. He drove the automobile into the alley, put Amrheim in, and drove her to the hospital.
After the defendant had dictated this statement to Farnum, he read it and signed it. Throughout the interview, the defendant was lucid and did not appear to be under the influence of any drugs. He told Farnum that he was not under the influence of alcohol, that he had not consumed any drugs for many hours and that he was no longer affected by those drugs.
The second written statement. After the defendant signed the first statement, Farnum left the interview room and conferred with a detective (Durkin) who had been interviewing Dowd in an adjacent room. Farnum learned that Dowd had related a significantly different course of events. According to Dowd, the incident had not occurred on Spring Street, but rather in an apartment on Highland Street. In addition, Dowd had informed Durkin that a woman named "Pat" (Jaffe) was also involved.
Farnum returned to the room where the defendant was waiting and confronted him with the inconsistencies between the defendant's and Dowd's accounts of the events. Again, no Miranda warnings were given to the defendant. During this *233 interview, which was rather hostile, Farnum aggressively shouted at the defendant and called him a liar. The defendant then revised his account of the day. He explained that earlier in the evening, he, Dowd and Amrheim had gone to Jaffe's apartment, where they consumed heroin and cocaine. Amrheim injected herself with a speedball and appeared to lose consciousness. The defendant and Dowd tried to revive her by placing her in a bathtub of cold water. She did not respond. The defendant and Dowd then put her in bed. At approximately 7:30 P.M.., when another attempt to awaken Amrheim failed, they drove her to the hospital.
Farnum typed this statement on the same victim/witness form as the first statement, and the defendant signed it. As Farnum was concluding this interview with the defendant, he received a call from Durkin, who, in the meantime, had gone to Jaffe's apartment. During this call, Farnum was informed that, in an effort to revive Amrheim, the defendant had injected her with a mixture of salt, water and cocaine.
The third written statement. Armed with this information, Farnum returned to the interview room where the defendant, by now, had been for nearly two hours. Farnum read the defendant his Miranda rights from a card, and had the defendant sign the card acknowledging that he received and understood the warnings. Farnum told the defendant of his conversation with Durkin, and asked him what had really happened that evening. The defendant then supplemented his earlier version of events with the detail that, in an attempt to revive Amrheim, he had injected her with a solution of salt, water and cocaine.
Farnum recorded this version of events on a form used to record defendants' (as opposed to witnesses') statements. The defendant signed the statement.
The motion judge's rulings. The judge held that, until the conclusion of the first written statement, the defendant "was not in custody or deprived of his freedom in a significant way," and therefore, not entitled to Miranda warnings. He found that: "the defendant was entirely free to leave" and that "[t]he questioning was informal and nonaggressive." *234 The judge found "beyond a reasonable doubt that the [first written] statement was voluntary."
By the time Farnum took the second statement, he was aware of some serious inconsistencies between the defendant's and Dowd's versions of events. The judge held that the defendant should have been read his Miranda warnings at this point. The judge found that: "Although Farnum still did not know whether a crime had been committed, he suspected that the defendant knew. The questioning became aggressive and the defendant was confronted with inconsistencies in his story. Farnum used the inconsistencies to leverage a further statement. The defendant had been in the station for almost two hours. There was a good deal of shouting. It is reasonable to conclude that the defendant was not free to leave the police station. Indeed, a reasonable person in this atmosphere ... would conclude that he was not free to leave...."
The judge denied the motion to suppress as to the third written statement. In his original memorandum, the judge held that the third statement was not tainted by the illegality of the second statement because the second statement was not inculpatory (and thus, did not let the "cat of the bag"). He concluded further that even if the "cat had been let out of the bag," under the principles of Oregon v. Elstad, 470 U.S. 298 (1985), the third statement did not have to be suppressed.
In Commonwealth v. Smith, 412 Mass. 823 (1992), which was decided after the judge had ruled, we rejected the principles of Elstad. Smith, supra at 836-837. Because that decision was issued on the day that the parties appeared before a single justice of this court on the defendant's request for leave to file an interlocutory appeal, the single justice denied the request without prejudice so as to give the judge the opportunity to reconsider his ruling in light of Smith. Doing so, the judge affirmed his earlier ruling that suppression of the third statement was not required, concluding that Smith was factually distinguishable.
Analysis. We agree with the judge that the first written statement need not be suppressed. The defendant argues that *235 the first interview constituted a custodial interrogation. The judge's factual conclusion that the defendant was free to leave up until the time of the second statement is amply supported by the evidence. The judge found that the officers investigating Amrheim's death did not suspect that any crime had been committed or that the defendant may have been a suspect rather than a witness to a sudden, unexplained death. The defendant's first written statement (and his earlier oral ones) were not the product of a custodial interrogation, and Miranda warnings were not required. See Commonwealth v. Bryant, 390 Mass. 729, 736-737 (1984).
The difficult question presented by this case is whether the illegality of the second statement tainted the third statement, which the defendant gave after he had received his Miranda warnings.[2]
In this Commonwealth, there is a presumption "that a statement made following the violation of a suspect's Miranda rights is tainted," and the prosecution must "show more than the belated administration of Miranda warnings in order to dispel that taint." Smith, supra at 836. This presumption may be overcome by showing that either: (1) after the illegally obtained statement, there was a break in the stream of events that sufficiently insulated the post-Miranda statement from the tainted one; or (2) the illegally obtained statement did not incriminate the defendant, or, as it is more colloquially put, the cat was not out of the bag. The Commonwealth *236 argues that both theories properly apply to this case. We disagree.
A. Break in the stream of events. Although the judge made no finding whether there was a break in the stream of events,[3] we have no difficulty concluding that there was not. See Smith, supra at 832. The Commonwealth argues that there was a break in the stream of events when Farnum left the interview room to take Durkin's call, during which Farnum learned that the defendant had injected Amrheim with the cocaine and saline solution. We do not consider this the type of "intervening circumstance" that breaks the stream of events. The third statement was the product of a continuous interrogation; the defendant never left the room and never spoke to anyone other than Inspector Farnum. Cf. Commonwealth v. Watkins, 375 Mass. 472, 482 (1978) (defendant given opportunity to telephone attorney, instead had lengthy conversation with mother before deciding to give statement). Farnum's brief absence from the room did not insulate the subsequent statement. See Commonwealth v. Haas, 373 Mass. 545, 548, 554 (1977).
B. Cat out of the bag. The judge found that the third statement was not tainted because the second statement did not inculpate the defendant. We conclude that this finding is clearly erroneous. It is true that the defendant's third statement, in which he admitted injecting Amrheim with a cocaine and saline solution, contained the most inculpatory detail of all three statements. However, the second, illegally obtained statement was also incriminating. In it the defendant admitted that he had previously fabricated an account of the evening, which could fairly be construed as consciousness of guilt. See Smith, supra at 834. Moreover, the second statement acknowledged that he had spent the day with Amrheim, that he had consumed illegal drugs, and that he had known that Amrheim was unconscious when he put her *237 in a tub of cold water. That the defendant may have intended to convey a version of events that ignored the most obviously inculpatory detail does not mean that the earlier details do not incriminate him. Clearly they do. See Smith, supra at 834; Haas, supra at 554.
This is not a case where the only incriminating information came after the defendant received Miranda warnings, or where the later statement was "substantially different from, and even contradictory to, the original statements." Commonwealth v. Watkins, supra at 482. The third statement was identical to the illegally obtained second statement, except for the additional detail regarding the injection of the cocaine and saline solution. This addition, though obviously of critical importance, was a product of the second statement, because it simply supplemented an already (though less) incriminating account of events. Contrast Watkins, supra at 482 (later statement not product of illegal one where illegal one denied any involvement in incident). As we stated in Smith, supra at 836: "The wiser course ... is to presume that a statement made following the violation of a suspect's Miranda rights is tainted, and to require the prosecution show more than the belated administration of Miranda warnings in order to dispel that taint." No such showing was made here.
The Commonwealth has been unable to overcome the presumption that the third statement was tainted by the illegality of the second statement. Thus, we conclude that the third statement also must be suppressed.[4] The order denying suppression of the defendant's third written statement is reversed and the statement is ordered suppressed. In all other respects, the order is affirmed.
So ordered.
NOTES
[1] Before arriving at the police station, the defendant made this, and certain other oral statements, to the police. The motion judge found that "any and all statements made prior to the first [written] statement at the police station were non-custodial and voluntary." These findings are well supported by the evidence, and we agree with the judge's conclusions regarding the oral statements.
[2] The Commonwealth did not seek leave to file an interlocutory appeal from the grant of the defendant's motion to suppress as to the second statement. See Mass. R. Crim. P. 12 (b) (2), 378 Mass. 884 (1979). Commonwealth v. Lewin (No. 3), 408 Mass. 147, 150-151 (1990). In its brief, the Commonwealth argues that, contrary to the judge's conclusion, Miranda warnings were not necessary before the defendant made the second statement because he was not in custody. The Commonwealth argues that, until Farnum heard from Durkin that the defendant had injected Amrheim with a cocaine and saline solution, he was not suspected of any crime. It cites Commonwealth v. Simpson, 370 Mass. 119, 125 (1976), for the proposition that Miranda warnings need not be given before the person being questioned becomes a suspect in a crime. The judge's finding that the defendant was in custody at this point was well supported, and that fact distinguishes this case from Simpson.
[3] The judge made no such finding because he concluded that the cat was not out of the bag, and thus, no such showing by the Commonwealth was necessary.
[4] Given this result we need not reach the question whether the defendant's waiver of his Miranda rights was knowing and voluntary.
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Landmark Ventures, Inc. v Kreisberg & Maitland, LLP (2020 NY Slip Op 00248)
Landmark Ventures, Inc. v Kreisberg & Maitland, LLP
2020 NY Slip Op 00248
Decided on January 14, 2020
Appellate Division, First 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 January 14, 2020
Renwick, J.P., Kapnick, Mazzarelli, Webber, JJ.
10781 655089/17
[*1] Landmark Ventures, Inc., et al., Plaintiffs-Appellants,
vKreisberg & Maitland, LLP, et al., Defendants-Respondents.
Kerr, LLP, New York (William B. Kerr of counsel), for appellants.
Law Offices of Gabriel Mendelberg, P.C., New York (Gabriel Mendelberg of counsel), for respondents.
Order, Supreme Court, New York County (Shlomo Hagler, J.), entered June 6, 2018, which granted defendants' motion to dismiss the complaint, unanimously affirmed, with costs.
As in Landmark Ventures, Inc. v InSightec, Ltd. (__AD3d__ [1st Dept. 2020], decided simultaneously herewith, the motion court correctly recognized that defendant Kreisberg & Maitland LLP (K & M) was not a party to the settlement agreement. The agreement defines "Party" as John Doe, LMV, LMV USA, Ralph Klein, and Zeev Klein, and only John Doe and the "remaining Parties" are bound by the non-disparagement clause of paragraph 9. Defendant Gabriel Mendelberg signed the agreement on behalf of K & M as "Attorneys for Plaintiff" on the same page and just above the signature block for plaintiffs' attorneys, who, similarly, signed as "Attorneys for LMV, LMV USA and Kleins." Plaintiffs failed to show that the rule that an agent acting on behalf of a disclosed principal is not bound absent "clear and explicit" evidence of the agent's intention to be bound (see Savoy Record Co. v Cardinal Export Corp. , 15 NY2d 1, 4 [1964] [internal quotation marks omitted]) does not apply here or that the requisite evidence of intention exists.
Contrary to plaintiffs' contention, the court's interpretation does not render the attorney signatures superfluous. Among other things, their signatures eliminate any doubt that, in executing the settlement agreement, all parties were represented by counsel, a fact that would support a finding that the agreement is valid in the event that its validity is ever challenged.
Plaintiffs also failed to adequately allege damages (see Fowler v American Lawyer Media, Inc. , 306 AD2d 113 [1st Dept 2003]).
The court correctly dismissed the claim for misappropriation of trade secrets. Plaintiffs cite no authority to support their contention that bank records and checks such as those at issue here constitute trade secrets, which are defined as "any formula, pattern, device or compilation of information which is used in one's business, and which gives [one] an opportunity to obtain an advantage over competitors who do not know or use it" (Ashland Mgt. v Janien , 82 NY2d 395, 407 [1993] [internal quotation marks omitted]). They cite Leo Silfen, Inc. v Cream (29 NY2d 387, 393 [1972]) for the proposition that customer lists may be protected as trade secrets if the customers' patronage was "secured by years of effort and advertising effected by the expenditure of substantial time and money." However, they do not allege that their clients fall into this category, rather than being "readily ascertainable outside the . . . business as prospective users or consumers of the [business's] services or products" (29 NY2d at 392).
Plaintiffs failed to explain how the disclosure of customers' identity or the dates and amounts of certain payments for unspecified services at unspecified rates could constitute information exploited by their competitors, even assuming the competitors located this information in the 13 days during which they had access to it.
Plaintiffs' argument that the lines between defendant Law Offices of Gabriel Mendelberg P.C. and K & M are blurry is reasonable, but the court's omission of alter ego claims from its [*2]analysis does not warrant reversal, given the absence of an enforceable contract between plaintiffs and K & M (and, a fortiori, between plaintiffs and the remaining defendants) and plaintiffs' failure to adequately allege that trade secrets were compromised.
We have considered plaintiffs' remaining arguments and find them unavailing.
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: JANUARY 14, 2020
CLERK
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41 Cal.2d 128 (1953)
JAMES H. EATWELL et al., Appellants,
v.
HOWARD J. BECK et al., Respondents.
L. A. No. 22683.
Supreme Court of California. In Bank.
May 29, 1953.
Emmett E. Patten and Glen A. Duke for Appellants.
Victor Bewley and W. Torrance Stockman for Respondents. *130
SCHAUER, J.
Plaintiffs appeal from a judgment of nonsuit in their action to recover damages resulting from alleged fraudulent misrepresentations as to the income of a motel which they purchased. It is our conclusion that plaintiffs' request to reopen their case, amend their complaint, and present further evidence to meet the objections raised by defendants should have been granted, and that the judgment (except as to defendant David Craig Cummings) should be reversed.
Plaintiffs are Mr. and Mrs. (John C. and Florence) Botto, who are advanced in age, and their daughter and her husband, Mr. and Mrs. (James H. and Eunice A.) Eatwell. Defendants are Howard J. Beck and J. H. Rice, real estate brokers and partners who negotiated the transaction complained of, a Mr. and Mrs. (Sam M. and Loretta A.) Thomas, [fn. 1] sued as the owners who employed Beck and Rice to make the sale, and Mr. and Mrs. (David Craig and Anna Luella) Cummings, who held an encumbrance on the property and formerly owned it.
Plaintiffs allege in substance: On October 19, 1948, the real estate brokers, acting as the agents of defendants Thomas, entered into negotiations with plaintiffs for the sale to plaintiffs of the Thomases' 10-unit motel property (including both realty and personalty) and business located near Fontana, California. Plaintiffs had informed the brokers that Mr. Botto was a carpenter by trade but was unable by reason of his age to obtain or perform regular work, that plaintiff Mr. Eatwell was a laborer who earned approximately $240 a month, that both Mrs. Botto and Mrs. Eatwell were "untrained and inexperienced in any occupation or business other than that of housewife"; that the Bottos were prepared to invest "their entire savings and accumulations" of $7,000 "in the purchase of a motel or motor court to be operated jointly by the plaintiffs and used and occupied by them as their home, if ... they should be able to purchase such a property and business which had theretofore produced and was then producing a sufficient income" to meet monthly payments on any encumbrances on the property, to pay all expenses except wages and salaries, and to "provide a moderate surplus as ... compensation for their services in the operation" of the motel. The brokers falsely and fraudulently informed plaintiffs that monthly gross income of the Thomas motel property was and had been for some time past *131 between $700 and $800 a month and defendant Mrs. Cummings, who was managing the motel, falsely and fraudulently told plaintiffs that the gross income for the first 19 days of October, 1948, was $450. Actually (plaintiffs further allege) the true gross income was not then and had never been over $275 a month. Thereafter on the same day (October 19) plaintiffs, in reliance upon the representations as to gross income, agreed to purchase the property for the total price of $43,000, paying $7,000 in cash and the balance by assuming two encumbrances on which payments totaling $275 monthly were required; defendants Cummings were the holders of one of such encumbrances, on which the unpaid balance was some $22,225.
Plaintiffs alleged damage in the sum of $7,000, paid on the purchase price of the property, plus other sums alleged to have been paid by them as insurance, escrow charges; and principal and interest on the two encumbrances. They prayed for recovery of all of such sums, plus exemplary damages.
The case was tried before the court without a jury. At the close of plaintiffs' evidence, during which it developed that subsequent to filing this action plaintiffs had lost the property by foreclosure, all defendants moved for a nonsuit on the ground that plaintiffs had failed to either plead or prove a cause of action under the so-called "out-of-pocket loss rule" included in the provisions of section 3343 [fn. 2] of the Civil Code and held to constitute the sole and exclusive measure of damages suffered by one defrauded in the purchase, sale, or exchange of property. (See Bagdasarian v. Gragnon, (1948), 31 Cal.2d 744, 760-763 [192 P.2d 935].) For "nonsuit purposes" defendants Thomas and the real estate brokers stipulated and "conceded" that the evidence would support a finding of fraud. [fn. 3]
Following argument on the nonsuit motion and prior to the court's ruling thereon, plaintiffs moved for permission *132 "to reopen their case, for leave to amend the complaint therein, and for leave to offer additional evidence ... as to the actual value of the property in question here ... [T]he amendments are for the purpose of clarifying the point of the actual value vs. the representative value." The amendments proposed by plaintiffs would add to the complaint allegations that the real estate brokers falsely and fraudulently represented to plaintiffs that the property was worth $43,000 (the amount for which plaintiffs purchased the property), that such representation was untrue in that the property was worth only $30,000, and that plaintiffs were thereby damaged in the sum of $13,000; and would add a prayer for the $13,000. Plaintiffs also filed, with their notice of motion to reopen, an affidavit of a real estate appraiser to the effect that he had examined the property in question and had determined that its actual value at the time plaintiffs purchased it was approximately $32,500; and also an affidavit of one of plaintiffs' counsel to the effect that their failure to offer such evidence earlier in the proceedings was "due to the inadvertence of counsel." Following further argument the court denied plaintiffs' motion, granted defendants' motion for nonsuit, and rendered judgment accordingly. This appeal by plaintiffs follows.
As grounds for reversal plaintiffs contend that the allegations of their complaint and the evidence they produced would under concepts of fraud actions prior to the enactment of section 3343, or under any construction of that section other than as limiting recovery to that expressly authorized by it, have entitled them to some recovery or relief; that the fraudulent representations upon which they rely, and which were pleaded and prima facie established, were such that if the actual value of the property was less than the price they paid therefor, then under the provisions of section 3343 they are entitled to recover; that the evidence already before the court when the motions were made tended to prove that the value of the property they purchased was less than the price they paid; that inasmuch as the evidence of the fraudulent misrepresentations, together with some evidence tending to show damages under the out-of-pocket rule authorized by section 3343, was before the court and since plaintiffs before the ruling of the trial court on the motion for nonsuit applied for permission to amend their complaint to remedy the claimed deficiency in the pleading and also requested leave to introduce further evidence specifically substantiating the newly *133 proffered allegations, the court abused its discretion in refusing to permit plaintiffs to reopen their case, amend their complaint, and cure the claimed deficiency in both pleading and proof.
[1] As is pointed out in Sferlazzo v. Oliphant (1914), 24 Cal.App. 81, 86 [140 P. 289], in which a judgment of nonsuit and an order denying a new trial were reversed, "One of the chief objects subserved by a motion for nonsuit is to point out to the court and to opposing counsel the specific oversights and defects in plaintiff's proof of his case; and this in order that, as to the latter, he may supply if possible the specified deficiencies in his proof. [Citations.] When the plaintiff in this case, his attention being called to the matter, offered to do this, it was the duty of the court to permit him to supply the missing evidence; and it was error to refuse this privilege to the plaintiff and, after such refusal, to grant a motion for nonsuit. [Citation.]" (See also, Manford v. Coats (1935), 6 Cal.App.2d 743, 747 [45 P.2d 395]; 9 Cal.Jur. 563-564, 39; 24 Cal.Jur. 770-771, 51.)
And in Low v. Warden (1886), 70 Cal. 19 [11 P. 350], a judgment of nonsuit was reversed where the court had refused to permit plaintiff to reopen the case and introduce testimony which "The court, after hearing argument [on the motion for nonsuit], intimated" was necessary. On appeal, this court stated (p. 21 of 70 Cal.): "We are of opinion that justice to the plaintiff demanded of the court that he should have been allowed to introduce testimony to prove the indorsement. The views of plaintiff's counsel in regard to the questions presented were novel and peculiar, and the course pursued by him singular, but we do not think that this justified the court in refusing to allow the plaintiff to prove that the note had been indorsed to him. ... If the nonsuit were allowed to stand, the plaintiff would be compelled to bring a new action, to which the statute of limitations would be a bar. The plaintiff would thus suffer the loss of money justly due to him. Under the circumstances, this should not be allowed. We think the court erred in refusing to permit the plaintiff to introduce testimony as to the indorsement, for which the judgment must be reversed." (See, also, Code Civ. Proc., 581c.)
[2a] We are convinced that in the present case plaintiffs should likewise have been permitted to reopen their case and present further evidence (under the provisions of section 3343 of the Civil Code as construed and applied in Bagdasarian *134 v. Gragnon (1948), supra, 31 Cal.2d 744, 760-763), of the actual value of the property as compared with the value with which they parted. As contended by them, they had already introduced evidence tending to show certain elements which go toward the ascertainment of "actual" or "market" value of the motel. (See p. 754 of Bagdasarian v. Gragnon, supra.) For example, there was evidence that during the four months just prior to plaintiffs' purchase of the property the income therefrom "would average between $300.00 and $450.00, actually $438.00 per month ..., never ... any more than $438.00." Also, plaintiff Mrs. Eatwell testified that "As far as income was concerned I don't think it was worth a dime."
[3] It has been held that although "Anticipated revenue from the property is not 'additional damage' within the meaning of section 3343 ... It is an element to be considered in determining the actual value of the property ..." (Oliver v. Benton (1949), 92 Cal.App.2d 853, 856 [208 P.2d 375].) There was also evidence that defendants Thomas, from whom plaintiffs purchased the motel for $43,000 on October 19, 1948, had themselves purchased it only the previous day (October 18, 1948), for the sum of $40,000. [4] Evidence of "sales of the identical property in question, whether realty or personalty" is also a proper indicium of value. (Bagdasarian v. Gragnon (1948), supra, 31 Cal.2d 744, 758.) [2b] Under such circumstances and in view of the fact that upon the argument on the motion for nonsuit the trial court had indicated it felt the evidence as to value was insufficient, it was incumbent upon the court to accept plaintiffs' offer and permit them to produce further and more specific evidence as to the actual, or market, value of the property after taking into consideration the various elements properly entering into such value. (See p. 754 of the Bagdasarian case; see, also, 8 Cal.Jur. 906; 10 Cal.Jur. 843 et seq, 1021 et seq.)
[5] As already indicated, plaintiffs' complaint contained averments appropriate to an award of, and it demanded, exemplary damages. Section 3343 of the Civil Code, after authorizing the out-of- pocket measure of recovery, concludes: "Nothing herein contained shall be deemed to deny to any person having a cause of action for fraud or deceit any legal or equitable remedies to which such person may be entitled." We hold, therefore, that such section was not intended to, and that it does not, preclude the recovery of exemplary *135 damages. (See Bagdasarian v. Gragnon (1948), supra, 31 Cal.2d 744, 763.)
Cases relied upon by defendants [fn. 4] in which refusal to permit reopening for the introduction of further evidence was held proper do not involve motions for nonsuit, and are also otherwise distinguishable upon their facts from the situation here presented. No useful purpose would be served by discussing them in detail. In Mayer v. Beondo (1948), 83 Cal.App.2d 665, 668-671 [189 P.2d 327, 190 P.2d 23], likewise not involving a nonsuit, in which it was held that the trial court erred in permitting plaintiff to reopen his case in order to present further proof in support of his request for specific performance of a contract to convey real estate, it appears that the defects in plaintiff's case were called to his attention early in the trial but he failed to take timely steps to remedy them. And in Engstrom v. Auburn Auto. Sales Corp. (1938), 11 Cal.2d 64, 67, 72 [77 P.2d 1059], it appears that during the first two days of a trial lasting several days plaintiff-appellant knew that the defendant Silkman was not expected to attend the trial but nevertheless made no effort to secure his presence or his deposition prior to the close of the trial; it does not appear that any offer of proof was made; it does appear that evidence on the point in question was clear and uncontradicted and that appellant made no effort to controvert it; and that on the appeal the "appellant merely states the point without argument to support it." Under those circumstances the court's refusal to permit plaintiff to reopen the case in order to procure Silkman's testimony after the judge had indicated his intention to grant defendants' motion for a directed verdict, was upheld. Such decision furnishes no precedent for denying the motion of plaintiffs in the present case.
[6] It is likewise apparent that plaintiffs should be permitted to amend their complaint so as to plead the specific remedy and request damages under the out-of-pocket loss rule of section 3343 of the Civil Code, as construed by this court in Feckenscher v. Gamble (1938), 12 Cal.2d 482, 500 [85 P.2d 885], and Bagdasarian v. Gragnon (1948), supra, 31 *136 Cal.2d 744, 760-763. By the complaint on file it is clear that plaintiffs were attempting to state a cause of action for damages for fraud. Their allegations as to the fact and substance of the fraud, and their reliance on it to their actual detriment, were adequate. They did not specifically allege damages under the theory and method of computation authorized by section 3343 but even under the limitations held to be imposed by that section the facts alleged tended at least inferentially to show that the actual value of the property purchased was less than the price paid. The defendants do not appear to have been misled or in anywise prejudiced by the failure of the plaintiffs to have earlier pleaded the more specific facts. Under these circumstances, and in accordance with the rule that amendments shall be liberally allowed in the interests of justice, we are satisfied that plaintiffs' request for leave to amend in the particulars noted should have been granted.
[7] Our conclusion that the amendment should have been allowed is in accord with the general rule that where "the facts stated in the complaint show that the plaintiff is entitled to damages of some sort, it is not a fatal error that the pleader has mistaken the rule by which such damages should be determined." (Warfield v. Basso (1923), 62 Cal.App. 47, 49 [216 P. 48]; see, also, Gallagher v. California Pac. T. & T. Co. (1936), 13 Cal.App.2d 482, 486 [157 P.2d 195]; Bonde v. Bishop (1952), 112 Cal.App.2d 1, 5 [245 P.2d 617]; Barr v. Southern Calif. Edison Co. (1914), 24 Cal.App. 22, 25 [140 P. 47]; Riser v. Walton (1889), 78 Cal. 490 [21 P. 362]; Sutter v. General Petroleum Corp. (1946), 28 Cal.2d 525, 532-533 [170 P.2d 898, 167 A.L.R. 271].) In Keidatz v. Albany (1952), 39 Cal.2d 826, 829 [249 P.2d 264], relied upon by defendants, the statement that "Plaintiffs' complaint did not, however, allege that the property was worth less than the price they agreed to pay for it (Civ. Code, 3343), and accordingly, it did not state a cause of action for damages for fraud," was made in the course of deciding that by the complaint being discussed plaintiffs were seeking to enforce rescission of the contract there involved rather than to recover damages for fraud, and is not controlling here. [8] As we recently observed in Porter v. Bakersfield & Kern Elec. Ry. Co. (1950), 36 Cal.2d 582, 590 [225 P.2d 223], it is elementary that the language used in any opinion is to be understood in the light of the facts and the issue then before the court. In the present case plaintiffs do not purport to have made a rescission nor do they plead facts (such as restoration or an offer to restore, *137 promptness, etc.) entitling them to rescind. (See Davis v. Rite-Lite Sales Co. (1937), 8 Cal.2d 675, 678- 679 [67 P.2d 1039].)
[9] With respect to the contention of defendants Cummings that the evidence is insufficient to support a finding of fraud against them, the plaintiffs Mrs. Botto and Mrs. Eatwell testified that on the day of the transaction here involved Mrs. Cummings (who was managing the motel and collecting the rents) informed them that although "I don't have my books brought up to date ... I know up ... until today [October 19, 1948] I have done $450 worth of business this month." When Mrs. Eatwell "asked for the books she told me her books were not brought up to date." Mrs. Botto further testified that the following April Mrs. Cummings visited the motel and at that time Mrs. Botto "said to Mrs. Cummings, ... 'Mrs. Cummings, why didn't you tell us the day we came out to look at the motel that ... the place had been sold the day before, and it was not doing the business that [defendant] Mr. Beck had told us it was, and we would not have bought the place.' ... She said, well, she started, but every time she started to say something, Mr. Beck would make a face or something or give her some expression on his face so that she wouldn't talk. ... [And] she did make the remark that she had stopped a couple of deals for Mr. Beck." Mrs. Eatwell testified that Mrs. Cummings stated, "I wanted to say something to you, but every time I'd look at Beck, he'd frown and shake his head ... We did mess up a couple of deals for him." It is apparent that the testimony quoted, when construed most strongly in favor of plaintiffs as is required on a motion for nonsuit (Raber v. Tumin (1951), 36 Cal.2d 654, 656 [226 P.2d 574], would support a finding of fraudulent misrepresentation on the part of Mrs. Cummings, upon which plaintiffs were entitled to rely. (See Bagdasarian v. Gragnon (1948), supra, 31 Cal.2d 744, 748; Feckenscher v. Gamble (1938), supra, 12 Cal.2d 482, 494.)
[10] As to defendant Mr. Cummings, plaintiffs state that what they seek from him is "compensatory damages in the amount of $624.40 on the theory of unjust enrichment." The $624.40 (the amount sought from Mr. Cummings under the prayer in the complaint) represents sums paid by plaintiffs to the Cummingses to apply on the encumbrance which they held against the motel. Since it is not contended that this sum was not owing to the Cummingses we are aware of no *138 theory, and plaintiffs suggest none, upon which it could be recovered from Mr. Cummings. It follows that as to him, the motion for nonsuit was properly granted.
The judgment is affirmed as to defendant David Craig Cummings and is reversed as to all other defendants.
Gibson, C.J., Shenk, J., Edmonds, J., Carter, J., and Spence, J., concurred.
"Nothing herein contained shall be deemed to deny to any person having a cause of action for fraud or deceit any legal or equitable remedies to which such person may be entitled."
NOTES
[fn. 1] 1. A second Mr. and Mrs. Thomas were also named as defendants but the action was dismissed as to them.
[fn. 2] 2. Civil Code, section 3343: "One defrauded in the purchase, sale or exchange of property is entitled to recover the difference between the actual value of that with which the defrauded person parted and the actual value of that which he received, together with any additional damage arising from the particular transaction.
[fn. 3] 3. Although the matter seemingly was not raised in the trial court, defendants Cummings urge on appeal that as to themselves a finding of fraud would be without evidentiary support. We discuss this contention hereinafter in this opinion.
[fn. 4] 4. Such cases are: Consolidated Nat. Bank v. Pacific Coast S. S. Co. (1892), 95 Cal. 1 [30 P. 96, 29 Am.St.Rep. 85]; San Francisco Breweries v. Schurtz (1894), 104 Cal. 420 [38 P. 92]; Loftus v. Fischer (1896), 113 Cal. 286 [45 P. 328]; Houghton v. Lawton (1923), 63 Cal.App. 218 [218 P. 475]; Nulty v. Price (1927), 202 Cal. 279 [260 P. 291]; Bovais v. Cassassa (1930), 108 Cal.App. 649 [291 P. 886]; Mazzenga v. Rosso (1948), 87 Cal.App.2d 790 [197 P.2d 770]; and Kan v. Tsang (1949), 90 Cal.App.2d 538 [203 P.2d 86].
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482 F.2d 283
Donald GARDNER and Richard Eagen, Plaintiffs-Appellants,v.Samuel T. JOYCE, Sheriff, Indian River County, et al.,Defendants-Appellees.
No. 73-1452 Summary Calendar.*
United States Court of Appeals,Fifth Circuit.
July 25, 1973.
Douglas S. Lyons, Miami, Fla. (Court-appointed), for plaintiffs-appellants.
Fred R. Ober, Miami, Fla., for defendants-appellees.
Before JOHN R. BROWN, Chief Judge, and DYER and SIMPSON, Circuit Judges.
PER CURIAM:
1
Gardner and Eagen brought this civil rights action for damages under 42 U.S. C.A. Sec. 1983, alleging that certain summary disciplinary action taken against them while they were being held in the Indian River County Jail violated their constitutional rights. After a jury trial which resulted in a verdict for the county sheriff and the chief jailer, Gardner and Eagen appealed. They argue here that they should have received a directed verdict on the question of due process, that their court-appointed attorney should receive compensation under the Criminal Justice Act, 18 U.S.C.A. Sec. 3006A, that they were prejudiced by the admission of certain evidence even though it was ultimately excluded, and that the district court erroneously refused two of their requested jury instructions. We affirm.
2
There were two incidents which gave rise to these damage claims. The first, involving Gardner, resulted in his being placed in administrative segregation1 for seven days following his use of vulgarity toward a jailer; the jailer had just returned a letter which had not complied with the jail's outgoing mail procedures.
3
The second incident began with a jailer's concern over a dirty dayroom being occupied by the plaintiffs and four other prisoners. When questioned by the chief jailer about the mess, Gardner and Eagen became abusive and intractable. The chief jailer left to get some additional help; when he returned with several deputies, Gardner and Eagen refused to cooperate and Gardner broke off a length of wood from a broom handle for a weapon. The deputies then used mace to subdue Gardner, and, after he dropped a sharpened spoon, Eagen was also subdued and taken away. Each man received seven2 days of administrative segregation. It is undisputed that there was no written notice of charges and no hearing prior to the imposition of the segregation in either incident.
4
Plaintiffs' first contention is that the summary disciplinary action taken violated Fourteenth Amendment due process as a matter of law. We do not agree. Although this court is never reluctant to protect the civil rights of all citizens, including prisoners, see, e. g., Cruz v. Hauck, 5 Cir. 1973, 475 F.2d 475, when a constitutional claim is aimed at the internal administrative decisions of jails and prisons, those decisions are accorded great deference. Royal v. Clark, 5 Cir. 1971, 447 F.2d 501; Krist v. Smith, 5 Cir. 1971, 439 F. 2d 146; Flint v. Wainwright, 5 Cir. 1970, 433 F.2d 961; Haggerty v. Wainwright, 5 Cir. 1970, 427 F.2d 1137; Conklin v. Wainwright, 5 Cir. 1970, 424 F.2d 516; cert. denied, 400 U.S. 965, 91 S.Ct. 376, 27 L.Ed.2d 385; Diehl v. Wainwright, 5 Cir. 1970, 419 F.2d 1309; Granville v. Hunt, 5 Cir. 1969, 411 F.2d 9.
5
Without considering the rights that other prisoners may have under other circumstances, our review of this record and the applicable law convinces us that the actions of these jail officials, about which there was some dispute, did not require a directed verdict on the question of whether the plaintiffs' due process rights had been violated.
6
The plaintiffs' three remaining arguments require little attention. First, the request for attorney's fees under the Criminal Justice Act for an attorney appointed under 28 U.S.C.A. Sec. 1915 to assist a prisoner in a Sec. 1983 suit finds no support or authority in the CJA. Cf. Dragon v. United States, 5 Cir. 1969, 414 F.2d 228. Secondly, the evidence and testimony about the hacksaw blade sent to Eagen, which was improperly admitted but then correctly excluded, was not so prejudicial as to require a reversal, especially in light of the cautionary instruction given by the district judge and the absence of a motion for a mistrial. See Conner v. United States, 5 Cir. 1963, 322 F.2d 647, cert. denied, 1964, 377 U.S. 907, 84 S.Ct. 1167, 12 L.Ed.2d 178. Finally, the plaintiffs' requested instructions-defining due process and noting the irrelevance of plaintiffs' guilt-were, when the district court's charge is read as a whole, not improperly refused as unnecessarily repetitive or improper statements of the law. See Brents v. Freeman's Oil Field Service, Inc., 5 Cir. 1971, 448 F.2d 601; McGuire v. Davis, 5 Cir. 1971, 437 F.2d 570; Lind v. Aetna Casualty & Surety Co., 5 Cir. 1967, 374 F.2d 377.
7
Affirmed.
*
Rule 18, 5 Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Company of New York, et al. 5 Cir. 1970, 431 F.2d 409, Part I
1
The administrative segregation consisted of a prisoner's being removed from his normal cell and transferred to a vacant, but regulation cell for the period of the segregation. During this time, a prisoner is not allowed visitors, mail, or canteen privileges. He is fed the normal prison diet, however, and the segregation cell provides the same physical facilities as are afforded the other prisoners
2
Both Gardner and Eagen claimed that they were segregated for twenty-one days, but the jail records and the defendants' witnesses indicate that the punishment lasted only seven days
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651 F.Supp. 269 (1986)
Melvin Ray SMITH, Sr.
v.
EXECUTIVE FUND LIFE INSURANCE COMPANY.
No. 86-777-B.
United States District Court, M.D. Louisiana.
December 31, 1986.
William T. Lowrey, Jr., Baton Rouge, La., for plaintiff.
Francis G. Weller, Ethel H. Cohen, Deutsch, Kerrigan & Stiles, New Orleans, La., John F. Derenbecker, for defendant.
POLOZOLA, District Judge.
This matter is before the court on plaintiff's motion to remand this case to state court. Oral argument was held on December 5, 1986 before this court and for the reasons set forth below, the motion of the plaintiff to remand must be granted.
Plaintiff filed this action on April 4, 1986 in the Twentieth Judicial District Court for the Parish of East Feliciana. The plaintiff alleges that the defendant has unreasonably withheld benefits for total disability under a policy of insurance issued to the *270 plaintiff by the defendant. The defendant answered the state court suit on April 19, 1986. Thereafter, a pre-trial conference was held and a trial date was set in January of 1987. On November 7, 1986, after the case had been pending in state court over seven months, the defendant removed this case to federal court. The plaintiff then filed a motion to remand. The court finds that the defendant did not timely remove the case within the thirty day period set forth in 28 U.S.C. § 1446(b).
The issue on this motion to remand is when did defendant know that the amount in controversy exceeded $10,000.00 and did the defendant remove the case within thirty days that the amount in controversy became known to the defendant.
The plaintiff's petition does not set forth a total amount in controversy. Rather, the petition prays for $540.00 a month plus statutory penalties and attorney's fees.[1] Since defendant paid benefits under the policy until January 28, 1986, the amount in controversy was far below the $10,000.00 needed to invoke the jurisdiction of this court at the time the state court petition was filed. But as the months passed and no further benefits were paid, the amount in controversy increased. The defendant set forth the amount in controversy in Exhibit A of the petition by taking the amount due each month and multiplying by two for the statutory penalty under La.R.S. 22:657. Exhibit A provides:
7-28-86 $6,540.00
8-28-86 7,620.00
9-28-86 8,700.00
10-28-86 9,780.00
11-28-86 10,860.00
In determining the amount in controversy in a case where the plaintiff does not pray for a specific amount the court may look to the petition for removal or make an independent evaluation of the monetary value of the claim. Rollwitz v. Burlington Northern Railroad, 507 F.Supp. 582, 585 (D.Mont.1981). In determining the amount in controversy, this court must look to the time of the removal petition. Ellis v. Logan Co., 543 F.Supp. 586, 588 (W.D.Ken.1982).
The defendant argues that the case did not become removable until October 28, 1986 at which point it was obvious that the $10,000.00 amount was met $9,780.00 in payments and penalties plus reasonable attorney's fees were in dispute at that time. Plaintiff on the other hand asserts that the defendant should have known much earlier that $10,000.00 was in dispute and that the filing of the petition of removal on November 7, 1986 was much too late. The court finds that the amount in controversy began at least by September 28, 1986 when $8,700.00 was due in benefits plus a reasonable attorney's fee. Counsel for defendant in oral argument concedes a reasonable attorney's fee due at this time would cause the amount due to exceed $10,000.00 if attorney's fees were awarded.
The removal statutes must be construed narrowly to prevent encroachment on state court jurisdiction and to give effect to the plaintiff's choice of forum. Robinson v. Quality Insurance Co., 633 F.Supp. 572, 574 (S.D.Ala.1986). However, it would be unfair to the defendant to require him to guess as to the point in time at which $10,000.00 is in controversy.
The thirty days cannot begin until the defendant is able to reasonably and intelligently conclude from the pleadings and "other papers" that the amount in controversy is in excess of $10,000. Rollwitz, 507 F.Supp. at 586.
The problem in this case is not with the amount due or the penalty involved, but rather with the amount of reasonable attorney's fees. When such fees are awarded under a statute, they are included in calculating the jurisdictional amount. Pardue v. River Thames Insurance Co., 651 F.Supp. 143, (M.D.La.1986); Martin v. Granite City Steel Corp., 596 F.Supp. 293, 296 (S.D.Ill.1984). Under the facts of this case, it is reasonable to conclude that this case was clearly removable by September *271 28, 1986. Therefore, the thirty day period for removal began at that point. Since the petition was not filed until November 7, 1986, the removal petition was not timely filed and this case must be remanded to state court.
The court does not feel that this holding is unduly harsh on defendant. In most cases in which the plaintiff does not pray for a specific amount, it is unreasonable to expect the defendant to calculate with any amount of certainty the claims of the plaintiff. But in this case, the defendant even provided the court with a chart of the accrued payments and penalties. It is clear that the defendant should have known at an early date when the requisite jurisdictional amount would be met and when removal would be proper. Once removal was proper, the defendant should have timely filed its removal petition rather than waiting until slightly over a month before trial to remove the case to this court.
Therefore:
IT IS ORDERED that the plaintiff's motion to remand be and is hereby GRANTED; and
IT IS FURTHER ORDERED that this case be remanded to the Twentieth Judicial District Court for the Parish of East Feliciana.
Judgment shall be entered accordingly.
NOTES
[1] The first payment due in February is $520.00. All other payments sought are $540.00.
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677 F.2d 116
U. S.v.McConnell
81-7423
UNITED STATES COURT OF APPEALS Eleventh Circuit
5/5/82
1
N.D.Ga.
VACATED
|
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 08-1930
ISAAC ISAIAH, M.D.,
Plaintiff - Appellant,
v.
WMHS BRADDOCK HOSPITAL CORPORATION; MEMORIAL HOSPITAL AND
MEDICAL CENTER OF CUMBERLAND, INCORPORATED,
Defendants - Appellees.
Appeal from the United States District Court for the District of
Maryland, at Baltimore. J. Frederick Motz, District Judge.
(1:07-cv-02197-JFM)
Submitted: July 31, 2009 Decided: September 1, 2009
Before WILKINSON, SHEDD, and AGEE, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Conrad W. Varner, VARNER & GOUNDRY, P.C., Frederick, Maryland,
for Appellant. Jack C. Tranter, Sarah Downing Howard, GALLAGHER
EVELIUS & JONES LLP, Baltimore, Maryland, for Appellees.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Isaac Isaiah, M.D., appeals an order granting summary
judgment against him in an action he brought against WMHS
Braddock Hospital Corp., et al. (collectively “WMHS”). Because
Dr. Isaiah does not challenge one of the bases for the decision
against him, we affirm.
Dr. Isaiah initiated the present action alleging several
state claims against WMHS arising from the precautionary
suspension and subsequent revocation of his medical privileges
at WMHS. Federal jurisdiction is based on diversity. See 28
U.S.C. § 1332.
The district court considered both parties’ motions for
summary judgment, and granted WMHS summary judgment upon two
distinct and independent grounds, (1) immunity under the federal
Health Care Qualified Immunity Act (“HCQIA”), 42 U.S.C. § 11112,
et al., and (2) immunity under the Maryland statutes providing
immunity for peer review activity, Md. Code Ann., Health Occ. §
14-502 and Cts. & Jud. Proc. § 5-638. The district court’s
order granting summary judgment to WMHS is based accordingly.
On appeal, although Dr. Isaiah challenges the district
court’s ruling on the issue of immunity under the HCQIA, he does
not challenge the district court’s determination that WMHS was
entitled to immunity under the Maryland statute. Dr. Isaiah
2
does not mention the judgment of immunity under Maryland law in
his statement of issues or anywhere else in his brief.
WMHS contends that because Dr. Isaiah failed to challenge
this separate, but equally dispositive, ruling, he has waived
the right to challenge it on appeal. We agree.
Federal Rule of Appellate Procedure 28(a)(9)(A) requires
that the argument section of an appellant’s opening brief must
contain the “appellant’s contentions and the reasons for them,
with citations to the authorities and parts of the record on
which the appellant relies.” Failure to comply with the
specific dictates of this rule with respect to a particular
claim triggers abandonment of that claim on appeal. See 11126
Baltimore Boulevard, Inc. v. Prince George’s County, 58 F.3d
988, 993 n.7 (4th Cir. 1995) (en banc). Furthermore, Federal
Rule of Appellate Practice 28(a)(5) requires a statement of
issues presented for review, but Dr. Isaiah’s statement of
issues does not raise any claim of error as to the district
court’s judgment of immunity under Maryland law. Because Dr.
Isaiah failed to challenge the district court’s ruling as to
immunity under the Maryland statutes, he has waived the right to
review of that ruling on appeal. *
*
Despite this specific point being raised in the Appellees’
brief, Dr. Isaiah did not file a reply brief, and the time for
filing it has long passed. Even if he had addressed the issue
(Continued)
3
Immunity under the HCQIA is a separate legal analysis from
the grant of immunity for peer review actions under the Maryland
statute. In Imperial v. Suburban Hospital Ass’n, 37 F.3d 1026
(4th Cir. 1994), we observed that the Maryland statute is
“broader in scope than the immunity granted by the [HCQIA],” and
noted that the state statute extends immunity to “all civil
liability” and is based on whether an individual “acts in good
faith and within the scope of the jurisdiction of a Medical
Review committee.” Id. at 1031-32 & 1031 n.* (emphasis
omitted). Similarly, the Maryland Court of Appeals has stated:
[B]ecause the Maryland statute requires that a member
of a review committee act in good faith, while the
HCQIA employs objective standards of reasonableness,
“the State law . . . may, in some circumstances,
provide additional immunity or protection to medical
review bodies. The State law is preempted by the
Federal only to the extent that it provides less
immunity than the Federal, not to the extent it
provides more.”
Goodwich v. Sinai Hosp., 680 A.2d 1067, 1082 (Md. 1996)
(emphasis omitted). While a person is only exempt under the
HCQIA when the objective standards set forth in that statute are
satisfied, a person who does not meet those objective standards
in a reply brief, the Court will generally not consider issues
raised for the first time in that manner, United States v.
Brooks, 524 F.3d 549, 556 n.11 (4th Cir. 2008), or in oral
argument. Goad v. Celotex Corp., 831 F.2d 508, 512 n.12 (4th
Cir. 1987).
4
may still be entitled to immunity under the Maryland statute if
those actions “were nonetheless taken in good faith.” Bender v.
Suburban Hosp., Inc., 758 A.2d 1090, 1104 (Md. Ct. Spec. App.
2000).
Because the Maryland statute provides an independent basis
for the district court’s judgment granting summary judgment to
WMHS, and because Dr. Isaiah has abandoned any challenge to that
determination on appeal by failing to raise it in his opening
brief, there is no reason to consider the underlying merits of
his HCQIA-based claim. Dr. Isaiah had to challenge both bases
for the district court’s judgment in order to prevail on appeal.
See, e.g., Atwood v. Union Carbide Corp., 847 F.2d 278, 280 (5th
Cir. 1988) (holding that where an issue “constituted an
independent ground for [the disposition] below, appellants were
required to raise it to have any chance of prevailing in [their]
appeal”). Even if Dr. Isaiah’s appeal were successful, the
alternate basis for the district court’s judgment would stand,
and Dr. Isaiah’s appeal would be of no effect.
Because Dr. Isaiah has waived review of the district
court’s independent and alternate ground for its judgment, we
conclude that oral argument would not assist the decisional
process. For the aforementioned reasons, we affirm the district
court’s order granting summary judgment to WMHS.
AFFIRMED
5
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271 F.2d 218
HAZELTINE RESEARCH, INC., Plaintiff-Appellant,v.DAGE ELECTRIC COMPANY, INC., Defendant-Appellee.
No. 12490.
United States Court of Appeals Seventh Circuit.
July 8, 1959.
Petition for Rehearing Withdrawn November 16, 1959.
Edward A. Ruestow, Little Neck, N. Y., M. Hudson Rathburn, Chicago, Ill., W. Houston Kenyon, Jr., New York City, Leroy Eason, Little Neck, N. Y., Mason, Kolehmainen, Rathburn & Wyss, Chicago, Ill., of counsel, for appellant.
Theodore W. Anderson, Jr., Chicago, Ill., C. B. Dutton, Indianapolis, Ind., Olson, Mecklenburger, von Holst, Pendleton & Neuman, Chicago, Ill., of counsel, for appellee.
Before SCHNACKENBERG, PARKINSON and KNOCH, Circuit Judges.
PARKINSON, Circuit Judge.
1
Plaintiff-appellant, Hazeltine Research, Inc. (Hazeltine), brought this action for infringement of its Patent No. 2,540,012 against Dage Electric Company, Inc. (Dage), defendant-appellee. Dage counterclaimed for a declaratory judgment of invalidity and noninfringement. The District Court found the patent invalid and dismissed the complaint, but also found the patent, if valid, to have been infringed. This appeal followed.
2
The patent in suit was issued, on January 30, 1951, to Hazeltine, as assignee of one Octavio M. Salati, the inventor, on application of Salati filed May 19, 1945.
3
The patent in suit deals with a connector used in the joining together of "coaxial transmission lines or cables. These cables, used extensively in the electronics industry, carry relatively high frequency electrical energy. The high frequency necessitates the use of a specialized transmission line and as "coaxial" implies there are, in the cable, two conductors, an inner rod and an outer tubular sheath, separated by an insulating dielectric spacer. The cable itself, if properly designed, creates no difficulty and its ability to transmit the electrical energy with a minimum of reflection back towards the source can be adequately determined. The engineering term "characteristic impedance" is one used to denote the nonreflection factor of any coaxial cable, i. e., if the characteristic impedance is constant there will be no reflection.
4
The difficulty arises when one coaxial cable must be joined to another. If the cable connector is such that the characteristic impedance changes abruptly there will be a reflection. Such a change is known as a "discontinuity". There is also the further problem of a short circuit between the inner and outer conductors of the connector if not properly designed as to the dielectric spacer.
5
Without going into greater detail it appears that Hazeltine admits that the discontinuity problem presented by the connectors had been solved insofar as medium and large coaxial cables were concerned. However, it contends that its patented connector was and still is the only adequate one in the field of small size cables, or, as it says, the problem was "miniaturization", i. e., how to solve the reflection problem in small size connectors while still meeting the problems of voltage breakdown and sturdy mechanical construction.
6
Hazeltine argues that the prior art connectors were of the "continuous constant impedance" type in which the impedance is the same for any portion, however short, along the connector length. These connectors were designed so that their impedance "matches" the impedance of the cable with which they are to be used. However, if this type is utilized to connect cables of a relatively small size either the connector would be of a larger physical size than desirable or if made in a small size the components, particularly the inner rod would be fragile, the tolerances would become difficult to maintain, and such connectors would not be suited to mass production. This is due to the fact that there is a set ratio between the inside radius of the outer sheath and the radius of the inner rod and as the former becomes smaller so must the latter, hence the size of the connector is limited to the minimum practical size of the inner rod. Of course, to ignore the ratio between the two would not give the desired impedance. Hazeltine, however, contends that Salati overcame these obstacles simply by abandoning the continuous constant impedance theory and substituting therefor sections of impedance in his connector that were either higher (inductive) or lower (capacitive) than line impedance and which averaged out to line impedance.
7
Using the Salati principle it is possible to construct a connector of small size wherein the internal components have the necessary size, strength and rigidity required for field use inasmuch as the prior ratio between the inner rod and outer sheath need no longer be maintained through each incremental length of the connector. However, Dage contends that the prior art actually set forth the same principles that Salati claims for his invention and that Salati's patent is vague and indefinite.
8
The District Court made extensive findings of fact. Basically they may be broken down into the four following main findings:
9
1. The language of the claims of the patent in suit is invalid in that it is vague and indefinite;
10
2. The patent taught nothing not already found in the prior patents relied upon by Dage;
11
3. The patent taught nothing not already found in the three connectors designed for the Armed Forces which constituted prior knowledge; and
12
4. If the patent in suit is valid it has been infringed by the two Dage accused devices.
13
The District Court based its findings of vagueness and indefiniteness on the following:
14
1. It is silent as to size, type or characteristic impedance of the cable with which it is to be used, and it provides no information from which these facts might be determined;
15
2. It is silent as to the size of the connector or what would constitute a small connector;
16
3. It uses the term "so proportioned" when actually three definite proportions as to dimensions and material would be necessary; and
17
4. It fails to mention the existence of discontinuity capacitance, the method of determination, or the inclusion of the factor in the over all design.
18
Assuming that these findings are correct in their factual content, do they then invalidate Salati's patent as being vague and indefinite? We think not.
19
It is well settled that a patent must be written in a manner intelligible to the person who would normally be expected to utilize it. The fact that a patent would use such terms or, to the converse, omit such terms as would then render it incomprehensible to a layman would not of necessity render it invalid. It is only when those skilled in the art are unable to determine the extent, purpose or rationale of the invention from a study of the patent that it may be said the patent is vague and indefinite and, therefore, invalid.
20
The Supreme Court has repeatedly held that a specification in letters patent is sufficiently clear and descriptive when expressed in terms intelligible to a person skilled in the art to which it relates. Webster Loom Co. v. Higgins, 1881, 105 U.S. 580, 26 L.Ed. 1177; Seabury v. Am Ende., 1894, 152 U.S. 561, 567, 14 S.Ct. 683, 38 L.Ed. 553; Carnegie Steel Co. v. Cambria Iron Co., 1902, 185 U.S. 403, 437, 22 S.Ct. 698, 46 L.Ed. 968.
21
Therefore, determination of the question of vagueness and uncertainty must be made in light of what a person skilled in the electronics art would be able to glean from the Salati patent.
22
The District Court made, inter alia, the following findings of fact:
23
"Coaxial cables and connectors therefor are old and well known, dating back prior to 1930. The transmission and treatment of microwaves was well understood prior to 1900.
24
"A. As early as 1924 the textbooks included sections teaching the design of coaxial transmission lines including determination of capacitance, C, inductance, L, and characteristic impedance Zo from the ratio of the conductor diameters D/d and the dielectric constant, K. This teaching was utilized in the design of cables, connectors or other associated appurtenances.
25
"B. The attainment of high voltage operation by providing long surface paths between the inner and outer conductors was also well known as early as 1930, and tables, charts and formulas of voltage breakdown through air were available.
26
"C. During 1944 two articles (Defendant's Exhibit 26) by Whinnery et al. appeared in the Proceedings of the Institute of Radio Engineers teaching the importance of and design compensation for discontinuity capacitances which are the important reflective effects produced at each radial wall or step within a coaxial cable or connector."
27
It would appear that the full significance of these findings was not correlated by the District Court to the question of the vagueness of the patent in suit. All that was necessary for Salati to set forth was the method of designing the well understood components of the connector so that there was an enlarged inner rod, an adequate dielectric spacer and compensating sections of high and low impedance. The term "so proportioned" simply referred the person reading the patent to the formulae, of which many were known since 1924, in order that he might design his connector with an average impedance matching that of the cable to be used. The fact that Dage's expert witness was able to analyze the Salati patent indicates that those skilled in the art would experience no difficulty in comprehending its teachings. Hazeltine's expert witness was asked the question: "Would you say whether or not in your opinion the disclosure in the Salati Patent as a whole is adequate to teach one skilled in the art how to practice this Salati invention?" His answer was: "Yes, I would think so." We find no evidence in this record to indicate Salati's patent would be unintelligible to those skilled in the art. We think under the circumstances the term "so proportioned" was adequate for those who would make use of Salati's patent. Webster Loom Co. v. Higgins, 1881, 105 U.S. 580, 26 L.Ed. 1177.
28
The problem as to whether Salati's patent is invalid in that it does not state the size or impedance of the cable with which it is to be used nor what constitutes a "small connector" is also illusory. While it is true that the Salati connector was designed originally for ¼ inch 50-ohm coaxial cable and that its greatest utility lies in the smaller sizes where the prior type connectors are unsatisfactory, a person skilled in the art, reading the Salati patent, would realize that the Salati connector could be employed with either a small or large cable, providing, of course, the proper dimensions as found in the proven formulae were used. The fact the patent does not specify an exact size does not render it invalid.
29
The failure to mention the possibility of a discontinuity capacitance occurring within Salati's connector and the significance thereof is, in our opinion, not an invalidating defect. A discontinuity capacitance caused by any sharp curve in the line or, in the case of a connector, any acute break on the surface of the conductors, may cause a reflection. In the year 1944 the so-called "Whinnery articles" were published whereby it was possible to compute the discontinuity capacitance of any irregularity that might occur within a connector. These articles predated Salati's application. Therefore, both the presence and significance of discontinuity capacitances were known to those skilled in the art and would simply have to be taken into account when making use of the patent, i. e., when computing the dimensions of the inductive section to balance the capacitive section, the discontinuity capacitance must also be considered.
30
It might appear that the term "so proportioned" is being allowed too much latitude; however, a careful review of the record convinces us that a person skilled in the art would have no difficulty in following Salati's teachings and factors such as the discontinuity capacitance would present no problem to those who keep abreast of the latest findings in the field of electronics.
31
We, therefore, hold that the Salati patent is not invalid for want of specificity.
32
The District Court found that Salati's patent taught nothing not already found in the prior art. Nine separate patents were cited by Dage.
33
The first four patents, Green No. 1,841,473; White, et al. No. 2,125,597; Kaar No. 2,127,408; and Fell No. 2,406,945. were used, as stated by Dage, "to establish that the patent art bore out the equations, sample calculations, and extensive connector design background provided by Dean Fischer at the trial." These patents simply constitute the general background of the art and buttress our holding that one skilled in the art would not find Salati's patent vague or indefinite.
34
The White and Kaar patents are more or less the same; both deal with the problem of joining together cables of two different impedances. There is uncontradicted testimony by Hazeltine's expert that neither White nor Kaar attempted to solve the problem that Salati faced nor does their teaching in any way direct itself to a solution of that problem. The Green cable joint is to be employed with high frequency cables wherein the impedances are the same but the physical sizes differ between the two cables to be joined. Fell's patent is an "insulator for concentric transmission lines." None of these patents deals with an easily detachable connector.
35
We now consider the remaining five patents to determine if, individually or in combination, they had brought the art to such a point that Salati's teachings were either known or were obvious as the next logical step to those skilled in the art.
36
Watts No. 1,871,397, as well as Waite, Jr. No. 2,615,953, is primarily concerned with the mechanics of the connector. Both seem to be aware of the problem of discontinuity but other than casual reference to avoid it there is nothing. As to Waite, Dean Fischer, Dage's expert witness, testified, "the Waite patent really is directed towards the mechanism or device of clamping means and the way in which the braid is clamped and the way in which the insulation of the cable can also be clamped at the end of the cable."
37
Buschbeck No. 2,267,371 provides a compensating section in a cable where a joint, connector or sharp bend has produced a discontinuity that must be cancelled out. However, Hazeltine's expert testified, and we can find nothing in the record to the contrary, that if Buschbeck's section was reduced to the physical size that a Salati connector might be, the "intermediate conductor * * * would become impossibly fragile. It would not be a rigid member anymore." Also in the Buschbeck patent the two capacitive sections and the one inductive section were arranged in a manner contrary to the sequence Salati used. On its face this distinction might not appear too important but again Hazeltine's expert, without contradiction, testified that for Salati to have followed Buschbeck would have "spoiled the other features of his arrangement", i. e., the size and spacing of the dielectric. In short, the only testimony anent the direct comparison of Buschbeck to Salati, as opposed to Dean Fischer's discussion of Buschbeck standing alone, was to the effect that Salati never could have made a workable miniaturized connector had he followed the teachings of Buschbeck.
38
Cork No. 2,490,622 is basically a constant continuous impedance connector with a screw and ring adjustment to form a complete impedance match. The screw provides a capacitive section as it is threaded in or out as desired. Also by means of an adjusting ring the insulation material of the halves may be kept at a desired distance apart thereby forming an air space which would constitute an inductive section. Hence, as Dage says, this connector might have both an inductive and capacitive section. However, a comparison of the two patents shows that the teachings of Cork would not lead to the patent in suit.
39
Cork's patent utilizes two devices known to the prior art. The inner and outer conductors are kept a uniform distance apart thereby giving a constant impedance and the connector itself is one-half wave length long. Hence if this connector was miniaturized Cork would simply be faced with the problems always attendant on the smaller sized constant impedance connectors. Moreover, Cork's inductive and capacitive sections are mere corrective devices created in a totally different way than those of Salati. Cork's device would not be satisfactory in field use as would Salati's in that the former would have two moving parts on the exterior surface.
40
The remaining patent is Weber, et al. No. 2,529,436 which shows a "modified form of bullet connector." The patent goes on to say that the "purpose of providing the groove 5c is to compensate for the discontinuity in the conductor shape used by the collar 5b, in other words, any wave reflection caused by collar 5b is compensated or cancelled by a corresponding reflection caused by groove 5c". Here Weber has apparently a normal connector wherein, due to a sharp break caused by the attachment of the "bullet" to the inner rod, a discontinuity appears. This is solved by a "groove", i. e., the adjacent diameter of the "bullet" is sharply reduced a corresponding amount and, therefore, the discontinuity is cancelled out. Here again we have basically the constant impedance connector, with all the inherent problems of miniaturization, with a corrective factor added. Without going into greater detail we can say that while Weber, to some extent, actually used a compensating section in a prior type connector to cancel a discontinuity the teachings are such that Weber would not have made obvious, to a person skilled in the art, a connector where such compensating sections constituted the very essence thereof.
41
As to the three nonpatented connectors, HN, BN and BNC, developed for the Armed Forces, constituting prior knowledge, the District Court found that the "complete combination of even the narrowest and most detailed claims of the patent is completely shown in * * * the BN, HN and Bell BNC connectors."
42
The type HN is a matched connector, i. e., it has the same impedance as the cable to which it is attached. There is no testimony in the record that this connector used the mismatching technique of Salati's patent but to the contrary it appears that it was of a large size and was a continuous constant impedance connector of the prior style. Despite Dage's contentions in its brief, Dean Fischer did not testify as to whether the HN connector had sections of high or low impedance and in fact said nothing other than the HN was "said to be a constant impedance connector." The record is barren of any substantial proof that the HN connector resembles in any way the Salati connector or taught anything that would have aided Salati.
43
The type BN connector, while having successively different impedances, was not intended for high frequency transmission and at such high frequency would be completely unsatisfactory. The Government publication Installation and Maintenance of Transmission Lines Waveguides and Fittings issued by the Electronics Division of the Bureau of Ships, Navy Department, states as to the BN connectors: "They are not constant impedance and are therefore not recommended for applications with frequencies in excess of approximately 200 megacycles per second unless the electrical requirements of the circuit are not critical in regard to impedance matching."
44
We fail to see how this connector could have taught Salati anything about high frequency connectors.
45
Lastly we come to the BNC connector upon which Dage relies heavily. We have searched the record and we can find no testimony indicating that the BNC used Salati's mismatching technique. Dage's expert witness, Dean Fischer, testified that the BNC would be matched only with a cable having approximately 52 ohms. This in itself means nothing as the matching may be accomplished in many ways. Hazeltine's expert and Salati both testified that the BNC would be badly mismatched and was completely unsatisfactory because of excessive reflections.
46
On September 19, 1944 Lt. Cdr. Neher, identified as "Chairman Army-Navy R. F. Cable Coordinating Committee", wrote to Hazeltine in part as follows:
47
"At the last meeting of members of the Army-Navy R. F. Cable Co-ordinating Committee and your organization to discuss constant impedance connectors for RG-58/U cable, the design presented by your organization looked very good and sufficiently near completion to be considered the standard type for its intended application.
48
"In accordance with the information obtained at this meeting, the Coordinating Committee discontinued their own work on this type connector and recommended that Bell Telephone Laboratories discontinue their work."
49
Dage's own witness, Edwin A. Mroz, a Government Electronic Engineer, testified that he suspected that it was the BNC connector which was recommended for abandonment.
50
Therefore, we must conclude that there is no valid basis upon which the District Court could find that the HN, BN or BNC connectors constituted invalidating prior knowledge. The only supported finding from this record could be that the Salati patent superseded and, to a great extent, made obsolete the three aforementioned connectors, and that the patent in suit was not invalid over the prior art. In fact, Hazeltine's expert testified, without objection or contradiction, as follows:
51
"Q. Tell me, Professor, whether or not in your opinion the Salati Patent would have been obvious to one skilled in the art at the time it was made?
52
"A. No, sir, in my opinion it certainly would not have been obvious."
53
The burden of proving invalidity by clear and cogent evidence was on Dage. Radio Corp. v. Radio Eng. Laboratories, 1934, 293 U.S. 1, 8, 55 S.Ct. 928, 79 L.Ed. 163; Mumm v. Jacob E. Decker & Sons, 1937, 301 U.S. 168, 171, 57 S.Ct. 675, 81 L.Ed. 983; Helms Products v. Lake Shore Manufacturing Co., 7 Cir., 1955, 227 F.2d 677, 680. We have in mind the decisions of this Court in Hobbs and Hyster,1 nevertheless, we have found nothing in the prior art or knowledge which rebuts the prima facie proof of the patent's validity as the Salati patent is valid over the prior art, including that which was not before the Patent Office.
54
A brief study of the case of Great A & P Tea Co. v. Supermarket Equipment Corp., 1950, 340 U.S. 147, 71 S.Ct. 127, 95 L.Ed. 162, will indicate how difficult it is to set an exact standard of invention where, as here, no new physical element has been added. However, Salati went far beyond the simple realignment of old and known components. It is true that the inner conductor, outer conductor and dielectric were all well known to the art but they are by nature necessities for all connectors in this field. Salati not only rearranged these parts but in doing so injected an entirely different concept that theretofore had not been thought of in relation to coaxial cable connectors, and produced an entirely new and useful result. We recognize that compensating sections had been used in the industry from time to time as a corrective factor but that the idea of using this principle for the basis of connector design was not obvious to those well skilled in the art is shown by the lack of success Bell Telephone Laboratories had with the BN and BNC connectors. Rohm & Haas Company v. Roberts Chemicals, 4 Cir., 1957, 245 F.2d 693, 697; Technical Tape Corp. v. Minnesota Mining & Mfg. Co., 2 Cir., 1957, 247 F.2d 343, 347.
55
Looking backward we may say the principle discovered by Salati was lurking in the background but it is clear from this record it was not obvious to one skilled in the art. Hindsight is of little value now.
56
The District Court found that two of the accused devices manufactured and sold by Dage infringed the patent in suit, if the patent is valid. Dage does not question that finding here and we agree that Dage is guilty of infringement as to the two accused devices, No. A-100-056-1 (Military Type No. UG 88/U) and No. A-100-130-1 (Military Type No. UG 89/U).
57
For the reasons stated the findings and conclusions of the District Court that the patent in suit is invalid are not supported by any substantial evidence and are clearly erroneous.
58
The District Court made other findings with which we cannot agree. However, as they are of minor significance and in light of what we have heretofore held any further discussion would serve no useful purpose.
59
Judgment reversed and cause remanded for further proceedings consistent with this opinion.
Notes:
1
Hobbs v. Wisconsin Power & Light Company, 7 Cir., 1957, 250 F.2d 100; Hyster Company v. Hunt Foods, Inc., 7 Cir., 1959, 263 F.2d 130
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FILED
NOT FOR PUBLICATION APR 23 2012
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
KULWINDER SINGH, No. 09-71662
Petitioner, Agency No. A095-564-359
v.
MEMORANDUM *
ERIC H. HOLDER, Jr., Attorney General,
Respondent.
On Petition for Review of an Order of the
Board of Immigration Appeals
Submitted April 17, 2012 **
Before: LEAVY, PAEZ, and BEA, Circuit Judges.
Kulwinder Singh, a native and citizen of India, petitions for review of the
Board of Immigration Appeals’ order dismissing his appeal from an immigration
judge’s (“IJ”) decision denying his motion to reopen removal proceedings. We
have jurisdiction under 8 U.S.C. § 1252. We review for an abuse of discretion the
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
BIA’s denial of a motion to reopen. Toufighi v. Mukasey, 538 F.3d 988, 992 (9th
Cir. 2008). We deny the petition for review.
The agency did not abuse its discretion in denying Singh’s motion to reopen
because it considered the record and acted within its broad discretion in
determining that the evidence was insufficient to establish prima facie eligibility
for asylum, withholding of removal, or CAT relief. See Mendez-Gutierrez v.
Gonzales, 444 F.3d 1168, 1172 (9th Cir. 2006); Gomes v. Gonzales, 429 F.3d
1264, 1267 (9th Cir. 2005) (prior relocation was evidence that petitioners could
again relocate).
Singh’s contention that the agency failed to consider how his new evidence
related to a future fear of persecution is belied by the record.
PETITION FOR REVIEW DENIED.
2 09-71662
|
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|
658 F.Supp. 688 (1987)
Gerda Dorothea DeWEERTH, Plaintiff,
v.
Edith Marks BALDINGER, Defendant and Third-Party Plaintiff,
v.
WILDENSTEIN & CO., INC., Third-Party Defendant.
No. 83 Civ. 1233 (VLB).
United States District Court, S.D. New York.
April 20, 1987.
*689 *690 Fox Glynn & Melamed, New York City, for plaintiff; John R. Horan, Jeffrey P. Wiegand, of counsel.
Edward M. Sills, New York City, for defendant and third-party plaintiff.
Shearman & Sterling, New York City, for third-party defendant; Jeremy G. Epstein, of counsel.
VINCENT L. BRODERICK, District Judge.
I.
Plaintiff Gerda Dorothea DeWeerth seeks the return from defendant Edith Marks Baldinger of a painting by Claude Monet entitled "Champs de BlÈ Vetheuil" ("the Monet").
A bench trial was had before me on a "submitted" basis, in which written and videotaped depositions and the exhibits were made available to me. This opinion contains my findings of fact and conclusions of law.[1]
II.
The court has jurisdiction of the action under 28 U.S.C. ß 1332(a)(2); Mrs. DeWeerth is a citizen of the Federal Republic of Germany, and Mrs. Baldinger is a citizen of the State of New York. The Monet which is the subject of this action is worth more than $10,000.
Venue is proper under 28 U.S.C. ß 1391(a).
The Monet is an impressionistic depiction in oil of a wheat field, a village and trees near Vetheuil, France. It measures 65 centimeters by 81 centimeters, and is signed and dated "Claude Monet '79".
Mrs. DeWeerth's father, Karl von der Heydt, purchased the Monet in or about 1908, and he thereafter kept it in his house in Bad Godesberg, West Germany. Plaintiff inherited the Monet from her father after his death on August 9, 1922, in the division of the works and objects of art in his estate. With the exception of the years 1927 to 1929, when the Monet was kept in her mother's house, plaintiff kept the Monet in her residence in Wuppertal-Elberfeld from 1922 until August 1943, where it was on display on a wall next to a sculpture by Auguste Rodin, also inherited from her father. This sculpture is still in plaintiff's possession at her West German residence, and plaintiff has submitted a 1943 photograph showing the Monet and the Rodin displayed together in her residence. From that time until the present, she neither sold nor otherwise disposed of the Monet, nor did she entrust the Monet to anyone else to sell or otherwise dispose of it.
In August 1943, during the Second World War (the "War"), Mrs. DeWeerth sent the Monet, along with the Rodin sculpture and other valuables, by van to her sister Gisela von Palm (now deceased) in Oberbalzheim in Southern Germany, for safekeeping. Although the van arrived, plaintiff never saw the Monet again. In the fall of 1945, Gisela von Palm informed plaintiff of the disappearance of the Monet from Mrs. von Palm's house in Oberbalzheim. There is no direct evidence as to what caused the disappearance of the Monet. American soldiers were quartered in the house after the close of the War in 1945, and it was after they had left that its disappearance was noted. I infer that either one of those soldiers, or someone else, stole the painting from the von Palm house where it had been sent for safekeeping.[2]
*691 Mrs. DeWeerth was approximately 50 years old when she learned of the Monet's disappearance. Subsequently, she made efforts to locate it. In 1946 she reported the loss of the Monet to the military government then administering the Bonn-Cologne area after the end of the War. In 1948 she solicited the assistance of her lawyer, Dr. Heinz Frowein, in attempting to find and recover it. Plaintiff also made inquiries in 1955 of one Dr. Alfred Stange, known to Mrs. DeWeerth as an art expert. In 1957 she reported the Monet as missing to the Bundeskriminalamt (the West German federal bureau of investigation) in Bonn. All of these efforts to find the Monet were unsuccessful.
By December 1956 however, the Monet had found its way to the United States through Switzerland. Third party defendant Wildenstein & Co., Inc. ("Wildenstein"), an art gallery in New York City, appears to have acquired the Monet on consignment from Francois Reichenbach, an art dealer from Geneva, Switzerland, in about December 1956. From December 1956 to June 1957, Wildenstein had possession of the Monet in New York. A Wildenstein record shows a 1962 payment, or credit, to Reichenbach, evidently for the Monet.
In June 1957, Wildenstein delivered the Monet for inspection to Mrs. Baldinger at her residence at 710 Park Avenue, New York, New York. Mrs. Baldinger, after several days, purchased the Monet in good faith and for value from Wildenstein on or about June 17, 1957.
After its purchase by Mrs. Baldinger, the Monet was publicly exhibited only on two occasions. Mrs. Baldinger exhibited the Monet at a benefit held in the Waldorf-Astoria Hotel in New York City, from October 29 to November 1, 1957, and loaned it to Wildenstein for display during a Wildenstein exhibition entitled "One Hundred Years of Impressionism" held April 2 to May 9, 1970 at its gallery in New York City. At the close of this exhibition, Wildenstein returned the Monet to Mrs. Baldinger. Except for those two exhibitions, Mrs. Baldinger maintained the Monet exclusively in her residence at 710 Park Avenue, New York City, from June 1957 to the present date.
There are only four published references to the Monet in the art literature: two of them are in catalogues in connection with the exhibitions already cited, and the other two are in publications with which Wildenstein was apparently connected:
(1) Claude Monet: Bibliographie et Catalogue Raisonne, Vol. 1 1840-1881. Published by la Bibliotheque des Arts, Lausanne, Paris; introduction by Daniel Wildenstein; collaborators Rodelphe Walter, Sylvie Crussard, and the Foundation Wildenstein, 1974, Geneva; painting no. 595.
(2) The exhibition catalogue One Hundred Years of Impressionism, A Tribute to Durand-Ruel, A Loan Exhibition, April 2-May 9, 1970, Wildenstein Gallery, New York; painting no. 43.
(3) Monet: Impressions, Daniel Wildenstein, published in New York, 1967, Library of Congress call no. ND553.M76W5313.
(4) The exhibition catalogue Festival of Art, October 29-November 1, 1957, Waldorf-Astoria Hotel, New York; item 125.
In or soon after July 1981, plaintiff, through the efforts of her nephew Peter von der Heydt, discovered that the Monet had been exhibited in 1970 at the aforementioned Wildenstein loan exhibition. Plaintiff thereafter retained counsel in New York in 1982 to determine whether Wildenstein knew the identity of the present possessor of the Monet. When Wildenstein refused to disclose the possessor's identity or the Monet's whereabouts, plaintiff commenced a proceeding in November, 1982 against Wildenstein in New York State Supreme Court seeking "disclosure to aid in bringing an action" under N.Y.C.P.L.R. *692 ß 3102(c). On December 1, 1982, the State Supreme Court found for the plaintiff, ordering Wildenstein to reveal the identity of the possessor. Plaintiff thereafter learned that defendant Baldinger possessed the Monet.
By letter to Baldinger dated December 27, 1982, plaintiff demanded return of the Monet. By letter dated February 1, 1983, Baldinger refused the demand. This action ensued.
III.
Under Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941), in this diversity action I must apply the same substantive law that New York would apply, including New York's choice of law rules. Thus the initial question is whether, under New York choice of law theory, German or New York law is applicable to determine who owns the Monet.
In resolving this issue, I am guided by Kunstsammlungen Zu Weimar v. Elicofon, 536 F.Supp. 829, 845 (E.D.N.Y.1981), aff'd., 678 F.2d 1150, 1160 (2d Cir.1982) ("Elicofon"), a case upon which both parties rely. In Elicofon, a diversity action brought by a German government art museum seeking recovery of two stolen paintings, involving both East and West Germany, a foreign national, and an American citizen, the court was required to determine the ownership of two Albrecht Duerer portraits executed around 1499. These portraits had been stolen in 1945 from a castle in what is now East Germany and discovered in 1966 at the New York residence of Elicofon, an American citizen, who alleged that he had purchased them in good faith 20 years earlier from an American ex-serviceman who appeared at his Brooklyn home and represented that he had bought them while in Germany. On cross-motions for summary judgment, the district court held for the German government art museum and against Elicofon, finding that the art museum had sufficient ownership interest in the paintings to pursue the action. In doing so, the district court ruled that German law[3] was not applicable to determine whether Elicofon acquired title to the paintings. It found that "New York's choice of law dictates that questions relating to the validity of a transfer of personal property are governed by the law of the state where the property is located at the time of the alleged transfer." 536 F.Supp. at 846 (citations omitted). Moreover, it noted that the same result would obtain if it applied the "significant relationship" analysis often invoked by New York courts to the facts of the case, that is, if it determined which state had the most significant relationship to the chattel and to the parties. Id.
Applying either analysis dictated the same result in Elicofon: New York law applied. The court ruled that "Germany's connection with the controversy [was] not sufficient to justify displacing the rule of lex loci delictus." Id. citing Neumeier v. Kuehner, 31 N.Y.2d 121, 335 N.Y.S.2d 64, 71, 286 N.E.2d 454, 461 (Ct.App.1972). It found the fact that the theft of the paintings occurred in Germany was "totally irrelevant to the policy of [German law] to protect bona fide purchasers so as to promote the security of transactions." Id. Instead, it found significant contacts with New York:
In contrast, the contacts of the case with New York, i.e., Elicofon purchased and holds the paintings here, are indeed relevant to effecting its interest in regulating the transfer of title in personal property in a manner which best promotes its policy. The fact that the theft of the paintings did not occur in New York is of no relevance. In applying the New York rule that a purchaser cannot acquire good title from a thief, New York courts do not concern themselves with the question of where the theft took place, but *693 simply whether one took place. Similarly, the residence of the true owner is not significant for the New York policy is not to protect resident owners, but to protect owners generally as a means to preserve the integrity of transactions and prevent the state from becoming a marketplace for stolen goods. In finding that New York law governs the question of title, we hold that Elicofon did not acquire title under [German law].
Id. at 846.[4]
Under Elicofon, I find that the law of New York governs all issues in this case, including the question of which party has the superior right to possession of the Monet. New York is the place where the sale of the painting to Mrs. Baldinger occurred and where the Monet is and has been located. The fact, as in Elicofon, that the theft of the Monet took place in Germany and not New York is irrelevant, as is the fact that Mrs. DeWeerth is a resident of Germany and inherited the painting while in Germany. New York policy, as described in Elicofon, is to protect owners generally "as a means to preserve the integrity of transactions and prevent the state from becoming a market place for stolen goods." This policy warrants the application of New York law in the case before me.[5]
IV.
Having determined that New York law applies, I turn to the merits of the case. Defendant has argued initially that plaintiff's action should be barred both by the defense of laches[6] and the statute of limitations governing actions for recovery of a chattel due to her long delay in asserting her claim, and also because she has not diligently sought to discover the painting's whereabouts until now.[7]
It is not disputed that Mrs. Baldinger acquired the Monet in 1957; that Mrs. DeWeerth upon discovering in December, 1982 that defendant had the painting, demanded return of the Monet on December 27, 1982 and that defendant refused the demand on February 1, 1983; and that on February 16, 1983 plaintiff instituted this *694 action. Mrs. Baldinger asserts that plaintiff's claim is barred by the three year statute of limitations contained in N.Y.C.P. L.R. ß 214(3).[8]
Under N.Y.C.P.L.R. ß 214(3) the three year statute of limitations does not commence running until a demand is made to return the property and the demand is refused. See Elicofon, 536 F.Supp. at 848 citing Frigi-Griffin Inc. v. Leeds, 52 A.D.2d 805, 383 N.Y.S.2d 339 (1st Dept. 1976), aff'd., 678 F.2d at 1161.[9] Thus when Mrs. DeWeerth instituted her suit in 1983, it was well within three years of accrual of the cause of action and timely under New York law.
It is also true as a matter of New York law that "a party may not unreasonably delay in making a demand which starts the running of the limitations period." Elicofon, 536 F.Supp. at 849 citing Heide v. Glidden Buick Corp., 188 Misc. 198, 67 N.Y.S.2d 905 (1st Dept.1947). "The question of what constitutes a reasonable time to make a demand depends upon the circumstances of the case." Elicofon, 536 F.Supp. at 849 citing Reid v. Board of Supervisors, 128 N.Y. 364, 28 N.E. 367 (1891); Nyhus v. Travel Management Corp., 466 F.2d 440 (D.C.Cir.1972). Mrs. Baldinger claims that Mrs. DeWeerth did little to locate the Monet and nothing to publicize her loss, and what steps she did take to locate the painting were inadequate. Therefore, Mrs. Baldinger argues that Mrs. DeWeerth's claim is barred by virtue of her lack of diligence in locating and claiming the painting as her own, and by virtue of the unreasonableness of the delay in commencing her suit.
Defendant cites Elicofon for the proposition that an initial demand must be made within a reasonable time and that plaintiff has a duty to make genuine and diligent efforts to ascertain who had the painting so as to be able to make her demand. In Elicofon, defendant claimed that it was plaintiff's duty to make "genuine and diligent efforts to find the paintings" and because plaintiff failed to make such efforts "any delay in making a demand for the paintings was unreasonable." 536 F.Supp. at 849. Plaintiff in Elicofon rejected the contention that it had a duty to look diligently for the paintings, and suggested that "its only duty was to make the demand once it knew of the location of the paintings." Id. The court in Elicofon did not decide the issue because "the undisputed evidence clearly demonstrate[d] that the [plaintiff] made a diligent although fruitless effort to locate the paintings." Id. at 849-50.
The same is true in this case.
After she learned from her sister that the Monet was missing, Mrs. DeWeerth set out on a course to locate and recover it. I have already found that (1) in 1946, she reported its loss to the military government then administering the Bonn-Cologne area after the end of the War; (2) in 1948, she solicited the assistance of her lawyer in endeavoring to find it; (3) in 1955, she made inquiries to an art expert she knew of; and (4) in 1957, she reported it as missing to the Bundeskriminalamt. Thus plaintiff made a "diligent although fruitless effort" to find the Monet through 1957. I am further persuaded that upon the circumstances of this case the plaintiff's failure to pursue the Monet after 1957 until her nephew discovered in 1981 that the Monet had been exhibited in New York was reasonable. Mrs. DeWeerth was an elderly woman during that period, and the only published references to the Monet were not generally circulated.
Moreover, any comparison with Elicofon is inapposite. There the plaintiff was a government-owned art museum, with resources, *695 knowledge and experience that far exceeded any means an individual such as Mrs. DeWeerth could muster to carry on a credible search for a missing painting.
For all of these reasons, I find that plaintiff did not unreasonably delay her demand for the return of the Monet, and her action is not barred on timeliness grounds.[10]
V.
Mrs. Baldinger contends that even if plaintiff's claim to recover the Monet is timely, plaintiff has not established a superior right to possession of the painting by failing to prove that she owns the painting, and that the painting was stolen. She argues that Mrs. DeWeerth has not demonstrated her own prior valid title to the Monet to recover the painting from Mrs. Baldinger, who has possessed it as a good faith purchaser for over 25 years. I disagree.
To establish a cause of action in an action sounding in replevin[11] under New York law, Mrs. DeWeerth must show that she has an immediate and superior right to possession of the Monet. Wurdeman v. Miller, 633 F.Supp. 20, 22 (S.D.N.Y.1986) citing Honeywell Information Systems, Inc. v. Demographic Systems, Inc., 396 F.Supp. 273, 275 (S.D.N.Y.1975), including proof of ownership. Elicofon, 536 F.Supp. at 852 citing Honeywell Information Systems, Inc., supra.
Through her testimony and the documentary evidence submitted at trial,[12] Mrs. DeWeerth has established that she was the owner of the Monet by inheritance from her father at the time it disappeared from her sister's home, and that she neither sold it nor entrusted it to anyone else to sell. Her testimony with respect to the 1943 photograph further supports that the Monet displayed in 1943 in her residence next to the Rodin sculpture is the same painting as is currently possessed by defendant.
Mrs. Baldinger, who indisputably purchased the Monet in good faith and for value from Wildenstein in 1957,[13] would *696 prevail only if she could trace her title back to Mrs. DeWeerth. This she cannot do. The trail back from Mrs. Baldinger leads through Wildenstein to Reichenbach, and stops there. There is no evidence before me with respect to how Reichenbach came into possession of the Monet.
Moreover, under New York law not even a bona fide purchaser can acquire valid title of a chattel from a thief, or from one who acquired the property from a thief. See Elicofon, 678 F.2d at 1160. I have inferred that the painting was stolen during the occupation of Frau von Palm's house by American soldiers, after plaintiff had sent the painting to her sister's house for safekeeping with no intention that it be sold. The defendant has introduced no evidence to the contrary. Rather, she has sought to shift the burden to plaintiff to prove that the painting was stolen and not sold or consigned by Frau von Palm. However, the burden of proof rests with the defendant to show some act by the plaintiff beyond merely entrusting his property to someone who then sells it to an innocent purchaser. Cf. Hartford Accident & Ind. Co. v. Walston & Co., 21 N.Y.2d 219, 287 N.Y.S.2d 58, 68, 234 N.E.2d 230 (Ct.App. 1967) (stockbroker required to establish that it observed reasonable commercial standards in transferring stocks to establish it was bona fide purchaser to avoid liability to owner from whom they were stolen); United States Fidelity & Guaranty Co. v. Leon, 165 Misc. 549, 300 N.Y.S. 331, 334 (Municipal Ct.N.Y.Co.1937) (burden of proof upon defendant if he is asserting title to stolen bond to show he is bona fide holder, and if he is asserting title in his predecessor, that the latter was a bona fide holder).
Mrs. DeWeerth has thus established a superior right to possession of the Monet.
VI.
A. Defendant's Counterclaim
Defendant has alleged a counterclaim seeking damages for her "considerable personal distress and anguish" occasioned by plaintiff's claim that she is a converter, and for the diminution in value of the Monet caused by this litigation. Answer and Counterclaim ∂∂ 11-13.
Whether characterized as a claim for intentional infliction of emotional distress or as a claim for malicious prosecution, as plaintiff construes it, the counterclaim is without merit.
The New York Court of Appeals has ruled that to set forth a viable cause of action for intentional infliction of emotional distress, the allegations must:
... satisfy the rule set out in Restatement of Torts, Second, which we adopted in Fischer v. Maloney, 43 N.Y.2d 553, 557, 402 N.Y.S.2d 991, 373 N.E.2d 1215, that: "One who by extreme and outrageous conduct intentionally or recklessly causes severe emotional distress to another is subject to liability for such emotional distress" (ß 46, subd. [1]). Comment d to that section notes that: "Liability has been found only where the conduct has been so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community."
Murphy v. American Home Products Corp., 58 N.Y.2d 293, 461 N.Y.S.2d 232, 236, 58 N.Y.2d 293 (Ct.App.1983).
The conduct complained of falls far short of these requirements.
Any attempt by defendant to assert a claim for malicious prosecution is premature:
[T]hat tort lies only when the judicial proceeding "begun in malice, without *697 probable cause, ... finally ends in failure." It cannot be asserted as a counterclaim in the very action it challenges as malicious.
Bank of Boston International of Miami v. Arguello Tefel, 644 F.Supp. 1423, 1430 (E.D.N.Y.1986) citing Kalso Systemet, Inc. v. Jacobs, 474 F.Supp. 666, 670 (S.D.N.Y. 1979) (quoting Grant v. City of Rochester, 68 Misc.2d 358, 326 N.Y.S.2d 691, 693 (Sup. Ct.1971)).
Moreover, this claim is without merit because:
[i]n order to establish a claim for malicious prosecution, ... a plaintiff must show among other matters that there was some interference with his person or property. This requirement is satisfied only if a court issues a provisional remedy, such as an attachment, an order of arrest or an injunction. No such remedy was issued in connection with [this] proceeding.
Id. citing Tedeschi v. Smith Barney, Harris Upham & Co., Inc., 548 F.Supp. 1172 (S.D.N.Y.1982).
B. Remaining Affirmative Defenses[14]
1. Adverse Possession
"Five elements must be established in order to gain title by adverse possession: possession must be hostile and under claim of right, it must be actual, it must be open and notorious, it must be exclusive and it must be continuous." Risi v. Interboro Industrial Parks, Inc., 99 A.D.2d 174, 470 N.Y.S.2d 174, 175 (2d Dept.1984) citing Belotti v. Bickhardt, 228 N.Y. 296, 127 N.E. 239 (Ct.App.1920). The Second Circuit in Elicofon observed that "[c]ourts and commentators have noted that the mere residential display of paintings may not constitute the type of open and notorious possession sufficient to afford notice to the true owner." 678 F.2d at 1164 n. 25 (citations omitted).
Except for two brief public exhibitions, one in 1957 for four days and the other in 1970 for a little more than a month, Mrs. Baldinger maintained the Monet exclusively in her home. Such possession is not sufficiently open and notorious to constitute adverse possession, and this defense must fail.
2. Gratuitous Bailment
Defendant has also argued that plaintiff has no right to possession of the painting because she made a gratuitous bailment of the Monet. This contention is also without merit.
A gratuitous bailment is one for the benefit of the bailor only. Pettinelli Motors, Inc. v. Morreale, 242 N.Y.S.2d 78, 80 (Sup.Ct. Oneida Co. 1963).
Under New York law, a bailment is defined as:
"[a] delivery of personal property for some particular purpose, or a mere deposit, upon a contract express or implied, and that after such purpose has been fulfilled it shall be redelivered to the person who delivered it, or otherwise dealt with according to his directions, or kept until he reclaims it."
Rich v. Touche Ross & Co., 415 F.Supp. 95, 99 n. 2 (S.D.N.Y.1976) citing Mays v. New York, N.H. & H.R. Co., 197 Misc. 1062, 97 N.Y.S.2d 909, 911 (1st Dept., App.T.1950).
A bailment "describes a result which in many instances does not flow from the conscious promises of the parties made in a bargaining process but from what the law regards as a fair approximation of their [intentions]."
Id. citing Ellish v. Airport Parking Co., 42 A.D.2d 174, 345 N.Y.S.2d 650 (2d Dept. 1973), aff'd on opinion below, 34 N.Y.2d 882, 359 N.Y.S.2d 280, 316 N.E.2d 715 (1974).
As a threshold matter, it is questionable whether plaintiff's delivery of the Monet to her sister for safekeeping during the War constituted a bailment. Even if it did, however, the fact that it was gratuitous has no *698 relevance to the issue of title to the painting.
VII.
In summary, plaintiff has shown by a fair preponderance of the credible evidence that she owned the Monet, that she did not sell it or authorize anyone to sell it on her behalf, and that defendant Baldinger currently has it in her possession and refuses to return it. The affirmative defenses and the counterclaim are without merit and are dismissed with prejudice. Judgment shall be rendered for the plaintiff and defendant is directed to deliver the painting to her.[15]
Plaintiff's counsel will submit a final judgment on notice pursuant to Rule 54, F.R.Civ.P. There is no just reason for delay.
A conference in this case will be held on May 7, 1987 at 9 a.m. in courtroom 2703 to chart the further course of the third-party litigation.
SO ORDERED.
NOTES
[1] Mrs. Baldinger has brought a third-party action against Wildenstein & Co., Inc., a New York art dealer, from whom she bought the Monet in 1957. The pre-trial order provided for separate trials of Mrs. DeWeerth's claim against Mrs. Baldinger and Mrs. Baldinger's claim against Wildenstein. This opinion only addresses the primary action.
[2] This inference is supported by, inter alia, the testimony of Frau Huber, who worked for Mrs. von Palm at the time of the painting's disappearance, and who testified that Mrs. Palm was very upset when she discovered that the painting was missing. Evidence admissible under the excited utterance or res gestae exception to the hearsay rule can be used to prove the happening of a startling event. Insurance Co. v. Mosley, 75 U.S. (8 Wall.) 397, 19 L.Ed. 437 (1869); Stewart v. Baltimore & O. R. Co., 137 F.2d 527, 529-30 (2d Cir.1943); see 4 Weinstein's Evidence ∂ 803(2) [01] at 803-88 (1985).
[3] Specifically, Elicofon asserted acquisition of title under the German law doctrine of Ersitzung, under which "title to movable property may be obtained by a good faith acquisition of the property plus possession of it in good faith, and without notice of a defect in title, for the statutory period of ten years from the time the rightful owner loses possession." See Elicofon, 536 F.Supp. at 845.
[4] The Second Circuit affirmed the district court's choice of law rulings, "substantially for the reasons stated in the district court's opinion." 678 F.2d at 1160.
[5] It is true that the court in Elicofon considered German law governing the question of succession. However, to the extent that German law should apply to the issue of plaintiff's inheritance of the Monet, neither party has demonstrated that German law differs from New York law, and I have not embarked on an independent investigation of the question. See Aaron Ferer & Sons Ltd. v. Chase Manhattan Bank N.A., 731 F.2d 112, 121 (2d Cir.1984) citing Cousins v. Instrument Flyers, Inc., 44 N.Y.2d 698, 405 N.Y.S.2d 441, 376 N.E.2d 914 (Ct.App.1978); Bartsch v. Metro-Goldwyn-Mayer, Inc., 391 F.2d 150, 155 n. 3 (2d Cir.1968), cert. den. 393 U.S. 826, 89 S.Ct. 86, 21 L.Ed.2d 96 (1968). Moreover, the issue is in essence whether the evidence of plaintiff's possession of the Monet is sufficient under New York law to entitle her to possession. In any event, I have found as a matter of fact that plaintiff inherited the Monet from her father and the issue of whether German law applies is irrelevant.
[6] The defense of laches is composed of four elements which must be established by the defendant:
(1) conduct on the part of the defendant ... for which the complainant seeks a remedy;
(2) delay in asserting the complainant's rights, the complainant having had knowledge or notice of the defendant's conduct and having been afforded an opportunity to institute a suit;
(3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right on which he bases his suit; and
(4) injury or prejudice to the defendant in the event that relief is accorded to the complainant or that the suit is not held to be barred.
Dedvukaj v. Madonado, 115 Misc.2d 211, 214, 453 N.Y.S.2d 965, 968 (N.Y. City Civ.Ct.1982) citing 36 N.Y.Jur., Limitations & Laches, Sec. 153 at 141 (1964).
[7] Among the affirmative defenses asserted by defendant are laches, statute of limitations, failure to exercise due diligence in pursuit of a claim, waiver, and estoppel. Because all of these defenses raise essentially the same issue Äî whether plaintiff's claim to recover the Monet was timely and not unreasonably delayed Äî I treat all of these defenses together in this section. Defendant herself concedes this point, at least with respect to the overlap between laches and statute of limitations. See Joint Trial Brief of Defendant and Third-Party Defendant at 11* citing Bohemian Brethren Presbyterian Church v. Greek Archdiocesan Cathedral of the Holy Trinity, 94 Misc.2d 841, 405 N.Y.S.2d 926, 929 (Sup. Ct.N.Y.Co.1978), aff'd., 70 A.D.2d 538, 416 N.Y. S.2d 751 (1st Dept.1979); Elicofon, 536 F.Supp. at 852 n. 20.
[8] N.Y.C.P.L.R. ß 214 provides:
The following actions must be commenced within three years: ...
3. an action to recover a chattel or damages for the taking or detaining of a chattel;
[9] The Second Circuit also held that even if the cause of action had accrued in 1946, when Elicofon bought the paintings, "the then-applicable limitation period was tolled under New York's judicially-created `non-recognition' toll because the United States did not recognize GDR until 1974, which precluded the [plaintiff] from intervening until then." 678 F.2d at 1161.
[10] Even if plaintiff had unreasonably delayed her demand, defendant cannot show that she was prejudiced by the delay. She has argued that because of the delay the testimony of Frau von Palm, the only person who could testify as to what happened to the painting, has been irretrievably lost. This argument fails because it assumes, contrary to all the other evidence presented, that Frau von Palm's testimony would have been favorable to her.
It also fails because it is simply not true. Defendant could have deposed Reichenbach to attempt to trace the history of the painting's transfers, but she did not. Having failed to exhaust obvious paths of inquiry she cannot sustain her burden of proving that she was prejudiced.
Neither has she shown that plaintiff's delay was so prolonged and inexcusable as to amount to an abandonment of her right to the painting, see Tiffany & Co. v. L'Argene Products Co., 67 Misc.2d 384, 324 N.Y.S.2d 326, 330-31 (Sup.Ct. N.Y.Co.1971), aff'd. 37 A.D.2d 699, 323 N.Y.S.2d 642 (1st Dept.1971), app. dis'd., 29 N.Y.2d 484, 324 N.Y.S.2d 1030, 274 N.E.2d 314 (1971); Kalisch-Jarcho, Inc. v. City of New York, 58 N.Y.2d 377, 461 N.Y.S.2d 746, 750 n. 8, 448 N.E.2d 413 (Ct.App.1983), or to constitute a waiver of her rights and claims. Defendant's affirmative defense of estoppel in this context is also without merit.
[11] According to the Practice Commentaries to Article 71 of the C.P.L.R., replevin is a term that is no longer used in the C.P.L.R., and is not synonymous with an action to recover a chattel. It is "a procedure in the nature of a provisional remedy, which may be used as an incident to such action, by which an officer seizes the chattel before judgment. Both under the CPA and the C.P.L.R. an action to recover a chattel may proceed without seizure of the chattel." McLaughlin, Practice Commentaries, McKinney's Cons. Laws of N.Y., Book 7B, C.P.L.R. C7101:1 et seq. at 170-72. In any event, the Practice Commentaries suggest that an action under Article 71 "is one to establish a possessory right to a chattel superior to that asserted by defendant." Id. See also East Side Car Wash, Inc. v. K.R.K. Capitol, Inc., 102 A.D.2d 157, 476 N.Y.S.2d 837, 840 (1st Dept.1984). Whether characterized as an action sounding in replevin or an action to recover a chattel, the burden is still on the plaintiff to establish that she has a superior right to possession.
[12] The relevant exhibits, specifically the 1943 photograph (exhibit 5), have been in existence 20 years or more and thus contain hearsay admissible under the ancient documents exception of Fed.R.Evid. 803(16). Mrs. Baldinger admits the authenticity of these exhibits.
[13] Because she acquired the painting from Wildenstein in 1957, seven years prior to New York's adoption of the Uniform Commercial Code, pre-Code law is controlling.
This is so because pursuant to ß 10-101 and ß 10-105, subsequently renumbered ß 13-101 and ß 13-105, the Uniform Commercial Code in New York applies to "transactions entered into and events occurring on and after the effective date specified in Section 10-105 of this Act [September 27, 1964]."
Mrs. Baldinger relies heavily on U.C.C. 2-403, although she concedes that under both the U.C.C. and pre-U.C.C. law, title conveyed by a thief is void.
[14] I have already considered and rejected all but two of the affirmative defenses: (1) failure to state a claim upon which relief can be granted; (2) statute of limitations; (3) laches; (4) failure to exercise due diligence in pursuit of a claim, waiver and estoppel; (5) good title; and (6) abandonment.
[15] Because the Monet is a "unique chattel", I may exercise my equitable jurisdiction to enter a judgment directing Mrs. Baldinger to deliver the painting to Mrs. DeWeerth. See Elicofon, 536 F.Supp. at 859 citing C.P.L.R. ß 7109; Chabert v. Robert & Co., 273 A.D. 237, 76 N.Y.S.2d 400 (1st Dept.1948); Raftery v. World Film Corp., 180 A.D. 475, 167 N.Y.S. 1027 (1st Dept. 1917).
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481 F.2d 1402
*Richardv.Dresser Offshore Services, Inc.
73-2271
UNITED STATES COURT OF APPEALS Fifth Circuit
Sept. 7, 1973
1
W.D.La.
2
---------------
* Summary Calendar cases; Rule 18, 5 Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Co. of
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744 F.2d 95
*U.S.v.Massaro
84-5332
United States Court of Appeals,Eleventh Circuit.
9/6/84
1
S.D.Fla.
AFFIRMED
2
---------------
* Fed.R.App.P. 34(a); 11th Cir.R. 23.
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222 Cal.App.3d 964 (1990)
272 Cal. Rptr. 132
JOHN THOMPSON et al., Plaintiffs and Respondents,
v.
CARL JESPERSEN et al., Defendants and Appellants.
Docket No. B045410.
Court of Appeals of California, Second District, Division Two.
August 2, 1990.
*966 COUNSEL
Feinberg, Gottlieb & Grossman, Mark S. Gottlieb and William A. Feinberg, for Defendants and Appellants.
Bryan, Cave, McPheeters & McRoberts, Frank E. Merideth, Jr., and Hillary Arrow Booth for Plaintiffs and Respondents.
OPINION
GATES, J.
In July 1986 John and Anelisa Thompson (the Thompsons) contracted with Carl Jespersen and Jespersen Construction Co., Inc. (Jespersen) for the construction of a single family residence. Their agreement provided for arbitration, subject to certain exceptions not here relevant, of "[a]ll claims, disputes and other matters in question between the Contractor and the Owner arising out of, or relating to, the Contract Documents or the breach thereof...."
Dissatisfied with Jespersen's performance of its obligations under the contract, the Thompsons in April 1988 submitted a demand for arbitration in which they claimed they had suffered significant damages.[1] Jespersen denied the allegations and made a counterclaim for nearly $120,000.
After the matter had proceeded to hearing, the arbitrators filed their award requiring Jespersen to pay the Thompsons only $10 in damages, but $75,000 in attorney's fees.
The Thompsons thereafter petitioned the trial court to enter judgment confirming this award. In response, Jespersen requested that it be corrected by deleting the grant of fees, which it contended, as it had during the arbitration, was beyond the jurisdiction of the arbitrators. When the court upheld the award in its entirety, Jespersen appealed, seeking resolution of a single issue that is, apparently, one of first impression, i.e.: whether arbitrators *967 have the authority to award attorney's fees in the absence of a provision therefor in either the arbitration contract or the submission to arbitration.
(1) As has frequently been pointed out, the powers conferred upon an arbitrator are exceptionally broad. "The arbitrator's findings on questions of both law and fact are conclusive. [Citation.] A court cannot set aside an arbitrator's error of law, no matter how egregious. [Citations.] Nor can courts interfere with the award by examining `the merits of the controversy, the sufficiency of the evidence supporting the award, or the reasoning supporting the decision.' [Citation.] An error of fact by the arbitrator cannot form the basis of court review. [Citation.]" (Severtson v. Williams Construction Co. (1985) 173 Cal. App.3d 86, 92-93 [220 Cal. Rptr. 400]; Meat Cutters Local No. 439 v. Olson Bros. (1960) 186 Cal. App.2d 200, 204 [8 Cal. Rptr. 789], and cases cited therein.)
(2) Nevertheless, it is equally well established that the arbitrator "cannot bind the parties with an award based on an issue or dispute not properly submitted to him ... [, since his] `... jurisdiction or authority to act is derived from, and limited by, the arbitration agreement or submission' [citation]...." (Meat Cutters Local No. 439 v. Olson Bros., supra, 186 Cal. App.2d at p. 204; Victoria v. Superior Court (1985) 40 Cal.3d 734, 739 [222 Cal. Rptr. 1, 710 P.2d 833]; Jones v. Kvistad (1971) 19 Cal. App.3d 836, 842 [97 Cal. Rptr. 100].)[2]
Applying these principles to the instant case, we conclude the arbitrators were without jurisdiction to consider the issue of attorney's fees. The Thompsons admitted below that "[t]he parties' contract is silent on the subject of attorney's fees in the event arbitration is required to settle a dispute" and further acknowledged that "[w]ere this case in Superior Court, that would end the issue because the basic rule in court actions is that attorney's fees are not recoverable unless specifically provided for in the parties' contract." Notwithstanding these concessions, they urge the award was authorized by the construction industry rules of the American Arbitration Association, which were incorporated into the parties' arbitration agreement.
However, only rule 43 appears even indirectly applicable, and it merely permits an arbitrator to "grant any remedy or relief that is just, equitable, *968 and within the terms of the agreement between the parties." (Italics added.) The latter condition, of course, was not present here. As a consequence, we can but concur with the observation that these rules "contain no express provision nor one from which an implication may be drawn that the parties have agreed that the successful party shall be entitled to reimbursement of his attorney's fees." (Domke on Commercial Arbitration (rev. ed.) § 43.01, p. 536.)
To uphold an award of attorney's fees in the absence of an agreement to arbitrate the issue would result in gross unfairness which could only serve to frustrate the strong public policy favoring arbitration "`... as an expeditious and economical method of relieving overburdened civil calendars.... [Citations.]'" (Victoria v. Superior Court, supra, 40 Cal.3d at p. 738.)
Today, in the course of obtaining needed, often vital, services, every adult is asked to sign numerous agreements containing arbitration clauses. Few would willingly continue to do so if, rather than avoiding the costs of litigation, they would be subjecting themselves, sub silentio, to expenses that, in the absence of a contract so providing, are impermissible even in traditional trial proceedings.
"Although the parties may agree to submit to arbitration an issue which would not otherwise be arbitrable under the terms of the contract [citation]" (Campbell v. Farmers Ins. Exch. (1968) 260 Cal. App.2d 105, 112 [67 Cal. Rptr. 175]), Jespersen's conduct here cannot be construed as evincing an intention to confer upon the arbitrator the power to award attorney's fees. On the contrary, it strenuously, and consistently, contended the arbitrators had no jurisdiction to make such an award. While its counsel ultimately did submit copies of its billings, they stressed they were doing so only as a protective measure in the event the law was not as they believed it to be. Obviously, to have done otherwise would have been quite inappropriate and such precaution did not constitute a waiver of their client's basic contention.
(3) Similarly, Code of Civil Procedure section 128.5, provides no basis for upholding the instant fee award. Quite apart from the fact that this statute, on its face, is limited to trial and judicial arbitration proceedings, the Thompsons have cited to no evidence in the record from which it could be inferred that Jespersen engaged in bad faith actions or tactics, or that the arbitrators relied upon section 128.5 in ordering Jespersen to pay the Thompsons' attorney's fees.
*969 The judgment is reversed insofar as it confirms the award of attorney's fees; in all other respects it is affirmed. Jespersen shall recover its costs on appeal.
Roth, P.J., and Compton, J., concurred.
Respondents' petition for review by the Supreme Court was denied October 17, 1990.
NOTES
[1] Jespersen asserted below that the Thompsons' aggregate claims totaled "almost $900,000." In its findings the trial court merely referred to them as being "in excess of $50,000."
[2] Where the arbitrator does exceed his powers, the court will correct the award if it can do so "without affecting the merits of the decision upon the controversy submitted." (Code Civ. Proc., § 1286.6, subd. (b).) If it cannot do so, it will vacate the award. (Code Civ. Proc., § 1286.2, subd. (d).)
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NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
STATE OF ARIZONA, Appellee,
v.
AARON LUDWIG, Appellant.
No. 1 CA-CR 16-0735
FILED 8-15-2017
Appeal from the Superior Court in Maricopa County
No. CR2015-134384-001
The Honorable Richard L. Nothwehr, Judge Pro Tempore
AFFIRMED
COUNSEL
Maricopa County Attorney’s Office, Phoenix
By Daniel P. Strange
Counsel for Appellee
Suzanne M. Dallimore, P.C., Tempe
By Suzanne M. Dallimore
Counsel for Appellant
STATE v. LUDWIG
Decision of the Court
MEMORANDUM DECISION
Judge Randall M. Howe delivered the decision of the Court, in which
Presiding Judge Jon W. Thompson and Chief Judge Samuel A. Thumma
joined.
H O W E, Judge:
¶1 Aaron Ludwig appeals the trial court’s order denying his
petition for an entry of clearance pursuant to A.R.S. § 13–4051 and his
request to seal the record. For the following reasons, we affirm.
FACTS AND PROCEDURAL HISTORY
¶2 In January 2015, Ludwig resigned from his position as Chief
Counsel of the Financial Remedies Section of the Arizona Attorney
General’s Office (“AGO”). In April 2015, Afficient Towing and Recovery
towed a car that belonged to Ludwig’s friend, S.H. That night, Ludwig
researched the towing company, the applicable city ordinances pertaining
to towing, and trial court records for Afficient and its owner B.J. Ludwig
learned that Afficient could not require S.H. to pay for the tow before
releasing her car.
¶3 The following day, Ludwig accompanied S.H. to Afficient’s
tow yard to assist in retrieving the car. Upon reaching the service counter,
Ludwig introduced himself as the “immediate past chief” of the Financial
Remedies Section of the AGO. Ludwig placed his research papers on the
counter and removed his business card holder from his pocket. Clipped to
the top of the business card holder was a Super Bowl commemorative
badge baring the words “Arizona Attorney General” and “Asst. Attorney
General” and the last three digits of Ludwig’s old employee number.
Ludwig removed the badge and placed it on the counter in front of
Afficient’s employee. Ludwig then presented his old AGO business card.
¶4 At this time, B.J. arrived to work and noticed Ludwig’s badge
on the service counter. Ludwig again introduced himself as the “immediate
past chief” of the Financial Remedies Section of the AGO. B.J. invited
Ludwig and S.H. into her office. Ludwig informed B.J. that the tow was
unlawful under the city ordinances, that they were there to pick up the car,
and that he had legal documents pertaining to Afficient’s previous criminal
2
STATE v. LUDWIG
Decision of the Court
issues. Ludwig then handed B.J. the papers and his AGO business card. B.J.
became upset with Ludwig and believed that he was harassing her. She
then stated to S.H. that “all you needed to do was ask for your car . . . he
didn’t need to say anything.” S.H. recovered her car without having to pay
and they left.
¶5 After Ludwig and S.H. left, B.J. called the AGO to report
Ludwig’s conduct. B.J. stated that “agent” Ludwig used his “color of
authority” to intimidate her into releasing the car, which she would have
done upon request. The AGO assigned an agent to investigate. The agent
interviewed B.J. and obtained a copy of the documents that Ludwig left at
Afficient, including a copy of Ludwig’s old AGO business card. The agent
then completed a “release questionnaire” form that included a probable
cause section that stated that Ludwig represented himself as an AGO
employee to recover a towed car, and presented a badge and an old AGO
business card to retrieve the car. Because Ludwig was a former chief in the
AGO, the AGO sent a conflict memorandum and its entire investigative file
to the Maricopa County Attorney’s Office (“MCAO”). In the conflict
memorandum, the AGO agent noted that Ludwig’s case was opened for
“information only” and recommended a charge for criminal impersonation
under A.R.S. § 13–2006(A)(3).
¶6 Three months later, MCAO charged Ludwig with felony
criminal impersonation under A.R.S. § 13–2006(A)(3). At Ludwig’s
attorney’s request, MCAO interviewed Ludwig and in October 2015
dismissed the charge without prejudice. In April 2016, Ludwig petitioned
for entry of clearance pursuant to A.R.S. § 13–4051 and requested the
records sealed pursuant to Maricopa County Superior Court Local Rule
(“Local Rule”) 2.19(c). Three months later, at the evidentiary hearing on the
petition for clearance, Ludwig moved for summary judgment, which the
trial court denied.
¶7 At the evidentiary hearing, Ludwig testified that he
introduced himself as the “immediate past chief” of the Financial Remedies
Section of the AGO and that he always introduced himself like that because
it acted as a concise resume and gave him instant credibility. Ludwig also
testified that he used the commemorative badge on his business card holder
and that he placed it on the counter along with his old AGO business card.
Ludwig stated, however, that he did not mean to leave his old AGO
business card with Afficient and instead meant to leave his current business
card.
3
STATE v. LUDWIG
Decision of the Court
¶8 Ludwig also stated that he left the AGO on bad terms and that
he resigned in lieu of being fired. Additionally, Ludwig testified that he
believed that the AGO’s investigative process did not follow the correct
procedures and that the only reason the AGO investigated him was because
of a personal animosity between him and the Criminal Division chief. A
former assistant chief agent of the Special Investigations Section of the AGO
testified that although investigations normally follow a specific process, a
case that was classified as “information only” would be sent to a different
agency to investigate and prosecute.
¶9 Ludwig testified further to the injustice that he suffered since
being charged with a felony. As a former prosecutor, Ludwig stated that
having to go to court as a defendant made him feel humiliated.
Additionally, Ludwig worked as the managing director of the
Counterracketeering Group and in that capacity, worked with law
enforcement officers and prosecutors who could find out that he had a
felony charge on his record.
¶10 The trial court denied the petition, finding that probable cause
supported Ludwig’s charge, Ludwig’s testimony did not establish that he
was factually innocent, and that “the evidence does not indicate that
[Ludwig] was wrongfully arrested or charged.” The court specifically noted
that the alleged improper motive from the AGO did not make Ludwig’s
charge wrongful because MCAO did its own independent review before
charging Ludwig. The trial court also found that based on Ludwig’s actions,
it “cannot find that justice would be served by an order to clear the records
in this matter.” The court further denied Ludwig’s request to seal the record
because he failed to show a compelling interest to do so. Ludwig timely
appealed.
DISCUSSION
1. Petition for Clearance and Request to Seal the Record
¶11 Ludwig argues that the trial court erred by denying his
petition for clearance and his request to seal the record. Ludwig contends
that he provided sufficient evidence to satisfy A.R.S. § 13–4051’s
requirements and that the trial court misinterpreted the relevant statutes.
Ludwig specifically contends that the trial court looked only to whether
probable cause existed in determining that he was not wrongfully charged
and that his charge was the result of the AGO’s improper investigation. We
review a ruling on a petition for clearance under A.R.S. § 13–4051 for an
abuse of discretion and defer to the trial court regarding any factual
4
STATE v. LUDWIG
Decision of the Court
findings, given its position to asses witness credibility and resolve any
conflicts in the evidence. See State v. Mohajerin, 226 Ariz. 103, 108 ¶ 18
(App. 2010). Because Ludwig did not prove that the criminal impersonation
charge was “wrongful” under the statute, the trial court did not abuse its
discretion by denying his petition.
¶12 By statute, “[a]ny person who is wrongfully arrested, indicted
or otherwise charged for any crime may petition the superior court for entry
on all court records . . . and any other records of any other agency . . . a
notation that the person has been cleared.” A.R.S. § 13–4051(A). “After a
hearing on the petition, if the judge believes that justice will be served by
such entry, the judge shall issue the order requiring the entry that the
person has been cleared on such records[.]” A.R.S. § 13–4051(B). As used in
the statute, the term “wrongfully” is viewed in its broader sense as
encompassing not only unlawful but also “unfairness or injustice.”
Mohajerin, 226 Ariz. at 107 ¶¶ 11–12. To succeed in a petition for clearance,
a petitioner must prove both that his charge was “wrongful” and that
justice requires an entry of a notation of clearance. Id. at 104 ¶ 1.
¶13 Here, the trial court correctly interpreted A.R.S. § 13–4051.
This statute puts the burden of proof solely on Ludwig to prove the statute’s
elements. To determine whether a charge is “wrongful,” the trial court is
required to consider more than just whether probable cause existed at the
time MCAO charged Ludwig. Id. at 109 ¶ 19. Before the trial court denied
Ludwig’s petition by finding that the evidence did not show that Ludwig
was “wrongfully” charged, it specifically found that probable cause
supported the charge and that Ludwig testimony did not establish that he
was factually innocent. As such, Ludwig’s contention that the trial court
abused its discretion by determining that a probable cause finding alone
was sufficient to deny his petition is unsupported by the record.
¶14 The record supports the trial court’s finding that probable
cause supported Ludwig’s charge. MCAO charged Ludwig with criminal
impersonation in violation of A.R.S. § 13–2006(A)(3). A person commits
criminal impersonation by “[p]retending to be, or assuming a false identity
of, an employee or a representative of some person or organization with the
intent to induce another person to provide or allow access to property.”
A.R.S. § 13–2006(A)(3). When B.J. initially called the AGO she stated that
“agent” Ludwig used his “color of authority” to intimidate her into
releasing the car. B.J. sent a copy of Ludwig’s old AGO business card to the
investigative agent and explained that Ludwig displayed his badge to
Afficient employees. The court found that during Ludwig’s testimony he
failed to establish that the charge was unsupported by probable cause. On
5
STATE v. LUDWIG
Decision of the Court
this record, we cannot say that the trial court abused its discretion by
determining that probable cause supported the charge. See State ex rel. Dep’t
of Econ. Sec. v. Burton, 205 Ariz. 27, 30 ¶ 14 (App. 2003) (“An abuse of
discretion exists when the record, viewed in the light most favorable to
upholding the trial court’s decision, is devoid of competent evidence to
support the decision.”).
¶15 The record also supports the trial court’s finding that Ludwig
was not factually innocent. To be innocent of criminal impersonation under
A.R.S. § 13–2006(A)(3), Ludwig had to prove that he did not assume the
false identity of an employee of an organization or that he did not intend to
induce access to property. Ludwig failed to prove his innocence here.
Ludwig went out of his way to show that he was affiliated with the AGO.
Ludwig could have introduced himself as the managing director of the
Counterracketeering Group or as an attorney. Even though Ludwig
introduced himself as the “immediate past chief,” pairing that with the
presentation of the business card and the badge that contained Ludwig’s
old employee number and the words “Arizona Attorney General” and
“Asst. Attorney General,” whether Ludwig was still a lawyer at the AGO
was ambiguous. Further, by Ludwig’s own admission, he intended to
induce B.J. into giving S.H. her car. Thus, the trial court did not err by
finding that Ludwig failed to prove that he was factually innocent.
¶16 Ludwig counters that he could not be legally guilty of
criminal impersonation under A.R.S. § 13–2006(A)(3) because Afficient had
to provide S.H. her car. Ludwig contends that because the law required
Afficient to provide S.H.’s car to her upon request, the fact that he might
have impersonated a lawyer from the AGO was immaterial. But under the
criminal impersonation statute’s plain language, Ludwig needed to have
only intended to induce B.J. into providing or allowing access to property.
Because the statute’s language is clear and unambiguous, “we apply it
without resorting to other methods of statutory interpretation.” Haag v.
Steinle, 227 Ariz. 212, 214 ¶ 9 (App. 2011). Further, “‘property’ means
anything of value, tangible or intangible.” A.R.S. § 13–105(37). Ludwig
admitted and the trial court found that Ludwig went to Afficient’s tow yard
with legal documents and AGO items to encourage and induce B.J. to
release S.H.’s car. Therefore, Ludwig’s contention that he could not be
guilty of criminal impersonation because S.H. had a right to receive her car
is without merit.
¶17 Ludwig next argues that he was wrongfully charged because
the AGO did not follow the normal investigative procedures and that the
investigation would have been dismissed had it not been for the personal
6
STATE v. LUDWIG
Decision of the Court
animosity between him and the Criminal Division chief. Here, the trial
court found that any alleged improper motive did not make Ludwig’s
charge “wrongful” under the statute. The record supports the trial court’s
finding. Although the AGO submitted its investigative report to MCAO,
the conflict memorandum stated that the case was opened as “information
only.” According to the former assistant chief agent who testified at trial,
“information only” meant that the MCAO would conduct the investigation
and the potential prosecution. Assuming that the AGO did not close the
investigation for some improper motive, that alone would still not entitle
Ludwig to relief under A.R.S. § 13–4051. See Mohajerin, 226 Ariz. at 111 ¶ 26.
Additionally, the trial court found that MCAO conducted its own review,
which negated any inference of improper motive of the AGO. Thus, the trial
court did not err by finding that any alleged improper motive did not make
Ludwig’s charge “wrongful.”
¶18 Accordingly, the trial court correctly considered whether
Ludwig was “wrongfully” charged under its broad definition as Mohajerin
requires. The court determined that: (1) probable cause supported Ludwig’s
charge, (2) Ludwig’s testimony did not prove that he was factually
innocent, and (3) that any alleged improper investigation did not warrant
finding the charge “wrongful.” Thus, the trial court did not abuse its
discretion by denying Ludwig’s petition for clearance. 1
¶19 Next, Ludwig argues that the trial court erred by denying his
request to seal the record. Under Local Rule 2.19(c), “the court may order
the court files and records . . . to be sealed or redacted, provided the court
makes and enters written findings that the specific sealing or redaction is
justified by compelling interests that outweigh the public interest” in access
to the records. Ariz. Local R. Prac. Super. Ct. (Maricopa) 2.19(c). The trial
court found that Ludwig failed to show a compelling interest that
outweighed the public’s right to access. On appeal, Ludwig states that he
showed “good cause” to seal the records. Even assuming that Ludwig
showed good cause to seal the records, that would not be enough to satisfy
the compelling interests standard that the rule requires. See Kamakana v. City
& Cty. of Honolulu, 447 F.3d 1172, 1180 (9th Cir. 2006) (“A good cause
showing will not, without more, satisfy a compelling reasons test.”).
Accordingly, the trial court did not err by failing to find that Ludwig
showed a compelling interest to seal the record.
1 Because Ludwig failed to prove that he was “wrongfully” charged,
we need not address the trial court’s finding that justice did not require
entry of an order of clearance under A.R.S. § 13–4051(B).
7
STATE v. LUDWIG
Decision of the Court
2. Motion for Summary Judgment
¶20 Ludwig further argues that the trial court erred by denying
his oral motion for summary judgment made at the beginning of the
evidentiary hearing. Arizona Rule of Civil Procedure 56(b)(3) states that
“[a] summary judgment motion may not be filed later than the dispositive
motion deadline set by the court or local rule, or absent such a deadline,
90 days before the date set for trial.” Petitions for clearance under A.R.S.
§ 13–4051 are civil in nature and as such must comport with the civil rules.
See Mohajerin, 226 Ariz. at 106 ¶ 7. Because Ludwig did not move for
summary judgment 90 days before the evidentiary hearing, his motion was
untimely and the trial court did not err by denying it.
CONCLUSION
¶21 For the foregoing reasons, we affirm.
AMY M. WOOD • Clerk of the Court
FILED: AA
8
|
{
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|
122 F.Supp.2d 566 (2000)
Mary FRIESS, Plaintiff,
v.
RELIANCE STANDARD LIFE INS. CO., et al., Defendants.
No. CIV.A. 99-5010.
United States District Court, E.D. Pennsylvania.
November 28, 2000.
*567 *568 Arelene Glenn Simolile, Rachael Benner DeAngelo, Arlene Glenn Simolile & Assoc., Philadelphia, PA, for plaintiff.
Joshua Bachrach, Rawlet & Henderson, Philadelphia, PA, for defendants.
EXPLANATION AND ORDER
ANITA B. BRODY, District Judge.
Before me is defendant's motion for summary judgment. For the reasons set forth below, defendant's motion will be denied without prejudice.
Plaintiff Mary Friess brought this action against the defendant, Reliance Standard Life Insurance Company ("Reliance") following Reliance's denial of her claim for long-term disability ("LTD") benefits. Because the insurance policy at issue is an employee benefit plan, this action is governed by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001 et seq. Removal was proper as ERISA provides that a civil action may be brought in federal court by a plan participant "to recover benefits due to him under the terms of the plan...." 29 U.S.C. § 1132(a)(1)(B). ERISA preempts all state claims that "relate to any employee benefit plan." 29 U.S.C. § 1144(a).
Factual Background[1]
Woodward and Lothrop established and maintained a benefit plan offering LTD benefits to its employees. As an employee of Woodward and Lothrop,[2] Friess participated in the plan. Her coverage under the plan became effective in 1989.[3]
Woodward and Lothrop's plan was insured under a group LTD policy ("the Policy") issued and administered by Reliance. The Policy states that Reliance will pay a monthly benefit if an insured:
*569 (1) is Totally Disabled as the result of a Sickness or Injury covered by this Policy; (2) is under the regular care of a Physician; (3) has completed the Elimination Period; and (4) submits satisfactory proof of Total Disability to us.
Defendant's Motion for Summary Judgment, Exhibit B, p. 7.0. According to the Policy, an employee is "Totally Disabled" when "during the Eliminator Period and thereafter an Insured cannot perform the material duties of any occupation.... Any occupation is one that the Insured's education, training or experience will reasonably allow." Id. at 2.1. An insured who is "Partially Disabled" capable of performing the material duties of any occupation on a part-time basis or some of the material duties on a full-time basis will be considered Totally Disabled, the definition continues, except during the "Elimination Period." The "Elimination Period" is defined as a period of 90 consecutive days of Total Disability for which no benefit is payable, and begins on the first day of Total Disability. Id. at 1.0-2.0.
On January 19, 1996, Friess submitted a claim for LTD benefits under the Policy. Friess maintained that she had become totally disabled on May 25, 1994, when she fell from a platform at work and broke her left ankle. In her motion, plaintiff indicates that she had expected the injury to heal, allowing her to return to work. However, her doctors eventually determined that the ankle injury was permanent, as her severe pain and difficulty walking and standing did not subside. Following the determination that the injury was permanent, Friess filed her claim with Reliance in January of 1996.[4]
After receiving Friess's claim in January of 1996, Reliance opened a file on Friess and began obtaining medical records from her treating physicians. At Reliance's request, Friess provided the necessary medical releases and authorizations, and also provided Reliance with contact information concerning the doctors she had seen after the ankle injury. Based on the information provided by Friess, Reliance undertook to contact those doctors to obtain necessary records and evaluations.
The compiled medical records document problems with Friess's left ankle and foot dating from November 28, 1994, when William Markmann, M.D. began treating Friess for those problems.[5] However, Friess maintains that her medical treatment began immediately following her fall on May 25, 1994. On the day of the fall, she was taken to the emergency room at Nazareth Hospital and treated for an ankle injury. On the next day, May 26, 1994, Friess saw Dr. Thomas Peff for treatment. Dr. Peff treated Friess over the next several months. During that time, Dr. Peff put a cast on the ankle and had Friess perform physical therapy.
In November of 1994, Dr. Markmann's practice assumed care for Friess. The record of his November 28, 1994 evaluation[6] indicates that Friess described her earlier treatment under Dr. Peff to Dr. Markmann. Friess also provided Dr. Markmann with x-rays she brought with her from Dr. Peff's office. Friess complained to Dr. Markmann of persistent pain in her left ankle and foot that made *570 walking and standing difficult. Dr. Markmann ordered an MRI[7] scan of her ankle and foot and also an EMG[8] of her back and left leg. On December 20, 1994, Markmann prescribed Percodan in response to Friess's request for pain relief.
On December 28, 1994, I.M. Solanki, M.D. conducted the MRI.[9] The records of both Dr. Solanki and Dr. Markmann indicate that the MRI study was normal.
In January of 1995, Dr. John Beight, another doctor in the same practice group as Dr. Markmann, examined Friess.[10] His records indicate that Friess continued to complain of persistent pain in her foot. He agreed with Dr. Markmann that she should have an EMG. In notes dated January 20, 1995, Dr. Beight wrote that he believed Friess could work in a seated position. However, Friess's attempt to resume work in late January 1995 intensified her pain. On January 27, 1995, Beight recorded his belief that it would be unwise for Friess to continue working if her pain continued to worsen.
The record indicates that Bruce Grossinger, D.O. conducted an EMG on February 3, 1995.[11] Dr. Grossinger concluded that the study was abnormal, indicating mild partial entrapment of the left peroneal nerve.[12] Dr. Grossinger recorded his opinion that the nerve injury occurred in the context of the work accident on May 25, 1995.
The record also included a standard Reliance attending physician evaluation form completed by Dr. Beight at some point in 1996.[13] On the evaluation form, Dr. Beight diagnosed Friess with left ankle avulsion and entrapment of the peroneal nerve; he also noted her pain and walking difficulty. Dr. Beight indicated the possibility that surgery on the ankle might be required to release the nerve. He concluded that Friess had the following restrictions and limitations: in an 8-hour work day, she could: 1) stand less than 1 hour; 2) sit from 5-8 hours; 3) walk less than 1 hour; 4) and drive 3-5 hours. He found that Friess could climb only occasionally, but could bend, squat, reach, kneel, crawl, and use her right foot continuously or at least frequently. Dr. Beight found that Friess had no mental or nervous limitations. He indicated that Friess could lift or carry ten pounds maximum and occasionally small objects, a level of capacity identified on the form as "sedentary work."
In his written evaluation, Dr. Beight could not say when he expected Friess to resume working. He could not say when her condition might improve. In fact, he reported that Friess had probably achieved maximum medical improvement.
On December 13, 1996, Reliance denied the claim. The decision was based on the administrative record submitted with the Motion for Summary Judgment, including: *571 treatment notes from Drs. Markmann and Beight; the x-rays films taken while Friess was under Dr. Peff's care; the MRI report from Dr. Solanki; the EMG report from Dr. Grossinger; and the evaluation form filled out by Dr. Beight in 1996. Reliance did not order an independent medical examination of Friess. The record apparently does not include any expert opinions on the medical evaluations. The record on which Reliance based its denial did not include information from Nazareth Hospital, where Friess was taken immediately following the accident at work, nor from Dr. Peff, who first treated Friess for her injury.
The parties dispute the reasons for the absence of Dr. Peff's records from the administrative record. Friess contends that Dr. Peff did not respond because Reliance made an error in its request for records. Reliance sent a written request to Dr. Peff dated October 23, 1996.[14] In that request, Reliance asked Dr. Peff to provide copies of all medical treatment records "for the period from May 1, 1995 to present." Friess broke her ankle in May of 1994. She was no longer in Dr. Peff's care by May of 1995. Because Reliance did not request records from the relevant time period, Friess maintains, Dr. Peff did not respond and Reliance lacked information critical to it decision.
Reliance points out that the Policy places the burden of producing medical records on Friess, providing that benefits will be paid "if an Insured ... submits satisfactory proof of Total Disability to us." In its reply brief, Reliance included a letter sent to Friess on October 25, 1996 informing her that the medical information necessary to continue processing her claim had not been received.[15] The letter stated that Reliance had requested information from Dr. Peff and Dr. Grossinger, and would not continue to process the application until a response was received. The letter also stated: "if you have additional medical information not previously supplied, please forward a copy for our review." Despite the October 23, 1996 request to Dr. Peff and the October 25, 1996 notice to Friess, Reliance never received records from Dr. Peff. Reliance made its December 13, 1996 decision to deny benefits based on an administrative record that contained no medical documentation made prior to November 28, 1994, although the ankle injury occurred in May of 1994.
Friess claims that she attempted to appeal the December 1996 decision, and was again denied. On October 1, 1999, Friess filed suit in the Philadelphia County Court of Common Pleas. Reliance properly removed the action to federal court.
Summary Judgment Standard
Summary judgment is proper where 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). The court should determine whether there are factual issues that merit a trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Summary judgment is appropriate if no factual issues exist and the only issues before the court are legal. See Sempier v. Johnson and Higgins, 45 F.3d 724, 727 (3d Cir.1995).
At summary judgment, the nonmoving party receives the benefit of all reasonable inferences. See Sempier, 45 F.3d at 727. The motion should be granted if the record taken as a whole "could not lead a rational trier of fact to find for the nonmoving party, [and] there is no `genuine issue for trial.'" Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538.
*572 Standard of Review for Denial of Benefits under ERISA
The ERISA statute itself does not dictate a standard of review. However, the Supreme Court addressed the issue in Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989), and determined that:
a denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.... Of course, if a benefit plan gives discretion to an administrator or fiduciary who is operating under a conflict of interest, that conflict must be weighed as a facto[r] in determining whether there is an abuse of discretion.
Id. at 115, 109 S.Ct. 948 (citation omitted). Under Firestone, when a plan grants its administrator discretionary authority, courts should limit review of the administrator's decision to abuse of discretion. Firestone also instructs that a discretionary administrator's conflict of interest should influence the amount of deference a court shows in its review of the decision under the abuse of discretion standard.
The Third Circuit has subsequently held that when the language of a plan gives the administrator discretionary authority, courts must apply the arbitrary and capricious standard of review.[16]See Abnathya v. Hoffmann-La Roche, Inc., 2 F.3d 40, 44-45 (3d Cir.1993). Under that highly deferential standard of review, a court must defer to the administrator's decision unless the decision "is not clearly supported by the evidence in the record or the administrator has failed to comply with the procedures required by the plan." Id. at 41. The discretion required to trigger the arbitrary and capricious standard of review can be express or implied from the plan's terms. See Luby v. Teamsters Health Welfare and Pension Trust Funds, 944 F.2d 1176, 1180 (3d Cir.1991).
The Courts of Appeals have gone in somewhat different directions in their efforts to interpret Firestone's instruction that a conflict of interest should be a "factor" in determining the level of deference shown to a discretionary administrator. The Third Circuit recently held that when an insurance company both insures and administers benefits, it is generally acting under a conflict of interest that warrants a heightened form of the arbitrary and capricious review standard. See Pinto v. Reliance Standard Life Insurance Co., 214 F.3d 377, 378 (3d Cir.2000). While recognizing that particular circumstances could ameliorate the inherent conflict, the Third Circuit in Pinto recognized that the typical insurance company is structured so that the payment of claims directly affect its profits. Given that self interest, "there would seem to be insufficient incentive for the carrier to treat borderline cases ... with the level of attentiveness and solicitude that Congress imagined when it created ERISA `fiduciaries.'" Id. at 388. The Third Circuit concluded that a heightened standard is appropriate when reviewing benefit denials of insurance companies that pay ERISA benefits out of their own funds. See Id. at 390.
In Pinto, the Third Circuit adopted the "sliding scale" approach to review under a "heightened" arbitrary and capricious standard. To best reconcile Firestone's dual commands, the Third Circuit concluded, the arbitrary and capricious standard cannot be abandoned even in the presence of a conflict that threatens to seriously bias the administrator's decision. Rather, the intensity of review should increase in proportion to the intensity of the conflict. See Pinto, 214 F.3d at 393. The Third *573 Circuit instructed district courts to "consider the nature and degree of apparent conflicts with a view to shaping their arbitrary and capricious review." Id.
While the Court in Pinto subjected self-interested administrators to a more searching standard of arbitrary and capricious review, it refused to impose new evidentiary burdens on them. In Pinto, the Third Circuit made it clear that the conflicted administrator is not required to make a good faith, reasonable investigation of a claim. See Pinto, 214 F.3d at 394, n. 8. The Third Circuit did not suggest that the administrator has a duty to gather more information. See Id. Imposing such duties would effectively shift the burden of proof to the administrator. A rule that permitted such a result would be at odds with the Supreme Court's instructions to defer to the determinations of administrators vested with discretionary authority.
Rather, the proper inquiry is whether the record adequately supports the administrator's decision.[17] In Pinto, the Third Circuit instructed lower courts to consider not only the reasonableness of the result, but also the process by which the result was achieved. See Pinto, 214 F.3d at 393. Courts should scrutinize the problems in the decisionmaking process used by the self-interested administrator. "Suspicious events" raise the likelihood of self-dealing, and move review toward the stricter extreme of the arbitrary and capricious range. See Id. at 394.
To arrive at the proper standard of review, the district court must make a finding on the extent to which conflicts of interest warrant increased scrutiny. Pinto held that the district court, while forbidden from expanding the administrative record on the historic facts that informed the administrator's decision, may take evidence regarding the conflict of interest and ways in which the conflict may have influenced that decision.[18]See Pinto, 214 F.3d at 395. The Third Circuit described the type of evidence the court may consider when evaluating the seriousness of the conflict: the sophistication of the parties, the information accessible to the parties, the exact financial relationship between the insurer and the employer company, the current status of the fiduciary, and the stability of the employer company.[19]Id. at 392. Such evidence equips the district court to review the contested decision under an "arbitrary and capricious" standard heightened according to the potency of the conflict.
Application
If the Policy grants discretionary authority to Reliance, its decision to deny Friess benefits must be reviewed under the arbitrary and capricious standard. The Policy does not contain an express grant of discretionary authority to the administrator, Reliance; rather, it provides that Reliance will pay benefits if the insured submits "satisfactory proof" of total disability. The grant of discretion in the policy does not need to be explicit to trigger *574 the arbitrary and capricious review standard. The Third Circuit has recognized that discretionary authority may be implied in a plan's terms even if not granted expressly. See Luby, 944 F.2d at 1180.
The Third Circuit in Pinto found discretionary authority conveyed in the exact "satisfactory proof" language used in the Policy. Considering a provision requiring submission of satisfactory proof of total disability, the Third Circuit concluded: "It is undisputed that Reliance Standard had discretion to interpret the plan." Pinto, 214 F.3d at 379.[20] The identical language in the Policy before this court, therefore, invests Reliance with discretion over benefit determinations.
While Reliance has discretion, if its judgment is compromised by conflicts of interest, the highly deferential standard of arbitrary and capricious review must be adapted. Conflicts must be factored into the deference shown to the administrator's determination. In this case, Woodward and Lothrop paid Reliance to fund, interpret, and administer its LTD plan. In Pinto, the Third Circuit concluded that such an arrangement "generally presents a conflict and thus invites a heightened standard of review." Pinto, 214 F.3d at 383. Simply by the terms of its arrangement with Woodward and Lothrop, Reliance has a potential conflict of interest.
In determining the influence of the potential conflict on the decision to deny Friess LTD benefits, I must consider the process by which Reliance reached that decision. Pinto does not impose on Reliance a duty to conduct a good faith, reasonable investigation; however, it does invite the conclusion that a decision based on inadequate information might have been arbitrary and capricious. Procedural anomalies indicating a biased review process help the court determine how much to lessen its deference to the administrator's decision.
Overall, it seems that Reliance may have conducted an unreasonably lax investigation into Friess' claim. For example, the record indicates that its effort to reach Dr. Peff, the first doctor to treat Friess, amounted to a single letter containing a major error. While Reliance made it clear to Friess that she was responsible for submitting additional medical information not already supplied, it may have been reasonable to think that Reliance had undertaken to contact Dr. Peff on its own. As Dr. Peff did not respond to the erroneous letter, Reliance may have lacked adequate medical information on the crucial period of time immediately following Friess's May 1994 injury.
In addition, Reliance did not undertake an independent medical review of Friess' condition. While Reliance is not required to order an independent examination, the failure to examine may indicate an inattentive process. Also, Reliance did not credit the Social Security Administration's finding that Friess was disabled.[21] The Court *575 in Pinto actually observed that Reliance, also a party to the Pinto case, "places significant trust in the SSA process." Pinto, 214 F.3d at 393. Finally, Reliance may have used selectively the statement made by Dr. Beight, Friess' attending physician. Reliance concludes that Dr. Beight has certified Friess for sedentary work, yet fails to credit both his inability to say when she might possibly return to work, and his conclusion that Friess probably has reached maximum recovery. Procedural anomalies such as these, Pinto suggests, could push a court to the "far end of the arbitrary and capricious `range,'" causing the court to examine the administrative record with great skepticism. Pinto, 214 F.3d at 393.
Conclusion
Summary judgment must be denied if a reasonable factfinder could conclude that Reliance's decision was the result of self-dealing instead of the result of a trustee carefully exercising its fiduciary duty to Mary Friess. See Pinto, 214 F.3d at 394. Here, there appear to be genuine issues of material fact as to whether Reliance may have acted arbitrarily and capriciously under the Pinto standard in making its determination on the basis of an inadequate record.
On the basis of the evidence already submitted by parties, it might be possible to conclude that Reliance's conflict of interest is sufficiently potent to warrant a penetrating review of the decision to deny Friess benefits. However, I defer my conclusion to allow the parties to gather evidence on the conflict of interest and the ways in which the conflict ought to shape the heightened arbitrary and capricious standard of review described in Pinto v. Reliance Standard Life Insurance Co., 214 F.3d 377 (3d Cir.2000).
Defendant's Motion for Summary Judgment is therefore denied without prejudice. An appropriate order follows.
AND NOW, this Day of November, 2000, it is ORDERED that Defendant's Motion for Summary Judgment (Docket Entry No. 9) is DENIED without prejudice.
It is FURTHER ORDERED that the parties are authorized to take discovery until January 19, 2001 regarding the potential conflict of interest according to Pinto v. Reliance Standard Life Insurance Co., 214 F.3d 377 (3d Cir.2000). The parties shall file dispositive motions no later than February 2, 2001. The parties shall file responses to dispositive motions no later than February 16, 2001.
NOTES
[1] As appropriate at summary judgment, the following facts, where controverted, are construed in the manner most favorable to the plaintiff as non-moving party.
[2] Friess was a merchandise associate at John Wanamaker's, a division of Woodward and Lothrop, at the time of her allegedly disabling injury.
[3] The parties do not dispute the fact that Friess had coverage under the LTD Policy. In 1989, through her employer, Friess applied for LTD insurance with Reliance. She opted for the coverage that provided benefits equivalent to 60% of her salary should she become disabled. Answer to Defendant's Motion for Summary Judgment, Exhibit A. Friess allegedly paid the premiums, through a payroll deduction, from 1989 until the date of her accident in May 1994.
[4] Since the accident, Friess has made successful claims for worker's compensation and Social Security disability benefits. Friess has been receiving worker's compensation benefits since May 25, 1994, the day of the fall at work. Reliance was aware of the worker's compensation claim, but maintains that Friess did not give Reliance a copy of the file made by the worker's compensation insurance carrier. On April 14, 1999, the Social Security Administration ("SSA") awarded Friess disability benefits.
[5] The medical records indicate that Friess saw Dr. Markmann in early 1989 for problems with her left ankle. As Reliance does not claim that its denial of benefits was predicated on a finding of preexisting condition, however, that evidence is not relevant.
[6] Defendant's Motion for Summary Judgment, Exhibit D.
[7] Magnetic Resonance Imaging (MRI): Technique used to image internal structures of the body, particularly soft tissues. Used because the images are often superior to normal x-rays. See Medical Dictionary, at http://www.medical-dictionary.com (last visited Nov. 20, 2000).
[8] Electromyography (EMG): A test which measures muscle response to nerve stimulation. Used to evaluate muscle weakness and to determine if weakness is related to muscles themselves or a problem with the nerves that supply the muscles. See Medical Dictionary, at http://www.medical-dictionary.com (last visited Nov. 20, 2000).
[9] Defendant's Motion for Summary Judgment, Exhibit E.
[10] Defendant's Motion for Summary Judgment, Exhibit D.
[11] Defendant's Motion for Summary Judgment, Exhibit F.
[12] The peroneal nerve is the lateral of two branches of the sciatic nerve. It provides motor and sensory innervation to parts of the leg and foot. See Medical Dictionary, at http://www.medical-dictionary.com (last visited Nov. 20, 2000).
[13] Defendant's Motion to Summary Judgment, Exhibit H. The form appears to be date-stamped twice, indicating receipt on both January 26, 1996 and May 31, 1996.
[14] Answer to Defendant's Motion for Summary Judgment, Exhibit B.
[15] Defendant's Reply Brief in Support of its Motion for Summary Judgment, Exhibit A.
[16] The "arbitrary and capricious" standard is essentially the same as the "abuse of discretion" standard. See Abnathya v. Hoffmann-La Roche, Inc., 2 F.3d 40, 45, n. 4 (3d Cir. 1993). See also Nazay v. Miller, 949 F.2d 1323, 1336 (3d Cir.1991); Daniels v. Anchor Hocking Corp., 758 F.Supp. 326, 328-330 (W.D.Pa.1991).
[17] Policy considerations reinforce the wisdom of focusing the inquiry on the sufficiency of the record. Such an approach eliminates the need for the district court to engage in fact-finding, an exercise that would discourage the parties from assembling evidence at the administrator's level, where evidence is most easily and most efficiently assembled. See Vega v. National Life Insurance Services, 188 F.3d 287, 298 (5th Cir.1999).
[18] The district court also may find sufficient evidence in the record to conclude that review under the heightened standard is required. Pinto, 214 F.3d at 395.
[19] Defendant's Motion for Summary Judgment indicates that Friess's former employer, Woodward and Lothrop, ceased operations in 1996. Some courts assume that an employer's reputational interest in fairly settling the claims of its employees may mitigate potential conflicts, as the employer would come under pressure to discontinue a plan that was highly unpopular with its employees. Here, Woodward and Lothrop cannot be counted on to police Reliance's temptation to self deal.
[20] Courts in this district and in other circuits have concluded that this exact "satisfactory proof" language confers discretion on the administrator. See, e.g., Marques v. Reliance Standard Life Insurance Co., No. CIV.A. 99-2033, 1999 WL 1017475, at *2 (E.D.Pa. Nov.1, 1999) (Relying on Luby to infer discretion from the "satisfactory proof" language); Landau v. Reliance Standard Life Insurance Co., No. CIV.A. 98-903, 1999 WL 46585 at *4-5 (E.D.Pa. Jan.13, 1999); Sciarra v. Reliance Standard Life Insurance Co., No. CIV.A. 97-1363, 1998 WL 564481 at *7-8 (E.D.Pa. Aug.26, 1998) (Finding that the phrase "satisfactory proof" confers discretionary authority on Reliance to determine eligibility for LTD benefits). See also Yeager v. Reliance Standard Life Insurance Co., 88 F.3d 376, 381 (6th Cir.1996); Wilcox v. Reliance Standard Life Insurance Co., No. 98-1036, 1999 WL 170411 at *2 (4th Cir. Mar.23, 1999) (unpublished opinion) ("Only the most tortured reading of the language in Reliance's `Insuring Clause' could lead to a conclusion that the plan in this case is not vested with the discretionary authority to determine eligibility for benefits.").
[21] Reliance argues in its Motion for Summary Judgment that the SSA determination was not a part of the administrative record on which it made its December 1996 decision to deny benefits. Friess learned of the favorable decision from the SSA in April 1999, months before she filed suit against Reliance. Had she presented it to Reliance at that time as evidence of disability, Reliance could have used the SSA findings to reconsider its decision.
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J-A10001-15
2015 PA Super 141
K.T. AND M.R.T. IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellants
v.
L.S. F/K/A L.R.
Appellee No. 2072 MDA 2014
Appeal from the Order Entered November 6, 2014
In the Court of Common Pleas of York County
Civil Division at No(s): 2013-FC-001604-03
BEFORE: GANTMAN, P.J., MUNDY, J., and JENKINS, J.
OPINION BY GANTMAN, P.J.: FILED JUNE 17, 2015
Appellants, K.T. (“Paternal Grandmother”) and M.R.T. (“Paternal
Grandfather”) (collectively, “Paternal Grandparents”), appeal from the order
entered in the York County Court of Common Pleas, which denied their
request for partial physical custody of their minor grandchildren, K.A.T.
(born in September 2007) and K.W.R. (born in March 2009) (“Children”), in
this custody action. We reverse and remand for further proceedings.
The certified record indicates the relevant facts and procedural history
of this case as follows. Appellee, L.S. f/k/a L.R. (“Mother”), and D.T.
(“Father”) are the natural parents of Children. Mother gave birth to K.A.T.
while she was in high school and living with her mother (“Maternal
Grandmother”). Maternal Grandmother would not permit Father to live with
Mother because they were unmarried, so Mother moved in with Father in
J-A10001-15
Paternal Grandmother’s home in December 2007, when K.A.T. was
approximately two months old.1 Mother and Father did not marry, but they
maintained a relationship until early 2009. In January 2009, when Mother
was pregnant with their second child, K.W.R., Mother and Father separated
and Mother moved with K.A.T. out of Paternal Grandmother and W.B.’s
home.2 At that time, Mother moved in with a co-worker for several months.
Beginning in January or February 2009, Mother and Father split
custody of K.A.T. During Father’s periods of physical custody, Children
resided with Father in Paternal Grandmother and W.B.’s home. Mother gave
birth to K.W.R. in March 2009. Mother and Father subsequently split
custody of K.W.R. as well. In April 2009, Mother met D.S. In May 2010,
Mother married D.S. (“Mother’s Husband”) in Hawaii; Father and Mother
agreed Father would take custody of Children while Mother was in Hawaii to
marry. In the summer of 2010, Father anticipated imminent deployment to
Iraq. Based on his expected deployment, Father agreed Mother could take
____________________________________________
1
Paternal Grandparents were divorced in 1998. When Mother and K.A.T.
moved in with Paternal Grandmother, Paternal Grandmother was living in
Erie County with her long-term significant other, W.B., with whom she still
resides. Paternal Grandfather also lives in Erie County with his significant
other, D.D.
2
The parties dispute whether Mother moved out of Paternal Grandmother
and W.B.’s home in December 2008 or January 2009. When Mother moved
out, Father was away in basic training for the United States Army since
September 2008.
-2-
J-A10001-15
Children to live in Hawaii with Mother’s Husband.3 Mother and Father agreed
Father would have custody of Children during the summer months and
holidays, and that Father could communicate with Children via phone calls
and social media. Around August 2010, Mother and Mother’s Husband
moved with Children to Hawaii. Mother obtained a new telephone number,
but she did not disclose her new phone number to any of Father’s family
members, including Paternal Grandparents, and limited Children’s telephone
communication only to Father. After Mother had already moved to Hawaii
with Children, Father learned his anticipated deployment would not occur,
but he continued to permit Mother to live with Children in Hawaii. Mother
and Father agreed that if Mother moved back to Erie County, they would
again split physical custody of Children on an equal basis.
In November 2011, Mother and Mother’s Husband returned from
Hawaii with Children and moved to Clymer, New York.4 The parties dispute
whether Mother told Father she had moved back from Hawaii with Children.
In August 2012, Mother and Children moved with Mother’s Husband to
Wisconsin. Mother obtained a new phone number upon moving, which she
did not give to Father or Paternal Grandparents. On February 17, 2013,
while Mother and Children were still living in Wisconsin with Mother’s
____________________________________________
3
Mother’s Husband was in the Army and stationed in Hawaii at that time.
4
Clymer, New York is approximately eight miles away from Corry,
Pennsylvania (where Paternal Grandmother and W.B. live in Erie County).
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Husband, Father died in an automobile accident. Mother and Children did
not attend Father’s funeral. Around March 2013, Mother and Mother’s
Husband moved with Children to York County, Pennsylvania, where they
currently reside.
On September 6, 2013, Paternal Grandparents filed a joint petition in
York County seeking partial physical custody of Children.5 At the time
Paternal Grandparents filed their petition, Mother had denied them any
access whatsoever to Children. By order dated October 4, 2013 and entered
October 7, 2013, the court issued an interim custody order granting sole
legal and primary physical custody of Children to Mother. The court awarded
Paternal Grandparents the following periods of partial physical custody,
beginning with a “phase-in” schedule:6 (1) Friday, September 27, 2013,
from 5:30-7:30 p.m., in York County, with Mother present; (2) Saturday,
September 28, 2013, from 9:30 a.m. until 12:00 p.m., in York County, with
Mother present; (3) December 27-29, 2013, at Paternal Grandmother’s
home in Erie County, phasing out Mother’s presence during the scheduled
visits; and (4) two weekends between January 1, 2014 and June 1, 2014, in
____________________________________________
5
Paternal Grandparents previously filed a joint petition for partial custody in
Erie County but withdrew that petition to refile in York County. Paternal
Grandparents have standing to seek partial custody pursuant to 23 Pa.C.S.A.
§ 5325(1) (stating where parent of child is deceased, parent or grandparent
of deceased parent may file action of partial physical custody or supervised
physical custody).
6
The parties live approximately 5½ hours away.
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York County. The interim custody order provided the following regular
schedule of partial physical custody thereafter: (1) three weeks over the
summer (one week in June, July, and August) in the summer of 2014 and
each following summer; (2) two weekends each in the fall and spring to
occur in York County; (3) four overnight periods during Children’s Christmas
break, between December 27th through December 31st each year; and (4)
any other times agreed to by the parties. The interim custody order also
included a provision for Skype communication between Children and
Paternal Grandparents to occur each Sunday at 7:00 p.m., beginning on
October 6, 2013.
After Paternal Grandparents commenced their custody action, Mother’s
Husband started proceedings to adopt Children. The court initially granted
the adoption, but Paternal Grandparents intervened on or around November
4, 2013, when they learned of the proceedings. Because Mother and
Mother’s Husband failed to notify Paternal Grandparents about the adoption
proceedings, the court vacated the adoption decree.7
The court held a custody trial on February 10, 2014. At the start of
trial, the court announced it was the first custody trial the court had presided
over in approximately five years. The court expressed dissatisfaction with
____________________________________________
7
At the time of trial, Mother’s Husband testified he planned to re-commence
the adoption proceedings once the custody proceedings were resolved.
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the legislature’s enactment of the Custody Act since the court had last
presided over a custody trial. The court stated:
Frankly, I’m not sure how I want to do this. But since this
is the first custody trial that I have to sit on—fortunately,
the other cases assigned to me have been resolved by
agreements.
That being so, I think it fair to counsel to advise them that
I did sit and try and figure out when the last custody trial I
had and I think it was about five years ago having other
assignments in the interim.
And during that period of time, the legislature enacted a
big comprehensive custody act, bunch of stuff that they
did. They determined that they needed to help the courts
in deciding these cases by telling them what factors they
have to consider in determining what the best interest of
the child or children is.
Honestly, I’ve taken a look at the statute. I have personal
reservations as to whether the legislature can tell me how
to make a decision. But I’m told that’s the way we do it.
So counsel should be on the alert that I haven’t studied
these things. I haven’t gone and looked and figured out
whatever. So touch base on those things that you think
are important to decide what is in the best interest[s] of
these children.
(N.T. Trial, 2/10/14, at 11-12; R.R. at 9a).
Paternal Grandmother testified, inter alia, as follows.8 Mother moved
into her home when K.A.T. was approximately two months old. Paternal
Grandmother and Mother had a nice relationship while Mother lived with her
and W.B. During this time, Mother wrote Paternal Grandmother and W.B. a
____________________________________________
8
(See id. at 14-74; R.R. at 10a-40a.)
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“thank you” card expressing gratitude for their kindness and generosity, as
well as a Valentine’s Day card.9 Mother also wrote Paternal Grandmother a
“get well” card after Paternal Grandmother had surgery. On February 7,
2008, Mother executed an “authorization for treatment of a minor” form,
which gave Paternal Grandmother and W.B. authority to accompany K.A.T.
to doctor’s appointments and to consent to K.A.T.’s medical examinations
and/or treatment.
Mother moved out in January 2009. When Mother and Father split
custody of Children, Father was living with Paternal Grandmother, so
____________________________________________
9
The “thank you” card states:
I wanted to find a thank you card filled with all the words
that I feel. But then I found this card & knew it was
perfect [because] it’s in this card that I can write down my
own feelings with all of my own words.
[Paternal Grandmother and W.B.,]
Everything you guys do and have done for me (& [K.A.T.])
is so appreciated. I hope that eventually I can help you
the way that you’ve helped me. You’ve dealt with my
bullshit and helped me on my feet—and for that I’m truly
grateful. I’ve never met two other people who are so
willing to help others. You’ve given me so much & much of
that isn’t what money can buy. You’ve taught me lessons
that I won’t forget & shown me love that I will always
remember. I thank you both for all that you do. Thank
you for everything.
[Mother].
(Paternal Grandparents’ Exhibit 3).
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Children stayed at Paternal Grandmother and W.B.’s home during Father’s
periods of physical custody. Paternal Grandmother testified Mother refused
to let Paternal Grandparents communicate with Children when they lived in
Hawaii. Paternal Grandmother explained Mother threatened Father while in
Hawaii that if Father disclosed Mother’s phone number to Paternal
Grandparents, or allowed anyone else on the phone line during Father’s
phone calls with Children, that Mother would disconnect the call. Mother
also “un-friended” Paternal Grandmother on Facebook.
Paternal Grandmother testified that Mother failed to tell Father when
she moved from Hawaii to Clymer, New York. In February 2012, Father
learned that Mother was in Clymer, and when Father confronted Mother
about moving from Hawaii, Mother claimed she was back in town for a short
time on vacation. Paternal Grandmother explained Mother agreed Father
could visit Children once during this “vacation” period. Paternal
Grandmother testified that Father visited Children again in July 2012, when
Father discovered through Maternal Grandmother that Mother was still living
with Children in Clymer. In August 2012, Father returned to Clymer to visit
Children again, but Mother had already moved away.
Following Father’s sudden death in February 2013, Paternal
Grandmother hired a private investigator to locate Mother and Children.
When the private investigator discovered Mother had an address in
Wisconsin, Paternal Grandmother hired a second private investigator in
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Wisconsin. Ultimately, Paternal Grandmother located Mother and Children in
York County, Pennsylvania. Upon finding Mother and Children, Paternal
Grandparents served Mother with the custody complaint.
Paternal Grandmother testified that Mother was uncooperative with the
terms of the interim custody order. With respect to the court-ordered Skype
conversations, Paternal Grandmother said Mother claimed her camera was
broken, so Paternal Grandparents could not actually see Children during the
calls. Paternal Grandmother’s son, S.T. (“Children’s Uncle”), offered to fix
Mother’s camera free-of-charge, but Mother refused the offer. Paternal
Grandmother testified that if she called Mother to speak with Children
outside of the court-ordered Skype timeframe, Mother would not answer the
phone or she would state it was not a good time or tell Paternal
Grandmother to wait until the court-ordered timeframe to speak with
Children.
Paternal Grandmother testified that Paternal Grandparents’ first visit
with Children under the interim custody order was a success. The visit took
place at an arcade, and Children recognized Paternal Grandparents right
away. Paternal Grandmother also spoke highly of Paternal Grandparents’
visit with Children over the Christmas holiday. Paternal Grandmother had a
Christmas party at her home with Children’s extended family. Paternal
Grandparents, their significant others, and Children’s paternal aunts, uncles,
cousins, and other relatives attended. Children made glow bugs, balloons,
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made a Christmas gift for Mother, and played with their cousins. Children
also participated in a balloon launch to honor Father’s memory. Children’s
great-aunt gave Children a memory box containing a small toy soldier and
Father’s dog tags. Mother later discarded the toy soldier, claiming it
promoted violence.
While the interim custody order was in place, Paternal Grandmother
sent Children Captain America and Superman action figures. Paternal
Grandmother testified Mother also discarded these action figures as “too
violent,” even though Mother permitted Children to dress-up as Superman
and Batman for Halloween.
Paternal Grandmother admits she has rheumatoid arthritis. Paternal
Grandmother denied having any health issues which would impede her
ability to care for Children. Paternal Grandmother and W.B. both smoke
cigarettes but do not smoke around Children. Paternal Grandmother
admitted she was charged with passing a bad check in 2012 and with theft
of services in 2009.10 Paternal Grandmother did not explain the details of
these charges.
Paternal Grandmother is currently employed with Interim Health Care
for the past four years. Prior to her employment with Interim Health Care,
____________________________________________
10
Counsel for Paternal Grandparents objected to the admission of testimony
concerning these criminal charges. The court overruled the objection as
relevant to Children’s best interests. Paternal Grandparents challenge this
evidentiary ruling in their third issue on appeal.
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Paternal Grandmother owned a daycare which she operated out of her
home. Children were enrolled in the daycare when Father was at work
during his periods of physical custody (when Father and Mother had split
custody). Father paid Paternal Grandmother approximately $14.00 or
$15.00 each week as his “co-pay” for the daycare services. Paternal
Grandmother said Father paid her to babysit K.A.T. even when Mother had
been living with Paternal Grandmother and W.B.
Paternal Grandmother intervened with the adoption proceedings
because she does not want Mother’s Husband to adopt Children. Paternal
Grandmother said Mother’s Husband uses military-style discipline with
Children. Paternal Grandmother also expressed concerns that Mother’s
Husband is racist, based on his Facebook posts related to “racial stuff and
Nazi stuff.”11
Paternal Grandmother requested the court to enlarge Paternal
Grandparents’ periods of partial physical custody under the interim custody
order. Paternal Grandmother sought three weekends each in the fall and
spring to occur in Erie County so that Children’s extended family can see
Children. Paternal Grandmother suggested the parties could meet at a half-
way point to exchange custody. Paternal Grandmother also sought two
weeks’ custody in June, July, and August. Paternal Grandmother explained
____________________________________________
11
The Facebook rants were keenly distressing to Paternal Grandmother
because W.B. is African-American.
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that she has an amicable relationship with Paternal Grandfather, and they
agreed that during Paternal Grandparents’ periods of partial physical
custody, Children will stay overnight at Paternal Grandmother and W.B.’s
home; Paternal Grandfather will see Children during the daytime.
Paternal Grandfather testified, inter alia, as follows.12 Paternal
Grandfather has a good relationship with Paternal Grandmother. Paternal
Grandfather goes to Paternal Grandmother’s house during the court-ordered
timeframe for Skype calls with Children. Paternal Grandfather echoed
Paternal Grandmother’s testimony regarding the successful first visit with
Children under the interim custody order. Paternal Grandfather said
Children remembered him when Paternal Grandfather first saw them at the
arcade. Paternal Grandfather had a great interaction with Children at the
Christmas visit as well. Children asked Paternal Grandfather to teach them
guitar. Paternal Grandfather admitted he had a problem with alcohol abuse
in the past that worsened after Father’s death. Paternal Grandfather
currently attends Alcoholics Anonymous meetings twice each week and does
not consume alcohol. Paternal Grandfather last consumed alcohol on
December 21, 2013. When confronted with a recent picture of himself
holding a beverage can, Paternal Grandfather described the beverage
____________________________________________
12
(See N.T., 2/10/14, at 75-93; R.R. at 41a-50a.)
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pictured as a “Genny NA”; the “NA” stands for non-alcoholic.13 Paternal
Grandfather smokes cigarettes, but he does not do so in front of or around
Children.
Paternal Grandfather is unemployed due to a 1996 work-related oil
field injury that required multiple surgeries. Paternal Grandfather currently
collects social security disability and has no residual effects from the injury
which would impair his ability to care for Children. Paternal Grandfather
discussed a custody schedule with Paternal Grandmother and echoed
Paternal Grandmother’s request for additional time with Children. Paternal
Grandfather confirmed Paternal Grandmother’s statement that Children
would sleep at Paternal Grandmother and W.B.’s home during Paternal
Grandparents’ periods of partial physical custody. Paternal Grandfather
indicated that he will travel with Paternal Grandmother to York County to
visit Children if the court permits Paternal Grandparents to exercise partial
physical custody; they will obtain separate rooms in the same hotel.
Paternal Grandfather indicated he did not call Mother to speak with
Children while they were in Hawaii because Mother threatened to disconnect
her phone and disappear with Children if anyone from Father’s family
contacted her. Paternal Grandfather said Father did not disclose Mother’s
phone number to his family members in fear of losing Children. Paternal
____________________________________________
13
The Genesee Brewing Company website confirms that “Genny NA” is a
non-alcoholic beer. See http://www.geneseebeer.com/beer/genesee-na/.
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Grandfather asked Maternal Grandmother for Mother’s address, but Maternal
Grandmother would not disclose it. Maternal Grandmother gave Paternal
Grandfather a ride home once. Maternal Grandmother asked where Father
was and told Paternal Grandfather that she knew where Children were
residing. Father happened to be at Paternal Grandfather’s home at that
moment. Father then had a discussion with Maternal Grandmother outside
of Paternal Grandfather’s presence, after which Father left Paternal
Grandfather’s home with Maternal Grandmother to see Children.14
Laurie Rogan, the first private investigator Paternal Grandmother
hired, testified via telephone, inter alia, as follows.15 Paternal Grandmother
hired her in March 2013 to locate Mother and Children. Ms. Rogan’s initial
investigation led her to believe Mother and Children were residing in
Wisconsin. Paternal Grandmother subsequently hired a private investigator
in Wisconsin, who determined that Mother and Children had lived there but
moved. Ms. Rogan subsequently sent a United States Postal Service
ancillary service request to obtain Mother’s forwarding address, which
provided Mother’s current location in York County, Pennsylvania.
____________________________________________
14
Paternal Grandfather did not elaborate on the details of this event, but
additional testimony at trial indicated that Father’s interaction with Maternal
Grandmother took place while Mother was living with Children in Clymer,
New York, shortly before she moved to Wisconsin in August 2012.
15
(See N.T., 2/10/14, at 94-105; R.R. at 51a-56a.)
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Children’s Uncle testified, inter alia, as follows.16 Children’s Uncle
offered to fix Mother’s computer for no charge so the Skype visual
technology would work. During Children’s visit over the Christmas holiday,
Children recognized Children’s Uncle and jumped into his arms. Children’s
Uncle played guitar with Children, and they built toys. Children’s Uncle
observed that Children seemed very happy during their visit with Father’s
family over Christmas. Children’s Uncle did not contact Mother when she
lived in Hawaii with Children because Father told him that if anyone from his
family were to call Mother, she would hang up the phone. Children’s Uncle
has attempted to contact Mother on Facebook in the past, but he cannot find
her name; so Children’s Uncle believes Mother “blocked” him.
W.B. testified, inter alia, as follows.17 W.B. is Paternal Grandmother’s
significant other. W.B. has known Children since they were babies; Children
call W.B. “poppy.” W.B. loves Children as if they are his biological
grandchildren; W.B. gets along very well with Children. Mother lived with
K.A.T. in Paternal Grandmother and W.B.’s home. W.B. and Mother were
mostly friendly during that timeframe.
In June 2010, the Commonwealth charged W.B. with harassment due
____________________________________________
16
(See id. at 105-116; R.R. at 56a-61a.)
17
(Id. at 116-135; R.R. at 61a-71a.)
- 15 -
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to a physical altercation with a neighbor;18 the neighbor had pulled into
W.B.’s driveway, continually revved his engine, and refused to exit W.B.’s
property. The Commonwealth also charged the neighbor in relation to the
incident. The neighbor no longer lives in W.B.’s neighborhood. W.B. did not
recall a charge against him for trespass by a motor vehicle.
W.B. is currently disabled due to multiple degenerative discs. W.B.
receives social security disability. W.B. does not drink alcohol.
W.B. attended the first visit between Paternal Grandparents and
Children under the interim custody order. Children remembered W.B. and
called him “poppy.” The second visit with Children under the interim
custody order took place on September 28, 2013, at a park. W.B. also
attended that visit and played tag with Children, at great physical cost. At
the Christmas visit at Paternal Grandmother and W.B.’s home, Children were
excited and appeared to have lots of fun. Children made Mother pictures of
reindeer as a Christmas gift.
W.B. denied he smoked marijuana in his home when Mother lived
there. W.B. also denied driving by Mother’s place of employment after
Mother had moved out of his home. Following W.B.’s testimony, Paternal
Grandparents rested their case.
____________________________________________
18
Counsel for Paternal Grandparents objected to testimony concerning this
harassment charge, but the court overruled the objection as relevant to
Children’s best interests.
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Mother testified, inter alia, as follows.19 Mother moved out of Maternal
Grandmother’s home in December 2007 and moved into Paternal
Grandmother and W.B.’s home at that time. Mother lived with Paternal
Grandmother and W.B. with K.A.T. until December 2008. Mother’s
relationship with Paternal Grandmother was good at first. Over the course
of Mother’s stay at Paternal Grandmother and W.B.’s home, Mother’s
relationship with Paternal Grandmother worsened. Mother felt like nothing
she did was good enough while living in Paternal Grandmother’s home.
Mother said Paternal Grandmother had strict rules. For example, Paternal
Grandmother would not allow Mother to talk on the phone or go to the
grocery store without Paternal Grandmother’s permission. Mother claimed
Paternal Grandmother told Mother that if she wanted to move out, Mother
would have to leave K.A.T. with Paternal Grandmother and W.B.
Mother conceded that she let Paternal Grandmother watch K.A.T. while
Mother worked; Mother enrolled K.A.T. in Paternal Grandmother’s home
daycare. Mother said she paid Paternal Grandmother for her daycare
services using government assistance. Mother paid Paternal Grandmother
every other week; Father paid Paternal Grandmother on the alternating
____________________________________________
19
(Id. at 136-209; R.R. at 71a-108a.)
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weeks.20 Mother claimed Paternal Grandmother forced her to commit
welfare fraud; Mother alleged she ultimately had to repay the government as
a result.21
Mother claimed she also had difficulties with W.B. while living in his
home. Mother said she initially liked W.B. but is now “terrified” of him.
Mother observed W.B. smoke marijuana in the home. Mother claimed she
once overheard W.B. talking about a drug deal, and W.B. threatened to kill
Mother if she told anyone what she had heard. Mother said she could not
escape from Paternal Grandmother and W.B.’s home because they allegedly
had video surveillance around the home and trained guard dogs.
When confronted with the letters Mother wrote to Paternal
Grandmother and W.B. while living in their home, Mother claimed she was
grateful to have a roof over her head. Mother testified: “I know how to
count my blessings regardless of how bad something can be, and I did not
want to make [Paternal Grandmother and W.B.] mad.” (N.T., 2/10/14, at
182; R.R. at 94a).
Mother said she had an okay relationship with Paternal Grandfather.
According to Mother, Paternal Grandfather drank a lot.
____________________________________________
20
Mother claimed she had receipts for each payment she made to Paternal
Grandmother, but she did not present those receipts at trial.
21
Mother presented no evidence at trial to substantiate these allegations.
- 18 -
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Mother testified that she attempted to contact Father at basic training
to inform him she planned to move out of Paternal Grandmother and W.B.’s
home with K.A.T. Mother’s attempts to reach Father at basic training were
unsuccessful. Mother left in the middle of the night in December 2008 and
moved in with a co-worker with K.A.T.; Mother was pregnant with K.W.R. at
that time. Father returned home from basic training for a break around
January 2009. Mother met with Father at that time and brought K.A.T. to
their meeting. Mother claimed Father “kidnapped” K.A.T. for a week and
refused to return K.A.T. to Mother’s care until Mother’s relative threatened
Father that he would lose his military career if he did not return K.A.T.
Mother admitted she did not report the alleged kidnapping to any
authorities.
In early 2009, Mother and Father split physical custody of K.A.T. on a
50/50 basis. Mother gave birth to K.W.R. in March 2009. Once K.W.R.
reached six months’ old, Mother and Father split physical custody of K.W.R.
on a 50/50 basis as well. Mother said Father did not utilize all of his
custodial time with Children under the shared custody arrangement. Mother
conceded that Paternal Grandparents might have spent time with Children
during Father’s periods of physical custody, though she was uncertain where
Father lived at this time.
Mother began a relationship with D.S. in April 2009, and they married
in May 2010. Mother admitted that Father took custody of Children for two
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weeks while she was in Hawaii to marry.22 Mother and Father agreed that
Mother could take Children to live in Hawaii with Mother and Mother’s
Husband if Mother agreed to release Father from his child support obligation.
The agreement provided that Father would get custody of Children during
the summertime, holidays, and have unlimited communication with Children
through phone calls and social media. Mother also agreed the custody
arrangement would revert to 50/50 custody if Mother moved back to Erie
County.
Mother moved with Children and Mother’s Husband to Hawaii in
September 2010. Mother said Father called only once every four to six
months while she lived in Hawaii with Children. Father did not send Children
cards while they lived in Hawaii. Mother admitted she told Father not to
disclose her phone number to others, but she did not recall threatening to
run away with Children if Father gave out her number. Mother said Father
did not utilize all of his custody time with Children in the summer because
Father anticipated deployment overseas.
Mother, Children, and Mother’s Husband relocated from Hawaii to
Clymer, New York in November 2011. Mother stayed in New York until
August 2012, when she moved with Children and Mother’s Husband to
____________________________________________
22
Counsel for Paternal Grandparents suggested that Father took custody of
Children for six weeks while Mother was in Hawaii to marry; Mother denied
this proposition.
- 20 -
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Wisconsin.23 Mother claimed she told Father about her return to New York,
and she permitted Father to see Children. Mother said her stay in New York
was only temporary, to use up Mother’s Husband’s vacation time from the
Army. Mother admitted she told Husband she was only in New York on
vacation. Mother conceded she did not immediately tell Father she was back
from Hawaii for good. Mother denied that she was hiding from Father or
Father’s family while she moved around the country.
Mother, Children, and Mother’s Husband moved to Wisconsin in August
2012, when Mother’s Husband started school. After the move to Wisconsin,
Mother claimed she had problems with her phone which necessitated a new
phone number. Mother did not tell Father her new phone number. Mother
____________________________________________
23
Mother admitted she was angry with Maternal Grandmother for bringing
Father to see Children in New York the night before Mother and Children
moved to Wisconsin. Counsel for Paternal Grandparents had the following
exchange with Mother regarding this incident:
[Counsel]: [I]f I ask [Maternal Grandmother] whether
she brought [Father] to Clymer, New York, because she
thought it was wrong for you to be hiding these kids from
him, she’s going to tell me that I’m full of crap and that
didn’t happen?
[Mother]: Good luck. My mom is a pistol. Good luck.
[Counsel]: You were angry with your mother, weren’t
you, because of what she did?
[Mother]: Yeah.
(N.T., 2/10/14, at 192; R.R. at 99a).
- 21 -
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claimed Father still could have contacted Mother through Facebook, if he
wanted to reach her. When Father died in the automobile accident in
February 2013, Mother was living with Children and Mother’s Husband in
Wisconsin. Mother did not attend the funeral because of the cost of travel.
Additionally, Mother claimed Children did not really know Father and
regarded Father as the “guy with the cool tattoo.” After Father’s death,
some of his family reached out to Mother’s Husband through Facebook,
asking to see Children. Mother denied their request, stating Father’s family
had not previously made any effort to see Children. Paternal Grandmother
tried to contact Mother to discuss Father’s life insurance policy, but Mother
did not want to work with Paternal Grandmother.
Mother testified that Children’s behavior has changed since entry of
the interim custody order. Mother claimed Children now need counseling
because they are wetting the bed and having nightmares. Mother insisted
Children’s emotional issues did not begin until after entry of the interim
custody order. Mother said Children hate the Skype calls, and the calls are
terrible. Mother contended Children have nightmares because of the Skype
calls. Mother tried to fix her phone to allow use of the visual technology, but
her efforts were unsuccessful. Mother testified that Children’s first visit with
Paternal Grandparents under the interim custody order was terrible.
Children did not recognize Paternal Grandparents and Children hid behind
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Mother’s leg when they saw Paternal Grandparents. Mother claimed she had
bruises on her leg from Children squeezing her so tight.
Mother would not permit Children to play with the action figure toys
Paternal Grandparents sent Children because Mother said that the toys
promote violence. Mother threw away candy Paternal Grandparents sent
Children because Mother thinks candy is bad for Children. Mother
complained Children returned home, from the Christmas visit with Paternal
Grandparents, smelling like cigarettes and were sick and exhausted after
this visit.
Mother denied Paternal Grandmother’s request to speak with Children
on the phone outside of the court-ordered Skype timeframe because Mother
said Children are too busy. Children participate in martial arts classes two to
four days each week. Mother does not want Paternal Grandparents to have
any custody of Children whatsoever because she thinks Paternal
Grandparents are horrible people. Mother admitted that she once filed an
abuse report against Paternal Grandmother, which Children and Youth
Services ruled “unfounded.”
Mother’s Husband testified, inter alia, as follows.24 Mother’s Husband
has a good relationship with Children. Prior to Father’s death, Mother’s
Husband was on good terms with Father. Mother’s Husband gave his phone
____________________________________________
24
(Id. at 210-229; R.R. at 108a-118a.)
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number to Father in case Father was unable to reach Mother. Mother’s
Husband said Father did not exercise his holiday time with Children while
they lived in Hawaii. Father called Children only five or six times while they
were in Hawaii.
Mother’s Husband said that during Children’s first visit with Paternal
Grandparents under the interim custody order, Children seemed
uncomfortable. Mother’s Husband denied that Children ran into Paternal
Grandparents’ arms at the first visit. Children called Paternal Grandmother
“nana” only after she repeated that word to Children multiple times.
Children are not excited to participate in the Skype calls. Mother’s Husband
has tried to fix the visual technology for the Skype calls but to no avail.
Mother’s Husband initially denied posting racist and Nazi-type
comments on Facebook. Mother’s Husband said he is not a racist or a Nazi.
Upon further questioning, Mother’s Husband admitted he posted a response
to a friend’s comment on Facebook on August 11, 2011, stating: “We need
to start a fucking chapter of the KKK or Nazi or something. I refuse to live
in a town with anything but whites.” (Id. at 227; R.R. at 117a.) Mother’s
Husband said this post “was a joke because [my friend was talking] about all
of the niggers moving here because there is lots of them.” (Id. at 227-28;
R.R. at 117a.) Mother’s Husband said he was not serious. Mother’s
Husband admitted he had a conversation with a friend on Facebook on
February 15, 2013, in which Mother’s Husband said: “I want to go nigger
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hunting.” (Id. at 224; R.R. at 115a.) Mother’s Husband defended this
comment as follows: “…I was angry. But nigger by definition is an ignorant
person. It does not mean anybody of color.” (Id. at 228; R.R. at 117a.)
Mother’s Husband said he has African-American friends. Mother’s
Husband could not recall posting a picture of Hitler to his Facebook page,
stating: “Hail to Hitler. We should all be like him.” (Id.) Mother’s Husband
explained that when he was in the Army he would shave his head and people
would call him Hitler because his last name is German, so if Mother’s
Husband did post a picture of Hitler, it was meant as a joke. Mother’s
Husband conceded that on October 18, 2013, he posted: “…I won’t stop until
they get nothing because that’s what they deserve[,]” in reference to
Paternal Grandparents and the current custody action. (Id. at 226; R.R. at
116a.) Mother’s Husband’s Facebook post referencing Paternal
Grandparents continued that during Paternal Grandparents’ last visit with
Children, Mother’s Husband believed Paternal Grandparents were high on
pain pills.
Mother’s Husband said he disciplines Children using exercise. Mother’s
Husband makes Children do squats, leg lifts, and other forms of exercise as
punishment. Children learn a similar discipline in their Hapkido marital arts
classes. Mother’s Husband said Mother did not throw away the action figure
toys Paternal Grandparents sent Children; Mother stored the action figures
in the laundry room because Mother and Mother’s Husband do not allow
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Children to play with toys that promote violence. Mother’s Husband said
Children’s behavior has changed since the start of the custody proceedings.
Children sleep in Mother and Mother’s Husband bed more frequently and
have nightmares. Children are currently in counseling.
Mother’s Husband tried to adopt Children. Paternal Grandparents
intervened, which caused the court to vacate the adoption decree. Mother’s
Husband still plans to adopt Children after these custody proceedings are
resolved.
Mr. Dennis Lagan is a private investigator whom Mother hired for
purposes of the custody proceedings. Mr. Lagan testified, inter alia, as
follows.25 Mother hired Mr. Lagan to conduct background investigations on
Paternal Grandparents, W.B., and any other relatives with whom Children
might have contact.26 Mr. Lagan discovered the following criminal records.
In October 2009, the Commonwealth charged Paternal Grandmother with
theft of services; Paternal Grandmother pled guilty in November 2009, paid
a fine, $250.00 in restitution, and costs. In 2012, Paternal Grandmother
pled guilty to a traffic violation. Later in 2012, the Commonwealth charged
____________________________________________
25
(Id. at 229-241; R.R. at 118a-124a.)
26
Counsel for Paternal Grandparents objected to testimony/evidence
concerning criminal records, but the court overruled the objection as
relevant to Children’s best interests.
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Paternal Grandmother with bad checks; the disposition was guilty.27 Also in
2012, the Commonwealth charged Paternal Grandmother with operating a
vehicle without required financial responsibility; that charge was dismissed.
In 2013, Paternal Grandmother pled guilty to speeding (71 mph in a 55 mph
zone).
Mr. Lagan did not discover any criminal history, bankruptcies, tax
liens, or judgments against Paternal Grandfather. Mr. Lagan found one child
support action against Paternal Grandfather from 1998.
Mr. Lagan discovered that the Commonwealth charged W.B. with
trespass by a motor vehicle in 2008; W.B. pled guilty to this offense and
paid a fine and costs. In 2010, the Commonwealth charged W.B. with
harassment due to a physical altercation; W.B. pled guilty to this offense in
July 2010 and paid a fine and costs.
____________________________________________
27
Mr. Lagan shared no factual basis for the theft of services, traffic violation,
and bad checks convictions. Mr. Lagan also could not determine whether
the convictions were summary offenses or misdemeanor offenses.
Additionally, counsel for Paternal Grandparents confronted Mr. Lagan with a
print-out from the Pennsylvania State Police dated May 15, 2012, which
showed that Paternal Grandmother had no criminal record. Mr. Lagan
explained that the Pennsylvania State Police records are generally based on
fingerprinting; Mr. Lagan suggested Paternal Grandmother might not have
been fingerprinted for her crimes. Mr. Lagan indicated that the Pennsylvania
State Police records might be different than the records accessed through
the Unified Judicial System Portal. Neither the Pennsylvania State Police
record nor the Unified Judicial System Portal record pertaining to Paternal
Grandmother’s convictions is part of the certified record on appeal.
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Maternal Grandmother testified, inter alia, as follows.28 Maternal
Grandmother’s relationship with Mother is currently fine, though they have
had their “ups and downs” over the years. Maternal Grandmother would not
permit Mother and Father to live together when Mother gave birth to K.A.T.
because they were unmarried, so Mother moved in with Father at Paternal
Grandmother and W.B.’s home. Mother became distraught living with
Paternal Grandmother and W.B., so Mother moved out.
When Mother and Father shared custody of Children, Maternal
Grandmother described the custodial arrangement as “horrible.” Maternal
Grandmother said Children had no set routine because they were always
back and forth between homes. Maternal Grandmother said Father did not
always show up for his periods of physical custody.
Maternal Grandmother said she drove Father to see Children in New
York on March 20, 2012, but Father did not get out of the car. Maternal
Grandmother indicated Father already knew Mother was living with Children
in New York when this incident took place. Maternal Grandmother admitted
Mother was upset that Maternal Grandmother brought him to see Children
on this date. Maternal Grandmother said she spoke to Father again on
August 18, 2012 and informed Father that Mother and Mother’s Husband
planned to move to Wisconsin with Children. Maternal Grandmother told
____________________________________________
28
(Id. at 241-257; R.R. at 124a-132a.)
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Father it might be the last opportunity to see Children for a while, but Father
said he did not want to see Children.29 Maternal Grandmother denied that
anyone from Father’s family had ever contacted her, asking for Mother’s
phone number or address. Maternal Grandmother believes Mother’s
Husband is a great man who is good with Children and is giving Children a
good life.
Mr. Wilson L. Richardson teaches Children Hapkido,30 a martial arts
class, two to three days each week. Mr. Richardson testified, inter alia, as
follows.31 Mr. Richardson said Mother and Mother’s Husband attend the
classes and watch Children more frequently than most parents do. Children
are doing well in the class.
Keiton Lyle Westfall testified, inter alia, as follows.32 Mr. Westfall is
Father’s second cousin. Mr. Westfall and Father did not spend much time
together, but they always conversed when they saw each other. In speaking
____________________________________________
29
There is some inconsistency in the testimony as to whether Maternal
Grandmother drove Father to see Children on March 20, 2012, or on August
18, 2012, shortly before Mother and Children moved to Wisconsin with
Mother’s Husband.
30
Hapkido is a self-defense based curriculum that also teaches Children the
discipline of exercise.
31
(Id. at 257-261; R.R. at 132a-134a.)
32
(Id. at 262-265; R.R. at 134a-136a.)
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with Father, Mr. Westfall did not recall Father ever being distraught about
Children or discussing a search for Children.
After Mr. Westfall’s testimony, Mother rested her case. The court
instructed counsel to address in closing arguments the statutory factors
relating to grandparent custodial rights as well as the two or three year
period in which Paternal Grandparents had no contact with Children.
Regarding the lack of contact, the court stated: “And, of course, the effect
of—assuming parent withholds the children from grandparents, and frankly it
makes no difference whether it is hiding them or just simply saying you can’t
see them, it is the time lag that I’m concerned about.” (Id. at 267; R.R. at
137a.) The court explained that it planned to make a decision immediately
following closing arguments so that the parties could leave the courtroom
informed of the result.
Following closing argument, the court explained its custody decision as
follows:
Now, before we had this most recent legislation, the test
was actually pretty direct and somewhat simple. Upon the
death of a child, the parents of the deceased child may
seek reasonable partial custody to an unmarried child upon
a finding that partial custody would be in the best interest
of the child and would not interfere with the parent-child
relationship.
Court decisions instruct that the court must consider the
amount of personal contact between the parents, the
grandparents, and the child or children.
The purpose of allowing partial custody under this is not to
replace a parent with a grandparent as a primary
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caregiver. And essentially what the cases were saying is
natural biological parent trumps grandparent for primary
physical custody, period.
But as it relates to partial physical custody, that was to
continue a healthy relationship with grandparents if that
was in the child’s best interest and would not interfere with
the parent’s relationship. And the statute was then
apparently replaced by this new one with these factors.
And I’m sorry. I have to say this. When I started
reviewing the code when I got this assignment, my first
reaction was the legislature has embarked upon an
unconstitutional encroachment of the court’s authority.
They are telling us what we must consider to make a
decision.
I’m not sure—the example came to mind is for example if
the legislature said we’re going to control fat people. So
anybody who makes a personal injury claim in an
automobile accident case, you’ve got to consider whether
they are fat or not. Now what the heck does that have to
do with somebody’s injuries? And some of the factors, I’m
sorry, that I have reviewed I’m shaking my head saying
what the heck does this have to do with the best interest
of the children? Oh, it controls the conduct of the adults
because the adults can’t act like adults. So we’ll dictate
how the adults will act and call it in the best interest of the
children.
I’m tempted to just rule, [Paternal Grandparents’ counsel],
because I know you are a competent, qualified, good
practitioner in the area of family law that this is all
unconstitutional because it infringes upon my authority to
make a decision. Any I may find the case that I will do
that.
But nevertheless, the legislature has enacted these factors.
You addressed them. Now, as [Mother’s counsel] pointed
out, there is no testimony on some of the stuff because it
doesn’t exist. All right. So we pass over those and we
look at the factors and we do so with the understanding
that grandparents have the burden of proof in these areas.
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There is a curious circumstance that comes to mind. If a
biological parent—I’m not saying that’s the case here. But
if a biological parent intentionally creates conflict and
estrangement with that biological parent’s former in-laws,
do they get punished for what they did by saying we’re
going to ignore the conflict because biological parent
created it and we’re still going to give partial physical
custody to grandparents knowing there is an irreconcilable
conflict and then say you live with it? I don’t think that is
in the best interest of the children.
Which brings me back to finally all well and good, here are
the factors you[,] that you consider. How do you consider
them? Who caused what? That is part of the equation.
That is part of the discussion. I guess as I get more
educated in this area, I’ll answer that question for myself.
But the facts are that I would find from the testimony
there is contact between [Paternal Grandmother] and
there has been literally no contact with [Paternal
Grandfather]. And he’s—I don’t mean to be disrespectful
to you. You’re sort of the passenger sitting in the car and
your former wife is driving it. And in whichever direction
she ends, that’s where you’re going. That’s another
circumstance.
We have divorced grandparents involved with significant
others living in separate households, both of them are
Plaintiffs. And yet they solved the apparent problem of
splitting time with them by their own agreement that if
they get partial physical custody, the kids are going to stay
overnight with [P]aternal [G]randmother and [P]aternal
[G]randfather will come and pick them up and be with
them during the day while [Paternal Grandmother] works.
That doesn’t sound like it has…much court supervision at
all, but nobody is asking me to get involved in that
because they’ve agreed. So I don’t have the dilemma of
saying let me figure out…how to split time with
grandfather, grandmother, Skype calls. He goes over to
her place, and they participate in these Skype calls.
That’s another thing. I’m sorry. This micromanaging
contacts over the phone and Skype and all that stuff, you
just can’t be all things to all people. And from the
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evidence, I do accept [M]other’s testimony that these
Skype calls are upsetting. They are an interruption of their
routine. And I can appreciate that.
How do you have a conversation with a 4-year-old? Hi.
How are you? Tell me what you did today. What do you
think of the Middle East situation? Four-year-olds don’t
have conversations with people in most instances. They
report. I played. I like the puzzle. I like my bat. I like
the ball. I watched the Muppets. They are not on [TV]
anymore or whatever, whoever.
But 6-year-olds are starting to have conversations. They
are going to school. They are in kindergarten, first grade.
This Skype technology, I heard the evidence. And I heard,
oh yeah, we’ll get you the right device and this will all
work. Mom refused that. But then she doesn’t apparently
know how to use her phone to make it work. But then I
heard testimony that it doesn’t work for group calls with
phones.
And I will tell you what my concern was when I heard all of
that testimony and there was I believe you said you could
get up to ten people on a call if you’re on a computer.
Ma’am, in my judgment, that is overload. You get ten
people yammering at a 4-year-old, all visual, all seeing, all
that. To me, I can’t comprehend how that would impact a
4-year-old.[33]
All right. Where am I? Well, I’m analyzing the evidence in
front of me. There is no question there is a conflict
between the two. I’m calling them households even
though I know [Paternal Grandparents have] two
households. Conflict between the households.
One thing that I will tell you struck me and was concerning
to me, [M]other’s current husband has been described as a
____________________________________________
33
No testimony established that Paternal Grandparents placed or intended
to place ten people on the Skype calls while the interim custody order was in
effect. Rather, testimony explained that the “group call” function on Skype
allows up to ten people to participate on a call.
- 33 -
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good father, doing a good job, accepting of these children.
And he stepped up to adopt these children and apparently,
according to evidence, had got an order allowing him to
adopt the children. And [Paternal G]randparents couldn’t
just let that go. They had to go in and undo that to get it
vacated. To what end?
And my reaction was real simple to that. They stuck their
nose in that situation and probably they should have
stayed the hell out of it. Their—I can’t say daughter-in-
law but their son’s paramour and their grandchildren are in
a stable family, legally married, doing the right thing to
adopt these boys. And [Mother’s Husband] steps up and
for whatever reasons, you undid it. I don’t believe that
could possibly be considered a best interest for your
grandchildren in any way, shape, or form.
Yes, I read the section. One notation. I do agree
[Mother’s counsel] referred [to] grandparent
considerations under the 5328 subsection, but you said as
well as the other general factors.
If I am compelled to use the factors that the legislature set
up, I’m not looking beyond what the statute says.
And the statute says grandparents factors. Fine. If I’m
told I have to use those factors, I’m not going back and
looking at general factors because I don’t think I should
anyway be compelled to.
But the bottom line is this. There is a conflict between
[Paternal G]randmother and [M]other. Who created it?
Even if I say [M]other, still is a fact. Now I don’t
necessarily believe that [M]other created the conflict.
And even if she did and her perception is wrong, what is
the old saying[,] perception becomes reality[,] is reality.
Now, what am I to do with that, say [M]other you have got
to make it up with your former paramour’s mother? Gee,
I’m sure that will work. Wait a minute, counseling. We’ll
make you spend money for counseling to heal this rift.
Well, [Paternal G]randmother is in Erie. Excuse me.
[Corry], close to Erie.—
- 34 -
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* * *
Corry. And [Mother] is in Hanover. How is that going to
work? Oh, let’s make everybody drive three hours to get
at a middle point and find some counselor to talk to these
people for an hour and send them back on their way. That
will give them a lot of time to think while they are driving
back and forth. That is not going to work.
So bottom line is this. Right or wrongly, I don’t believe
that the conflict between [M]other and [P]aternal
[G]randmother can be fixed. And I don’t think, therefore,
it is in the best interest to trump [M]other’s decision not to
give access to grandparents simply because grandparents
want to establish a relationship with their grandchildren. I
don’t see any need. Mother needs no help. She has a new
husband. He’s doing good by her. They are stable, adding
to their family.[34] So I’m not going to interfere with her
decision.
She is [C]hildren’s mother. And I don’t see any reason,
even considering all of these factors that I’m supposed to
think about, to conclude that [C]hildren would be better or
it would be in their best interest to be compelled to spend
regulated time with grandparents, nor for that matter have
dictated times for contact on the phone.
So having said all of that, the bottom line order is this.
ORDER
AND NOW, to wit, this 10th day of February, 2014, the
complaint for custody filed by [Paternal Grandparents] is
dismissed. We will enter no order of partial physical
custody.
* * *
____________________________________________
34
Mother was pregnant at the time of the custody trial.
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(Id. at 289-298; R.R. at 148a-152a.)35
On March 7, 2014, Paternal Grandparents timely filed a notice of
appeal and concise statement of errors complained of on appeal pursuant to
Pa.R.A.P. 1925(a)(2)(i). Paternal Grandparents raised four issues in their
concise statement challenging: (1) the court’s decision to sever all ties
between Children and their Paternal Grandparents’ ancestry; (2) the court’s
admission of evidence of criminal and motor vehicle offenses; (3) the court’s
failure to consider the Custody Act’s statutory factors and to conduct a
detailed analysis; and (4) the court’s exclusive focus on the conflict between
Mother and Paternal Grandparents. On March 24, 2014, the court issued a
responsive Pa.R.A.P. 1925(a) opinion. In its opinion, the court stated:
We have reviewed our Decision and feel no need presently
to elaborate further. As the issues are styled, we would
take the opportunity to offer some generalized comments
and observations. Simply put, this Judge believes that the
legislature has unduly encroached upon the judiciary and
the way Judges are to perform their responsibilities. To
state the issues of error as failing to conduct a detailed
child custody analysis as required misdirects the focus
away from the sole question of what is in the best interests
of children. …
Since it is unlikely a litigant would directly challenge “the
factors” (23 Pa.C.S. 5328), in the context of the issues
____________________________________________
35
Prior to trial, the parties had filed motions for contempt. Mother filed for
contempt, alleging Paternal Grandparents had smoked in front of Children.
Paternal Grandparents filed for contempt based on Mother’s alleged
interference with the visual capabilities of the Skype calls. The court denied
both petitions for contempt at the conclusion of trial, finding insufficient
evidence to substantiate either claim.
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styled, it is hoped this appeal may address the threshold
question[:] can the legislature do what this law purports to
do? The development of custody law, as is so with the
common-law, was unquestionably within the province of
the judiciary. An absolute preclusion from primary custody
when a parent moved in the paramour[,] evolved to a
more precise consideration of what is the effect of such a
meretricious relationship on children. While the judiciary
may have struggled with shifting social [mores], the
Courts never lost focus that the paramount question was
and always will be[,] what is in the best interest of
children.
* * *
This is not a new challenge for the Courts. When called
upon, it has been decided by the Superior Court that
legislation is not the end all be all. In considering a
natural parent’s petition to resume custody of his or her
children, the best interest of the child standard was
applicable rather than the clear necessity standard as set
out in the Juvenile Act (42 Pa.C.S.A. 6301 et seq.).
Perhaps in hindsight, this Judge should have declared
outright in this case that “the factors” would not be
considered and thus pre[v]ented the precise question
being asked now. What we did do is consider the evidence
and arguments presented by the litigants and to the best
of our human ability decide what was in the best interest
of these two boys. We do not think we were wrong in the
result or how we got there.
(Rule 1925(a) Opinion, filed March 24, 2014, at 2-5) (some internal citations
omitted).
On September 16, 2014, this Court vacated and remanded the matter,
based on the trial court’s failure to utilize the requisite statutory factors in
making its determination. Specifically, this Court instructed the trial court to
consider upon remand the sixteen general statutory “best interest” factors
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applicable when making any order of custody (see 23 Pa.C.S.A. § 5328(a))
and the three statutory custody factors pertaining to grandparents and
great-grandparents (see 23 Pa.C.S.A. § 5328(c)(1)). Based on its
disposition, this Court declined to address the merits of any of Paternal
Grandparents’ issues.
On November 6, 2014, the trial court issued its remand decision. The
trial court’s remand decision provides no facts or procedural history of the
case. The remand decision initially references the closing arguments of
counsel and incorporates by reference the court’s on-the-record discussion
at the conclusion of the custody trial. The court’s remand decision
continues, in its entirety and without any discussion of legal authority
whatsoever, as follows:
We then reference the grandparents’ factors in Section
5328(c)(1) of the Child Custody Act. We consider the
three subsections as follows: (i) none for approximately 3
years; (ii) interference would result to the parent/child
relationship as it did when grandparents intervened in a
finalized adoption by Mother’s current husband resulting in
the adoption being undone and still pending at the time of
this custody trial; (iii) awarding custody to grandparents
would not be in the best interest of the children. The
analysis however, does not end there and we continue to
consider the 16 factors set forth at pages 4-6 of the
Superior Court Opinion. We will address each factor ad
seriatum.
Factor 1: Neither party is more likely to encourage
and promote frequent and continuing contact.
Factor 2: There exists no risk of physical harm to the
children, though efforts to influence a child’s thinking may
possibly create emotional stress.
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Factor 3: Grandparents have performed no parental
duties for at least three years, while Mother has.
Factor 4: Grandparents are unnecessary to provide
stability and continuity in [Children’s] education, family life
and community life as circumstances present at trial.
Mother provides for those.
Factor 5: Grandparents (and others) are the extended
family, 5½ travel hours away. Mother’s current husband
completes the traditional family unit of husband and wife
and children. There is no evidence they need help from
any outside source.
Factor 6: There is no reason to believe [C]hildren’s
relationship is anything but good and at the time of trial a
third sibling was expected. We fail to see how
grandparents add anything to the sibling relationships.
Factor 7: There was no evidence presented as to the
well-reasoned preference of [C]hildren.
Factor 8: Not applicable.
Factor 9: Mother is more likely to maintain a loving,
stable, consistent and nurturing relationship “adequate” for
[C]hildren’s emotional needs.
Factor 10: Mother is more likely to attend to the daily,
physical, emotional, developmental, educational and
special needs of [C]hildren. Need it be stated,
Grandparents are 5½ hours away.
Factor 11: The parties [live] at least 5½ travel hours
apart.
Factor 12: While each party may have the ability to
make appropriate child-care arrangements and be
“available,” as written, we do not believe this subsection
permits us to rewrite the statute to address quality of care.
However, see factor 9.
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Factor 13: There exists a high level of conflict between
the parties, more so with [Paternal Grandmother] than
with [Paternal Grandfather]. While the parties may state a
willingness to cooperate, we are unpersuaded that there
exists the ability to cooperate.
Factor 14: While there was evidence presented about
past drug and alcohol use/abuse, adequate evidence of
present circumstances is lacking.
Factor 15: While [Paternal G]randfather may have
some difficulties getting around, there is no evidence that
any party or household member is mentally impaired or
physically incapable.
Factor 16: No other relevant factors exist of
significance.
Following then the directive to properly consider
[Children’s] best interest in light of the statutory factors,
we have done so. To answer this question we have
balanced each factor singularly and in toto in each to the
other and as each may apply to the underlying
circumstances presented. Considering then the evidence
presented as to the subject matter of each factor and
further considering the arguments of counsel, we do
conclude that it is not in the best interests of these
children to be compelled by court order to spend times of
partial physical custody with [Paternal] Grandparents. An
appropriate Order dismissing [Paternal G]randparents’
complaint follows hereinafter.
(Remand Decision, filed November 6, 2014, at 1-4). Paternal Grandparents
timely filed a notice of appeal and Rule 1925(a)(2)(i) statement on
December 5, 2014. On December 17, 2014, the trial court issued a
supplemental opinion, commenting only on its evidentiary rulings concerning
the criminal offenses of Paternal Grandmother and W.B. (See Supplemental
Rule 1925(a) Opinion, filed December 17, 2014, at 1-2.)
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Paternal Grandparents raise the following issues for our review:
WHETHER THE TRIAL COURT COMMITTED AN ABUSE OF
DISCRETION OR AN ERROR OF LAW BY FAILING TO
PROPERLY ANALYZE THE CUSTODY FACTORS SET FORTH
IN 23 PA.C.S. § 5328(a) AND (c) OF THE CUSTODY ACT,
AS AMENDED, ON REMAND, AS DIRECTED BY THE
SUPERIOR COURT OF PENNSYLVANIA WHEN THE TRIAL
COURT MERELY ENGAGED IN A CURSORY AND
PERFUNCTORY ANALYSIS RATHER THAN THOROUGHLY
EXAMINING AND CONSIDERING ALL FACTORS AS SET
FORTH IN § 5328(a) AND (c), AND IN ACCORDANCE WITH
THE STANDARD OF WHAT IS IN CHILDREN’S BEST
INTERESTS?
WHETHER THE TRIAL COURT COMMITTED AN ABUSE OF
DISCRETION OR AN ERROR OF LAW IN FAILING TO GRANT
PATERNAL GRANDPARENTS ANY RIGHTS OF PARTIAL
PHYSICAL CUSTODY, WHICH, IN EFFECT, CUTS CHILDREN
OFF FROM THEIR PATERNAL ANCESTRY AND IS CONTRARY
TO THE BEST INTEREST[S] OF CHILDREN AND IS IN
CONTRAVENTION OF WELL-SETTLED CASE LAW AND THE
PURPOSE OF 23 PA.C.S. § 5325?
WHETHER THE TRIAL COURT COMMITTED AN ABUSE OF
DISCRETION OR AN ERROR OF LAW BY REPEATEDLY
ALLOWING THE ADMISSION OF EVIDENCE (OVER
OBJECTIONS) OF CRIMINAL AND MOTOR VEHICLE
OFFENSES NOT ENUMERATED IN 23 PA.C.S. § 5329 AND
WHICH WERE NOT OTHERWISE ADMISSIBLE UNDER THE
RULES OF EVIDENCE?
(Paternal Grandparents’ Brief at 4).
For purposes of disposition, we combine Paternal Grandparents’ first
and second issues. Paternal Grandparents argue the legislature recognized
a beneficial relationship between children and their grandparents when it
gave grandparents standing under 23 Pa.C.S.A. § 5325, in the event of a
parent’s death. Paternal Grandparents assert the trial court wholly ignored
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the importance of their role in Children’s lives. Paternal Grandparents
contend the court’s custody decision effectively severed all ancestral ties
between Children and Father’s family because Mother and Mother’s Husband
have made clear they will not permit Paternal Grandparents to have any
contact or communication with Children in the future.
Paternal Grandparents also argue that the court’s decision following
remand fails to set forth a detailed analysis to support the court’s decision to
deny Paternal Grandparents any contact with Children. With respect to the
trial court’s initial consideration of the grandparent factors (see 23 Pa.C.S.A.
§ 5328(c)(1)), under Section 5328(c)(1)(i) (amount of contact between child
and grandparent prior to filing of custody action), Paternal Grandparents
assert the court merely stated Paternal Grandparents have not had contact
with Children for approximately three years. Paternal Grandparents aver the
court ignored their substantial contact with Children prior to the custody
action, where K.A.T. resided with Paternal Grandmother and W.B. for one
year and Paternal Grandparents provided care for both Children when
Mother and Father shared physical custody after their separation in 2009.
Paternal Grandparents claim their lack of contact with Children in recent
years stemmed from Mother’s repeated moves and refusal to inform Paternal
Grandparents of her contact information and whereabouts. Paternal
Grandparents stress how they needed to hire a private investigator to locate
Mother and Children after Father’s death.
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Under Section 5328(c)(1)(ii) (whether custody award interferes with
parent-child relationship), Paternal Grandparents complain the trial court
improperly focused on Paternal Grandparents’ intervention with the adoption
proceedings by Mother’s Husband. Paternal Grandparents insist the trial
court blamed them for asserting their rights under the adoption statute to
provide testimony regarding whether Mother’s Husband would be an
appropriate adoptive parent. Paternal Grandparents maintain that Mother’s
and Mother’s Husband’s failure to notify Paternal Grandparents about the
adoption proceedings (which resulted in the court vacating the adoption
decree) deprived Paternal Grandparents of an opportunity to participate in
the determination of whether adoption by Mother’s Husband would serve
Children’s best interests. Paternal Grandparents suggest their intervention
in the adoption proceedings was especially necessary in light of Mother’s
Husband’s inflammatory racist comments on Facebook.
Regarding Section 5328(c)(1)(iii) (whether custody award is in best
interest of child), Paternal Grandparents recite the court’s entire analysis of
this factor as follows: “awarding custody to grandparents would not be in the
best interest of children.” Paternal Grandparents contend the “best interest
of the child” determination is the polestar criterion in custody cases, and the
court’s bare assertion is woefully inadequate.
Paternal Grandparents proclaim the court was also required to analyze
all of the sixteen statutory custody factors under Section 5328(a). Paternal
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Grandparents highlight the trial court’s initial remarks on the record that it
would not consider the sixteen custody factors and would consider only the
three factors related to grandparents seeking custody. When compelled to
do so by this Court, the trial court mentioned the sixteen factors in its
remand decision but provided no detail or analysis of the factors, and no
references to the record. Paternal Grandparents maintain the court’s
decision after remand falls far short of a thorough analysis.
Paternal Grandparents further suggest the record does not support the
court’s conclusory statements as to certain factors.36 For example, Paternal
Grandparents suggest that factor one (which party is more likely to
encourage and permit frequent and continuing contact between child and
another party) actually favors Paternal Grandparents, as Mother admitted
she will not permit Paternal Grandparents to see Children; the court
erroneously concluded this factor favored neither party. Regarding factor
three (parental duties performed by each party on behalf of child), the court
concluded Paternal Grandparents performed no parental duties for three
years, but Paternal Grandparents maintain the court ignored Mother’s
____________________________________________
36
The court determined there was no evidence presented relevant to the
court’s analysis of factor 2 (present and past abuse committed by party or
member of party’s household), factor 7 (well-reasoned preference of child),
factor 14 (history of drug or alcohol abuse of party or member of party’s
household), and factor 15 (mental and physical condition of party or
member of party’s household). The court did not mention factor 2.1 (related
to child abuse and involvement with protective services) in its decision
following remand.
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repeated moves and efforts to exclude Paternal Grandparents from
Children’s lives as well as Paternal Grandparents’ efforts to locate Mother
and Children. As to factor four (need for stability and continuity in child’s
education, family life and community life), the court said Paternal
Grandparents were “unnecessary” for Children’s stability and continuity.
Paternal Grandparents aver the amount of custodial time awarded to
Paternal Grandparents under the interim custody order does not disrupt
Children’s lives, and the court failed to consider any benefit to Paternal
Grandparents’ involvement in Children’s lives.
Paternal Grandparents contend the court also ignored evidence of
Children’s extended family on Father’s side, who reside in Erie County
(relative to factor five), when the court simply concluded: “Mother’s current
husband completes the traditional family unit of husband and wife and
children. There is no evidence they need help from any outside source.”
Paternal Grandparents explain the court indicated that Paternal
Grandparents add nothing to Children’s sibling relationships (relative to
factor six); Paternal Grandparents submit this factor is inapplicable in the
context of a case where grandparents seek only partial physical custody.
Regarding factor eight (attempts of parent to turn child against other
parent), the court concluded this factor was inapplicable, but Paternal
Grandparents suggest the record is replete with examples of Mother’s efforts
to turn Children against them by excluding Paternal Grandparents from
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Children’s lives. With respect to factor nine (which party is more likely to
maintain loving, stable, consistent and nurturing relationship with child
adequate for child’s emotional needs), Paternal Grandparents contend both
parties demonstrated adequate parenting skills, but the court inexplicitly
determined factor nine favored Mother, without consideration of Paternal
Grandparents’ loving relationship with Children. In deliberation of factor ten
(which party is more likely to attend to daily physical, emotional,
developmental, educational and special needs of child), Paternal
Grandparents complain the court failed to consider Paternal Grandparents’
ability to care for Children during their periods of partial physical custody.
Instead, the court focused on the distance between the parties. Paternal
Grandparents claim the trial court impermissibly relied primarily on the
distance between the parties in its discussion of three of the sixteen
factors,37 when distance is relevant only to factor eleven. Even as to factor
eleven (proximity of residences of parties), Paternal Grandparents insist
their request for partial physical custody as dictated under the interim
custody order is reasonable in light of the distance between the parties.
Concerning factor twelve (each party’s availability to care for child or
ability to make appropriate child-care arrangements), Paternal Grandparents
claim this factor is neutral because Paternal Grandparents will be available to
____________________________________________
37
The court mentioned the distance between the parties’ residences in its
consideration of factors five, ten, and eleven.
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care for Children during their periods of partial physical custody and have
already agreed to a joint schedule during those periods.38 Paternal
Grandparents aver the court erroneously concluded that no party to this
custody action has the ability to cooperate (relative to factor thirteen). To
the contrary, Paternal Grandparents declare that they have been cooperative
with Mother, but Mother remains uncooperative with Paternal Grandparents,
in an effort to keep them away from Children.
Regarding factor sixteen (any other relevant factor), the court said no
other relevant factors of significance exist. Paternal Grandparents submit
the court ignored, inter alia, Mother’s unsubstantiated allegations that
Paternal Grandparents’ conduct during the interim custody order caused
Children to suffer emotional harm and behavioral issues, Mother’s and
Mother’s Husband’s outright refusal to permit Paternal Grandparents any
contact with Children whatsoever, Mother’s efforts to exclude Paternal
Grandparents from Children’s lives over the years preceding the current
custody action, and Mother’s Husband’s racially derogatory comments on
Facebook. Paternal Grandparents conclude the trial court’s remand decision
is severely deficient and unsupported by the record, and this Court must
reverse the trial court’s custody decision and award Paternal Grandparents
____________________________________________
38
The trial court conceded that both parties might have the ability to make
appropriate child-care arrangements and be “available,” but then the court
referred back to its analysis of factor nine, favoring Mother. (See Remand
Decision, filed November 6, 2014, at 3.)
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partial custody in accordance with the terms of the interim custody order. 39
We agree.
In custody cases, the relevant scope and standard of review are as
follows:
[T]he appellate court is not bound by the deductions or
inferences made by the trial court from its findings of fact,
nor must the reviewing court accept a finding that has no
competent evidence to support it…. However, this broad
scope of review does not vest in the reviewing court the
duty or the privilege of making its own independent
determination…. Thus, an appellate court is empowered to
determine whether the trial court’s incontrovertible factual
findings support its factual conclusions, but it may not
interfere with those conclusions unless they are
unreasonable in view of the trial court’s factual findings;
and thus, represent a gross abuse of discretion.
R.M.G., Jr. v. F.M.G., 986 A.2d 1234, 1237 (Pa.Super. 2009) (quoting
Bovard v. Baker, 775 A.2d 835, 838 (Pa.Super. 2001)). “On issues of
credibility and weight of the evidence, we defer to the findings of the trial
judge who has had the opportunity to observe the proceedings and
demeanor of the witnesses.” R.M.G., Jr., supra.
The parties cannot dictate the amount of weight the trial
court places on the evidence. Rather, the paramount
concern of the trial court is the best interest of the child.
Appellate interference is unwarranted if the trial court’s
consideration of the best interest of the child was careful
and thorough, and we are unable to find any abuse of
discretion.
____________________________________________
39
At the custody trial, Paternal Grandparents asked for additional custodial
time with Children, but on appeal they seek only the custodial time awarded
under the interim custody order. (See Paternal Grandparents’ Brief at 65.)
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Id. (quoting S.M. v. J.M., 811 A.2d 621, 623 (Pa.Super. 2002)). “Indeed,
our admittedly circumscribed standard of review does not preclude this Court
from finding that a trial court abused its discretion in fashioning a custody
order. While prudence dictates that we exercise our authority sparingly, we
are not powerless to rectify a manifestly unreasonable custody order.” V.B.
v. J.E.B., 55 A.3d 1193, 1200 (Pa.Super. 2012). “Ultimately, the test is
‘whether the trial court’s conclusions are unreasonable as shown by the
evidence of record.’” Ketterer v. Seifert, 902 A.2d 533, 539 (Pa.Super.
2006) (quoting Dranko v. Dranko, 824 A.2d 1215, 1219 (Pa.Super.
2003)).
The statutory presumption favoring an award of custody to parents
over third-parties is not applicable to the current case because Paternal
Grandparents seek only partial physical custody of Children. See 23
Pa.C.S.A. § 5327(b) (setting forth presumption in cases concerning primary
physical custody). The Child Custody Act (“Act”) provides:
§ 5328. Factors to consider when awarding custody
(a) Factors.−In ordering any form of custody, the court
shall determine the best interest of the child by
considering all relevant factors, giving weighted
consideration to those factors which affect the safety of the
child, including the following:
(1) Which party is more likely to encourage and
permit frequent and continuing contact between the
child and another party.
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(2) The present and past abuse committed by a party
or member of the party’s household, whether there is a
continued risk of harm to the child or an abused party
and which party can better provide adequate physical
safeguards and supervision of the child.
(2.1) The information set forth in section 5329.1(a)
(relating to consideration of child abuse and
involvement with protective services).
(3) The parental duties performed by each party on
behalf of the child.
(4) The need for stability and continuity in the child’s
education, family life and community life.
(5) The availability of extended family.
(6) The child’s sibling relationships.
(7) The well-reasoned preference of the child, based
on the child’s maturity and judgment.
(8) The attempts of a parent to turn the child against
the other parent, except in cases of domestic violence
where reasonable safety measures are necessary to
protect the child from harm.
(9) Which party is more likely to maintain a loving,
stable, consistent and nurturing relationship with the
child adequate for the child’s emotional needs.
(10) Which party is more likely to attend to the daily
physical, emotional, developmental, educational and
special needs of the child.
(11) The proximity of the residences of the parties.
(12) Each party’s availability to care for the child or
ability to make appropriate child-care arrangements.
(13) The level of conflict between the parties and the
willingness and ability of the parties to cooperate with
one another. A party’s effort to protect a child from
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abuse by another party is not evidence of unwillingness
or inability to cooperate with that party.
(14) The history of drug or alcohol abuse of a party or
member of a party’s household.
(15) The mental and physical condition of a party or
member of a party’s household.
(16) Any other relevant factor.
* * *
(c) Grandparents and great-grandparents.—
(1) In ordering partial physical custody or supervised
physical custody to a party who has standing under
section 5325(1) or (2) (relating to standing for partial
physical custody and supervised physical custody), the
court shall consider the following:
(i) the amount of personal contact between the
child and the party prior to the filing of the action;
(ii) whether the award interferes with any
parent-child relationship; and
(iii) whether the award is in the best interest of
the child.
* * *
23 Pa.C.S.A. § 5328(a), (c)(1). Thus, when deciding an award of custody,
the court must conduct a thorough analysis of the best interests of the child
based on the factors set forth in the Act. E.D. v. M.P., 33 A.3d 73
(Pa.Super. 2011). “All of the factors listed in [S]ection 5328(a) are required
to be considered by the trial court when entering a custody order.” J.R.M.
v. J.E.A., 33 A.3d 647, 652 (Pa.Super. 2011) (emphasis in original).
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Nevertheless, “there is no required amount of detail for the trial court’s
explanation; all that is required is that the enumerated factors are
considered and that the custody decision is based on those considerations.”
M.J.M. v. M.L.G., 63 A.3d 331, 336 (Pa.Super. 2013), appeal denied, 620
Pa. 710, 68 A.3d 909 (2013).
Further, “in the recent past, grandparents have assumed increased
roles in their grandchildren’s lives and our cumulative experience
demonstrates the many potential benefits of strong inter-generational ties.”
Hiller v. Fausey, 588 Pa. 342, 360, 902 A.2d 875, 886 (2006), cert.
denied, 549 U.S. 1304, 127 S.Ct. 1876, 167 L.Ed.2d 363 (2007). Thus:
While acknowledging the general benefits of these
relationships, we cannot conclude that such a benefit
always accrues in cases where grandparents force their
way into grandchildren’s lives through the courts, contrary
to the decision of a fit parent. In contrast, however, we
refuse to close our minds to the possibility that in
some instances a court may overturn even the
decision of a fit parent to exclude a grandparent
from a grandchild’s life, especially where the
grandparent’s child is deceased and the grandparent
relationship is longstanding and significant to the
grandchild.
Id. at 360, 904 A.2d at 886-87 (internal footnote omitted) (emphasis
added). See also Commonwealth ex. rel. Goodman v. Dratch, 159 A.2d
70, 71 (Pa.Super. 1960) (stating: “Unless there [is] some compelling
reason, we do not believe that a grandchild should be denied visitation to his
grandparents”).
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Additionally, in the context of custody proceedings, “[h]ostilities
between the [parties] are relevant only insofar as they constitute a threat to
the child or affect the child’s welfare.” Nancy E.M. v. Kenneth D.M., 462
A.2d 1386, 1388 (Pa.Super. 1983). Importantly:
A custodial parent’s suspicion of or animosity towards
another parent or third party seeking visitation should not
alone warrant denial of visitation; otherwise the custodial
parent could always effectively deny visitation simply by
testifying to suspicion or animosity. Instead of deferring to
suspicion or animosity, the hearing judge must try to
determine whether there is any basis for these feelings.
Stated more broadly, the judge must appraise whether
the relationship between the disputing parties has
an adverse effect on the child.
* * *
Except under unusual circumstances, no child should be
cut off entirely from one side of [his or her] family.
[V]isits with a grandparent are often a precious part of a
child’s experience and there are benefits which devolve
upon the grandchild from the relationship with his
grandparents which he cannot derive from any other
relationship. If animosities continue between the parties,
and result in adverse [e]ffects on [the child]…, a
visitation order may be revised, even to the extent of
retracting visitation.
Commonwealth ex. rel. Williams v. Miller, 385 A.2d 992, 995 (Pa.Super.
1978) (internal citations omitted) (emphasis added) (reversing trial court
order denying maternal grandmother visitation with grandchild following
mother’s death; maternal grandmother offered sufficient reasons why
visitation with child for one weekend each month would serve child’s best
interests; record did not support trial court’s finding that maternal
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grandmother abandoned mother; father’s “mistrust” of maternal
grandmother was not valid reason for denying her visitation; trial court
failed to provide sufficient consideration to unusual facts of case; and if
enforcing visitation away from child’s home presents harmful effects on
child, then trial court may specify place and conditions of visitation). See
also Johnson v. Diesinger, 589 A.2d 1160 (Pa.Super. 1991) (explaining
how rivalry between parents and grandparents for child’s affection can be
devastating; when animosity exists, appropriate inquiry is not where to place
blame, but how does animosity affect best interests of children).
Instantly, the court announced at the start of the custody trial that it
had not presided over a custody trial in the past five years, and the court
was dissatisfied with the legislature’s enactment of the Act since the court
had last presided over a custody trial. (See N.T., 2/10/12, at 12; R.R. at
9a) (stating: “I have personal reservations as to whether the legislature can
tell me how to make a decision”). Following the conclusion of closing
arguments, the court again expressed disdain with the Act. (See id. at 290-
91; R.R. at 148a-149a) (stating: “I’m tempted to just rule…that this is all
unconstitutional because it infringes upon my authority to make a decision”).
During the court’s on-the-record remarks, the court acknowledged the
existence of the statutory factors at Sections 5328(a) and 5328(c)(1), but
went on to state that it would consider only the statutory factors pertaining
to grandparents’ rights. (Id. at 295; R.R. at 151a) (stating: “If I am
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compelled to use the factors that the legislature set up, I’m not looking
beyond what the statute says. And the statute says grandparents factors.
Fine. If I’m told I have to use those factors, I’m not going back and looking
at general factors because I don’t think I should anyway be compelled to”).
At the conclusion of trial, the court dismissed Paternal Grandparents’
custody complaint, awarding them no periods of partial physical custody.
After Paternal Grandparents filed their notice of appeal, the trial court
issued a Rule 1925(a) opinion, once again expressing contempt with the Act
as “unduly encroach[ing] upon the judiciary and the way [j]udges are to
perform their responsibilities.” (Rule 1925(a) Opinion at 2). In its opinion,
the trial court declined to analyze any of the factors set forth in Section
5328(a) or Section 5328(c)(1). Instead, the court simply concluded: “What
we did do is consider the evidence and arguments presented by the litigants
and to the best of our human ability decide what was in the best interest of
these two boys. We do not think we were wrong in the result or how we got
there.” (Id. at 5).
On September 16, 2014, this Court vacated and remanded the matter,
based on the trial court’s failure to utilize the requisite statutory factors in
making its determination. Specifically, this Court instructed the trial court to
consider upon remand the general statutory “best interest” custody factors
set forth at Section 5328(a) and the three statutory custody factors
pertaining to grandparents at Section 5328(c)(1).
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On November 6, 2014, the trial court issued its decision after remand.
Significantly, the trial court’s remand decision provides no facts or
procedural history of the case. (See Remand Decision at 1-4.) Similarly
absent from the court’s decision after remand are any express credibility
determinations.40 The court also supplies no law whatsoever. (See Remand
Decision at 1-4.) Rather, the court issues mere conclusory statements as to
each factor under Section 5328(a) and Section 5328(c)(1). (See id.) Our
review of the court’s decision after remand leaves questionable whether the
court engaged in a thoughtful analysis of, and gave due consideration to,
each relevant factor, where the court offered no facts of record or analysis to
support its conclusions. See M.J.M., supra; J.R.M., supra; E.D., supra.
The court’s decision after remand appears to pay mere lip service to this
Court’s remand directive. Under these circumstances, the trial court’s
remand decision is deficient. See M.J.M., supra; J.R.M., supra; E.D.,
supra.
More importantly, many of the trial court’s conclusory statements do
not accurately reflect the evidence presented at trial. For example, the
court’s bald statement regarding Section 5328(c)(1)(i), that Paternal
Grandparents have had no contact with Children for approximately three
____________________________________________
40
The sole reference to a party’s credibility determination appears in the
midst of the court’s on-the-record remarks at the conclusion of trial, where
the court accepted as true Mother’s testimony that the Skype calls were
upsetting to Children. (See N.T., 2/10/14, at 293; R.R. at 150a.)
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years (see Remand Decision at 1), lacks necessary context. Specifically, the
court ignores, inter alia, the following evidence: (1) Mother and K.A.T. lived
with Paternal Grandmother and W.B. for one year; (2) Paternal
Grandparents spent substantial time with Children when Mother and Father
shared physical custody; (3) Mother repeatedly moved around the country
and refused to disclose (or to permit Father to disclose) her contact
information to Paternal Grandparents; and (4) Paternal Grandparents had to
hire a private investigator to locate Mother and Children in the aftermath of
Father’s death. The court similarly ignores this evidence concerning its
finding at Section 5328(a)(3) (parental duties performed by each party on
behalf of child), where the court simply states: “Grandparents have
performed no parental duties for at least three years, while Mother has.”
(Remand Decision at 2).
Under Section 5328(a)(1) (which party is more likely to encourage and
permit frequent and continuing contact between child and another party),
the trial court found this factor favored neither party. (See Remand
Decision at 2.) Nevertheless, the record discloses that this factor favors
Paternal Grandparents, as the evidence presented at trial shows they have
made efforts to cooperate with Mother during the pendency of the interim
custody order. Conversely, Mother and Mother’s Husband demonstrated
their opinion that Paternal Grandparents are “horrible,” and testified that
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they will not permit Paternal Grandparents to have any contact with Children
in the future (presumably, unless compelled to do so by court order).
Regarding Section 5328(a)(9) (which party is more likely to maintain
loving, stable, consistent and nurturing relationship with child adequate for
child’s emotional needs), Section 5328(a)(10) (which party is more likely to
attend to daily physical, emotional, developmental, educational and special
needs of child), and Section 5328(a)(12) (each party’s availability to care for
child or ability to make appropriate child-care arrangements), the trial court
announced, with little or no explanation, that each of these factors favored
Mother. (See Remand Decision at 3.) Significantly, the trial court made no
factual findings concerning Paternal Grandparents’ ability to care for and
support Children during their periods of partial physical custody. (See id.)
Nothing in the record suggests Paternal Grandparents are unable to or would
have difficulty providing care for Children. Paternal Grandmother and
Paternal Grandfather want to be part of Children’s lives and have amicably
worked out a schedule regarding the care for Children during their periods of
partial physical custody.
Further, the court’s decision following remand focuses on certain
factors, to the detriment of other relevant factors. For example, the court
placed great emphasis on the distance between the parties, which the court
mentioned in its consideration of factors five, ten, and eleven. (Id. at 2-3.)
We fail to see how proximity is relevant to factor five (availability of
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extended family) and factor ten (which party is more likely to attend to daily
physical, emotional, developmental, educational and special needs of child),
in the context of Paternal Grandparents’ request for limited partial physical
custody of Children.41 Compare Durning v. Balent/Kurdilla, 19 A.3d
1125 (Pa.Super. 2011) (explaining that award of shared physical custody of
school-aged child of parents who do not live in geographical proximity to
each other is contrary to child’s need for continuity at home and at school).
As well, the court relied heavily on the conflict between the parties,
determining the conflict could not be resolved. (See N.T., 2/10/14, at 295-
97; R.R. at 151a-152a) (stating: “So bottom line is this. Right or wrongly, I
don’t believe that the conflict between [M]other and [P]aternal
[G]randmother can be fixed”); (see also Remand Decision at 3) (regarding
analysis of Section 5328(a)(13), stating: “While the parties may state a
willingness to cooperate, we are unpersuaded that there exists the ability to
cooperate”). Absent from the court’s remarks, however, is an appropriate
analysis of why the conflict exists and why it adversely affects Children. See
Johnson, supra; Nancy E.M., supra; Miller, supra.
The court also seemed to base its decision largely on Paternal
Grandparents’ unwelcome intervention with the adoption proceedings. (See
N.T., 2/10/14, at 294-95; R.R. at 150a-151a) (stating: “And my reaction
____________________________________________
41
Maternal Grandmother also lives in Erie County, Pennsylvania.
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was real simple to that. They stuck their nose in that situation and probably
they should have stayed the hell out of it”); (see also Remand Decision at
1) (regarding analysis of Section 5328(c)(1)(ii), stating: “interference would
result to the parent/child relationship as it did when grandparents intervened
in a finalized adoption by Mother’s current husband resulting in the adoption
being undone and still pending at the time of this custody trial”). The court’s
comments are shocking in light of some of the disturbing testimony about
Mother’s Husband’s gravely inappropriate posts on Facebook (which he
admitted writing), especially where W.B. is African-American.
The court failed to consider, however, the important contribution
Paternal Grandparents can make in Children’s lives, particularly since their
Father’s death. With respect to Section 5328(a)(4) (need for stability and
continuity in child’s education, family life and community life), the court
coldly stated: “Grandparents are unnecessary to provide stability and
continuity in the child’s education, family life and community life as
circumstances present at trial. Mother provides for those.” (Id. at 2.)
Concerning Section 5328(a)(5) (availability of extended family), the court
explained: “Grandparents (and others) are the extended family, 5½ travel
hours away. Mother’s current husband completes the traditional family unit
of husband and wife and children. There is no evidence they need help from
any outside source.” (Id.) The court’s conclusory statements discount the
significant benefits Children can reap from Paternal Grandparents, who can
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provide Children ties to their deceased Father. See Hiller, supra; Nancy
E.M., supra. Additionally, the court disregarded evidence of Father’s
extended family living near Paternal Grandparents; Children could interact
with Father’s relatives during Paternal Grandparents’ periods of partial
physical custody.
Based on this record, we cannot agree that the court made a reasoned
decision based on the evidence presented, particularly in light of
Pennsylvania’s strong public policy favoring grandparent involvement in a
child’s life. See Hiller, supra; Miller, supra; Dratch, supra. See also
V.B., supra; Ketterer, supra. Therefore, we are compelled to reverse the
trial court’s decision to deny Paternal Grandparents’ request for partial
physical custody of Children, and remand for the court to enter the interim
custody order dated October 4, 2013 and entered October 7, 2013, as a final
order.
In their third issue, Paternal Grandparents acknowledge that in making
a custody determination, a court must consider whether a party seeking
custody poses a threat of harm to the child based on certain enumerated
prior criminal convictions. Paternal Grandparents explain that 23 Pa.C.S.A.
§ 5329(a) lists thirty-two enumerated offenses for the court to consider
when making this assessment. Paternal Grandparents emphasize that the
statute enumerates only misdemeanor and felony offenses and does not list
any summary offenses. Paternal Grandparents maintain that under Section
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5330, one party who has obtained information about a criminal charge filed
against the other party may move for a temporary custody order or
modification of an existing custody order (pending a hearing), but only
where the other party has been charged with an offense under Section
5329(a). Read together, Paternal Grandparents contend the legislature
limited the relevance of criminal convictions to only those offenses
enumerated in Section 5329(a), in awarding custody. Paternal
Grandparents argue that, even where a party seeking custody has a criminal
conviction for an enumerated offense, the court is not precluded from
granting that party custody; instead, the court shall consider the party’s
conduct relative to the offense to determine whether the party poses a
threat of harm to the child. Only when a parent has been convicted of
murder of the other parent can the court deny custody without considering
threat of harm (see 23 Pa.C.S.A. § 5329(b)).
Paternal Grandparents stress that none of the offenses considered by
the court are enumerated offenses under Section 5329(a). Paternal
Grandparents submit the court improperly allowed testimony (over their
objections) concerning Paternal Grandmother’s and W.B.’s respective
criminal histories, absent any prior convictions under Section 5329(a).
Paternal Grandparents acknowledge that the court stated in its supplemental
opinion that if it erred in admitting such testimony, the error was harmless.
Paternal Grandparents suggest the court’s improper admission of prior
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offenses played a part in the court’s determination as to the high level of
conflict between the parties, where the record shows Mother used Paternal
Grandmother’s and W.B.’s respective criminal histories to bolster Mother’s
position that the court should deny Paternal Grandparents any custodial time
with Children. Paternal Grandparents conclude the court’s evidentiary ruling
was erroneous. We agree.
Generally, our standard of review concerning evidentiary rulings is as
follows:
The admission or exclusion of evidence is within the sound
discretion of the trial court, and in reviewing a challenge to
the admissibility of evidence, we will only reverse a ruling
by the trial court upon a showing that it abused its
discretion or committed an error of law A trial court has
wide discretion in ruling on the relevancy of evidence and
its ruling will not be reversed absent an abuse of
discretion.
B.K. v. J.K., 823 A.2d 987, 991-92 (Pa.Super. 2003) (internal citations
omitted).
Section 5329 of the Act provides, in pertinent part:
§ 5329. Consideration of criminal conviction
(a) Offenses.−Where a party seeks any form of custody,
the court shall consider whether that party or member of
that party’s household has been convicted of or has
pleaded guilty or no contest to any of the offenses in this
section or an offense in another jurisdiction substantially
equivalent to any of the offenses in this section. The court
shall consider such conduct and determine that the party
does not pose a threat of harm to the child before making
any order of custody to that parent when considering the
following offenses:
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18 Pa.C.S. Ch. 25 (relating to criminal homicide).
18 Pa.C.S. § 2702 (relating to aggravated assault).
18 Pa.C.S. § 2706 (relating to terroristic threats).
18 Pa.C.S. § 2709.1 (relating to stalking).
18 Pa.C.S. § 2901 (relating to kidnapping).
18 Pa.C.S. § 2902 (relating to unlawful restraint).
18 Pa.C.S. § 2903 (relating to false imprisonment).
18 Pa.C.S. § 2910 (relating to luring a child into a motor
vehicle or structure).
18 Pa.C.S. § 3121 (relating to rape).
18 Pa.C.S. § 3122.1 (relating to statutory sexual assault).
18 Pa.C.S. § 3123 (relating to involuntary deviate sexual
intercourse).
18 Pa.C.S. § 3124.1 (relating to sexual assault).
18 Pa.C.S. § 3125 (relating to aggravated indecent
assault).
18 Pa.C.S. § 3126 (relating to indecent assault).
18 Pa.C.S. § 3127 (relating to indecent exposure).
18 Pa.C.S. § 3129 (relating to sexual intercourse with
animal).
18 Pa.C.S. § 3130 (relating to conduct relating to sex
offenders).
18 Pa.C.S. § 3301 (relating to arson and related offenses).
18 Pa.C.S. § 4302 (relating to incest).
18 Pa.C.S. § 4303 (relating to concealing death of child).
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18 Pa.C.S. § 4304 (relating to endangering welfare of
children).
18 Pa.C.S. § 4305 (relating to dealing in infant children).
18 Pa.C.S. § 5902(b) (relating to prostitution and related
offenses).
18 Pa.C.S. § 5903(c) or (d) (relating to obscene and other
sexual materials and performances).
18 Pa.C.S. § 6301 (relating to corruption of minors).
18 Pa.C.S. § 6312 (relating to sexual abuse of children).
18 Pa.C.S. § 6318 (relating to unlawful contact with
minor).
18 Pa.C.S. § 6320 (relating to sexual exploitation of
children).
Section 6114 (relating to contempt for violation of order or
agreement).
The former 75 Pa.C.S. § 3731 (relating to driving under
influence of alcohol or controlled substance).
75 Pa.C.S. Ch. 38 (relating to driving after imbibing alcohol
or utilizing drugs).
Section 13(a)(1) of the act of April 14, 1972 (P.L. 233, No.
64), known as The Controlled Substance, Drug, Device and
Cosmetic Act, to the extent that it prohibits the
manufacture, sale or delivery, holding, offering for sale or
possession of any controlled substance or other drug or
device.
(b) Parent convicted of murder.—No court shall award
custody, partial custody or supervised physical custody to
a parent who has been convicted of murder under 18
Pa.C.S. § 2502(a) (relating to murder) of the other parent
of the child who is the subject of the order unless the child
is of suitable age and consents to the order.
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(c) Initial evaluation.—At the initial in-person contact
with the court, the judge, conference officer or other
appointed individual shall perform an initial evaluation to
determine whether the party or household member who
committed an offense under subsection (a) poses a threat
to the child and whether counseling is necessary. The
initial evaluation shall not be conducted by a mental health
professional. After the initial evaluation, the court may
order further evaluation or counseling by a mental health
professional if the court determines it is necessary.
* * *
23 Pa.C.S.A. § 5329(a)-(c) (internal footnote omitted). Section 5330 of the
Act states:
§ 5330. Consideration of criminal charge
(a) Expedited hearing.—A party who has obtained
information under 42 Pa.C.S. § 1904 (relating to
availability of criminal charge information in child custody
proceedings) or otherwise about a charge filed against the
other party for an offense listed under section 5329(a)
(relating to consideration of criminal conviction) may move
for a temporary custody order or modification of an
existing custody order. The court shall hold the hearing
under this subsection in an expeditious manner.
(b) Risk of harm.—In evaluating any request under
subsection(a), the court shall consider whether the party
who is or has been charged with an offense set forth in
section 5329(a) poses a risk of physical, emotional or
psychological harm to the child.
(c) No prejudice.—Failure to either apply for
information under 42 Pa.C.S. § 1904 or act under this
section shall not prejudice any party in a custody
proceeding.
23 Pa.C.S.A. § 5330. “The plain language of the statute reveals the obvious
intent of the Legislature to ensure that custody is not being provided to a
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[party] whose past criminal behavior presents a present threat of harm to
the child.” Ramer v. Ramer, 914 A.2d 894, 900-01 (Pa.Super. 2006).42
Instantly, during Paternal Grandmother’s cross-examination, Mother’s
counsel sought to elicit testimony from Paternal Grandmother concerning a
bad check charge in 2012 and a theft of services charge in 2009. Counsel
for Paternal Grandparents objected. (See N.T., 2/10/14, at 69-70; R.R. at
38a.) Mother’s counsel responded: “[W]e are looking at what is in the best
interest of the children. And [Paternal Grandmother] is up here basically
indicating that she is a wonderful grandparent and we’re just showing her
history.” (Id. at 70; R.R. at 38a.) Mother’s counsel further stated that the
testimony was relevant under Section 5328(a)(16) (any other relevant
factor). (Id.) The court overruled Paternal Grandparents’ objection on this
basis. (Id.) During W.B.’s cross-examination, Mother’s counsel sought to
elicit testimony from W.B. concerning a harassment charge in 2010. (Id. at
129; R.R. at 68a.) Counsel for Paternal Grandparents objected, specifically
stating that harassment is not an enumerated offense under Section 5329,
____________________________________________
42
This Court decided Ramer in the context of 23 Pa.C.S.A. § 5303(b)
(repealed by 2010, Nov. 23, P.L. 1106, No. 112, § 1, effective January 24,
2011; re-codified at 23 Pa.C.S.A. § 5323, 5328-5330). Section 5303(b)
provided similar language to the current Section 5329(a), stating: “If a
parent has been convicted of or has pleaded guilty or no contest to an
offense as set forth below, the court shall consider such criminal conduct and
determine that the parent does not pose a threat of harm to the child before
making an order of custody, partial custody or visitation to that parent[.]”
23 Pa.C.S.A. § 5303(b) (repealed). That statute listed only fourteen
relevant convictions. See id.
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and is therefore irrelevant to the custody proceeding. (Id.) Mother’s
counsel responded: “It is absolutely relevant. We’re talking about the best
interest of these children. These children will be in the home where this
gentleman lives. Absolutely.” (Id.) Mother’s counsel conceded Mother was
not seeking an evaluation under Section 5329, but “[w]e’re just talking
about his character. It is about what is in the best interest of the children
and the people around the children, Your Honor.” (Id. at 130; R.R. at 68a.)
The court overruled Paternal Grandparents’ objection.
During Mr. Lagan’s direct-examination, Mother’s counsel sought to
elicit testimony concerning Mr. Lagan’s background investigations on
Paternal Grandparents and W.B. (Id. at 230; R.R. at 118a.) Counsel for
Paternal Grandparents again objected, explaining that Sections 5329 and
5330 specifically enumerate and discuss criminal convictions which are
relevant in a custody proceeding; counsel also stated any criminal
convictions pertaining to Paternal Grandparents or W.B., which are not
enumerated under the statute, are irrelevant. (Id.) Mother’s counsel
responded as follows: “This matter is what is in the best interest of the
children which includes what each party has in their background, what they
do every day, what type of person they are, and whether or not they should
be around children. It is absolutely relevant.” (Id.) The court then had the
following exchange with Mother’s counsel:
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[THE COURT]: But isn’t it limited by the
legislature moving into this area by defining certain
specific offenses?
[MOTHER’S COUNSEL]: Your Honor, I believe the 5329
section as well as 5330 is to determine who should have
an evaluation to see if they are at risk of harm to the
children to be able to have any custody at all. We’re
certainly not representing that [Mr. Lagan’s] going to give
us information to say that [Paternal Grandmother] has any
5329 offenses.
She has other offenses. We’re not saying that she should
have—well, she should have no contact at all just based on
these offenses.
We’re not asking that she receive an evaluation. We’re
just simply speaking to the type of person who [is] around
the children.
[THE COURT]: Are you saying this to me, for
example, if a criminal background check reveals a person
who has retail thefts, bad checks, forgeries, that somehow
may impact on their character?
[MOTHER’S COUNSEL]: Essentially, Your Honor, yes.
However, not to prove they will…commit those offenses
again but whether or not they should be around children.
[THE COURT]: The children.
[MOTHER’S COUNSEL]: Correct.
[THE COURT]: I’ll allow it. Objection is
overruled.
(Id. at 231-233; R.R. at 119a-120a.) Subsequently, Mr. Lagan testified that
he discovered Paternal Grandmother pled guilty to theft of services in
October 2009, a traffic violation in 2012, and speeding in 2013. Mr. Lagan
said Paternal Grandmother had another conviction for bad checks in 2012
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with a disposition of guilty.43 Mr. Lagan also found that W.B. pled guilty to
trespass by motor vehicle in 2008, and harassment in 2010. (Id. at 233-
35; R.R. at 120a-121a.) Mr. Lagan provided little to no detail concerning
the factual bases for any of these offenses. Mr. Lagan also did not indicate
the grading of any of the offenses.44 (Id.)
Section 5329 makes clear the type of criminal convictions the
legislature deemed relevant for purposes of making an award of custody, by
specifically enumerating only those crimes which evidence a threat of harm
to the child. See 23 Pa.C.S.A. § 5329(a); Ramer, supra. The parties
agree that none of Paternal Grandmother’s or W.B.’s prior criminal
convictions or motor vehicle offenses are listed in Section 5329(a). The
record is unclear whether any of the offenses at issue were graded higher
than summary offenses. In an effort to circumvent Section 5329, Mother’s
counsel attempted to obtain admission of the criminal offenses as relevant
generally to Section 5328(a)(16), which permits the court to consider “any
other relevant factor,” and the over-arching “best interests” analysis. We
cannot agree that the court’s admission of evidence concerning Paternal
Grandmother’s and W.B.’s criminal histories was proper under
____________________________________________
43
Mr. Lagan also indicated Paternal Grandmother was charged with
operating a vehicle without required financial responsibility in 2012, but that
charge was dismissed.
44
The investigatory report(s) on which Mr. Lagan relied at trial are not
included in the certified record.
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subsection(a)(16), where the Act expressly delineates those criminal
convictions which are relevant to a custody determination, and the offenses
at issue are not among those listed.45 See 23 Pa.C.S.A. § 5329(a). See
also Pa.R.E. 401 (explaining evidence is relevant if it has any tendency to
make fact more or less probable than it would be without evidence; and fact
is of consequence in determining action); Johns v. Cioci, 865 A.2d 931
(Pa.Super. 2004) (explaining that unless it is shown that parent’s conduct
has had harmful effect on child, that conduct should be given little weight in
custody determinations); Vicki N. v. Josephine N., 649 A.2d 709
(Pa.Super. 1994) (stating party’s past conduct is not relevant to custody
proceeding unless it will produce ongoing negative effect on child’s welfare);
Commonwealth ex rel. Gorto v. Gorto, 444 A.2d 1299 (Pa.Super. 1982)
(stating primary concern in custody matters lies not with past but with
present and future; facts as of time of trial are foundation for court’s
determination; past conduct is not relevant unless it will produce ongoing
negative effect on child’s welfare).
Moreover, under the doctrine of ejusdem generis, the court cannot
____________________________________________
45
On appeal, Mother argues only that testimony concerning Paternal
Grandmother’s and W.B.’s respective criminal histories was relevant to
determine, based on their character or reputation, whether it is in the best
interest of Children for Paternal Grandmother and W.B. to be around
Children. (See Mother’s Brief at 51-54.) Mother does not argue that she
offered Paternal Grandmother’s or W.B.’s criminal histories for impeachment
purposes.
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consider other criminal offenses under the general language of Section
5328(a)(16), where the Act expressly delineates those criminal convictions
which the legislature deemed relevant to a custody determination, and the
offenses at issue are not among those listed. See generally McClellan v.
Health Maintenance Organization of Pennsylvania, 546 Pa. 463, 473,
686 A.2d 801, 806 (1996) (explaining: “[u]nder our statutory construction
doctrine [of] ejusdem generis (“of the same kind or class”), where general
words follow the enumeration of particular classes of persons or things, the
general words will be construed as applicable only to persons or things of the
same general nature or class as those enumerated. When the opposite
sequence is found, i.e., specific words follow general ones,…the doctrine is
equally applicable, and restricts application of the general term to things
that are similar to those enumerated”). Mother cites no law to the
contrary.46 Therefore, the court erred by admitting into evidence Paternal
Grandmother and W.B.’s previous offenses, which fell outside of Section
5329.47 See B.K., supra.
____________________________________________
46
Instead, Mother relies on generic legal principles stating that criminal
convictions are reasonably probative as to the reputation of an individual
and have impact upon assessing a person’s character. (See Mother’s Brief
at 51-54.)
47
In its supplemental trial court opinion, the court indicated that to the
extent the court improperly admitted the evidence at issue, the error was
harmless. (See Supplemental Rule 1925(a) Opinion at 1-2.) In the event
(Footnote Continued Next Page)
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Accordingly, we reverse the trial court’s decision to deny Paternal
Grandparents’ request for partial physical custody and remand for the trial
court to enter immediately as a final order, the interim custody order dated
October 4, 2013 and entered October 7, 2013. Mother must fix the Skype
feature on her cell phone or home computer to allow visual capabilities
within thirty (30) days of this disposition. Alternatively, the parties could
consider using FaceTime to communicate.
Order reversed; case remanded with instructions. Jurisdiction is
relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 6/17/2015
_______________________
(Footnote Continued)
that this matter might proceed to a new custody trial at some point in the
future, the trial court’s harmless error analysis would be immaterial.
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IN THE COURT OF COMMON PLEAS OF YORK COUNTY, PENNSYLVANIA
CIVIL ACTION- LAW
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APPEARANCES: For Plaintiff: David Schanbacher, Esquire
For Defendant: Joseph A. Kalasnik, Esquire
This matter has been assigned to the Honorable Themas. v\. ~\\..ey ]l
INTERIM ORDER FOR CUSTODY. PENDING TRIAL
AND NOW, this 4 th day of Q Lhll /o;/ , 2013, this Order is
being entered as a result of a pre-trial conciliation conference held on September 27,
2013 before Leslie S. Arzt, Conciliator. The matter Is before the Court on paternal
Grandparents' petition seeking partial physical custody. The parties were unable to
reach an agreement to resolve these issues. Accordingly, this Order is being entered
Circulated 06/09/2015 03:33 PM
on an interim basis, in the best interests of the children, and to .govern the relationship
of the parties pending a trial in this matter.
MEDIATION:
Mediation has been waived due to the distance of the parties.
CUSTODY WORKSHOP:
The parties are hereby directed to participate in, and successfully complete the
custody workshop, consisting of the Kids First custody workshop, which is provided at
Family-Child Resources. Paternal Grandparents can attend a similar workshop in Erie,
PA. Informational pamphlets have been given to the parties. The parties shall contact
the appropriate agency within ten (10) days of the date of this Order. The parties shall
obtain certificates of successful completion of the training, and shall file their certificates
of completion with the Prothonotary within sixty (60) days of the date of this Order.
MATTERS PRELIMINARY TO TRIAL:
The trial of this case will be scheduled formally at a pre-trial conference which will
be scheduled by separate Order. Requests for a continuance of the pre-trial conference
shall be in writing and addressed to the Judge conducting the pre-trial conference, not
later than two (2) weeks prior to the date of the pre-trial conference.
The parties shall submit to the Court a proposed parenting plan pursuant to 23
Pa.C.S.A. §5331 not later than one (1) week prior to the time scheduled for the pre-trial
conference.
The parties are directed to cooperate in obtaining psychological evaluations,
home studies, and other investigations, which shall be requested within fifteen (15)
2
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days of the date of this Order. If such services are not requested by a party
within that time period, the party is deemed to have waived the right to obtain
such services. Each party shall pay the costs of all evaluations and studies which that
party requests, except that if the parties agree on a single evaluator for any purpose,
the cost of that evaluator shall be divided evenly between the parties.
23 Pa. C.S.A. §5329:
The parties represent that none of them, nor any member of his or her
household, has been convicted of an offense enumerated in 23 Pa. C.S. §5329 or an
equivalent offense in another jurisdiction.
BACKGROUND OF THE CASE:
This matter involves the custody of:
\(.. \l ., .· YOB: 2009 AGE: 4
K T4
p YOB: 2007 AGE: 6
MOTHER'S position is: Mother avers that the paternal grandparents should have
no contact with the children.
PATERNAL GRANDPARENT'S position is: Paternal Grandparents are seeking
partial physical custody of the children.
A previous court order concerning the children was entered on July 12, 2010
between Mother and Father, prior to Father's death. There are no prior custody orders
involving the Plaintiffs in this case.
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SOLE LEGAL CUSTODY:
The Court hereby awards sole legal custody to Mother. Sole legal custody
means the right of a party to exercise parental control over and make major decisions
for the benefit of the children, including, but not limited to, educational, medical and
religious decisions, without the necessity of obtaining the agreement of any other party.
PHYSICAL CUSTODY:
Primary physical custody of the children, as that term is defined in the Custody
Act, shall be with Mother.
Partial physical custody is the right to take possession of the children away from
the custodial party for a certain period of time. Paternal Grandparents shall have partial
physical custody of the children as follows:
SCHEDULE OF PARTIAL CUSTODY:
PHASE-IN:
Paternal Grandparents shall enjoy partial custody of the children as follows:
- On Friday, September 27, 2013 from 5:30 p.m. until 7:30 p.m. at Hickory Falls
in Hanover. Mother shall be present for this visit.
- On September 28, 2013, from 9:30 a.m. until 12:00 noon at Wirt Park in
Hanover Borough. Mother shall be present for this visit.
- During the children's Christmas break from school in December 2013, from
Friday, December 2ih through December 29th . Mother shall travel to Corry,
PA with the children and the visits shall occur at paternal grandmother's
residence. On Friday, December 2ih the visit shall occur from 5:30p.m. until
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8:30p.m. and Mother shall be present. She shall be responsible to transport
the children to and from paternal grandmother's residence for said visit. On
Saturday, December 28th from 9:30a.m. until 7:30 p.m. with Mother present
for the first half of the visit through 2:00 p.m. On Sunday, December 29th from
9:30a.m. until 12:30 p.m. without Mother being present. Mother shall be
responsible to transport the children to and from paternal grandmother's
residence for said visits.
- Two (2) weekends between January 1, 2014 and June 1, 2014 so long as
Paternal Grandparents travel to Hanover, PA. Said weekends shall begin on
Friday evening at 5:30 p.m. and end at 12:30 p.m. on Sunday. Paternal
grandparents shall provide Mother with at least thirty (30) days' notice of their
requested weekends.
REGULAR SCHEDULE OF PARTIAL PHYSICAL CUSTODY:
Summer:
In the Summer of 2014, and each summer thereafter, Paternal Grandparents
shall enjoy a total of three (3) weeks with the children during the children's summer
vacation from school. Paternal grandparents shall designate one (1) week in June, July
and August to begin on a Sunday at 12:30 pm through the following Sunday at 12:30
p.m. Paternal Grandparents shall advise Mother of their intended periods of custody at
least thirty (30) days prior to their intended summer vacation periods.
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Throughout the School year:
Paternal Grandparents shall be entitled to enjoy up to four weekends per school
year, by designating two (2) weekends in the fall and two (2) weekends in the spring
that they may travel to Hanover, Pennsylvania to spend time with the children from
Friday at 5:30 p.m. through Sunday at 12:30 p.m. Paternal Grandparents shall provide
Mother with at least thirty (30) days' notice of their requested weekends.
Christmas:
Paternal Grandparents shall enjoy up to four overnight periods during the
children's Christmas break from school, to begin no earlier than December 2?1h through
December 31st each year.
OTHER TIMES:
At any other times that the parties by mutual agreement can agree.
TRANSPORTATION:
Except as noted herein above with regard to the phase-in period, the
transportation burden shall generally be shared by the parties, with the party who is to
obtain custody at the time of exchange to provide for transportation from the residence
of the other party, unless otherwise specified. At all times, the children shall be secured
in appropriate passenger restraints. No person transporting the children shall consume
alcoholic beverages prior to transporting the children. No person transporting the
children shall be under the influence of any alcoholic beverages while transporting the
children.
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LATE FOR EXCHANGE:
In the event any party is more than 20 minutes late for a scheduled custody
exchange, in the absence of a telephone call or other communication from the party, the
other party may assume that the party who is late has chosen not to exercise that
period of custody, the period will be forfeited, and the other party will be free to make
other plans with the children.
TELEPHONE CALLS/SKYPE:
The parties are urged to use common sense in scheduling telephone calls to talk
to the children. The parties are hereby directed to refrain from preventing the party who
may be calling from talking to the children, or preventing the children from calling the
other parties, provided that the phone calls are not excessively frequent or too long in
duration that they disrupt the children's schedule.
Beginning on Sunday, October 6, 2013 at 7:00 p.m., and every Sunday
thereafter, the children shall be available to communicate with Paternal Grandparents
through Skype. The parties shall exchange their respective emails to set up the Skype
communication within seven (7) days, or no later than Friday, October 4, 2013.
DISPARAGING REMARKS:
Each of the parties and any third party in the presence of the children shall take
all measures deemed advisable to foster a feeling of affection between the children and
the other parties. Neither party shall do nor shall either party permit any third person to
do or say anything which may estrange a child from the other parties, their spouse or
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relatives, or injure a child's opinion of the other party or which may hamper the free and
natural development of a child's love and respect for the other parties.
The parties shall not use a child to convey verbal messages to the other party
about the custody situation or changes in the custody schedule.
FINANCIAL CARE OF CHILD:
In the event that a significant matter arises with respect to the medical care,
education, or financial care of the children, such as a change in occupation, health
insurance, educational expenses, or residence of a party, those matters shall be
discussed with the other party before any change is made by either party.
MUTUAL CONSULTATION:
Each party shall keep the other informed of his or her residence and telephone
number to facilitate communication concerning the welfare of the children and visitation.
WELFARE OF CHILDREN TO BE CONSIDERED:
The welfare and convenience of the children shall be the prime consideration of
the parties in any application of the provisions of this order. Both parties are directed to
listen carefully and consider the wishes of the children in addressing the custodial
schedule, any changes to the schedule, and any other parenting issues.
SMOKE I DRINK/ ILLEGAL SUBSTANCES:
No party shall smoke in a confined area, consume alcohol beverages to excess
or use illicit drugs while exercising physical custody of the children. Nor shall either
party permit another person to smoke in a confined area, consume alcohol beverages to
excess or use illicit drugs when the children are present. No party shall be under the
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influence of alcoholic beverages or illegal substances when in the presence of the
children.
RELOCATION OF A PARTY:
A relocation is defined as a change in a residence of the children which
significantly impairs the ability of a non-relocating party to exercise custodial rights. 23
Pa.C.S. §5322. No relocation shall occur unless every individual who has custody rights
to the children consents to the proposed relocation or the court approves the proposed
relocation. If a party seeks to relocate, that party shall notify every other individual who
has custody rights to the children. Both parties must follow the statutory requirements
contained in 23 Pa.C.S. §5337. Specifically, the relocating party must notify every other
individual who has custody rights to the children by certified mail, return receipt
requested. The notice must then comply with the following requirements:
Notice must be sent no later than:
(1) the eoth day before the date of the proposed relocation; or
(2) the 1 o" day after the date that the individual knows of the relocation if the
individual did not know and could not reasonably know of the relocation in
sufficient time to comply with the 60 day notice requirement and it is not
reasonably possible to delay the date of relocation so as to comply with the
60 day notice requirement.
Unless otherwise excused by law, the following information must be included in
the notice:
( 1) The address of the intended new residence.
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(2) The mailing address, if not the same as the address of the intended new
residence.
(3) Names and ages of the individuals in the new residence, including
individuals who intend to live in the new residence.
( 4) The home telephone number of the intended new residence, if applicable.
(5) The name of the new school district and school.
(6) The date of the proposed relocation.
(7) The reasons for the proposed relocation.
(8) A proposal for a revised custody schedule.
(9) Any other information which the party proposing the relocation deems
appropriate.
(10) A counter-affidavit as provided under subsection (d)(1) which can be used
to object to the proposed relocation and modification of a custody order.
(11) A warning to the non-relocating party that if the non-relocating party does
not file with the court an objection to the proposed relocation within 30 days
after receipt of notice, that party shall be foreclosed from objecting to the
relocation.
If any of the aforementioned information is not known when the notice is sent but
is later made known to the party seeking the relocation, then that party shall promptly
inform every individual who received notice.
If the non-relocating party objects to the proposed move he/she must do so by
filing the counter-affidavit with the court and the other party within 30 days. The notice
of objection to the opposing party must be sent by certified mail, return receipt
requested. If no objection is made in the manner set forth above then it shall be
presumed that the non-relocating party has consented to the proposed relocation and
10
Circulated 06/09/2015 03:33 PM
the court will not accept testimony challenging the relocation in any further review of the
custodial arrangements.
The court shall hold an expedited full hearing on the proposed relocation after a
timely objection has been filed and before relocation occurs. The Court may permit
relocation before a full hearing if the court finds that exigent circumstances exist.
MODIFICATION OF ORDER:
The parties are free to modify the terms of this order but in order to do so the
Court makes it clear that both parties must be in complete agreement to any new terms.
That means both parties must consent on what the new terms of the custody
arrangement or visitation schedule shall be.
In the event that one or the other does not consent to a change, that does not
mean each follows your own idea as to what you think the arrangements should be.
The reason this Court Order is set out in detail is so both parties have it to refer to and
to govern your relationship with the children and with each other in the event of a
disagreement.
Plaintiffs I Paternal Grandparents were both born in 1967. Defendant I Mother
was born in 1990.
Copies of this Order shall be sent to counsel for the parties.
11
|
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|
520 F.Supp. 800 (1981)
SOUTHERN PACIFIC TRANSPORTATION CO., Plaintiff and Counterdefendant,
v.
CALIFORNIA COASTAL COMMISSION, Defendant and Counterclaimant.
No. C-80-3916-MHP.
United States District Court, N. D. California.
August 11, 1981.
*801 Thormund A. Miller, Louis P. Warchot, Gary A. Laakso, San Francisco, Cal., for plaintiff and counterdefendant.
Linus Masouredis, Deputy Atty. Gen., San Francisco, Cal., for defendant and counterclaimant.
OPINION
PATEL, District Judge.
The Southern Pacific Transportation Company (hereinafter Southern Pacific) brought this action for declaratory relief against the California Coastal Commission (Coastal Commission), which has filed a counterclaim for declaratory and injunctive relief. As there are no disputed issues of material fact, the parties have filed cross motions for summary judgment.
This controversy concerns a stretch of railroad line (hereinafter the Monterey Line) which extends for a distance of 6.72 miles from milepost 123.30 (near Seaside) to milepost 130.02 in the Monterey Peninsula area. The Monterey Line passes through choice realty including the town of Pacific Grove and Cannery Row in Monterey. Southern Pacific, which owns the Monterey Line and operated train service along it, filed an abandonment application with the Interstate Commerce Commission (I.C.C.) on December 29, 1978. By a decision on February 26, 1979, the I.C.C. approved the *802 application and issued a permit which provided, inter alia, for both the cessation of service and dismantling of the right of way. Removal of the trackage would effectively foreclose the future use of the Monterey Line for rail transportation. The I.C.C.'s decision was published in the Federal Register on March 27, 1979 and became effective on May 11, 1979. 44 Fed.Reg. 18,316 (1979).
The Coastal Commission did not receive actual notice of Southern Pacific's abandonment application prior to the I.C.C.'s final determination. On June 21, 1979 the Coastal Commission's Legal Counsel wrote to the Chairman of the I.C.C. informing him that the Coastal Commission wanted to exercise its authority under § 307(c)(3) of the Coastal Zone Management Act of 1972 (CZMA) (current version at 16 U.S.C. § 1456(c)(3)(A) (1976)), to review the proposed dismantling of the right of way for consistency with the California Coastal Zone Management Program. In response to this claim, Southern Pacific filed the instant action for declaratory relief in order to avoid liability for violating the CZMA if it complies with the I.C.C. order.
The cross motions for summary judgment raise four legal issues: (1) is tearing up the tracks and dismantling the right of way (as distinguished from ceasing rail service) within the jurisdiction of the Coastal Commission pursuant to the CZMA; (2) if the Coastal Commission does have jurisdiction pursuant to the CZMA, has this authority been preempted or repealed by the abandonment provisions of the Interstate Commerce Act; (3) has the Coastal Commission waived its rights by failing to exercise them in a timely manner, and (4) does this court have jurisdiction over the Coastal Commission's counterclaim seeking injunctive relief?
I
THE COASTAL COMMISSION HAS AUTHORITY TO REVIEW RAILROAD ABANDONMENT PERMITS THAT PROVIDE FOR STRUCTURAL CHANGE IN THE RIGHT OF WAY
The Coastal Commission, as an authorized state agency for purposes of the CZMA, has expansive jurisdiction to review federal licenses or permits for consistency with its coastal zone management plan. At the outset the court notes that the Coastal Commission is not asserting jurisdiction over I.C.C. permits allowing a railroad to cease rail service, but only over permits to the extent that they provide for physical alteration in the right of way. Southern Pacific's challenge to the Coastal Commission's jurisdiction under the CZMA raises two issues: (1) whether Congress intended CZMA review procedures to extend to I.C.C. permits or licenses; and (2) whether track removal is a future land use under CZMA consistency provisions.
In enacting the CZMA Congress explicitly recognized the need to motivate and assist the coastal states in developing resource management programs in order to preserve and develop the nation's coastal resources. 16 U.S.C. §§ 1451-1452. Under the CZMA, once the Secretary of Commerce has determined that a state's proposed plan comports with the CZMA, the Secretary is authorized to make grants to the state absorbing up to 80% of the administrative costs of the program. 16 U.S.C. § 1455a. Of primary significance here is that approval also brings into play the federal consistency provision, which provides in relevant part:
After final approval by the Secretary of a state's management program, any applicant for a required Federal license or permit to conduct an activity affecting land or water uses in the coastal zone of that state shall provide in the application to the licensing or permitting agency a certification that the proposed activity complies with the state's approved program and that such activity will be conducted in a manner consistent with the program. At the same time, the applicant shall furnish to the state or its designated agency a copy of the certification, with all necessary information and data. Each coastal state shall establish procedures for public notice in the case of all *803 such certifications and, to the extent it deems appropriate, procedures for public hearings in connection therewith. At the earliest practicable time, the state or its designated agency shall notify the Federal agency concerned that the state concurs with or objects to the applicant's certification. If the state or its designated agency fails to furnish the required notification within six months after receipt of its copy of the applicant's certification, the state's concurrence with the certification shall be conclusively presumed. No license or permit shall be granted by the Federal agency until the state or its designated agency has concurred with the applicant's certification or until, by the state's failure to act, the concurrence is conclusively presumed, unless the Secretary, on his own initiative or upon appeal by the applicant, finds after providing a reasonable opportunity for detailed comments from the Federal agency involved and from the state, that the activity is consistent with the objectives of this chapter or is otherwise necessary in the interest of national security.
16 U.S.C. § 1456(c)(3)(A) (emphasis added). This section indicates that it was Congress' intention to make compliance with the consistency review procedure mandatory as to any applicant for a required federal license or permit.
An examination of the legislative history of the CZMA supports this interpretation. Congress intended the consistency provision to play a crucial role in motivating the states to cooperate with the federal government under the CZMA. This enhancement of the power of the coastal states was to be limited only by "matters of overriding national interest." S.Rep.No. 277, 94th Cong., 2d Sess. 9, reprinted in [1976] U.S.Code Cong. & Ad.News 1768, 1776. Congress provided no automatic exemption for CZMA-mandated consistency review even in the sensitive area of defense projects. S.Rep.No. 753, 92nd Cong., 2d Sess., reprinted in [1972] U.S.Code Cong. & Ad.News 4776, 4793.
There is nothing intrinsic in the nature of I.C.C. abandonment proceedings which could reasonably be characterized as of overriding national interest. Given Congressional intention to craft a broad statute, it is not the function of this court to narrow it. Consumers Union v. Heimann, 589 F.2d 531, 533 (D.C.Cir.1978). Furthermore, the Office of Coastal Zone Management in the National Oceanic and Atmospheric Administration (N.O.A.A.), which administers the CZMA, has determined that the Coastal Commission does have authority over abandonments. N.O.A.A. should be afforded considerable deference by the courts with respect to its interpretation of its own regulations. American Petroleum Institute v. Knecht, 609 F.2d 1306, 1310 (9th Cir. 1979). For the foregoing reasons this court holds that Congress did not intend to leave I.C.C. abandonment proceedings outside the scope of the CZMA.
Southern Pacific argues that removing the tracks is merely a precursor to future land use and is therefore not within the scope of Coastal Commission authority under § 1456(c)(3)(A). This argument lacks merit. California was one of the earliest states to have its proposed coastal zone management program approved as being in compliance with the CZMA. American Petroleum Institute, 609 F.2d at 1309. One aspect of the program is the California Coastal Act of 1976, Cal.Pub.Res.Code §§ 30000-31405. Pursuant to this enactment the Coastal Commission has primary authority over enforcement of the consistency provisions of the CZMA. Id. § 30330. Under California's federally-approved statutory scheme, "development" is defined as encompassing the alteration or demolition of any structure, including the facilities of any public, municipal, or private utility. Id. § 30106. "Structure" is defined broadly, and includes such things as roads and electric power lines. Ibid. Under this definition, demolition of the right of way is included within the scope of development along it.
There is nothing in the CZMA or its legislative history to suggest that Congress intended *804 to narrow the authority of the states by virtue of the artificial dichotomy urged by Southern Pacific. Congress sought to enhance the state's control over land use in the coastal zone by development of comprehensive management plans. S.Rep.No. 753, 92d Cong., 2d Sess., reprinted in [1972] U.S. Code Cong. & Ad. News 4776, 4779-80. As it is undisputed that once the tracks are gone several future land use options will be eliminated, an interpretation of § 1456(c)(3)(A) along the lines suggested by Southern Pacific would severely disable the Coastal Commission in the performance of its Congressionally mandated task of managing land use in the coastal zone. Thus, the Coastal Commission does have authority under the CZMA to conduct a consistency review of the abandonment permit with respect to track removal and dismantling the right of way.
II
THE JURISDICTION OF THE COASTAL COMMISSION OVER ABANDONMENTS PURSUANT TO THE CZMA IS NOT PREEMPTED OR REPEALED BY THE REVISED INTERSTATE COMMERCE ACT
Although §§ 10903-10907 of the Revised Interstate Commerce Act (current version at 49 U.S.C.A. §§ 10903-10907)[1] vest primary authority over abandonments as a whole in the I.C.C., they are not a talisman before which all other regulation of abandonments pursuant to other congressional enactments must fall (to paraphrase Coolidge v. New Hampshire, 403 U.S. 443, 461-62, 91 S.Ct. 2022, 2035, 29 L.Ed.2d 564 (1971)). It bears repeating that the dispute in this case is only over whether the Coastal Commission can regulate the physical removal of the trackage. Thus, the question is whether Congress intended to strip approved state agencies acting under color of the CZMA of any power to review I.C.C. abandonment permits. For the reasons indicated below, this court declines to interpret the abandonment provisions of the Revised Interstate Commerce Act as curtailing the authority of the Coastal Commission under the CZMA.
Whether the Coastal Commission's jurisdiction under the CZMA has been curtailed by the abandonment provision is not in reality a preemption issue because the CZMA contemplates a joint federal-state regulatory program. Ray v. Atlantic Richfield Co., 435 U.S. 151, 178 n.28, 98 S.Ct. 988, 1004 n.28, 55 L.Ed.2d 179 (1978). In Askew v. American Waterways Operators, Inc., 411 U.S. 325, 93 S.Ct. 1590, 36 L.Ed.2d 280 (1973), the Supreme Court refused to find that the federal Water Quality Improvement Act of 1970 preempted state authority over oil spills because it was "clear at the outset that the Federal Act does not preclude, but in fact allows, state regulation." Id. at 329, 93 S.Ct. at 1594. Similarly, in view of the clear intent of Congress in enacting the CZMA to develop a joint federal-state system for management of coastal zone resources, the question before this court is whether the abandonment provision, a federal statute, preempts or repeals in part the CZMA, another federal law.
Congress has not explicitly repealed any part of the CZMA by passage of the revised Interstate Commerce Act. In fact, former 49 U.S.C. § 1a(1) (1976) provided, inter alia, that "[a]bandonments and discontinuances shall be governed by the provisions of this *805 section or by the provisions of any other applicable Federal statute."[2] In Morton v. Mancari, 417 U.S. 535, 94 S.Ct. 2474, 41 L.Ed.2d 290 (1974), the Supreme Court explained the narrow role of a court where there is no manifest Congressional intention to repeal an earlier enactment.
In the absence of some affirmative showing of an intention to repeal, the only permissible justification for a repeal by implication is when the earlier and later statutes are irreconcilable....
....
The courts are not at liberty to pick and choose among congressional enactments, and when two statutes are capable of co-existence, it is the duty of the courts, absent a clearly expressed congressional intention to the contrary, to regard each as effective.
Id. at 550-51, 94 S.Ct. at 2482-83.
As repeal by implication is not favored, it is incumbent upon this court to give full effect to both enactments if at all possible. Kenai Peninsula Borough v. Alaska, 612 F.2d 1210, 1214 (9th Cir. 1980), aff'd sub nom. Watt v. Alaska, ___ U.S. ___, 101 S.Ct. 1673, 68 L.Ed.2d 80 (1981). Furthermore, in order for the later statute to repeal the CZMA by implication it would have to cover the entire field occupied by the earlier one. United States v. Brien, 617 F.2d 299, 310 (1st Cir. 1980).
In this case, the statutes are not irreconcilable. In Chicago & Northwestern Transportation Co. v. Kalo Brick & Tile Co., 450 U.S. 311, 317, 101 S.Ct. 1124, 1130, 67 L.Ed.2d 258 (1981), the Supreme Court considered (in the context of a preemption challenge) whether laws which placed an unconditional duty on railroads to provide car service conflicted with the abandonment provisions. The Court indicated that the crucial question is whether the challenged statute is an obstacle to the accomplishment of congressional objectives and purposes. Thus, the question whether the CZMA is able to co-exist with the abandonment provisions turns on whether, in light of Congress' objectives in passing the abandonment provisions, the CZMA stands as an obstacle to the accomplishment of those objectives.
The core of Southern Pacific's argument is that the time limits imposed on the processing of abandonments by the I.C.C. pursuant to the abandonment provisions conflicts with the more relaxed timetable for CZMA review. The legislative history of the Staggers Rail Act of 1980, which amended 49 U.S.C. § 10904, is indicative of congressional intent to expedite abandonment proceedings. H.R.Conf.Rep.No.1430, 96th Cong., 2d Sess. 125, reprinted in [1980] U.S.Code Cong. & Ad.News 3978, 4110, 4157. However, the inquiry does not end at this point. Pursuant to § 10904 an abandonment may have two phases: (1) discontinuance of rail service, and (2) removal of the trackage. As indicated by the discussion above, the focus of the inquiry must be whether the potential delay in the processing of the abandonment application with respect only to removal of the trackage stands as an obstacle to Congress' purpose in expediting the abandonment process.
Congress' purpose in enacting the original abandonment provisions of the Transportation Act of 1920 was "not primarily to protect the railroad, but to protect interstate commerce from undue burdens or discrimination." Colorado v. United States, 271 U.S. 153, 162, 46 S.Ct. 452, 453, 70 L.Ed. 878 (1926). The nature of the threat to interstate commerce which the abandonment provisions were designed to meet was characterized by the Court as follows:
Prejudice to interstate commerce may be effected in many ways. One way is by excessive expenditures from the common fund in the local interest, thereby lessening the ability of the carrier properly to serve interstate commerce. Expenditures in the local interest may be so large as to compel the carrier to raise reasonable interstate rates, or to abstain from making an appropriate reduction of such rates, or to curtail interstate service, or to forego *806 facilities needed in interstate commerce. Likewise, excessive local expenditures may so weaken the financial condition of the carrier as to raise the cost of securing capital required for providing transportation facilities used in the service, and thus compel an increase of rates. Such depletion of the common resources in the local interest may conceivably be effected by continued operation of an intrastate branch in intrastate commerce at a large loss.
Id. at 163, 46 S.Ct. 454. Thus the burden on interstate commerce is the potential hindrance of the railroad from performing its interstate commerce function due to operation of a line against the burden on interstate commerce in determining whether to approve a proposed abandonment as consistent with the present and future public necessity and convenience. In making this determination the I.C.C. is not required to consider the effect of track removal on either the affected locality or on interstate commerce. As part of the legislative history of the Railroad Revitalization and Regulatory Reform Act of 1976, Congress included a brief history of the abandonment provisions. Among the factors which Congress recognized were proper for consideration by the I.C.C. were: the interests of the shippers and public served by the line; the interests of the public at large who might be served by the strengthening of the rail system as a whole, and the interests of the affected employees. S.Rep.No.499, 94th Cong., 2d Sess. 39-41, reprinted in [1976] U.S.Code Cong. & Ad.News 53-56. The conclusion to be drawn is that the merits of whether to remove the trackage or not are at most peripheral to the initial determination whether the continued operation of the line is a burden on interstate commerce.
There is substantial authority for the view that the question of track removal is ancillary to the core decision which the I.C.C. must make and, therefore, that once the application to cease service has been approved the need to protect interstate commerce by expediting abandonment proceedings is greatly diminished. In an action brought on state law grounds by shippers against a railroad that discontinued service under an I.C.C. abandonment permit, the Supreme Court held that "the authority of the Commission to regulate abandonments is exclusive." Chicago & North Western Transportation Co. v. Kalo Brick & Tile Co., 450 U.S. 311, 320, 101 S.Ct. 1124, 1131, 67 L.Ed.2d 258 (1981). However, the Court defined an abandonment as "`characterized by an intention of the carrier to cease permanently or indefinitely all transportation service on the relevant line.'" Id. at 314, 101 S.Ct. at 1128 n.2 (emphasis added; citations omitted). Thus, the Court recognized that the major thrust of the abandonment provisions is to relieve the railroad of the cost of operating an unprofitable line in order to alleviate a burden on interstate commerce. To permit other authorities to delay or in any way impede this process would be contrary to the objectives of Congress in passing the abandonment provisions. Once the major burden is lifted, however, there is no longer a need for exclusive jurisdiction in the I.C.C.
Southern Pacific argues that CZMA review imposes a significant burden on interstate commerce in the form of the opportunity cost of delay in recycling the trackage. In the recent case of In re Boston & Maine Corp., 596 F.2d 2 (1st Cir. 1979), the court held that states do not have authority over the track removal phase of abandonments. This case is readily distinguishable as it involved preemption of state law rather than the alleged implied repeal of a joint federal-state program. In addition, it can be distinguished because of the federal courts' exclusive bankruptcy jurisdiction.
The most significant difference between the present case and In re Boston & Maine is that in that case the district court had approved a petition for reorganization under § 77(a) of the Bankruptcy Act, 11 U.S.C. § 205(a), and had subsequently authorized the trustees to apply to the I.C.C. for an abandonment certificate. 596 F.2d at 4. The court observed that the financial condition of the railroads is a federal concern because it impacts on their ability to provide services which in turn affects interstate *807 commerce. Id. at 6; see Colorado v. United States, 271 U.S. 153, 162, 46 S.Ct. 452, 453, 70 L.Ed. 878 (1926). The court also held that salvaging the rails provides a significant economic benefit to the railroad. In re Boston & Maine Corp., 596 F.2d at 6. In view of the financial plight of the railroad in that case, the opportunity cost of leaving the rails in the ground apparently would have been a burden on interstate commerce. Whether this court would curtail the Coastal Commission's authority if this were a bankruptcy and reorganization proceeding need not be decided at this time. In the factual circumstances of this case, plaintiff has not demonstrated that the potential loss of some income due to a short delay as a result of CZMA mandated consistency review is a significant burden on the railroad's performance of its interstate commerce function.
Congress clearly sought to make the CZMA applicable to all federal permits and licenses. In view of the objectives of the abandonment provision of the Interstate Commerce Act, this court holds that there is no conflict between the two enactments with respect to CZMA consistency review by the Coastal Commission of the proposed dismantling of the right of way, and therefore that such review is within defendant's authority.
III
THE COASTAL COMMISSION HAS NOT WAIVED ITS RIGHT TO REVIEW THE ABANDONMENT PERMIT, BECAUSE IT DID NOT RECEIVE ACTUAL NOTICE OF THE PENDING I.C.C. ABANDONMENT PROCEEDING
The parties agree that the Coastal Commission did not have actual notice of the I.C.C. abandonment proceeding, despite Southern Pacific's compliance with all relevant notice requirements under the abandonment provisions. The abandonment provisions simply do not provide for notice to CZMA state agencies. Nevertheless, Southern Pacific argues that the Coastal Commission waived its rights under the applicable regulations by failing to inform the I.C.C. of its intent to review the abandonment permit in a timely manner. The regulation, 15 C.F.R. § 930.54(a) (1980), that governs review of permits of licenses for unlisted activities,[3] provides in pertinent part that "[s]tate agencies must inform the Federal agency and applicant within 30 days from notice of the license or permit application, otherwise the State agency waives its right to review the unlisted activity." The question presented by the facts of this case is whether constructive notice is sufficient under this section.
Southern Pacific cites 44 U.S.C. § 1508 (1976) (a portion of the Federal Register Act) as authority for the proposition that notice by publication in the Federal Register is legally sufficient notice. However, 15 C.F.R. § 930.54(a) does not compel state agencies to review the Federal Register, and provides that "[t]he waiver does not apply in cases where the State agency does not receive notice of the Federal license or permit activity." If constructive notice by publication in the Federal Register were deemed sufficient, this passage would be devoid of any meaning. The provision for an exception in case of lack of notice would be superfluous. Moreover, 44 U.S.C. § 1508 provides for an exception in "cases where notice by publication is insufficient in law." This exception defeats Southern Pacific's argument. Finally, if actual notice is not required, the 30-day time limit for action under 15 C.F.R. § 930.54(a) (1980) would be very difficult to administer. Thus, actual notice must be required in order to trigger the thirty day period set forth in § 930.54(a).[4] As the *808 Coastal Commission did not receive actual notice, it cannot be deemed to have waived its right to review Southern Pacific's abandonment permit.
IV
THIS COURT DOES NOT HAVE JURISDICTION TO GRANT THE RELIEF SOUGHT BY THE COASTAL COMMISSION
Prior to 1975, the power to review I.C.C. orders was vested in three-judge district courts. Pursuant to 28 U.S.C. § 2321(a) (1976), the jurisdiction to review I.C.C. orders, with the exception of orders directing the payment of money or collection of fines, penalties or forfeitures, is now in the courts of appeals. Island Creek Coal Sales Co. v. ICC, 561 F.2d 1219, 1221-22 (6th Cir. 1977). 28 U.S.C. § 2321(a) provides in relevant part that "a proceeding to enjoin or suspend, in whole or in part, a rule, regulation, or order of the Interstate Commerce Commission shall be brought in the court of appeals." Only the court of appeals on direct review may enjoin an order of the I.C.C. No timely petition for review was filed in this case.
The Coastal Commission suggests that this court can circumvent this limitation on its power by ordering Southern Pacific to cure the defect in the I.C.C. permit by applying for a coastal permit. Although this is an attractive argument, this court simply lacks the power to issue an order which would in effect suspend or enjoin an I.C.C. order. In Seaboard Air Line Railroad Co. v. Daniel, 333 U.S. 118, 122-23, 68 S.Ct. 426, 428-29, 92 L.Ed. 580 (1948), the Supreme Court distinguished the power of a court to question the validity and scope of an I.C.C. order from issuing a decree to set it aside or suspend it. See also Illinois Central R.R. v. State Public Util. Comm'n., 245 U.S. 493, 504-05, 38 S.Ct. 170, 174, 62 L.Ed. 425 (1918). Under appropriate circumstances a district court may rule on the validity of the order, but it may not act to block its enforcement.
Thus, the court can (and does) deny Southern Pacific the relief it seeks and rule that the track removal phase of the abandonment was subject to consistency review by the Coastal Commission. However, to grant the Coastal Commission the relief it seeks would be equivalent to enjoining or suspending the I.C.C. order.
The Coastal Commission's counterclaim must be dismissed for lack of jurisdiction. Southern Pacific's motion for summary judgment is denied. Judgment will be entered denying the declaratory relief sought by Southern Pacific, and dismissing the counterclaim.
IT IS SO ORDERED.
NOTES
[1] The abandonment provisions of the Interstate Commerce Act were originally enacted as part of the Transportation Act of 1920, Pub.L.No. 66-152, § 402, 41 Stat. 456, 477-78 (1920), and were codified as former 49 U.S.C. § 1(18)-(22) (repealed 1976). These provisions were repealed by the Railroad Revitalization and Regulatory Reform Act of 1976, Pub.L.No. 94-210, §§ 802, 809, 90 Stat. 31, 127-30, 144-46 (1976), and a new abandonment section was codified as former 49 U.S.C. § 1a (1976) (repealed 1978). This section itself was repealed by the enactment of the Revised Interstate Commerce Act, Pub.L.No. 95-473, 92 Stat. 1337 (1978), and recodified without substantial change as 49 U.S.C. §§ 10903-10907 (1979 Supp. III). Further modifications in the abandonment provisions (not yet reflected in the United States Code) were effected by § 402 of the Staggers Rail Act of 1980, Pub.L.No. 96-448, § 402, 94 Stat. 1895, 1941-45 (1980). In this decision the court cites to the most recent version, as if officially codified, unless otherwise indicated.
[2] This provision was omitted without explanation when the section was recodified under the Revised Interstate Commerce Act as 49 U.S.C. § 10904 (1979 Supp. III).
[3] Pursuant to 15 C.F.R. § 930.53 (1980), state agencies, with the assistance of federal licensing agencies, are to develop a list of federal license and permit activities that will probably affect the coastal zone. Railroad abandonments were not a listed permit or license activity.
[4] Because actual notice is required, this court need not and does not resolve the question whether Southern Pacific's actions constituted constructive notice.
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510 So.2d 1074 (1987)
G & A BUILDING MAINTENANCE and Sentry Claim Services, Appellants/Cross-Appellees,
v.
Rose Helen MAKUSKI, Appellee/Cross-Appellant.
No. BQ-335.
District Court of Appeal of Florida, First District.
July 29, 1987.
R. Ty Hodges, of Miller, Hodges, Kagan & Chait, Miami, for appellants/cross-appellees.
Edward Schroll, Miami, for appellee/cross-appellant.
BARFIELD, Judge.
In this appeal and cross-appeal from a workers' compensation order awarding attorney fees under section 440.34, Florida Statutes (1983), the employer and carrier assert that the award is patently excessive and in excess of the amount claimed, and that it is unsupported by competent substantial evidence in the record. The claimant asserts that the deputy commissioner's reduction of hours and hourly rate, which he had found to be reasonable, is not supported by competent substantial evidence in the record. We reverse.
The claimant sustained permanent eye damage as the result of scar tissue which developed from injury to her cornea in a 1984 accident. The employer/carrier initially paid on the claim, then took the position that the claimant's eye disability was not causally related to an accident. Pursuant to a stipulation approved by the deputy commissioner, the claimant received a lump sum payment of $5,000 and the employer/carrier agreed to provide future medical care, including a possible corneal transplant. The parties agreed that the claimant's attorney was entitled to a reasonable attorney fee to be paid by the employer/carrier.
At the hearing to determine the amount of the fee, claimant's attorney presented an affidavit in which he stated that he represented the claimant from September 1985 to July 1986, that the issue involved in this case was "somewhat novel," requiring multiple medical depositions, that he devoted 43.9 hours to the case, that he was required to travel from his office in Dade County to *1075 the Keys, and that the fees customarily charged in his area for similar legal services vary from $150 to "in excess of" $200 per hour. He also testified in response to the deputy commissioner's questions that a rate of $300/hour was not unusual "on a contingency fee basis", and that a reasonable attorney fee in this case would be $8,000. He admitted on cross-examination that his time log was a reconstruction, that the case was not particularly complex from a medical standpoint once the proper frame of reference was developed, and that he charges $80/hour for defense work.
Counsel for the employer/carrier testified that 37 hours would be a reasonable figure for the time spent by the claimant's attorney, that attorneys are not paid $200-300/hour on a regular basis under usual circumstances, that the potential corneal transplant remains highly speculative, and that a reasonable value for attorney fees would be $3,250.
In his order, the deputy commissioner found that the claimant's attorney had expended 43.9 hours of professional time, not including the time involved at the hearing, and that this number of hours was reasonable, but reduced the hours to 35 for purposes of determining a reasonable fee. He also found, based on his own experience, that $300/hour was a reasonable rate for an attorney of this attorney's caliber, but reduced the rate to $265/hour without explanation. He found that the fee schedule contained in section 440.34 could not be reasonably and fairly applied in this case, considering the fact that the value of future medical care could not be ascertained, and that application of the fee schedule would result in an unjust and inadequate fee for the claimant's attorney. He awarded a fee of $9,275.
In a legislative attempt to standardize attorney fees absent exceptional circumstances, section 440.34 sets out a formula to be used in determining a reasonable attorney fee.[1] The deputy commissioner must consider eight factors enumerated in the statute, and may deviate from the statutory formula if, in his judgment, the circumstances of the particular case warrant an increase or decrease in the fee. His order must reflect that he considered all the relevant factors to the extent circumstances permit.[2]
Under the statutory formula, the claimant's lump sum settlement would result in an attorney fee of $1,250.[3] The deputy commissioner properly found this formula inadequate, and was therefore obliged to consider the factors set out in the statute in order to determine a reasonable fee. The record would support a reduction of the hours expended by the claimant's attorney to 37 hours instead of the 43.9 hours claimed, but there is no record support for a reduction of the hours to 35. Although there was some discussion of hourly fees in excess of those stated in the attorney's affidavit, there is no record support for the deputy commissioner's determination of $265/hour as a reasonable rate. In addition, an award in excess of the amount claimed by the claimant's attorney is inappropriate.
The order is REVERSED and REMANDED for reconsideration by the deputy commissioner of a reasonable attorney fee in light of specific findings consistent with the record, not to exceed the amount requested by the claimant's attorney.
MILLS and WENTWORTH, JJ., concur.
NOTES
[1] Fiesta Fashions, Inc. v. Capin, 450 So.2d 1128 (Fla. 1st DCA 1984); Roundtree Transport, Inc. v. Godek, 412 So.2d 66 (Fla. 1st DCA 1982).
[2] Id. See also, Department of Health and Rehabilitative Services/Division of Blind Services v. Bean, 435 So.2d 967 (Fla. 1st DCA 1983); Brevard County Mental Health Center v. Kelly, 420 So.2d 911 (Fla. 1st DCA 1982); East Coast Tire Co. v. Denmark, 381 So.2d 336 (Fla. 1st DCA 1980).
[3] Under either party's calculation of reasonable hours, this would amount to compensation of the claimant's attorney at a rate less than $40/hour.
|
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227 F.3d 170 (4th Cir. 2000)
LEONARD TRAFICANTI, d/b/a LT's Gas/Snaks, Plaintiff-Appellant,v.UNITED STATES OF AMERICA, Defendant-Appellee.
No. 99-1478 (CA-98-95-7-F).
UNITED STATES COURT OF APPEALS, FOR THE FOURTH CIRCUIT.
Argued: June 8, 2000.Decided: September 8, 2000.
Appeal from the United States District Court for the Eastern District of North Carolina, at Wilmington.
James C. Fox, District Judge.[Copyrighted Material Omitted]
COUNSEL ARGUED: Marcus W. Trathen, David Kushner, BROOKS, PIERCE, MCLENDON, HUMPHREY & LEONARD, L.L.P., Raleigh, North Carolina, for Appellant. Neal Irving Fowler, Assistant United States Attorney, Raleigh, North Carolina, for Appellee. ON BRIEF: Janice McKenzie Cole, United States Attorney, Anne M. Hayes, Assistant United States Attorney, Raleigh, North Carolina, for Appellee.
Before WILKINSON, Chief Judge, and WIDENER and TRAXLER, Circuit Judges.
Affirmed and remanded by published opinion. Chief Judge Wilkinson wrote the majority opinion, in which Judge Traxler joined. Judge Widener wrote a concurring opinion.
OPINION
WILKINSON, Chief Judge:
1
This case involves statutory and constitutional issues arising from LT's Gas/Snaks' permanent disqualification from the federal food stamp program. Leonard Traficanti, d.b.a. LT's Gas/Snaks, seeks to overturn the district court's grant of summary judgment in favor of the United States. The district court affirmed an agency decision disqualifying LT's from participating in the food stamp program. The agency also imposed a civil penalty of $40,000 should Traficanti ever sell or transfer his business. Traficanti appeals these rulings on a variety of grounds. Finding no merit in his claims, we affirm the dismissal of his suit.
I.
2
Leonard Traficanti is the owner and operator of LT's Gas/Snaks, a convenience store in Wilmington, North Carolina. Traficanti participates in the food stamp program, run by the Food and Nutrition ServiceS of the United States Department of Agriculture. In July of 1996, the Department of Agriculture launched an undercover operation to determine whether either the owner or the employees of LT's were trafficking in food stamps. The investigation determined that on four separate occasions, an employee of LT's, Rachel White, illegally trafficked in food stamps by exchanging cash for food coupons. White admitted to a friend of Traficanti's that she had engaged in illegal food stamp transactions. Allegedly, White was upset with Traficanti because he made her take a polygraph test to determine if she was stealing from the store. White bought food stamps illegally in order "to have something over" Traficanti if she ever had to "get even" with him. Traficanti fired White soon after his friend informed him of these allegations. Traficanti also telephoned the FNS on October 29, 1997, "as soon as" he learned about White's comments.
3
On October 27, 1997, the Agriculture Department issued a Charge Letter against Traficanti. The letter stated that the government was contemplating disqualifying LT's from the food stamp program due to the four instances of unlawful trafficking. The letter also informed Traficanti that he was eligible for a civil money fine in lieu of permanent disqualification if he could show by substantial evidence that LT's had an effective policy and program to prevent such violations. The letter referred Traficanti to the applicable federal regulations, and stated that he must provide the required documentation in order to avoid disqualification and qualify for the civil fine.
4
Traficanti responded that White was not acting within the scope of her employment, that she was intentionally trying to sabotage Traficanti, and that LT's in no way sanctioned, encouraged, or benefitted from the fraud. One week later, the FNS permanently disqualified LT's from participating in the food stamp program. The FNS also rejected Traficanti's request to convert the permanent disqualification into a fine. It determined that Traficanti did not show by substantial evidence that an effective fraud prevention program was in effect. See 7 C.F.R. § 278.6(i) (2000). The FNS also imposed a $40,000 civil money penalty should Traficanti transfer or sell his business. See 7 C.F.R. §§ 278.6(f)(2), 278.6(g). Traficanti appealed his disqualification to an FNS administrative review officer. The officer denied Traficanti's appeal.
5
Traficanti sought review of this decision in district court. See 7 U.S.C. § 2023(a)(13) (1994). The district court granted summary judgment for the United States, holding that Traficanti was strictly liable for his employee's actions. The court also rejected Traficanti's procedural and substantive due process claims with regard to LT's permanent disqualification. The district court then dismissed the constitutional claims stemming from the $40,000 transfer penalty because they were not ripe. Traficanti now appeals.
II.
6
The food stamp program allows qualified stores to accept food stamps instead of cash for certain food items. The store can then redeem the stamps for their cash value. See 7 U.S.C. §§ 2011 et seq. An approved store may be disqualified from participation or be subject to fines if it violates the governing regulations. See 7 U.S.C. § 2021(a). In 1988, Congress amended the Food Stamp Act to provide guidelines to determine the appropriate punishment when an owner violates the program. Disqualification is permanent upon the first instance of purchasing or trafficking in food stamps unless the Agriculture Department determines by "substantial evidence" that the store had "an effective policy and program in effect to prevent violations." 7 U.S.C. § 2021(b)(3)(B). If the store can show such a policy, as well as its non-involvement in the trafficking, the Secretary may impose a fine in lieu of disqualification. See id.
7
The Agriculture Department promulgated four criteria to determine whether a store qualifies for the fine. First, a store must show that it had an effective compliance policy; second, its compliance program must have been in effect prior to the violations; third, a store must have developed and instituted an effective personnel training program; and fourth, the store's ownership or management must not have been involved in the fraud. See 7 C.F.R.§ 278.6(i). A store must provide written documentation proving that it had such a policy and program before the violations. See id. at § 278.6(i)(1) & (2).
8
If the store is permanently disqualified, a civil money penalty "shall" be imposed if the store's ownership sells or transfers its business. Id. at § 278.6(f)(2). The amount of the penalty is based upon the store's average monthly redemptions of food stamps, with a maximum penalty of $10,000 for each violation. See id. at 278.6(g).
III.
A.
9
Traficanti contends that he committed no violation of the statute because he is merely an innocent owner. He thus argues that he should be subject to no penalty. Traficanti further maintains that strict liability should not apply in this instance, where the employee's specific intent in committing the fraud was to harm the unwitting employer.
10
We disagree. Traficanti concedes that his employee, White, violated the Act by exchanging food stamps for cash. Congress addressed the subject of unknowing owners in the 1988 amendments to the Food Stamp Act. These amendments allow the FNS to consider the owner's knowledge in deciding whether to impose disqualification or a monetary fine. See 7 U.S.C. § 2021(b)(3)(B); 7 C.F.R. § 278.6(i).
11
Consequently, Congress specifically intended that all owners be subject at least to some penalty, regardless of fault. The circuit courts that have examined the question agree that penalties attach to the owner, regardless of fault. See Kim v. United States, 121 F.3d 1269, 1273 (9th Cir. 1997) (listing cases). Congress chose such a strict liability regime in order to ensure that the person in the best position to prevent fraud -the owner -had sufficient incentive to stop wayward employees from stealing from the government. It is not the place of the judiciary to disregard the guidelines set by Congress. Even assuming Traficanti's ignorance of the violations, the statutory scheme dictates that he face the consequences for his employee's criminal behavior.
12
Traficanti maintains that the failure to consider evidence of fault violates his Fifth Amendment right to procedural and substantive due process. Even assuming arguendo that a procedural due process violation existed at the administrative level, the de novo hearing in the district court cured the violation. See Kim, 121 F.3d at 1274; TRM, Inc. v. United States, 52 F.3d 941, 944 (11th Cir. 1995).
13
No violation of substantive due process occurred either. The penalty need only serve a rational legislative basis in this instance, since no fundamental right is implicated. See Kim, 121 F.3d at 1273. A strict liability regime places ultimate economic responsibility for fraud on the owner, who is in the best position to deter deception ex ante. Moreover, the statute allows leniency if owners can show that they took certain affirmative measures to stop the fraud before it happened. Given these factors, we hold that the statute's strict liability regime is rationally related to the government's interest in preventing fraud. See also Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 14 (1991) ("Imposing liability without independent fault deters fraud more than a less stringent rule. It therefore rationally advances the State's goal.").
B.
14
Traficanti argues in the alternative that even if the store is strictly liable, the correct penalty is a fine instead of permanent disqualification.
15
Again, we disagree. Traficanti's permanent disqualification from the food stamp program is well within the bounds of agency discretion. Indeed, his permanent disqualification is mandated by the statute itself. Congress specifically required innocent owners to show that an effective anti-fraud program existed in order to qualify for the monetary fine in lieu of disqualification. See 7 U.S.C. § 2021(b)(3)(B) (the Secretary can impose a fine only if "there is substantial evidence that such store or food concern had an effective policy and program in effect to prevent violations" of the food stamp program). As the Ninth Circuit noted, the FNS is not at liberty to "impose a civil money penalty in lieu of permanent disqualification for a trafficking violation where the store [does] not have in effect an effective policy and program to prevent violations . . . . Such a result would violate the express language of section 2021(b)(3)(B)." Kim, 121 F.3d at 1276.
16
Traficanti had the opportunity to present evidence that he conducted an effective training program to combat food stamp fraud. He submitted no documentation to show that he met the four criteria mandated by the regulations. See 7 C.F.R.§ 278.6(i). Store owners cannot simply attest to having effective anti-fraud programs; rather, they must prove it. Traficanti fell well short of meeting the standards of the statute or the regulations. The FNS decision not to convert the permanent disqualification into a fine was mandated by statute.1
C.
17
Traficanti next argues that the $40,000 transfer penalty is unconstitutional because it violates substantive due process, the Takings Clause, the Double Jeopardy Clause, and the Excessive Fines Clause. These arguments are without merit.2
18
The penalty does not violate Traficanti's right to substantive due process because it has a rational basis: preventing illicit transfer of ownership in order to evade the sanctions of the statute. If no transfer penalty were imposed, Traficanti could nominally sell his business while retaining de facto control over the enterprise. Since the transfer fee is not clearly arbitrary or irrational, it satisfies the strictures of substantive due process. See Hodel v. Indiana , 452 U.S. 314, 331 (1981).
19
The penalty is not an unconstitutional taking either. Traficanti argues that the regulation wipes away "all economically beneficial or productive use" of his store. Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1015 (1992). Traficanti has not presented evidence as to why his assertion is true. The regulation does not prevent Traficanti from selling his land to any person; Traficanti must pay the transfer penalty, not the prospective purchaser.A post-sale penalty assessed against Traficanti simply does not negate all economically beneficial use of LT's.
20
The penalty does not violate the Double Jeopardy Clause. The disqualification and the transfer penalty are not criminal sanctions, and therefore the Double Jeopardy Clause is inapplicable. Permanent dis-qualification is a prophylactic measure, not a criminal penalty. See Cross v. United States, 512 F.2d 1212, 1217 (4th Cir. 1975) ("[D]isqualification from the food stamp program is not a criminal sanction."). Moreover, since Congress labeled the transfer fee a civil penalty, "only the clearest proof" that the sanction's effect is punitive can transform the penalty into a criminal one. See Hudson v. United States, 522 U.S. 93, 99-100 (1997) (internal quotation marks omitted). No such proof exists in this case. Since neither the disqualification nor the transfer penalty is a criminal sanction, both are outside the scope of the Double Jeopardy Clause.
21
Finally, Traficanti alleges that the transfer penalty violates the Excessive Fines Clause. This argument is without merit. The fine is not "grossly disproportional to the gravity of the defendant's offense." United States v. Bajakajian, 524 U.S. 321, 337 (1998); see also Vasudeva v. United States, 214 F.3d 1155,1161 (9th Cir. June 12, 2000) (rejecting argument that $40,000 fine by the FNS violates the Excessive Fines Clause).3
IV.
22
We do not underestimate the seriousness of the sanction in this case. However, Congress' foremost concern was to deter widespread fraud in food stamp transactions. Congress determined that the store owner is in the best position to prevent fraud in the food stamp program. Therefore, it placed the financial onus on owners to prevent the fraud before it occurs. Because Traficanti could not show that he maintained an effective anti-fraud program, the statutory penalty is permanent disqualification. The transfer penalty is likewise constitutional. For the foregoing reasons, we remand the case with instructions to the district court to dismiss it with prejudice.
AFFIRMED AND REMANDED
Notes:
1
Our concurring colleague urges that we reconsider the standard of review adopted by this court in Cross v. United States, 512 F.2d 1212 (4th Cir. 1975) (en banc). There is no need to debate the standard of review here because it makes no difference in this case. The underlying violation of the statute is uncontested, and thus a de novo review of the facts unnecessary, since Traficanti concedes that Rachel White, his employee, trafficked in food stamps while employed at LT's. The application of a de novo standard of review with respect to the imposition of a sanction also makes no difference here. The agency's mandate from Congress is not discretionary. The FNS must find that store owners are permanently disqualified if owners cannot prove by substantial evidence that they had an effective program to prevent future violations. See id. at §§ 2021(b); 2021(b)(3); 2021(b)(3)(B) ("[D]isqualification . . . shall be . . . permanent upon . . . the first occasion . . . of a disqualification based on the purchase of coupons or trafficking in coupons . . . except that the Secretary shall have the discretion to impose a civil money penalty . . . if the Secretary determines that there is substantial evidence that such store or food concern had an effective policy and program in effect to prevent violations of the chapter and the regulations."); see also id. at § 2021(e)(1) (transfer penalty "shall be" imposed on disqualified stores). It is undisputed that Traficanti did not submit any documentation that he had a compliance policy or training program in place. Thus, he failed to prove by "substantial evidence" that the store had "an effective policy and program in effect to prevent violations." 7 U.S.C. § 2021(b)(3)(B). Notwithstanding the concurrence's invitation to obviate the result here, see Post at 12 and n.4, neither the agency nor this court is at liberty to disregard the clear congressional judgment embodied in the statute. Whatever force our fine concurring brother's argument might have in another context, it is unnecessary to a resolution of this case. Here, the facts are uncontested and the legal principles that follow are statutorily mandated. This is not a matter of a standard of review but rather of giving effect to plain statutory text.
2
The district court did not consider the claims regarding the transfer penalty because it found that they were not ripe. We believe, however, that the claims are ripe. In Arch Mineral Corp. v. Babbitt, 104 F.3d 660, 665 (4th Cir. 1997), this court relied upon a two-part test to determine ripeness: 1) are the issues fit for judicial review, and 2) will hardship fall upon the parties by withholding court consideration? With regard to the first prong, an issue is fit for judicial review if the agency rule is final and not dependent on future uncertainties. In Arch Mineral the court held that a claim was ripe even though the agency decision was not officially final. It was final in actuality, however, because no "`further administrative action'" was required "`other than the possible imposition of sanctions.'" Id. at 668 (citing Northeast Airlines, Inc. v. CAB, 345 F.2d 662, 664 (1st Cir. 1965)). In this case, the agency retains no discretion once Traficanti attempts to sell his business. See 7 C.F.R. § 278.6(f)(2) (the person selling the retail store "shall be subjected to and liable for a civil money penalty") (emphasis added). No future uncertainty exists as to the imposition of the penalty.
The second prong asks whether hardship will fall upon the parties by withholding court consideration. In this case, the potential sanction is not some far-removed event, barely noticed on the horizon. On the contrary, Traficanti has alleged that he has attempted to sell his store on three different occasions. All possible sales collapsed due to the looming transfer penalty. The subsequent owner of LT's cannot participate in the food stamp program until Traficanti pays the fine. See 7 C.F.R. § 278.6(f)(4). The combination of the agency's lack of discretion to enforce the civil money penalty combined with Traficanti's unrefuted allegation that he is trying to sell the store makes this case ripe for adjudication.
3
Traficanti argues in the alternative that two of the violations cannot be attributed to his store. Therefore he asks us to reduce the penalty from $40,000 to $20,000. We decline to do so. With regard to Traficanti's claim that White was not in the store during one violation, we believe that it makes no difference in this situation. She was near the front door of the store, and she was in the employ of LT's at that particular time. We also reject Traficanti's claim that he should not be liable for one of the violations because in that instance, White was just a broker. Traficanti presented no evidence that this was the case. The record indicates only that an undercover agent entered LT's with $460 in stamps, and left LT's with $210 in cash. This evidence in itself is enough to establish that an employee of LT's bought food stamps.
WIDENER, Circuit Judge, concurring:
23
Although I concur in the result because of circuit precedent, I write separately to express my continuing doubt with the arbitrary and capricious standard of review established by this court's divided decision in Cross v. United States, 512 F.2d 1212, 1217-19 (1975) (en banc), and applied by the district court in this case. In Cross, this court ignored the language of the Food Stamp Act, 7 U.S.C. §§ 2011 et seq. (1996), and held that "de novo " does not mean de novo. Rather, in this circuit, de novo review by a district court of penalties imposed1 under the Food Stamp Act means a district court is limited to the arbitrary and capricious standard generally used in administrative review. See Cross, 512 F.2d at 1218 ("To be `valid,' a sanction must not be arbitrary and capricious, and a sanction is arbitrary and capricious if it is unwarranted in law or without justification in fact."). With this proposition, I do not agree.
24
The Food Stamp Act mandates de novo review by a district court. The Act states that "[t]he suit in the United States district court . . . shall be a trial de novo by the court in which the court shall determine the validity2 of the questioned administrative action in issue, except that judicial review of determinations . . . made pursuant to section 2025(c) . . . shall be a review on the administrative record." 7 U.S.C. § 2023(a)(15) (1996) (emphasis added). Thus, the plain language of the Act requires de novo review. In addition, the § 2025(c) exception indicates and emphasizes that Congress intended a de novo hearing in all cases, except when specifically limited to a lesser standard of review under the Act.3 Any judicially created limit on a district court's power of review, like that created in Cross, thus defeats this expressed intent of Congress. Moreover, because an"administrative action" under 7 U.S.C. § 2023(a)(15) must consist both of the finding of a violation and the punishment of that violation, I think, contrary to the Cross decision, that the Act mandates de novo review on both the finding of guilt and the sanction that is imposed. See Ghattas v. United States, 40 F.3d 281, 287 (8th Cir. 1994) (conducting de novo review on liability as well as sanction).
25
This full right of review would have allowed the district court to make its own independent judgment as to the severity of Traficanti's permanent disqualification in light of the factual findings. Significantly, the district court noted that Traficanti did not have knowledge of or benefit from the illegal acts of his employee, Rachel White, Tra-ficanti fired White upon learning of the illegal acts, and White was aware that food stamp trafficking was illegal. Most importantly, the district court found that White vengefully committed the illegal acts with the intent to cause harm to Traficanti. Cf. R Ranch Market Corp. v. United States, 861 F.2d 236, 239 (9th Cir. 1988), superceded by statute 7 U.S.C. 2021(b) (1988 amendment) (stating that "courts should not abandon their traditional function of giving very close scrutiny to situations involving the tortious or criminal actions of employees" and not holding employer liable because employer did not know of employee's trafficking). R Ranch Market for that principle followed Bodwin v. United States, 541 F.2d 1388 (10th Cir. 1976).
26
Moreover, de novo review would have given the district court power to evaluate Traficanti's sanction and whether his failure to produce sufficient documentation of a compliance program must lead to permanent disqualification. See 7 U.S.C. § 2021(b)(3)(B); 7 C.F.R. § 278.6(i). In this respect, because a compliance program will not deter or stop a disgruntled employee from intentionally setting up her employer, a district court could evaluate whether the compliance program requirements are applicable at all when an employee violates the law with the intent to sabotage her employer. The district court should also determine how to treat these situations under the Act. In short, de novo review, as intended under the Act, would have given the district court flexibility to address this issue of first impression and to avoid the harsh outcome that inevitably results from the application of the Cross standard in a case such as this. Cf. Sims v. United States Dep't of Agriculture Food & Nutrition Serv., 860 F.2d 858, 863 (8th Cir. 1998) (holding district court should have reduced sanction under Food Stamp Act); Ghattas v. United States, 40 F.3d 281, 287 (8th Cir. 1994) (conducting de novo review on liability as well as sanction under Food Stamp Act); United States v. Acosta , 17 F.3d 538, 544 (2d Cir. 1994) (illustrating harsh result under Federal Food, Drug, and Cosmetic Act, 9 U.S.C. § 331, where liability attaches without proof of intent).4
27
In sum, we continue to decline to give effect to the plain words "trial de novo" as found in § 2023(a)(15) of the statute.
28
In United States v. First City Nat'l. Bank, 386 U.S. 361, 368 (1967), the Court defined the clause "shall review de novo the issues presented." It reasoned that "The words `review' and `trial' might conceivably be used interchangeably. The critical words seem to be `de novo' and `issues presented.' They mean to us that the court should make an independent determination of the issues." First City Nat'l Bank, 386 U.S. at 368 (emphasis added). The words at issue in the case at hand are that the suit in court to review penalties such as those imposed in this case "shall be a trial de novo by the court in which the court shall determine the validity of the questioned administrative action in issue." 7 U.S.C. § 2023(a)(15). The penalties are certainly a part of "the administrative action in issue," yet we persist in giving little or no effect to the words "the court shall determine" (emphasis added). Our continued insistence on not giving effect to either the statute's words or the Supreme Court's definition is something I cannot justify. In my opinion, we should revisit Cross, follow the principle of Ghattas v. United States, 40 F.3d 281, 287 (8th Cir. 1984), and remand this case to the district court.
Notes:
1
Interestingly, a district court reviews the finding of liability according to the plain language of the statute--under a de novo standard of review. See Cross, 512 F.2d at 1218 ("[T]he scope of review of a sanction is not as broad as the scope of review of the fact of violations.").
2
When the district court determines that the administrative action is invalid, it is free to enter a judgment or order in accordance with the law and the evidence. See 7 U.S.C. § 2023(a)(16) (1996).
3
This exception applies to payment accuracy programs and is not applicable in this case.
4
The majority, fn. 1, finds undisputed that Traficanti did not submit any documents that he had a compliance policy or training program in place. It is equally undisputed, I suggest, that no policy or training program can prevent such a disgruntled employee from setting up her employer and in so doing, in all likelihood, committing a felony. See 7 U.S.C. § 2024(b)(1). If the courts in this circuit were not forbidden by our own precedent from making a de novo determination of penalty they could obviate the harsh and unjust result obtained here, as the cases I have cited from other circuits demonstrate.
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767 F.2d 907
Bufalinov.U.S.
84-2388
United States Court of Appeals,Second Circuit.
5/9/85
1
S.D.N.Y.
AFFIRMED
|
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463 Pa. 317 (1975)
344 A.2d 850
COMMONWEALTH of Pennsylvania, Appellee,
v.
Carol MOORE, Appellant.
Supreme Court of Pennsylvania.
Argued October 4, 1974.
Decided October 3, 1975.
*318 *319 H. David Rothman, Pittsburgh, for appellant.
John J. Hickton, Dist. Atty., John M. Tighe, First Asst. Dist. Atty., Robert L. Eberhardt, Lawrence N. Claus, Asst. Dist. Attys., Pittsburgh, for appellee.
Before EAGEN, O'BRIEN, ROBERTS, POMEROY, NIX and MANDERINO, JJ.
OPINION
EAGEN, Justice.
The appellant, Carol Moore, was indicted by the grand jury of Allegheny County on charges of murder and voluntary manslaughter in connection with the death of her husband, James Moore. She was also indicted on the charge of involuntary manslaughter. Although defense counsel sought consolidation of the indictments, the case proceeded to trial upon only the murder and voluntary manslaughter charges.
After a jury trial the appellant was convicted of voluntary manslaughter and sentenced to serve a maximum of three years imprisonment. Post trial motions were timely filed and denied. This direct appeal from the judgment of sentence then followed.
The appellant contends the trial court committed reversible error in refusing, after timely motion,[1] to consolidate for trial the two indictments arising out of the *320 same criminal conduct, one indictment being for murder and voluntary manslaughter, the other for involuntary manslaughter. She asserts the failure to consolidate the indictments and the concomitant refusal to charge the jury on involuntary manslaughter[2] prevented the jury from understanding the full significance of the law of homicide in Pennsylvania and led to a compromise verdict of voluntary manslaughter.
It is well-established that the propriety of consolidating separate indictments for trial is ultimately within the sound discretion of the trial court and the exercise of this discretion will be reversed only where it clearly appears that the rights of the defendant were thereby prejudiced. Commonwealth v. Patrick, 416 Pa. 437, 445, 206 A.2d 295 (1965); Commonwealth ex rel. Bolish v. Banmiller, 396 Pa. 129, 132, 151 A.2d 480 (1959); Commonwealth ex rel. Spencer v. Ashe, 364 Pa. 442, 446, 71 A.2d 799 (1950), cert. denied, 339 U.S. 990, 70 S.Ct. 1015, 94 L.Ed. 1390 (1950). While cognizant of the discretion vested in the trial court, we believe that failure to proceed on an involuntary manslaughter indictment, when consolidation is requested, is prejudicial error where the evidence presented would support such a verdict. Commonwealth v. Thomas, 403 Pa. 553, 170 A. 2d 112 (1961). See also Commonwealth v. Robinson, 452 Pa. 316, 305 A.2d 354 (1973); Commonwealth v. Flax, 331 Pa. 145, 200 A. 632 (1938).[3] This is such a case.
*321 The facts of this case[4] indicate that on the day of the shooting, the deceased returned home from a motorcycle club meeting apparently in a hostile mood. While the appellant prepared dinner for her husband, he began cursing and yelling at her. Deciding that she had had enough of this treatment, the appellant went upstairs to their bedroom and prepared to leave her husband. She grabbed her pocketbook, placed some savings into it, and returned downstairs. When the appellant told her husband she was leaving him, he indicated that he would prevent her from going. The appellant then went back upstairs, placed her husband's loaded gun into her pocketbook, and proceeded downstairs. The deceased was later found on the floor of the living room with a fatal gunshot wound of the chest.
Appellant's contention is that the killing of her husband was accidental and involuntary, resulting from a struggle over the gun in her pocketbook.[5] This struggle allegedly occurred when her husband, seeking to prevent her from leaving with their savings, thrust his hand into her pocketbook and felt the gun. Since her hand was already in her pocketbook, feeling for her keys, it is contended their hands came together on the gun, precipitating a fight for control of it. Appellant claims that during this struggle the gun came out of her pocketbook and discharged, fatally wounding the deceased.
Although the Commonwealth, to refute the appellant's story, did present evidence indicating that no struggle took place, we need only examine the appellant's version in passing upon the propriety of consolidation. *322 For it is within the jury's province to resolve conflicts in evidence, find where the truth lies and to determine the facts. Cf. Commonwealth v. Lowe, 460 Pa. 357, 333 A. 2d 765 (1975); Commonwealth v. Zapata, 447 Pa. 322, 290 A.2d 114 (1972). Thus, if a jury, giving credence to a defendant's version of an encounter could find that defendant guilty of involuntary manslaughter, fundamental fairness dictates the consolidation, upon request, of that indictment with the murder and voluntary manslaughter indictments as possible jury verdicts. As noted in Commonwealth v. Thomas, supra, the failure to consolidate leads to a refusal to instruct the jury on involuntary manslaughter. In those instances where an involuntary manslaughter verdict would be supported by the evidence, the failure to so acquaint the jury prevents it from operating with full knowledge of the relevant law and precludes the defendant from having a fair trial.
Involuntary manslaughter, which differs from murder in that specific intent and malice are absent, encompasses, "`the killing of another without malice and unintentionally, but in doing some unlawful act not amounting to a felony nor naturally tending to cause death or great bodily harm, or in negligently doing some act lawful in itself, or by the negligent omission to perform a legal duty.'" Commonwealth v. Mayberry, 290 Pa. 195, 198, 138 A. 686, 687 (1927). See also Commonwealth v. Jones, 452 Pa. 569, 308 A.2d 598 (1973); Commonwealth v. Flax, supra. Where the act itself is not unlawful, to make it criminal, the negligence must be such a departure from prudent conduct as to evidence a disregard for human life or an indifference to the consequences. Commonwealth v. Feinberg, 433 Pa. 558, 566, 253 A.2d 636 (1969); Commonwealth v. Aurick, 342 Pa. 282, 288-289, 19 A.2d 920 (1941).
Instantly, appellant's version, if believed by the jury, would have supported a verdict of involuntary *323 manslaughter.[6] Although her placing of the gun into her pocketbook for protection would not be an "unlawful act" within the definition of involuntary manslaughter, see Commonwealth v. Flax, supra, 331 Pa. at 157, 200 A. at 638, the jury may well have considered the subsequent struggle over a loaded weapon as needlessly creating a danger to human life, thus constituting criminally negligent conduct. Therefore, since the jury could have viewed appellant's conduct as criminally negligent, it was error for the trial court to deny consolidation upon request and fail to present involuntary manslaughter as a possible verdict.
Judgment reversed and new trial ordered.
ROBERTS, POMEROY and MANDERINO, JJ., filed concurring opinions.
NIX, J., filed a dissenting opinion.
JONES, C.J., took no part in the consideration or decision of this case.
ROBERTS, Justice (concurring).
In my view, the trial court's failure to instruct the jury on involuntary manslaughter, as requested by appellant, constitutes reversible error. Therefore, I concur in the judgment of the Court without reaching the question whether the trial court abused its discretion in refusing to consolidate the indictments for trial.
It is axiomatic that a trial court is required, at least when the defendant so requests, to illuminate all relevant legal issues for the jury and, in particular, to instruct *324 the jury on every verdict which it would be permissible for it to return. The minor premise, developed in this concurring opinion, is that a conviction of involuntary manslaughter would have been a permissible verdict in this case.
I
It is well settled in Pennsylvania that a criminal defendant may, at least in certain circumstances, be convicted, upon an indictment charging a particular offense, of a lesser offense which is constituent within the offense charged (the "lesser included offense" doctrine).[1] However, my research has uncovered no Pennsylvania statute,[2] rule, or case[3] which propounds a standard for *325 determining when an offense is included within a greater offense. The best articulation of such a standard, in my view, is found in section 1.07(4) of the American Law Institute's Model Penal Code:
"A defendant may be convicted of an offense included in an offense charged in the indictment or the information. An offense is so included when:
(a) it is established by proof of the same or less than all the facts required to establish the commission of the offense charged; or
(b) it consists of an attempt or solicitation to commit the offense charged or to commit an offense otherwise included therein; or
(c) it differs from the offense charged only in the respect that a less serious injury or risk of injury to the same person, property or public interest or a lesser kind of culpability suffices to establish its commission."
A "basic premise" of this section, that "it is desirable, where possible, to adjudicate the entire criminal liability of the defendant in a single trial,"[4] has been found persuasive by the Court in the past,[5] and I find it persuasive again today. Therefore, I would adopt section 1.07(4) as the law of Pennsylvania.[6]
It has been suggested that a conviction of a constituent offense is a permissible verdict only if there is a rational *326 basis for the fact-finder to find the defendant guilty of the lesser offense and acquit him of the greater offense.[7]*327 *328 Keeble v. United States, 412 U.S. 205, 208, 93 S.Ct. 1993, 1995, 36 L.Ed.2d 844 (1973); Model Penal Code, supra § 1.07(5).[8] However, I need not decide whether rationality should be a requirement for a permissible verdict, for in this case, a verdict of involuntary manslaughter would have been rational.[9]
Whatever else may render an included-offense verdict rational, and therefore permissible, that requirement is surely satisfied if there is evidence in the record which, if believed, would justify a conclusion that the defendant is guilty of the lesser offense and innocent of the greater offense. For example, if a defendant takes the witness stand and, while admitting his guilt of the lesser offense, contradicts the Commonwealth's evidence tending to show his guilt of the greater offense, a verdict of guilty of the lesser offense would surely be a rational one. Furthermore, we have long held that the fact-finder is free to believe all, part, or none of the evidence. E.g., Commonwealth v. Murray, 460 Pa. 605, 608, 334 A.2d 255, 257 (1975). Where the evidence is such that, if the *329 fact-finder disbelieves a portion, the remainder would justify a conclusion of guilt of the lesser offense, a verdict of guilty of the lesser offense is rational.[10] Finally, when the greater and lesser offenses are different degrees of the same basic offense differing only in the requisite state of mind, the susceptibility of the evidence to different inferences of what the defendant's state of mind was would render a verdict of guilty of the lesser offense a rational one.
II
The differences between the several degrees of criminal homicide are differences in the state of mind of the defendant at the time of the killing.[11] The various states of mind which establish that a criminal homicide is murder are grouped under the rubric of "malice," while it is hornbook law that the states of mind which render a killing manslaughter are not "malice." Analysis demonstrates, however, that the two classifications of states of mind are not neat pigeonholes.
In particular, one of the states of mind included within "malice" differs from the state of mind required for a conviction of involuntary manslaughter only as a matter of degree, a different gradation along the spectrum of culpable states of mind. One is guilty of murder if, in killing another, he "consciously disregarded an unjustified and extremely high risk that his actions might cause death or serious bodily harm to another . . .." Commonwealth v. Taylor, 461 Pa. 557, 565-566, 337 A.2d 545, 549 (1975) (opinion of Roberts, J., expressing the view of four Justices); see also W. LaFave & A. Scott, Handbook on Criminal Law § 70 (1972). One is guilty of involuntary manslaughter if, in killing another, he either *330 consciously disregarded or, grossly deviating from a standard of reasonable care, failed to perceive a substantial and unjustifiable risk that his actions might cause death or serious bodily harm to another. Crimes Code, 18 Pa.C.S. § 2504(a),[12] 302(b)(3),[13] 302(b)(4).[14], [15]
*331 There are at least two distinct ways in which the offense of involuntary manslaughter is included within the offense of murder. First, the evidence may persuade the jury that the defendant is guilty of murder in all respects except that the unjustified risk disregarded was merely substantial and not extremely high. Second, the evidence may persuade the jury that the defendant is guilty of murder in all respects except that the defendant did not, but should have, perceived the risk to others. Therefore, I conclude that involuntary manslaughter "differs from [murder] only in the respect that a less serious. . . risk of injury to the same person. . . or a lesser kind of culpability suffices to establish its commission."[16] Accordingly, involuntary manslaughter is a constituent offense of murder.
III
This Court has never considered whether involuntary manslaughter is a lesser included offense of murder. There is, however, a line of cases which, without considering whether involuntary manslaughter is a constituent offense, hold that involuntary manslaughter is never a permissible verdict upon a murder indictment.
In Commonwealth v. Gable, 7 S. & R. 423 (Pa. 1821), the defendant was indicted for murder. The jury returned a verdict of "not guilty of murder but guilty of manslaughter." The defendant argued that the verdict *332 was void for uncertainty because it did not specify of which variety of manslaughter the jury found him guilty. This Court held that the verdict was not uncertain. After pointing out that murder is a felony and involuntary manslaughter a misdemeanor, the Court reasoned:
"[O]ne who is indicted for murder, cannot be convicted of involuntary manslaughter, because it is well settled, that there cannot be a conviction of a misdemeanor, on an indictment for felony. Therefore, when on an indictment for murder, the jury find that the defendant is guilty of manslaughter, it must be understood, such manslaughter as is felonious, which can be no other than voluntary manslaughter."
7 S. & R. at 424. Gable was followed in Walters v. Commonwealth, 44 Pa. 135 (1863).
All support for the Gable holding was removed by Hunter v. Commonwealth, 79 Pa. 503 (1875). In Hunter the defendant was indicted for assault with intent to kill, a felony; the jury returned a verdict of guilty of simple assault, a misdemeanor. The defendant argued that he could not be convicted of a misdemeanor upon a felony indictment. This Court disagreed.
The Court reasoned that the common law rule relied upon in Gable resulted from different procedures employed at common law in felony and misdemeanor trials. But any such difference had long since disappeared in Pennsylvania, leading the Court to observe that "It is clear that the reason of the rule has no application in this state." 79 Pa. at 505. The Court concluded:
"[W]e have no hesitation in declaring that the old common-law rule, that upon an indictment for a felony there can be no conviction for a misdemeanor, no longer exists in Pennsylvania."
79 Pa. at 509.
Inexplicably the Court reverted to the Gable position, without rejecting or distinguishing Hunter, in Hilands v. *333 Commonwealth, 114 Pa. 372, 6 A. 267 (1886). After having been indicted for and acquitted of murder, the defendant was indicted for involuntary manslaughter. Upon the overruling of the defendant's plea of autrefois acquit, an appeal was taken to this Court, which affirmed, stating:
"It is very evident the [appellant] can never be tried again upon any charge of which he might have been convicted upon the first indictment. . . .
"But the protection extends no further than the offence charged in the first indictment, or of which he might have been convicted under it. He was not in jeopardy for any other offence. The first indictment charged murder. Under it he might have been convicted of murder of the first or second degree, or of voluntary manslaughter, but not of involuntary manslaughter. The latter offence is a misdemeanor; it must be charged as such, and cannot be included in an indictment charging felonious homicide . . . . It follows that when the [appellant] was put upon this trial for murder, he was placed in no jeopardy of a conviction for involuntary manslaughter."
114 Pa. at 380-81, 6 A. at 268.
Since Hilands the Court has regularly,[17] but not consistently,[18] held that involuntary manslaughter is not *334 a permissible verdict upon a murder indictment. Never did the Court seek to justify this holding by analyzing whether involuntary manslaughter was a constituent offense of murder. Several cases sought to support their holdings by exhuming the corpse of the common law rule which had been buried by the Court in Hunter. In most cases, no reason but blind adherence to precedent was given.
The only reason ever offered in support of the rule was that the additional instruction on involuntary manslaughter might tend to confuse the jury. See Commonwealth v. Nace, 222 Pa.Super. 329, 331, 295 A.2d 87, 88 (1972) (dictum); cf. Commonwealth v. Comber, 374 Pa. 570, 578, 97 A.2d 343, 346-47 (1953) (whether assault and battery is a permissible verdict upon a murder indictment). The Court, however, has not found the risk of jury confusion a persuasive reason for prohibiting conviction of a lesser included offense upon indictment for any crime other than murder. Moreover, jury confusion is surely no reason for prohibiting a conviction of involuntary manslaughter upon a murder indictment when a defendant is tried by the court without a jury. The possibility of jury confusion is too weak a reed upon which to rely to support a rule that is productive of great unfairness. See Commonwealth v. Thomas, 403 Pa. 553, 170 A.2d 112 (1961).
I conclude that the cases holding that involuntary manslaughter is not a permissible verdict upon a murder indictment ought not to be followed.
IV
The final step in the analysis is to inquire whether, if the law were to hold that rationality is a requirement for *335 a permissible verdict, a verdict of involuntary manslaughter would have been a rational verdict in this case. I conclude that it would.
Appellant was tried upon indictments for murder and voluntary manslaughter. At trial she took the witness stand. The opinion announcing the judgment correctly concludes that
"appellant's [testimony], if believed by the jury, would have supported a verdict of involuntary manslaughter. Although her placing of the gun into her pocketbook for protection would not be an `unlawful act' within the definition of involuntary manslaughter, the jury may well have considered the subsequent struggle over a loaded weapon as needlessly creating a danger to human life, thus constituting criminally negligent conduct."
Ante, at 853 (footnote & citation omitted).
The jury could rationally have concluded from all of the evidence that appellant consciously disregarded a substantial, but not extremely high, risk of harm to her husband. The jury could also have rationally concluded from the evidence that in the heat of a struggle appellant did not, but should have, perceived the risk that her conduct created. In either event, a verdict of involuntary manslaughter could rationally have been returned.
V
Appellant requested the trial court to instruct the jury on involuntary manslaughter. Upon the court's refusal, appellant took a specific exception to the charge and assigned this ground in support of her motion for a new trial. Because involuntary manslaughter would have been a permissible verdict, the instruction should have been given. Therefore, appellant is entitled to a new trial without regard to the fortuity of a pending indictment for involuntary manslaughter.
*336 POMEROY, Justice (concurring).
I concur in the decision of the Court that the trial court erred in refusing appellant's motion to consolidate for trial the murder and involuntary manslaughter indictments. Furthermore, I agree with my brother Roberts in his separate opinion that the failure of the trial court to charge as requested on involuntary manslaughter was also error. This concurrence is appended to suggest in short compass what I consider to be the proper rationale dictating consolidation and to indicate when I believe a charge to the jury on involuntary manslaughter is warranted.
The Court posits as its reason for requiring consolidation of the two indictments against Carol Moore the dictates of "fundamental fairness." Opinion of the Court, ante at 852. While no one can fault this premise as a basis for decision, there is, I believe, a less amorphous reason for granting appellant's motion for consolidation. It is that, properly considered, involuntary manslaughter, like voluntary manslaughter, is a lesser-included offense under a murder indictment. Sharing this view, Mr. Justice Roberts has set forth the bases for it in his opinion. I would add only that, so far as my research has discovered, the Pennsylvania view that involuntary manslaughter is not a lesser-included offense to murder is shared by no other jurisdiction. See e.g., United States v. Comer, 137 U.S.App.D.C. 214, 421 F.2d 1149 (1970); Anno., 11 A.L.R.Fed. 173 (1972); People ex rel. Fox v. Twomey, 15 Ill.App.3d 760, 305 N. E.2d 375 (1973); People v. Heffington, 32 Cal.App.3d 1, 107 Cal.Rptr. 859 (1973); Hewitt v. Commonwealth, 213 Va. 605, 194 S.E.2d 893 (1973); Anno., 102 A.L.R. 1019 (1936); Anno., 27 A.L.R. 1097 (1923); Anno., 21 A.L.R. 603 (1922).
Mr. Justice Roberts does not reach the question which is squarely raised in this case and decided by the majority, viz., whether the court should have granted the motion *337 to consolidate the indictments for trial. But if it is sound to conclude that involuntary manslaughter is a lesser-included offense of murder, I think it follows as the night the day, that a motion for consolidation must be granted. It also follows that if no request for consolidation is made and the defendant is acquitted of murder, he may not then be prosecuted on the involuntary manslaughter indictment. Any other result would raise serious questions of double jeopardy. See Waller v. Florida, 397 U.S. 387, 90 S.Ct. 1184, 25 L.Ed.2d 435 (1970); Ashe v. Swenson, 397 U.S. 436, 90 S.Ct. 1189, 25 L.Ed.2d 469 (1970); Ex parte Nielsen, 131 U.S. 176, 9 S.Ct. 672, 33 L.Ed. 118 (1889).[*]
Another consequence of the lesser-included offense concept is that in a case (unlike the present one) where there is no indictment for involuntary manslaughter but only one for murder, the presence of evidence which would enable the factfinder to return a verdict of involuntary manslaughter would entitle the defendant to an instruction on the elements of that offense. This conclusion is in accord with the views expressed by the Supreme Court of the United States in applying the federal rule on the doctrine of lesser-included offenses:
"The basic principles controlling whether or not a lesser-included offense charge should have been given in a particular case have been settled by this Court.. . . `[i]n a case where some of the elements of the crime charged themselves constitute a lesser crime, *338 the defendant, if the evidence justifie[s] it . . . [is] entitled to an instruction which would permit a finding of guilt of the lesser offense.' * * * But a lesser-offense charge is not proper where, on the evidence presented, the factual issues to be resolved by the jury are the same as to both the lesser and greater offenses. * * * In other words, the lesser offense must be included within but not, on the facts of the case, be completely encompassed by the greater. A lesser-included offense instruction is only proper where the charged greater offense requires the jury to find a disputed factual element which is not required for conviction of the lesser-included offense." (Emphasis added.) Sansone v. United States, 380 U.S. 343, 349-50, 85 S.Ct. 1004, 1009, 13 L.Ed.2d 882 (1965) [quoting Berra v. United States, 351 U.S. 131, 134, 76 S.Ct. 685, 100 L.Ed. 1013 (1956)].
See also Keeble v. United States, 412 U.S. 205, 208, 93 S. Ct. 1993, 36 L.Ed.2d 844, 847 (1973). It should be emphasized, however, that before a charge on involuntary manslaughter is required, there thus must be some evidence, from whatever source, which would permit the jury to return such a verdict. This is in contrast to the situation which now exists with respect to voluntary manslaughter. As this Court has recently held, a charge on voluntary manslaughter must be given on a trial for murder if it is requested, even absent evidence which would support a verdict of voluntary manslaughter. Commonwealth v. Jones, 457 Pa. 563, 319 A.2d 142 (1974). See also United States ex rel. Mathews v. Johnson, 503 F.2d 339 (3d Cir. 1974). Because at common law in Pennsylvania there reposes in the jury the inherent power to return such a verdict in the exercise of its discretion even in the absence of proof of the elements of voluntary manslaughter, we have concluded that the jury must be informed of its power in this respect. No similar *339 historical reasons, however, dictate such a rule with respect to involuntary manslaughter.
Under the facts of this case, as the Court correctly determines, the jury could have found appellant's conduct to be "criminally negligent." Opinion of the Court, ante at 853. Thus its decision is sound that the trial court erred in refusing the motion for consolidation. I therefore concur in the decision to reverse and remand for a new trial.
MANDERINO, Justice (concurring).
I join in the majority conclusion that refusal to grant appellant's motion to consolidate the indictment for murder and voluntary manslaughter and the indictment for involuntary manslaughter constituted reversible error. In the instant case, the majority found that the evidence presented would have supported a verdict of involuntary manslaughter. I express no opinion on the issue of whether a requested consolidation should be granted in other cases.
NIX, Justice (dissenting).
Today's result represents a perpetuation of a doctrine which, I believe, was ill-conceived in its inception, Commonwealth v. Thomas, 403 Pa. 553, 170 A.2d 112 (1961), and now unwisely and unnecessarily expanded. For the reasons that follow, I must dissent.
It has been a well-settled principle in this jurisdiction that consolidation or separation of indictments is a matter that is to be left to the sound discretion of the trial judge and this judgment will not be disturbed unless there is a showing of a manifest abuse of discretion which resulted in a clear injustice to the accused. Commonwealth v. Patrick, 416 Pa. 437, 206 A.2d 295 (1965); Commonwealth ex rel. Bolish v. Banmiller, 396 Pa. 129, 151 A.2d 480 (1959); Commonwealth v. Kloiber, 378 Pa. 412, 106 A.2d 820 (1954); Commonwealth ex rel. Spencer *340 v. Ashe, 364 Pa. 442, 446, 71 A.2d 799 (1950), cert. denied 399 U.S. 990, 70 S.Ct. 1015, 94 L.Ed. 1390 (1950); Commonwealth v. Grosso, 192 Pa.Super. 513, 162 A.2d 421 (1960). This principle is consistent with our concept of the role of the jurist in the conduct of the trial. It is his responsibility to attempt to identify, define and clarify the issues to be decided. The trial judge is expected, whenever possible, to minimize the complexities of the cause and not to compound them. It is therefore crucial that his exercise of discretion provide the flexibility in a determination on a request for severance or consolidation of indictments which would permit him to consider the extent to which the request would further complicate the task of the jury and weigh that factor against the benefit sought to be derived by the moving party. The majority opinion would remove this possibility.
I have a serious question as to the validity of the majority's implicit assumption that the additional instructions to the jury as to the elements of involuntary manslaughter, while they are laboring under the onerous task of attempting to absorb the difficult distinctions between the other grades of homicide, will provide the jurors with an understanding of "the full significance of the law of homicide in Pennsylvania." It is more likely to make comprehension impossible.[1]
Commenting upon the evils of the unnecessary joinder of charges the late Mr. Chief Justice Bell, then Mr. Justice Bell, had occasion to observe:
"If there could be a conviction of assault and battery on a murder bill the trial Judge would always have to charge the jury on first-degree murder, second-degree murder, voluntary manslaughter, and, certainly if requested, on aggravated assault and battery and simple assault and battery. This has never been *341 done in the history of the Commonwealth. When we take into consideration the additional points the trial Judge must define in a murder case, such as presumption of innocence, reasonable doubt, and usually several others (depending upon the particular facts of that particular case) the jury would likely become so befogged by legal technicalities and so confused by the maze of the law as to make a clear comprehension, weighing and correlation of the facts exceedingly difficult, and the rendition of a just verdict both difficult and doubtful. Furthermore, the likelihood of a "murderer" escaping his just punishment and being found guilty of aggravated assault and battery or simple assault and battery instead of one of the degrees of murder or manslaughter of which he was actually guilty would be greatly increased to the detriment of society." Commonwealth v. Comber, 374 Pa. 570, 578-79, 97 A. 2d 343, 346 (1953).[2]
The ruling today is predicated upon our decision in Commonwealth v. Thomas, supra. Thomas represented a radical departure from the prior cases in this jurisdiction and was obviously motivated by the Court's reluctance to meet forthrightly the issue presented therein. There it was apparent that the majority of the Court believed the verdict returned (murder in the second degree) was sufficiently supported by the record to meet our sufficiency of the evidence test yet believed the weight of the evidence to be otherwise. Attempting to avoid our long respected and salutary principle that the weight of the evidence is best left with the trial court, the Thomas Court contrived this principle to reach the result they desired.[3]
*342 The inconsistency of the Thomas ruling becomes apparent when we attempt to analyze it. It suggests that it is a right of the accused, where there is evidence of involuntary manslaughter, to have a jury consider this charge. However, inexplicably, they conditioned this right upon the existence of an indictment for involuntary manslaughter. If fundamental fairness requires, under a given record, that the finder of fact be allowed to consider the charge of involuntary manslaughter, why is that judgment dependent upon whether a prosecutor has been fit to indict? If there is some validity to the majority's position they necessarily must overrule the long standing principle that the judge is not entitled to charge as to involuntary manslaughter where there is no indictment therefor. Commonwealth v. Edwards, 431 Pa. 44, 52, 244 A.2d 683 (1968); Commonwealth v. Comber, supra 374 Pa. at 575, 97 A.2d at 345; Commonwealth v. Palermo, 368 Pa. 28, 31-32, 81 A.2d 540 (1951); Commonwealth v. Hardy, 347 Pa. 551, 554, 32 A.2d 767 (1943). Additionally there is no longer a basis for the rule that an involuntary manslaughter verdict may not be returned under a murder indictment. Commonwealth v. Comber, supra 374 Pa. at 575, 97 A.2d 343; Commonwealth v. Palermo, supra; Commonwealth v. Mayberry, 290 Pa. 195, 199, 138 A. 686 (1927).
Not only has the majority reaffirmed the doctrine which, I believe, is unsound, but it has compounded this error by extending it to a point which, in my judgment, renders it more egregious. In Thomas, the evidence presented in the Commonwealth's case strongly suggested the propriety of an involuntary manslaughter finding. On that record the holding of Thomas could legitimately have been confined to instances where there is substantial *343 evidence of involuntary manslaughter emanating from the Commonwealth's case-in-chief. Today, however, not only is the evidence of involuntary manslaughter of such a character that it would stretch the credulity of the most naive, but even more important it was introduced by the defense.
The Commonwealth established that there had been a intense marital disagreement between appellant and the deceased. When the husband attempted to prevent the wife from leaving the household, the wife went upstairs and placed a loaded gun in her pocketbook. The Commonwealth also established that there was no sign of a struggle and that the bullet wound, causing the death, was discharged from the gun appellant had placed in her pocketbook. It was in this setting that the defense attempted to create the phantasm of a struggle for this weapon during which the husband was unintentionally shot. To rule under these circumstances that a court is mandated to permit consolidation upon request and blindly ignore all of the other ramifications created by consolidation, is to me completely without justification and strains the quality of justice in Pennsylvania.
NOTES
[1] Rule 219(d) of the Pennsylvania Rules of Criminal Procedure provides, "The court, of its own motion, or on application of a party, may order separate trials of counts, grant a severance as to any defendant, or provide other appropriate relief." A motion to consolidate for trial separate charges or indictments is presented as a request for "other appropriate relief."
Instantly, defense counsel filed a pre-trial motion to consolidate the indictments but the trial court refused to rule upon the motion at that time. At the conclusion of the Commonwealth's case, defense counsel renewed the request for consolidation, but the trial court continued to reserve judgment. Finally, following presentation of the defense and prior to submitting the case to the jury, the trial court denied the motion to consolidate.
[2] The trial court, in accordance with a long line of cases holding that instructions on involuntary manslaughter need not be given to the jury when there is no indictment therefor, refused to charge the jury on involuntary manslaughter. See, e.g., Commonwealth v. Edwards, 431 Pa. 44, 52, 244 A.2d 683 (1968); Commonwealth v. Comber, 374 Pa. 570, 575, 97 A.2d 343 (1953); Commonwealth v. Palermo, 368 Pa. 28, 31-32, 81 A.2d 540 (1951); Commonwealth v. Hardy, 347 Pa. 551, 554, 32 A.2d 767 (1943). The appellant assigns this as error. However, in view of our decision today, holding that the failure to grant consolidation was improper, we need not re-examine the continued vitality of these decisions.
[3] The Commonwealth's reliance upon Commonwealth v. Reid, 432 Pa. 319, 247 A.2d 783 (1968), is misplaced as there was no indictment charging Reid with involuntary manslaughter and, consequently, no motion for consolidation to rule upon.
[4] The evidence consisted in large part of a voluntary, extrajudicial statement given the police by the appellant and her in-court testimony, corroborative of the prior statement.
[5] The appellant claims the gun was placed into her pocketbook in order to prevent her husband from using it against her.
[6] Commonwealth v. Jones, supra, and Commonwealth v. Garrison, 443 Pa. 220, 279 A.2d 750 (1971), are distinguishable on this point. In Jones, the only version of the facts presented indicated the appellant's actions were not of an unintentional, accidental or involuntary nature so as to reduce the offense to involuntary manslaughter. In Garrison, the appellant's testimony sought to establish self-defense and, in no way, indicated the elements of involuntary manslaughter were present.
[1] Commonwealth v. Soudani, 398 Pa. 546, 547 n. 1, 159 A.2d 687, 688 n. 1 (per curiam), cert. denied, 364 U.S. 886, 81 S.Ct. 177, 5 L.Ed.2d 107 (1960); Commonwealth v. Parker, 146 Pa. 343, 344, 23 A. 323 (1892) (per curiam); Hunter v. Commonwealth, 79 Pa. 503, 506 (1875) ("The general rule is well settled that upon an indictment charging a particular crime, the defendant may be convicted of a lesser offense included within it."); Dinkey v. Commonwealth, 17 Pa. 126, 129 (1851); Republica v. Roberts, 1 Yeates 6, 7, 1 L.Ed. 316 (Pa.1791); Commonwealth v. Nace, 222 Pa.Super. 329, 330, 295 A.2d 87, 88 (1972).
[2] But see Act of June 24, 1939, P.L. 872, § 1107 (formerly codified as 18 P.S. § 5107 (1963)) (repealed by Act of December 6, 1972, P.L. 1641, § 5):
"If, on the trial of any person charged with felony or misdemeanor, it shall appear to the jury upon the evidence, that the defendant did not complete the offense charged, but was guilty only of an attempt to commit the crime, he shall not by reason thereof be entitled to be acquitted, but the jury may return, as their verdict, that the defendant is not guilty of the felony or misdemeanor charged, but is guilty of an attempt to commit the same.
"Thereupon such person shall be liable to be punished in the same manner as if he had been convicted upon an indictment for attempting to commit the particular felony or misdemeanor charged in the indictment.
"No person so convicted shall be liable to be thereafter prosecuted of an attempt to commit the felony or misdemeanor for which he was so convicted."
See also Commonwealth v. White, 232 Pa.Super. 176, 180-182, 335 A.2d 436, 438 (1975).
[3] But cf. Commonwealth ex rel. Moszczynski v. Ashe, 343 Pa. 102, 106, 21 A.2d 920, 922 (1941) (quoting a legal encyclopedia, apparently with approval).
[4] Model Penal Code § 1.08(4), commentary at 42 (Tent.Draft. No. 5, 1956).
[5] See Commonwealth v. Campana, 452 Pa. 233, 304 A.2d 432, vacated and remanded, 414 U.S. 808, 94 S.Ct. 73, 38 L.Ed.2d 44 (1973), on remand, 455 Pa. 622, 314 A.2d 854 cert. denied, 417 U. S. 969, 94 S.Ct. 3172, 41 L.Ed.2d 1114 (1974). See also Crimes Code, 18 Pa.C.S. § 110 (1973).
[6] This Court has not hesitated in the past to look for answers to questions not resolved by our law to the codifications prepared by the American Law Institute. See e.g., Gilbert v. Korvette, Inc., 457 Pa. 602, 611-12 & n. 25, 327 A.2d 94, 100 & n. 25 (1974), and cases cited therein; see also Commonwealth v. Dobrolenski, 460 Pa. 630, 636-637, 334 A.2d 268, 271-72 (1975) (adopting a section of the ABA Standards for Criminal Justice).
[7] If rationality is a requisite for a permissible verdict, it is clear that there are at least two exceptions. We have long held that, upon an indictment for murder, a jury may: 1) return a verdict of guilty of murder in the second degree, notwithstanding that it is irrational to return any verdict other than either acquittal or guilty of murder in the first degree, if the evidence would have been sufficient to support a conviction of murder in the first degree; or 2) return a verdict of guilty of voluntary manslaughter, notwithstanding that it is irrational to return any verdict other than either acquittal or guilty of some degree of murder, if the evidence would have been sufficient to support a conviction of some degree of murder.
Murder in the second degree: Commonwealth v. Joseph, 451 Pa. 440, 449-50, 304 A.2d 163, 168 (1973); Commonwealth v. Schwartz, 445 Pa. 515, 520, 285 A.2d 154, 157 (1971); Commonwealth v. Collins, 436 Pa. 114, 119-20, 259 A.2d 160, 162-63 (1969) (opinion announcing the judgment); Commonwealth v. Schmidt, 423 Pa. 432, 441, 224 A.2d 625, 629-30 (1966) (dictum); Commonwealth v. Meas, 415 Pa. 41, 44-46, 202 A.2d 74, 75-76 (1964) (alternate holding); Commonwealth v. Turner, 367 Pa. 403, 407-09, 80 A.2d 708, 711 (1951) (alternate holding); Commonwealth v. Gibbs, 366 Pa. 182, 189-92, 76 A.2d 608, 611 (1951); Commonwealth v. Ferko, 269 Pa. 39, 112 A. 38 (1920); Commonwealth v. Fellows, 212 Pa. 297, 61 A. 922 (1905); Lane v. Commonwealth, 59 Pa. 371 (1869); Rhodes v. Commonwealth, 48 Pa. 396 (1864). These cases base their holdings, in part, on language appearing in the Penal Code, Act of June 24, 1939, P.L. 872, § 701, as amended (formerly codified as 18 P.S. § 4701 (1963)) (repealed by Act of December 6, 1972, P.L. 1641, § 5) and its predecessors. This language does not appear in the new Crimes Code, Act of December 6, 1972. I need not decide the effect of repeal of the relevant language on this exception from the rationality requirement, if any.
Voluntary manslaughter: Commonwealth v. Hill, 444 Pa. 323, 326, 281 A.2d 859, 860 (1971); Commonwealth v. Hoffman, 439 Pa. 348, 356-357, 266 A.2d 726, 730-731 (1970); Commonwealth v. Harry, 437 Pa. 532, 535, 264 A.2d 402, 404 (1970) (per curiam); Commonwealth v. Dennis, 433 Pa. 525, 528-529, 252 A.2d 671, 672-73 (1969); Commonwealth v. Cooney, 431 Pa. 153, 244 A.2d 651, 653 (1968); Commonwealth v. Pavillard, 421 Pa. 571, 576-577, 220 A.2d 807, 810 (1966); Commonwealth v. Frazier, 420 Pa. 209, 211-213, 216 A.2d 337, 338 (1966); Commonwealth v. Frazier, 411 Pa. 195, 202, 191 A.2d 369, 373 (1963); Commonwealth v. Moore, 398 Pa. 198, 157 A.2d 65 (1959); Commonwealth v. Nelson, 396 Pa. 359, 363, 152 A.2d 913, 915 (1959); Commonwealth v. Steele, 362 Pa. 427, 430, 66 A.2d 825, 827 (1949); Commonwealth v. Arcuroso, 283 Pa. 84, 87, 128 A. 668, 670 (1925); Commonwealth v. Kellyon, 278 Pa. 59, 61-62, 122 A. 166, 167 (1923); Commonwealth v. McMurray, 198 Pa. 51, 60, 47 A. 952, 953 (1901).
With respect to the second-degree murder exception, the cases cited above uniformly hold that the trial court is obligated, at least upon the request of the defendant, to instruct the jury that a conviction of second-degree murder is a permissible verdict and to define the elements of that offense. However, the court is not required to inform the jury that it may return that verdict irrationally. Commonwealth v. Joseph, supra; Commonwealth v. Schwartz, supra.
With respect to voluntary manslaughter, an anomolous situation prevailed for many years. While holding that voluntary manslaughter was a permissible verdict even if irrational, the Court also long held that the trial court was not obligated to instruct the jury on that offense unless it would have been rational for it to return that verdict. E.g., Commonwealth v. Cannon, 453 Pa. 389, 396-97, 309 A.2d 384, 389 (1973); Commonwealth v. Davis, 449 Pa. 468, 297 A.2d 817 (1972), cert. denied, 414 U.S. 836, 94 S.Ct. 183, 38 L.Ed.2d 72 (1973) (affirmance by equally divided court); Commonwealth v. Kenney, 449 Pa. 562, 568-69, 297 A.2d 794, 797 (1972); Commonwealth v. Banks, 447 Pa. 356, 363, 285 A.2d 506, 509 (1972); Commonwealth v. Matthews, 446 Pa. 65, 74, 285 A.2d 510, 514 (1971); Commonwealth v. Dews, 429 Pa. 555, 558-59, 239 A.2d 382, 384-85 (1968); Commonwealth v. LaRue, 381 Pa. 113, 121-22, 112 A.2d 362, 366-367 (1955); Commonwealth v. Yeager, 329 Pa. 81, 85-87, 91, 196 A. 827, 830-31, 833 (1938); Commonwealth v. Gibson, 211 Pa. 546, 548, 60 A. 1086 (1908) (per curiam); Commonwealth v. Sutton, 205 Pa. 605, 608-09, 55 A. 781, 782 (1903); Commonwealth v. Eckerd, 174 Pa. 137, 148-49, 34 A. 305, 305-06 (1896); Commonwealth v. Buccieri, 153 Pa. 535, 553, 26 A. 228, 235 (1893).
This anomoly, so far as my research has revealed, was the only instance of a divergence of permissible verdict and obligatory instruction, i.e., a permissible verdict of which the trial court was not required to inform the jury. This unfortunate situation was terminated in Commonwealth v. Jones, 457 Pa. 563, 319 A.2d 142 (1974) (per curiam; equally divided court); see id. at 564, 319 A. 2d at 143 (opinion in support of affirmance); id. at 577, 319 A.2d at 150 (opinion in support of reversal). In Jones, six members of the Court agreed on at least this much: after the decision in Jones, a trial court is obligated, upon the request of the defendant, to instruct the jury that voluntary manslaughter is a permissible verdict whether or not there is a rational basis for that verdict. (The opinion in support of reversal opined that the instruction is constitutionally required, and thus disagreed with the restriction to purely prospective application.) See also United States ex rel. Matthews v. Johnson, 503 F.2d 339 (3d Cir. 1974) (en banc), cert. denied, 420 U.S. 952, 95 S.Ct. 1336, 43 L.Ed.2d 430 (1975).
(Note: the discussion of the degrees of murder in this footnote reflects prior law where murder was divided into two degrees. See Act of June 24, 1939, P.L. 872, § 701 (formerly codified as 18 P.S. § 4701 (1963)) (repealed by Act of December 6, 1972, P.L. 1482, § 5); Act of December 6, 1972, P.L. 1482, § 1 (formerly codified as 18 Pa.C.S. § 2502 (1973)) (amended by Act of March 26, 1974, P.L. ___, § 4). Murder is presently divided into three degrees. 18 Pa.C.S. § 2502 (Supp.1975).)
[8] Keeble, it seems to me, fails to distinguish the questions of what are permissible verdicts and when a trial court is obligated to instruct the jury on a permissible verdict. Confusion is avoided and analysis more sure-footed when the two questions are treated as separate steps in the inquiry.
The Model Penal Code, §§ 1.07(4) & (5), while treating the two questions separately, misplaces the element of rationality. It seems to state that a conviction for an included offense is always a permissible verdict, but the trial court is obligated to instruct the jury on that verdict only if there is a rational basis for it. This formulation leaves open the possibility of permissible verdicts that the court need not charge on because they would be irrational, a situation which, in my view, must certainly be avoided. Therefore, if rationality is to be a requirement at all, it must be a requisite for a permissible verdict rather than an obligatory charge.
[9] See part IV infra.
[10] But see Model Penal Code, supra note 4, commentary at 43.
[11] See Commonwealth v. Stewart, 461 Pa. 274, 336 A.2d 282 (1975).
[12] person is guilty of involuntary manslaughter when as a direct result of the doing of an unlawful act in a reckless or grossly negligent manner, or the doing of a lawful act in a reckless or grossly negligent manner, he causes the death of another person."
[13] person acts recklessly with respect to a material element of an offense when he consciously disregards a substantial and unjustifiable risk that the material element exists or will result from his conduct. The risk must be of such a nature and degree that, considering the nature and intent of the actor's conduct and the circumstances known to him, its disregard involves a gross deviation from the standard of conduct that a reasonable person would observe in the actor's situation."
[14] person acts negligently with respect to a material element of an offense when he should be aware of a substantial and unjustifiable risk that the material element exists or will result from his conduct. The risk must be of such a nature and degree that the actor's failure to perceive it, considering the nature and intent of his conduct and the circumstances known to him, involves a gross deviation from the standard of care that a reasonable person would observe in the actor's situation."
[15] The killing in this case preceded the effective date of the Crimes Code, and thus the provisions quoted in notes 14-16, supra, are not strictly applicable. See Act of December 6, 1972, P. L. 1482, §§ 2, 6.
However, in my view, the sections quoted are (with one possible exception) an accurate and precise formulation of the law of involuntary manslaughter as developed in our cases. See Commonwealth v. Jones, 452 Pa. 569, 578-79, 308 A.2d 598, 604 (1973); Commonwealth v. Busler, 445 Pa. 359, 284 A.2d 783 (1971); Commonwealth v. Feinberg, 433 Pa. 558, 566, 253 A.2d 636, 640-41 (1969); id. at 574, 253 A.2d at 644 (concurring opinion of Roberts, J.); Commonwealth v. Comber, 374 Pa. 570, 581, 97 A.2d 343, 348 (1953); Commonwealth v. Aurick, 342 Pa. 282, 285-90, 19 A.2d 920, 922-24 (1941); Commonwealth v. Flax, 331 Pa. 145, 156, 200 A. 632, 637 (1938) (dictum); Commonwealth v. Mayberry, 290 Pa. 195, 198, 138 A. 686, 687-88 (1927); Commonwealth v. LaPorta, 218 Pa.Super. 1, 5-6, 272 A.2d 516, 519 (1970).
The one possible exception is that some of our cases may be read to say that one is guilty of involuntary manslaughter if death results from the "doing [of] some unlawful act not amounting to a felony nor naturally tending to cause death or serious bodily harm" without regard to the manner in which the act was performed. Commonwealth v. Mayberry, supra; but cf. Commonwealth v. Busler, supra, 445 Pa. at 361, 284 A.2d at 784. Section 2504(a), however, requires that, for an unlawful act causing death to form the basis of a conviction of involuntary manslaughter, the act must have been performed "in a reckless or grossly negligent manner. . . ." Note 14 supra.
If section 2504(a) changed the law of involuntary manslaughter to that extent, it does not affect my reliance on the Crime Code's formulation in this case because, if appellant is guilty of involuntary manslaughter, it is, as the opinion announcing the judgment recognizes, because of the "doing of a lawful act in a reckless or grossly negligent manner." See ante, at 857.
[16] Model Penal Code § 1.07(4)(c).
[17] See Commonwealth v. Jackson, 450 Pa. 417, 419 n. 2, 299 A.2d 209, 210 n. 2 (1973); Commonwealth v. Crosby, 444 Pa. 17, 23, 279 A.2d 73, 77 (1971) (opinion announcing the judgment); Commonwealth v. Edwards, 431 Pa. 44, 52, 244 A.2d 683, 687 (1968); Commonwealth v. Soudani, 398 Pa. 546, 547 n. 1, 159 A.2d 687, 688 n. 1 (per curiam) (dictum), cert. denied, 364 U.S. 886, 81 S.Ct. 177, 5 L.Ed.2d 107 (1960); Commonwealth v. Comber, 374 Pa. 570, 573-74, 97 A.2d 343, 344 (1953) (dictum); Commonwealth v. Hardy, 347 Pa. 551, 554, 32 A.2d 767, 768 (1943); Commonwealth v. Mayberry, 290 Pa. 195, 199, 138 A. 686, 688 (1927); Commonwealth v. Weinberg, 276 Pa. 255, 257-58, 120 A. 406, 407 (1923); Commonwealth v. Micuso, 273 Pa. 474, 477, 117 A. 211, 212 (1922) (alternate ground); Commonwealth v. Nace, 222 Pa.Super. 329, 331, 295 A.2d 87, 88 (1972) (dictum).
[18] See Commonwealth v. Jones, 452 Pa. 569, 578, 308 A.2d 598, 604 (1973) (implying that involuntary manslaughter is a permissible verdict on a murder indictment if rational); Commonwealth v. Robinson, 452 Pa. 316, 326, 305 A.2d 354, 359 (1973) (same); Commonwealth v. Flax, 331 Pa. 145, 156-57, 200 A. 632, 638 (1938) (same) (semble; dictum); Commonwealth v. Micuso, 273 Pa. 474, 477, 117 A. 211, 212 (1922) (same) (alternate ground).
[*] It is to be further noted that in Commonwealth v. Campana, 452 Pa. 233, 304 A.2d 432 (1973), vacated and remanded, 414 U.S. 808, 94 S.Ct. 73, 38 L.Ed.2d 44 (1973), on remand, 455 Pa. 622, 314 A. 2d 854 (1974), cert. denied, 417 U.S. 969, 94 S.Ct. 3172, 41 L.Ed.2d 1140 (1974), this Court held that a prosecutor must bring "in a single proceeding, all known charges against a defendant arising from a `single criminal episode.'" 452 Pa. at 253, 304 A.2d at 441 (emphasis added). While not controlling in the instant case (Campana was decided several months after Carol Moore's trial), consolidation would also be required under that decision. Moreover, in a case covered by the new Crimes Code, the same result would ensue. 18 Pa.C.S. § 110(1)(ii) (1973).
[1] The complicated nature of the homicide formulation in the New Crimes Code, 18 C.P.S.A. § 2501 et seq. (1973), highlights this problem.
[2] It is also difficult to understand how we can make it mandatory to join an indictment where the charge may only, in limited circumstances, be a lesser included offense and yet deny this right where the charge is a necessarily constituent offense. Commonwealth v. Comber, supra.
[3] "If the opinion is penetratingly read it is not difficult to perceive that what it `really' says, is that it believes that a conviction of involuntary manslaughter would be more just than a conviction of murder. It is a truism that `sympathy' cases frequently make bad law or create harmful precedents".
Commonwealth v. Thomas, supra 403 Pa. at 557, 170 A.2d at 113 (Dissenting Opinion, Bell, C.J.)
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33 So.3d 45 (2010)
A.D.M.
v.
DEPARTMENT OF CHILDREN AND FAMILIES.
Nos. 4D09-4688, 4D09-4689.
District Court of Appeal of Florida, Fourth District.
April 28, 2010.
Decision Without Published Opinion Affirmed.
|
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143 F.3d 497
81 A.F.T.R.2d 98-1748, 98-1 USTC P 50,375,98 Cal. Daily Op. Serv. 3179,98 Daily Journal D.A.R. 4393
James O. HENDERSON, Petitioner-Appellant,v.COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.
No. 96-70164.
United States Court of Appeals,Ninth Circuit.
Argued and Submitted Aug. 7, 1997.Decided April 29, 1998.
John Hinton, Boise, Idaho, for the petitioner-appellant.
Gilbert S. Rothenberg, Assistant Attorney General, Washington, DC, and Tamara S. Schottenstein, Assistant Attorney General, Washington, DC, for the respondent-appellee.
Appeal from a Decision of the United States Tax Court. Tax Ct. No. 12692-94.
Before: D. W. NELSON, WIGGINS, and KOZINSKI, Circuit Judges.
Opinion by Judge WIGGINS; Dissent by Judge KOZINSKI.
WIGGINS, Circuit Judge:
1
We must decide whether a taxpayer may claim Boise, Idaho as his "tax home" for the 1990 tax year even though virtually all of his work that year was for a traveling ice show. James Henderson claimed deductions under Internal Revenue Code § 162(a)(2) for living expenses incurred "away from home" while on the tours. The Commissioner disallowed the deductions, concluding that Henderson had no legal tax home for purposes of § 162(a)(2) because he lacked the requisite business reasons for living in Boise between ice show tours. As a result of the disallowance, Henderson had a deficiency in his 1990 federal income tax of $1,791. The Tax Court upheld the Commissioner's decision. We have jurisdiction under 26 U.S.C. § 7482(a), and we affirm.
2
Henderson's parents lived in Boise, where they had reared him. Even after graduating from the University of Idaho in 1989, he maintained many personal contacts with Boise. For instance, he received mail at his parents' residence, lived there between work assignments, and kept many belongings and his dog there. He also was registered to vote in Idaho, paid Idaho state income tax, maintained an Idaho driver's license, and maintained his bank account in Idaho. During 1990, he spent about two to three months in Boise, staying at his parents' residence. While he was there, he performed a few minor jobs to maintain or improve the family residence.
3
In 1990, Henderson worked as a stage hand for Walt Disney's World of Ice, a traveling show. His employers' corporate offices were in Vienna, Virginia. Henderson was employed on a tour by tour basis. He testified that at the end of one tour, he would be contacted about participating in the next one. Following the completion of a tour, he returned to his parents' home in Boise. He worked on three different Disney tours that year. The first lasted from January 1 to May 13, the second from July to November, and the third from December 5 to December 31. He traveled on tour to thirteen states and Japan. The tours stopped in each city for a few days or weeks. While traveling, he received $30 per day to cover expenses.
4
Henderson claims that he looked periodically for employment in Boise between the tours, but the evidence showed that he worked as a stage hand only for a single ZZ Top concert. The Tax Court found that while he returned to Boise in his "idle time," his source of employment during the tax year had no connection to Boise. On appeal, Henderson contends that his 1990 tax home was Boise, primarily based on his extensive personal contacts there.
5
Internal Revenue Code § 162(a)(2) allows a deduction for all ordinary and necessary "traveling expenses ... while away from home in the pursuit of a trade or business." 26 U.S.C. § 162(a)(2). This section embodies "a fundamental principle of taxation"-that the cost of producing income is deductible from a person's taxable income. Hantzis v. Commissioner, 638 F.2d 248, 249 (1st Cir.1981). To qualify for the "away from home" deduction, the Supreme Court has held that the taxpayer's expenses must (1) be reasonable and necessary expenses, (2) be incurred while away from home, and (3) be incurred while in the pursuit of a trade or business. Commissioner v. Flowers, 326 U.S. 465, 470, 66 S.Ct. 250, 252-53, 90 L.Ed. 203 (1946).
6
The first and third criteria are not at issue. The subject of this appeal is whether the expenses Henderson claims as deductions were incurred while "away from home." If Henderson establishes that his home was Boise, his reasonable traveling expenses on the Disney tours are deductible. The Tax Court concluded that Boise was not Henderson's tax home because his choice to live there had nothing to do with the needs of his work; thus, the Tax Court held that Henderson could not claim the deduction for traveling expenses incurred while away from Boise. It held that Henderson had no tax home because he continuously traveled for work. We agree.
7
Henderson builds a strong case that he treated Boise as his home in the usual sense of the word, but "for purposes of [section] 162, 'home' does not have its usual and ordinary meaning." Putnam v. United States, 32 F.3d 911, 917 (5th Cir.1994) ("In fact, 'home'-in the usual case-means 'work.' "). We have held that the term "home" means "the taxpayer's abode at his or her principal place of employment." Folkman v. United States, 615 F.2d 493, 495 (9th Cir.1980); see also Coombs v. Commissioner, 608 F.2d 1269, 1275 (9th Cir.1979) (stating that "tax home" is generally, but not always, exact locale of principal place of employment). If a taxpayer has no regular or principal place of business, he may be able to claim his place of abode as his tax home. See Holdreith v. Commissioner, 57 T.C.M. (CCH) 1383, 1989 WL 97400 (1989).
8
A taxpayer may have no tax home, however, if he continuously travels and thus does not duplicate substantial, continuous living expenses for a permanent home maintained for some business reason. James v. United States, 308 F.2d 204, 207 (9th Cir.1962); Cerny v. Commissioner, 62 T.C.M. (CCH) 1061, 1062 (1991), aff'd by unpublished opinion, 2 F.3d 1156 (9th Cir.1993).1 Clearly, if a taxpayer has no "home" for tax purposes, then he cannot deduct under § 162(a)(2) for expenses incurred "away from home." This is for good reason. In James, we examined the statutory precursor to the present version of § 162(a) and explained that the deduction was designed to mitigate the burden on taxpayers who travel on business. 308 F.2d at 207. The burden exists "only when the taxpayer has a 'home,' the maintenance of which involves substantial continuing expenses which will be duplicated by the expenditures which the taxpayer must make when required to travel elsewhere for business purposes." Id.; see also Andrews, 931 F.2d at 135 (emphasizing that the deduction's purpose was to mitigate duplicative expenses); Hantzis, 638 F.2d at 253. Thus, a taxpayer only has a tax home-and can claim a deduction for being away from that home-when it appears that he or she incurs substantial, continuous living expenses at a permanent place of residence. James, 308 F.2d at 207-08.
9
Revenue Ruling 73-539, 1973-2 C.B. 37, outlines three factors to consider in determining whether a taxpayer has a tax home or is an itinerant.2 Essentially, they are (i) the business connection to the locale of the claimed home; (ii) the duplicative nature of the taxpayer's living expenses while traveling and at the claimed home; and (iii) personal attachments to the claimed home. While subjective intent can be considered in determining whether he has a tax home, objective financial criteria are usually more significant. Barone, 85 T.C. at 465.
10
The location of Henderson's tax home is a determination of fact reviewed for clear error. Frank v. United States, 577 F.2d 93, 97 (9th Cir.1978). Similarly, we believe the determination of whether a taxpayer has a tax home or is an itinerant depends on the facts of each case and should be reviewed for clear error. Considering these factors, the Tax Court did not clearly err when it concluded that Henderson is an itinerant taxpayer.
11
First, Henderson had virtually no business reason for his tax home to be in any location-he constantly traveled in 1990 as part of his work with the World on Ice tours. His personal choice to return to Boise was not dictated by business reasons. Except for brief intervals, he was employed for the tours. He worked only one night in Boise. While he testified he looked for other work in Boise between tours, he also testified that at the end of each tour he would have a contract talk with the company manager about the next tour. The Tax Court determined that Henderson merely returned to Boise during his "idle time" between tours. While his reasons for returning may be entirely understandable, we cannot say the Tax Court clearly erred in concluding they were personal, not business, reasons. His minimal employment efforts in Boise do not change this analysis.
12
The importance of the business reason for residing in a certain place is illustrated in Hantzis. In that case, the First Circuit disallowed the "away from home" deduction for a law student from Boston who took a summer job in New York. The court held that she did not have a tax home in Boston, even though her husband lived in Boston and she lived there during the school year, because she had no business reason to maintain a home in Boston during the summer while she worked in New York. The court explained why the deduction did not apply in those circumstances:
13
Only a taxpayer who lives one place, works another and has business ties to both is in the ambiguous situation that the temporary employment doctrine is designed to resolve.... [A] taxpayer who pursues temporary employment away from the location of his usual residence, but has no business connection with that location, is not "away from home" for purposes of section 162(a)(2).
14
Hantzis, 638 F.2d at 255.
15
Second, Henderson did not have substantial, continuing living expenses in Boise that were duplicated by his expenses on the road. The evidence showed that he lived with his parents when he stayed in Boise. The Tax Court found that he paid no rent and had no ownership interest in his parents' home. His financial contributions in Boise were limited. He contributed some labor to maintenance and improvement of the home while he was there, and he paid about $500 for supplies. While his parents may have expended money that benefited Henderson as well-i.e., maintaining a mortgage, paying utilities, and so forth-this is not a substantial living expense incurred by Henderson. Further, any minor expense he may have incurred while living with his parents was not continuing during the periods while he traveled on tour. That is, there is no evidence he had any expenses in Boise while he traveled on the Disney tours.
16
The fact that Henderson may have incurred higher expenses while traveling with Disney than he would have if he had obtained a full-time job in Boise is not dispositive. The issue presented is whether his claimed expenses were incurred while he was away from his tax home. To assume that Henderson is entitled to the deduction simply because Henderson incurred higher expenses than he would have had he worked in Boise ignores the important question of whether Boise was his tax home at all. Only if Boise is his tax home can Henderson claim deductions for expenses incurred while away from Boise.
17
Because these two factors weigh against finding that he had a tax home in Boise, the Tax Court did not clearly err when it discounted his evidence on the third factor: personal attachment to Boise. Henderson cites cases, e.g. Horton v. Commissioner, 86 T.C. 589, 593, 1986 WL 22108 (1986), which hold that a taxpayer may treat a personal residence as his tax home even if it is not the same as the place of his temporary employment with a certain employer. This principle does not help Henderson, however, because he cannot establish any (non-de minimis ) business connection to Boise to justify the position that it was his permanent tax home. See Hantzis, 638 F.2d at 254-55. Thus, travel away from Boise while on tour with Disney was not travel "away from home" as that term is understood for income tax purposes.
18
AFFIRMED.
19
KOZINSKI, Circuit Judge, dissenting.
20
The Tax Code provides that travel expenses are fully deductible, so long as they are incurred while "away from home" in the pursuit of business. I.R.C. § 162(a)(2). Henderson fits comfortably within this language. He lived with his parents in Boise, which made their home his home under any reasonable definition of the term. And he incurred travel expenses in pursuing a job that moved from town to town. Given the itinerant nature of his employment, Henderson could not have avoided these travel expenses by moving his home closer to work. He is thus easily distinguished from the taxpayer in Hantzis v. Commissioner, 638 F.2d 248 (1st Cir.1981), who could have avoided the travel expenses altogether by moving closer to her work. Hantzis 's extra-statutory requirement that a home is not a "tax home" unless dictated by business necessity has no application when the job itself has no fixed location.
21
The other reasons offered by the IRS for denying Henderson his traveling expense deduction are not supported by the Code or the regulations, nor do they make any sense. That Henderson's parents did not charge him room and board is of no consequence. Neither the Code nor common experience requires that a taxpayer pay for his home, else all minors and many in-laws would be deemed homeless. "Home" is not a term of art; it is a common English word meaning a permanent place where a person lives, keeps his belongings, receives his mail, houses his dog--just as Henderson did. Indeed, a grown son living in his parents' house is said to be living "at home." Whether he compensates his parents in cash, by doing chores or through filial affection is none of the Commissioner's business. What matters is that, by going on the road in pursuit of his job, Henderson had to pay for food and lodging that he would not have had to buy had he stayed home.
22
James v. United States, 308 F.2d 204 (9th Cir.1962), cuts against the government. Despite some imprecise language in the opinion, the facts there were very different. George James was on the road 365 days a year and had no permanent home; he spent his entire life traveling from hotel to motel. Wherever a weekend or holiday found him, he would stay there until it came time to go to his next location. James thus was, indeed, a tax turtle--someone with no fixed residence. Henderson is very different: He had a home in Boise, a place where he returned when he wasn't working. He was no more a tax turtle than anyone else who travels a lot for business. That his home happens to be owned by his parents makes it no less his home.1
23
Fast planes and automobiles have turned us into a nation of itinerants. The tradition of families living together in one city, even under one roof, is sadly disappearing. Yet there is virtue in keeping families together, in parents who welcome their adult children under their roof. Leave it to the IRS to turn a family reunion into a taxable event. Henderson is being hit with extra taxes because his lifestyle doesn't conform to the IRS's idea of normalcy. But why should the government get extra money because the Hendersons chose to let their son live at home? Had they given him $600 a month to rent an apartment next door, Henderson surely would have gotten the travel deduction. I see no reason why the Henderson family ought to be penalized because the parents gave their son a gift of housing rather than cash--or why the Commissioner should be the beneficiary of this parental generosity. If Congress had said it must be so, I would bow to its wisdom. But Congress said no such thing and I do not feel bound to give the same deference to the Commissioner's litigating position.2 Given the dearth of authority or common sense supporting the Commissioner's view, we are free to encourage happy family arrangements like those between Henderson and his mom and dad. In the name of family values, I respectfully dissent.
1
Although perhaps surprising at first blush, this rule is well-established. See Andrews v. Commissioner, 931 F.2d 132, 137 (1st Cir.1991) ("The Commissioner and courts have adhered consistently to this policy that living expenses duplicated as a result of business necessity are deductible, whereas those duplicated as a result of personal choice are not."); Deamer v. Commissioner, 752 F.2d 337, 339 (8th Cir.1985); Rosenspan v. United States, 438 F.2d 905, 912 (2d Cir.1971); Barone v. Commissioner, 85 T.C. 462, 465, 1985 WL 15392 (1985), aff'd by unpublished decision, 807 F.2d 177 (9th Cir.1986)
2
While Revenue Rulings do not control our decision, they are instructive because they represent the interpretations of the agency responsible for enforcing the tax laws. See Idaho Ambucare Ctr., Inc. v. United States, 57 F.3d 752, 756 (9th Cir.1995)
1
James 's emphasis on duplication of expenses is unnecessary to the holding, and mistaken to boot. Duplication is one possible method of sifting out business expenses from personal ones, but not the method chosen by Congress. Section 162(a)(2) requires only that the taxpayer be away from home in pursuit of business; meals, for example, are fully deductible even though the expense is not duplicated back at home
2
Revenue Ruling 73-529 is entitled to some deference--exactly how much is unclear--but certainly far less than the statutesque deference we give regulations. See Estate of McLendon v. Commissioner, 135 F.3d 1017, 1023-24 (5th Cir.1998); First Chicago NBD Corp. v. Commissioner, 135 F.3d 457, 459-60 (7th Cir.1998). Because the Service cannot easily recant a position after a ruling is published, it has reason to be overly stingy in drafting. Institutional pressures may also drive the Service to stretch the language of the Code; it's easier for the Executive Branch to have the Service milk more revenue out of the existing Code than to persuade Congress to amend it. Moreover, unlike most regulations, Revenue Rulings are not subject to the notice-and-comment procedures of the Administrative Procedure Act. Ruling 73-529 sweeps too broadly to be persuasive here: Under the Ruling, Henderson would get no deduction even if he spent ten months a year at home instead of ten weeks, simply because he paid no rent
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17‐2261
Shepherd v. Comm’r Annucci
United States Court of Appeals
for the Second Circuit
AUGUST TERM 2018
No. 17‐2261
EON SHEPHERD,
Plaintiff‐Appellant,
v.
COMMISSIONER ANNUCCI, SUPERINTENDENT ROCK, SUPERINTENDENT SHEAHAN,
SUPERINTENDENT LA VALLEY, SUPERINTENDENT PEREZ, SUPERINTENDENT SMITH,
DSS MALLY, DSP ANDREWS, DSP LIRA, DSP JONES, CAPTAIN CALEVERIE, CHERYL
MORRIS, DR. KOENIGSMANN, DR. LEE, DR. TRABOUT, DR. HAIMES, NA BAINSTER,
NA JANSEN, NP SALOTI, DSP JONES, CORRECTIONAL OFFICER MANDIGO, RN TUNG
NGYER, DEACON BASHAW, CORRECTIONAL OFFICER HUSCH, SERGEANT TUCKER,
SERGEANT WILKIE, CORRECTIONAL OFFICER EKWEREKWU, DIRECTOR OF
CLASSIFICATION AND MOVEMENT FOR THE NEW YORK STATE DEPARTMENT OF
CORRECTIONS AND COMMUNITY SUPERVISION, DEPARTMENT OF CORRECTIONS AND
COMMUNITY SUPERVISION,
Defendants‐Appellees,
JANE/JOHN DOES, ET AL.,
Defendants.
On Appeal from the United States District Court
for the Western District of New York
SUBMITTED: DECEMBER 3, 2018
DECIDED: APRIL 15, 2019
Before: CABRANES, DRONEY, SULLIVAN, Circuit Judges.
Appeal from a judgment of the United States District Court for the Western
District of New York (Larimer, J.), dismissing Plaintiff‐Appellant’s complaint with
prejudice as a sanction for misrepresenting his litigation history. Plaintiff‐
Appellant argues that the district court abused its discretion by dismissing his
complaint as a sanction, and that the district court erred by considering materials
outside the complaint when evaluating whether he qualified for the “imminent‐
danger” exception to the Prison Litigation Reform Act’s “three‐strikes” rule. We
hold that a district court may conduct a limited evidentiary inquiry into a litigant’s
assertion of imminent danger. Because we find no abuse of discretion in the
district court’s dismissal of this case as a sanction, we affirm.
Michael Starr and Sheila (Qian) Shen,
Holland & Knight LLP, New York, NY for
Plaintiff‐Appellant.
Andrea Oser, Deputy Solicitor General, and
Kate H. Nepveu, Assistant Solicitor
General, for Barbara Underwood, Attorney
General, State of New York, for Defendants‐
Appellees.
RICHARD J. SULLIVAN, Circuit Judge:
Plaintiff‐Appellant Eon Shepherd appeals from the judgment of the United
States District Court for the Western District of New York (Larimer, J.), which
2
dismissed his pro se complaint with prejudice as a sanction for misrepresenting his
litigation history. The district court also determined that Shepherd was barred
from proceeding in forma pauperis because he had accumulated three strikes under
28 U.S.C. § 1915(g), and was not in “imminent danger of serious physical injury,”
id. On appeal, Shepherd argues that the district court abused its discretion by
dismissing his complaint as a sanction. Shepherd also argues that the district court
erred by considering materials outside the complaint when evaluating whether he
qualified for the imminent‐danger exception to the three‐strikes bar. We conclude
that district courts may conduct limited inquiries into whether a litigant’s fear of
imminent danger under Section 1915(g) is plausible. Moreover, because we find
no abuse of discretion in the district court’s dismissal of this case as a sanction, we
AFFIRM.
I. BACKGROUND
Plaintiff‐Appellant Eon Shepherd is an inmate at Five Points Correctional
Facility (“Five Points”) in Romulus, New York. On June 1, 2015, Shepherd filed
suit in the Southern District of New York against the New York Department of
Corrections and Community Supervision, 28 named defendants, and various John
and Jane Does (collectively, “Defendants”), setting forth 33 causes of actions under
various federal statutes. Shepherd also filed a request to proceed in forma pauperis
3
(IFP) – a status which allows a prisoner‐litigant to file a lawsuit without pre‐paying
the full filing fees. See 28 U.S.C. § 1915(a)(1). However, under what is known as
the “three‐strikes” provision, an incarcerated prisoner is prohibited from
proceeding IFP if he has commenced three prior lawsuits that have been dismissed
outright. See id. § 1915(g). In his complaint, Shepherd stated that he had filed
seven1 lawsuits previously, but asserted that none qualified as strikes.
As to his conditions of confinement, Shepherd alleged the staff at Five Points
failed to accommodate his disability – severe back pain and spasms that prevented
him from walking long distances – by refusing to house him close to the clinic, the
package room and the visiting area, although he conceded that the staff did place
him close to the law library, religious services, and the gym. Shepherd also
claimed that the medical staff refused to provide him treatment for his back pain
and other maladies. Finally, Shepherd asserted that he was placed on medical
“keeplock” (i.e., bed rest) against his wishes, and that this caused him further pain
and muscle atrophy.
The Southern District of New York (Preska, J.) initially granted Shepherd’s
application to proceed IFP. However, one month later, Judge Preska sua sponte
1 While Shepherd’s original complaint listed eight “previous” lawsuits, it indicated that one of
the listed lawsuits was still pending.
4
issued an order to show cause why Shepherd’s IFP status should not be revoked,
citing three prior IFP cases that Shepherd had brought, all of which qualified as
“strikes” and would ordinarily bar Shepherd from proceeding IFP. See 28 U.S.C.
§ 1915(g). Shepherd responded, arguing that his IFP status should not be revoked
because he was in “imminent danger of serious physical injury,” which is an
exception to the three‐strikes rule. See id. The case was subsequently transferred
to the Western District of New York (Arcara, J.),2 which found that Shepherd could
proceed IFP, as the complaint and his response to the order to show cause
provisionally demonstrated that he was in imminent danger of serious physical
injury.
After being served, Defendants moved to dismiss the complaint pursuant to
the “inherent authority of the Court,” arguing that Shepherd materially misled the
court by deliberately omitting from the complaint his prior “strikes.” Defendants
noted that Shepherd had previously filed ten federal lawsuits – not seven, as he
indicated in his complaint – and that the only cases he omitted were all cases that
would qualify as “strikes.” Defendants also moved to revoke Shepherd’s IFP
status, arguing that he was not in “imminent danger of serious physical injury.”
2 The case was ultimately transferred to Judge Larimer in the Western District of New York.
5
In support of their motion, Defendants attached sworn declarations from
Shepherd’s doctors, Dr. Michelle Belgard and Dr. Marshall Trabout, and
Shepherd’s medical records. The district court directed Shepherd to respond to
Defendants’ motion. Shepherd responded, attaching two sworn affirmations and
one sworn declaration, as well as a variety of exhibits.
On July 6, 2017, the district court dismissed Shepherd’s complaint. First, the
court reasoned that Shepherd had deliberately misled the court by failing to
disclose his three prior “strikes,” especially in light of Shepherd’s familiarity with
the court system and long litigation history. Second, as to his IFP status, the court
held that Shepherd’s fear of “imminent danger of serious physical injury” was
“without foundation,” and that there was “no indication” that he was in such
danger. Dist. Ct. Doc. No. 40 at 6. Although the order did not expressly state
whether dismissal was with prejudice, the court entered judgment for Defendants.
Shepherd timely filed a notice of appeal.
II. LEGAL STANDARD
We review a district court’s denial of IFP status pursuant to 28 U.S.C. § 1915
de novo. See Polanco v. Hopkins, 510 F.3d 152, 155 (2d Cir. 2007). We review a
sanction of dismissal with prejudice for abuse of discretion. Koehl v. Bernstein, 740
F.3d 860, 862 (2d Cir. 2014).
6
III. DISCUSSION
Shepherd principally advances two arguments. First, as to the revocation
of his IFP status, Shepherd argues that the district court erred by considering
materials beyond the complaint in determining whether he qualified for the
imminent‐danger exception to the three‐strikes rule. Second, Shepherd avers that
the district court failed to give him adequate notice that it was contemplating
dismissing his complaint with prejudice and that the district court failed to
consider lesser sanctions than dismissal. Although we need not strictly reach the
IFP issue if the sanction of dismissal was proper – as the imminent‐danger
exception under Section 1915(g) bears only on whether Shepherd would be
required to pre‐pay the filing fee – we nonetheless provide clarity to the district
courts as to the appropriateness of holding an evidentiary hearing when a
provisional determination of imminent danger is challenged.
A. Imminent‐Danger Exception
Adopted in 1996, the Prison Litigation Reform Act (PLRA) made a series of
amendments to 28 U.S.C. § 1915, which is the statute that governs IFP status for
incarcerated individuals. See Leonard v. Lacy, 88 F.3d 181, 182–83 (2d Cir. 1996).
Under the PLRA, prisoner‐litigants granted IFP status “must pay the full amount
of the filing fee to the extent they can afford to, as measured by the funds in their
7
prison accounts.” Harris v. City of New York, 607 F.3d 18, 21 (2d Cir. 2010). “The
fees are paid through periodic debits from the plaintiff’s prison account, which are
forwarded to the court by the custodial agency.” Id. Even if a prisoner has no
money available, he can still proceed IFP. See 28 U.S.C. § 1915(b)(4).
However, the PLRA restricts the availability of IFP status for frequent filers
through the “three‐strikes” rule.3 28 U.S.C. § 1915(g). This rule prohibits prisoner‐
litigants from bringing further actions or appeals IFP if they have brought at least
three prior actions that were dismissed because they were “frivolous, malicious,
or fail[ed] to state a claim upon which relief [could] be granted.” Id.; see also Harris,
607 F.3d at 20.4
But the three‐strikes rule itself contains an exception: prisoners are
permitted to file a lawsuit IFP – even if they have accumulated three strikes – if
3
The three‐strikes rule provides:
In no event shall a prisoner bring a civil action or appeal a judgment
in a civil action or proceeding under this section if the prisoner has,
on 3 or more prior occasions, while incarcerated or detained in any
facility, brought an action or appeal in a court of the United States
that was dismissed on the grounds that it is frivolous, malicious, or
fails to state a claim upon which relief may be granted, unless the
prisoner is under imminent danger of serious physical injury.
28 U.S.C. § 1915(g).
4 Of course, a prisoner‐litigant barred from filing IFP by the three‐strikes rule is not prevented
from filing a lawsuit – he must simply pre‐pay the filing fee.
8
they are “under imminent danger of serious physical injury.” Id. This “imminent‐
danger” exception is a “safety valve” that exists to “prevent impending harms.”
Malik v. McGinnis, 293 F.3d 559, 563 (2d Cir. 2002).
Shepherd argues that the district court erred by considering materials
outside the complaint when evaluating whether Shepherd qualified for the
imminent‐danger exception to the three‐strikes rule.
1. Consideration of Facts Outside the Complaint
We have not yet stated whether a district court may consider materials
outside the complaint (such as sworn submissions) or hold a hearing when a
defendant challenges a prisoner’s claim of imminent danger. In Chavis v. Chappius,
we noted that courts “should not make an overly detailed inquiry into whether [a
prisoner’s] allegations [of imminent danger of serious physical injury] qualify for
the exception,” because the three‐strikes rule “concerns only a threshold
procedural question.” 618 F.3d 162, 169 (2d Cir. 2010) (internal quotations
omitted). Nonetheless, in Chavis, we affirmed that denying leave to proceed IFP
is warranted “if the complainant’s ‘claims of imminent danger are conclusory or
ridiculous.’” Id. at 170 (quoting Ciarpaglini v. Saini, 352 F.3d 328, 331 (7th Cir.
2003)).
9
All of our sister circuits to have confronted this question have held that
district courts – upon challenge by a defendant – may conduct a narrow
evidentiary inquiry into the prisoner‐litigant’s fear of imminent danger. See Smith
v. Wang, 452 F. App’x 292, 293 (4th Cir. 2011); Taylor v. Watkins, 623 F.3d 483, 485–
86 (7th Cir. 2010); Fuller v. Myers, 123 F. App’x 365, 368 (10th Cir. 2005); Gibbs v.
Roman, 116 F.3d 83, 86–87 (3d Cir. 1997), overruled on other grounds by Abdul‐Akbar
v. McKelvie, 239 F.3d 307, 312 (3d Cir. 2001) (en banc). Additionally, district courts
throughout this circuit have uniformly held that courts may consider materials
outside of the complaint in conducting this limited inquiry. See, e.g., Abreu v.
Brown, 317 F. Supp. 3d 702, 706–07 (W.D.N.Y. 2018); Tafari v. Baker, No. 6:16‐cv‐
06472, 2017 WL 1406274, at *2 (W.D.N.Y. Apr. 20, 2017); Abreu v. Lira, No. 9:12‐cv‐
1385, 2014 WL 4966911, at *7 (N.D.N.Y. Sept. 30, 2014) (adopting report and
recommendation).
We agree that courts may reexamine a provisional determination that a
complainant is in “imminent danger of serious physical injury” when, after being
served with the complaint, a defendant challenges that determination. Congress
adopted the PLRA with the “principal purpose” of “deterring frivolous prisoner
lawsuits and appeals.” Nicholas v. Tucker, 114 F.3d 17, 19 (2d Cir. 1997). Allowing
10
courts to conduct a limited probe into the plausibility of a prisoner‐litigant’s claim
of imminent danger accords with the PLRA’s aims. Moreover, courts have long
permitted evidentiary submissions at the pleading stage in a variety of different
circumstances. For instance, in resolving a motion to dismiss for want of subject
matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1), “a district court
. . . may refer to evidence outside the pleadings.” Makarova v. United States, 201
F.3d 110, 113 (2d Cir. 2000). So too for a motion to dismiss for lack of personal
jurisdiction pursuant to Rule 12(b)(2), where district courts have “considerable
procedural leeway,” which includes “permit[ting] discovery in aid of the motion”
or conducting “an evidentiary hearing on the merits of the motion.” Dorchester
Fin. Sec., Inc. v. Banco BRJ, S.A., 722 F.3d 81, 84 (2d Cir. 2013) (quoting Marine
Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir. 1981)). This is also true for
a motion to dismiss under Rule 12(b)(2)’s neighbor, Rule 12(b)(3), in which we
allow parties to submit affidavits to demonstrate lack of venue. See, e.g., Phillips v.
Audio Active Ltd., 494 F.3d 378, 384 (2d Cir. 2007).
Affording district courts the latitude to conduct a limited inquiry is crucial
when a defendant challenges a provisional determination that a prisoner is in
imminent danger of serious physical injury. Holding otherwise would allow
11
prisoner‐litigants to continue proceeding IFP where an assertion of imminent
danger is made – even if defendants had “incontrovertible proof that rebutted
those allegations.” Taylor, 623 F.3d at 485. Such a rigid application would erode
the efficacy of the PLRA’s three‐strikes rule, by allowing “easy evasion” of the rule
if the litigant uttered the right words. Id. It would also contradict this Court’s
acknowledgment that district courts need not accept “conclusory” or “ridiculous”
assertions of imminent danger. Chavis, 618 F.3d at 170. And it would stand in
marked contrast to our approach with other gate‐shuttering mechanisms, such as
motions to dismiss for lack of subject‐matter jurisdiction, personal jurisdiction,
and venue.
The Ninth Circuit’s decision in Andrews v. Cervantes, 493 F.3d 1047 (9th Cir.
2007), is not to the contrary. Like Chavis, Andrews reaffirmed that, while courts are
permitted to probe the plausibility of an allegation of imminent danger, they
should not “make an overly detailed inquiry into whether the allegations qualify
for the exception.” 493 F.3d at 1055. Nothing in Andrews purports to say, however,
that defendants cannot mount a limited factual challenge to a district court’s
provisional determination that a prisoner satisfies the imminent‐danger exception,
12
or that district courts’ hands are tied in resolving this conflict. Andrews only
cautions – and we agree – that any such inquiry should be narrow.
Of course, a narrow evidentiary challenge to a provisional determination
that a prisoner is in imminent danger of serious physical injury should not
metastasize into “a full‐scale merits review.” Taylor, 623 F.3d at 486. Because any
such inquiry concerns only a “threshold procedural question,” Chavis, 618 F.3d at
169, resolving a challenge to the imminent‐danger exception “does no more than
permit the complainant to proceed with his or her cause of action [with or] without
pre–payment of the filing fee in full,” Gibbs, 116 F.3d at 87 n.7.
2. Application to Shepherd’s Case
The district court did not err in its conclusion that Shepherd’s claim of
imminent danger was “without foundation.” Dist. Ct. Doc. No. 40 at 6. Shepherd
asserted below that he was in imminent danger of serious physical injury because
(1) he “suffered numerous falls when made to walk long distances,” (2) doctors at
the prison “refuse[d] to issue pain medication that [would] offer [him] relief,” and
(3) his muscles atrophied as a result of being “confined to his cell 24 hours a day.”
Dist Ct. Doc. No. 7.
13
Dr. Belgard explained in a sworn declaration that, while Shepherd does
have chronic back pain, he has both wheelchair access and ambulatory aids – such
as a cane – to “ensure he does not fall when walking.” Dist. Ct. Doc. No. 27‐1 ¶ 12.
Dr. Trabout similarly noted that Shepherd has access to a variety of walking aids.
According to Dr. Trabout, Shepherd simply “did not want to use his ambulatory
aids or wheelchair,” as he alleged that they “caused him discomfort.” Dist. Ct.
Doc. No. 27‐2 ¶ 10.
As to Shepherd’s allegation that doctors refused to prescribe him pain
medication, Dr. Belgard stated that she did, in fact, prescribe Shepherd pain
medication, “although he . . . frequently refused to take [it].” Dist. Ct. Doc. No. 27‐
1 ¶ 13. Indeed, Shepherd was prescribed Motrin, which he refused to take on the
basis that it caused stomach irritation. Then, when Dr. Belgard prescribed Prilosec
(which would address any stomach irritation), Shepherd still refused to take his
medication. Shepherd even rebuffed Dr. Belgard’s third attempt to prescribe a
medication, Mobic, which would have “significantly reduced if not eliminated
entirely” his stomach irritation. Id. ¶¶ 16, 17.
Finally, Shepherd’s contention that his muscles atrophied as a result of 24‐
hour confinement was shown to be “ridiculous.” Chavis, 618 F.3d at 170. As Dr.
14
Trabout explained, Shepherd was kept in “medical keeplock” – medically ordered
bed‐rest – at his own request. Specifically, Shepherd said that his knee and back
pain “made it difficult to walk to the messhall for food.” Dist. Ct. Doc. No. 27‐2
¶ 9. He then complained that his cell was too far from the law library. But as Dr.
Trabout noted, Shepherd did not suffer and was not at “imminent” risk of
suffering from muscular atrophy for at least two reasons. First, he had access to
medical services at any time, and would have been treated promptly for any signs
of muscular degeneration. Second, Shepherd had an hour of recreation time each
day, during which he could perform any number of exercises – including walking
– to prevent or counter muscular atrophy.
In response to the declarations of his doctors and the medical records cited
therein, Shepherd offers a hodgepodge of contradictory excuses that further
undermine his contention that he was in imminent danger of serious physical
injury. For example, he contends that he wouldn’t use his wheelchair because it
exacerbated his lower back pain, and that using a cane didn’t stop him from
falling. Shepherd also insists he never requested medical keeplock – which might
help avoid this pain – while at the same time acknowledging that he requested a
placement where he would not have to “walk long distances.” Additionally,
15
Shepherd essentially concedes that he refused to take the medications prescribed
to him, but only states that these medicines were, based on past experience,
“ineffective.” Shepherd also states that he was in such extreme pain – he couldn’t
“move out of bed at times” – that he was unable to exercise or otherwise stave off
atrophy.
The evidentiary submissions showed Shepherd’s explanation for why he
was in imminent danger to be both circular and completely conclusory – indeed,
as the district court concluded, “without foundation.” The district court did not
therefore err in revoking his IFP status.
B. Notice of Possible Sanctions
Shepherd also argues that the district court erred procedurally by not giving
him adequate notice that his complaint could be dismissed – and judgment
entered for Defendants – as a sanction for furnishing false statements to the court
by deliberately omitting “strike” cases from his complaint.
“A court has the inherent power to supervise and control its own
proceedings and to sanction counsel or a litigant for bad‐faith conduct.” Sussman
v. Bank of Israel, 56 F.3d 450, 459 (2d Cir. 1995). “At a minimum,” sanctions should
16
not be imposed without adequate notice and an opportunity to be heard. Schlaifer
Nance & Co. v. Estate of Warhol, 194 F.3d 323, 334 (2d Cir. 1999).
Shepherd unquestionably received adequate notice, and had an opportunity
to be heard, before the district court dismissed his action. Defendants asked the
district court to dismiss Shepherd’s complaint as a sanction for misleading the
court as to his litigation history. The district court – in ordering Shepherd to
respond – stated bluntly that “the claims plaintiff asserts in his complaint may be
dismissed without a trial if he does not respond to this motion.” Dist. Ct. Doc. No.
30. Indeed, Shepherd’s response demonstrates that he was well aware of the
possible repercussions. Not only did his response attempt to articulate why the
omission of the three prior strikes was not misleading, but it also endeavored to
explain why the court should not dismiss his complaint. Especially given
Shepherd’s long familiarity with the court system, it is clear that Shepherd had
adequate notice of the possibility of dismissal with prejudice.
C. Consideration of Lesser Sanctions
Finally, Shepherd contends that the district court improperly failed to
consider a lesser sanction than dismissal. We have repeatedly stated that dismissal
is a harsh sanction that requires a district court to at least consider lesser remedial
17
measures before imposing that sanction. See, e.g., Selletti v. Carey, 173 F.3d 104, 111
(2d Cir. 1999) (explaining that before a district court dismisses an action for failure
to comply with a court order it must consider, among other things, “a sanction less
drastic than dismissal”); Dodson v. Runyon, 86 F.3d 37, 39 (2d Cir. 1996) (“The
remedy [of dismissal] is pungent, rarely used, and conclusive. A district judge
should employ it only when he is sure of the impotence of lesser sanctions.”
(internal quotation marks omitted)). Failure to consider a lesser sanction than
dismissal is generally an abuse of discretion. See In re Harris, 464 F.3d 263, 272 (2d
Cir. 2006) (“Dismissing the [case] without determining whether a lesser sanction
would have been appropriate . . . was an abuse of discretion.”).
However, where, as here, a litigant acted in bad faith, has significant
experience with the workings of the court, and has an extensive history with the
IFP statute, we have affirmed dismissal as a sanction even when the district court
did not explicitly consider a lesser sanction. See Vann v. Commʹr of N.Y. City Depʹt
of Correction, 496 F. App’x 113, 116 (2d Cir. 2012) (affirming dismissal with
prejudice where prisoner‐litigant with “litigation experience and extensive
familiarity of the [IFP] process” made false statements and concealed income on
IFP application); see also S. New England Tel. Co. v. Glob NAPs Inc., 624 F.3d 123, 148
18
(2d Cir. 2010) (stating that “district courts are not required to exhaust possible
lesser sanctions before imposing dismissal or default if such a sanction is
appropriate on the overall record”). In the present circumstances, we are satisfied
that the district court’s sanction of dismissal was not an abuse of discretion.
IV. CONCLUSION
For the foregoing reasons, the judgment of the district court is AFFIRMED.
19
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Opinions of the United
1999 Decisions States Court of Appeals
for the Third Circuit
1-6-1999
Bell Atl PA v. Communications
Precedential or Non-Precedential:
Docket 98-1231
Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_1999
Recommended Citation
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Filed January 6, 1999
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
NO. 98-1231
BELL ATLANTIC - PENNSYLVANIA, INC.
v.
COMMUNICATIONS WORKERS OF AMERICA,
AFL-CIO, LOCAL 13000; COMMUNICATIONS
WORKERS OF AMERICA, AFL-CIO, DISTRICT 13,
Appellants
On Appeal From the United States District Court
For the Eastern District of Pennsylvania
(D.C. Civ. No. 97-cv-04179)
District Judge: Honorable Clarence C. Newcomer
Argued: November 16, 1998
Before: BECKER, Chief Judge, GREENBERG, Circuit Judges
and McLAUGHLIN, District Judge.*
(Filed January 6, 1999)
PAULA R. MARKOWITZ, ESQUIRE
(ARGUED)
Markowitz & Richman
121 South Broad Street
Suite 1100
Philadelphia, PA 19107
Counsel for Appellants
_________________________________________________________________
*Honorable Sean J. McLaughlin, United States District Judge for the
Western District of Pennsylvania sitting by designation.
LAWRENCE S. COBURN, ESQUIRE
(ARGUED)
Pepper, Hamilton & Scheetz
18th & Arch Streets
3000 Two Logan Square
Philadelphia, PA 19103-2799
Counsel for Appellees
OPINION OF THE COURT
BECKER, Chief Judge.
This labor arbitration appeal presents the question
whether the District Court erred in finding that it was the
role of the court--and not an arbitrator--to determine
whether the underlying dispute between the parties was
subject to one particular arbitration procedure rather than
another. We conclude that this issue--which of two
arbitration procedures in a collective bargaining agreement
applies to a particular labor dispute--is one of "procedural
arbitrability," and therefore should be decided by an
arbitrator and not a federal court. We therefore reverse.
I. Facts and Procedural History
The parties to this dispute are Bell Atlantic-Pennsylvania
("Bell") and a local and regional body of the
Communications Workers of America (collectively "CWA").
Bell and the CWA, or their predecessors, have been parties
to a collective bargaining agreement ("CBA") for more than
half a century. The version of the CBA that is material to
this appeal was modified and extended on August 6, 1995,
with an effective ending date of August 8, 1998. Under the
CBA, the parties have agreed to arbitrate most disputes
under the contractual arbitration procedure (the "regular
arbitration" procedure). However, under the CBA, some
disputes that might arise are explicitly excluded from
arbitration, while others may only be arbitrated under a
special arbitration procedure (the "expedited arbitration"
procedure). Finally, some disputes may be arbitrated under
either arbitration procedure.
2
The dispute underlying the present appeal, which is not
before us (and was not before the District Court), revolves
around Bell's reorganization of certain of its administrative
units. Following negotiations between the parties pursuant
to the CBA's administrative-reorganization provisions, Bell
and the CWA reached an impasse, and Bell implemented its
proposed reorganization. The Union claimed that this
reorganization violated the CBA in a number of respects,
including alleged violations of the CBA provisions governing
employee transfers, involuntary assignments, overtime, and
definition of employee duties. It requested that these
disputes be submitted to the regular arbitration procedure
of the CBA. Bell refused, arguing that the administrative-
reorganization provision of the CBA authorized the Union to
use only the expedited arbitration procedure to resolve
such disputes.
Bell then sued in the District Court, alleging that the
Union had violated the CBA by insisting on submitting the
above dispute to regular arbitration, and seeking a
declaratory judgment that such disputes could only be
submitted to the expedited arbitration procedure.1 Upon
cross-motions for summary judgment, the District Court
granted Bell's motion, holding that (1) the determination
whether the parties' dispute must be submitted to the
expedited arbitration procedure and not the regular
procedure was a matter of "substantive arbitrability," and
therefore for the court to decide; (2) Bell was not required
to arbitrate its allegation that the Union had violated the
CBA; and (3) the CBA provision in question required the
Union to submit the underlying dispute to the expedited
arbitration procedure and not the regular arbitration
procedure. The Union filed a timely notice of appeal. We
have jurisdiction pursuant to 28 U.S.C. S 1291.2
_________________________________________________________________
1. The District Court had jurisdiction pursuant to section 301 of the
Labor-Management Relations Act, 29 U.S.C. S 185, the Declaratory
Judgment Act, 28 U.S.C. SS 2201-2202, and 28 U.S.C. S 1331.
2. While we review for clear error a district court's factual
determination
that a contractual dispute is arbitrable, see Lukens Steel Co. v. United
Steelworkers, 989 F.2d 668, 672 (3d Cir. 1993), we exercise plenary
review over the legal question presented here, i.e., whether a contractual
dispute is one of substantive or procedural arbitrability.
3
II. The Collective Bargaining Agreement's Arbi tration
Provisions
The CBA at issue here includes a number of provisions
governing contract disputes between the parties. The
grievance-and-arbitration provision of the CBA provides:
If, at any time, a controversy should arise between the
Union and the Company regarding the true intent and
meaning of any provision of this Agreement or
regarding any claim that either party has not
performed a commitment of this Agreement, the
controversy may be presented for review in accordance
with the [grievance provisions] of this Article. If the
controversy is processed under these Sections and is
not satisfactorily settled, the Union or the Company, by
written notice specifying the Section of the Agreement
alleged to be violated, may submit the question under
dispute to arbitration in accordance with the provisions
of Article 13 of this Agreement.
CBA S 10.07. Article 13, in turn, provides that "[t]here shall
be arbitrated only the matters specifically made subject to
arbitration by the provisions of this Agreement," id. S 13.01,
and that "[t]he procedure for arbitration is set forth in
Exhibit B," id. S 13.02.
Exhibit B provides, in relevant part:
The procedure to be followed in instituting and
conducting the arbitration of any matter subject to
arbitration under the provisions of Article 13, shall be
as follows, except that the tripartite board may be
eliminated and an agency other than the American
Arbitration Association may be substituted upon
mutual agreement of the parties.
Id. S B1.01. The remaining parts of Article B1 contain the
details of the procedure "to be followed in instituting and
conducting the arbitration of any matter subject to
arbitration under the provisions of Article 13," including the
appointment of an arbitrator by each side and the selection
of an impartial third arbitrator.
Exhibit B also contains a procedure for "expedited
arbitration":
4
In lieu of the procedures specified in Section B1 of this
Agreement, any grievance involving the suspension of
an individual employee, [with certain exceptions not
here relevant,] shall be submitted to arbitration under
the expedited arbitration procedure hereinafter
provided within fifteen (15) calendar days after the
filing of a request for arbitration. In all other grievances
involving disciplinary action which are specifically
subject to arbitration under Article 11 of this
Agreement, both parties may, within fifteen (15)
calendar days after the filing of the request for
arbitration, elect to use the expedited arbitration
procedure hereinafter provided. The election shall be in
writing and, when signed by authorized representatives
of the parties, shall be irrevocable. If no such election
is made within the foregoing time period, the
arbitration procedure in Section B1 shall be followed.
Id. S B2.01.
The underlying dispute in this case is governed, inter
alia, by Article 39 of the CBA. Under Article 39, Bell must
follow certain procedures when a reorganization is
contemplated, including consulting with the Union. If these
consultations fail to result in a reorganization agreement,
Bell may implement its own plan. Under the provision at
the heart of this case, "[i]f management implements
procedures without the agreement of the Union, the Union
may submit to expedited arbitration the question whether
the procedures implemented are in compliance with the
standards and requirements listed in [section] 39.05." Id.
S 39.07.
III. Substantive and Procedural Arbitrability
The ultimate question presented by Bell's initial
complaint is whether Article 39 requires the Union to use
the expedited arbitration procedure to resolve the disputes
surrounding Bell's administrative reorganization. However,
a threshold question--one that is dispositive of this appeal
--is interposed, for when faced with a dispute involving
labor arbitration, a federal court must first determine
whether resolution of the disagreement is for the court or
5
for an arbitrator to undertake. In this case, Bell argued and
the District Court found that the issue of which arbitration
procedure applied to the parties' reorganization dispute was
a matter properly for the court, and not an arbitrator, to
decide. For the reasons that follow, we disagree.
A.
Disputes surrounding arbitration have often been divided
into the categories of "substantive arbitrability" and
"procedural arbitrability." Substantive arbitrability refers to
the question whether a particular dispute is subject to the
parties' contractual arbitration provision(s). Absent a clear
expression to the contrary in the parties' contract,
substantive arbitrability determinations are to be made by
a court and not an arbitrator. Our national labor policy
evinces a strong preference for peaceful, self-resolution of
labor-management disputes, as explained in the famous
"Steelworkers' Trilogy."3 However, if an arbitrator were to
decide the substantive arbitrability issue, a party objecting
to having the underlying dispute submitted to arbitration
on the ground that it did not consent to do so would
already have its alleged intent (to not submit the dispute to
arbitration) ignored. See Gateway Coal Co. v. United Mine
Workers, 414 U.S. 368, 374 (1974) ("The law compels a
party to submit his grievance to arbitration only if he has
contracted to do so."); John Wiley & Sons, Inc. v. Livingston,
376 U.S. 543, 547 (1964) ("The duty to arbitrate being of
contractual origin, a compulsory submission to arbitration
cannot precede judicial determination that the collective
bargaining agreement does in fact create such a duty.").
Therefore, parties may be sent to arbitration only after the
court so directing them is satisfied that this was their
intent and that both parties consented to do so in their
contractual agreement.
Once this threshold determination has been made by the
court, i.e., once the court has discerned the parties' intent
_________________________________________________________________
3. See United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S.
593, 598-99 (1960); United Steelworkers v. Warrior & Gulf Navigation
Co., 363 U.S. 574, 577-78 (1960); United Steelworkers v. American Mfg.
Co., 363 U.S. 564, 566-67 (1960).
6
to submit their underlying dispute to arbitration, any
further matters surrounding the dispute are to be
submitted to the arbitration procedure. See Chauffeurs,
Teamsters & Helpers, Local Union No. 765 v. Stroehmann
Bros. Co., 625 F.2d 1092, 1093-94 (3d Cir. 1980) ("The
court's role . . . [is] to determine whether the underlying
subject matter of the grievance was arbitrable. Once that
determination has been made the entire dispute must be
resolved by the arbitrator." (citation omitted)). These other
matters are labeled, perhaps underinclusively, procedural
arbitrability issues, and are resolved as part of the
arbitration procedure to which the parties have committed
themselves, as a number of cases, arising in somewhat
different scenarios but nonetheless instructive here,
demonstrate. We set them forth in the margin.4
In its leading procedural arbitrability case, the Supreme
_________________________________________________________________
4. See, e.g., International Union of Operating Eng'rs, Local 150 v. Flair
Builders, Inc., 406 U.S. 487, 491-92 (1972) ("[O]nce a court finds that,
as
here, the parties are subject to an agreement to arbitrate, and that
agreement extends to `any difference' between them, then a claim that
particular grievances are barred by laches is an arbitrable question
under the agreement."); Independent Ass'n of Continental Pilots v.
Continental Airlines, 155 F.3d 685, 696 (3d Cir. 1998) (holding that
"determination of the parameters and scope" of an arbitrator's award,
which involved "an analysis of the interplay" between various contract
provisions, was a matter for the arbitrator to decide, not the courts);
Whittle v. Local 641, Int'l Bhd. of Teamsters, 56 F.3d 487, 490 n.2 (3d
Cir. 1995) ("Timeliness is a procedural issue, and in an arbitration
proceeding, procedural issues are for the arbitrator to decide."); Troy
Chem. Corp. v. Teamsters Union Local No. 408, 37 F.3d 123, 127-28 (3d
Cir. 1994) ("Once the court decided that the discharges were subject to
arbitration, it should have held that the dispute was arbitrable and that
matters relating to compliance with the grievance procedure or a waiver
were matters for the arbitrator."); Stroehmann Bros. Co., 625 F.2d at
1093 ("[T]he significance of a default in literal compliance with a
contractual procedural requirement calls for a determination of the
intention of the parties to the contract. Such a determination . . .,
under
the governing case law, [is a matter] for the arbitrator."); Controlled
Sanitation Corp. v. District 128, Int'l Ass'n of Machinists & Aerospace
Workers, 524 F.2d 1324, 1331 (3d Cir. 1975) (holding that company's
contention that union repudiated the agreement to arbitrate a particular
dispute was a matter for the arbitrator, and not the court, to decide).
7
Court explained why procedural arbitrability issues are best
left to the arbitrator:
Doubt whether grievance procedures or some part of
them apply to a particular dispute, whether such
procedures have been followed or excused, or whether
the unexcused failure to follow them avoids the duty to
arbitrate cannot ordinarily be answered without
consideration of the merits of the dispute which is
presented for arbitration.
John Wiley & Sons, 376 U.S. at 557. Therefore, procedural
issues are to be resolved by the arbitrator, once (and only
after) the court determines that the underlying dispute is
one the parties have agreed to submit to the arbitrator.
B.
The District Court in this case believed that the threshold
question before it was "whether the subject matter of the
instant dispute is covered and/or excluded from regular
arbitration under Sections 10.07 and B1." Bell Atl.-Pa., Inc.
v. Communications Workers, Local 13000, No. CIV.A.97-
4179, 1998 WL 84017, at *9 (E.D. Pa. Feb. 26, 1998)
(emphasis added). Put another way, the court found that
"the issue presented is whether the Company agreed to
arbitrate Article 39 disputes through Section B1 regular
arbitration--a question of substantive arbitrability." Id.
(emphasis added). However, the actual threshold question
before us--and given our resolution of this issue, the only
one before us--is whether Bell agreed to arbitrate Article 39
disputes. This is both a question of substantive arbitrability
and, given Bell's concession that the reorganization
disputes are subject to some arbitration procedure, a
foregone conclusion. Bell does not contend that it did not
agree to arbitrate disputes arising from its administrative
reorganizations. Rather, it disagrees with the Union's claim
that these disputes are subject to a particular arbitration
procedure. This disagreement, however, is not one of
substantive arbitrability.
The fundamental error of the District Court was its
expansion of the basic substantive arbitrability question
8
("whether or not the company was bound to arbitrate"5) into
a much broader inquiry, one that falls outside of the
substantive arbitrability domain ("whether the particular
arbitration clause covers the subject matter of the
particular dispute between the parties"6). Such an
expansion is unwarranted. It is inconsistent with this
Court's and the Supreme Court's precedents in this area
and it is not dictated by the policy concerns behind the
substantive arbitrability doctrine.7
_________________________________________________________________
5. AT&T Techs., Inc. v. Communications Workers, 475 U.S. 643, 649
(1986) (internal quotations omitted).
6. Bell Atl.-Pa., 1998 WL 84017, at *10.
7. In support of its position, Bell cites two cases ostensibly involving
multiple arbitration procedures like those that exist here. The first,
Adams v. Gould, Inc., 687 F.2d 27 (3d Cir. 1982), is completely
inapposite. The "sole question" in that interlocutory appeal was "whether
certain individual employees . . . [were] bound by the results of an
arbitration between their employer and their union and thereby barred
from bringing their complaint in federal court." Id. at 28. In Adams, the
union had arbitrated a grievance under one of two arbitration clauses,
and an arbitration award was eventually issued. Individual employees
then sought to litigate in federal court the same dispute that was the
subject of the arbitration. We reversed the district court's denial of
summary judgment on behalf of the employer, concluding that the
employees were bound by the results of the arbitration. See id. at 33.
One of the grounds that the individual employees urged in support of
their argument that they were not bound by the arbitration award was
that the parties (i.e., the employer and union) had used the incorrect
arbitration procedure. See id. at 32. There is no indication that the
parties actually discussed this issue during the arbitration or that the
arbitrator adjudicated the issue. Rather, it arose only in the collateral
context of our examining the employees' claim that they were not bound
by the already-issued arbitration award. Not surprisingly, given that no
alternative forum existed for resolving this issue, we reached (and
rejected) it. We were in no way faced squarely with the issue presented
here: must the court, rather than an arbitrator, determine which is the
appropriate arbitration procedure when the parties agree that their
dispute will be arbitrated at some future date?
The other case relied on by Bell comes from the Seventh Circuit. See
Torrington Co. v. Local Union 590, Int'l Union of Auto. Workers, 803 F.2d
927 (7th Cir. 1986). Although the court in Torrington decided which of
two arbitration provisions applied to the parties' underlying dispute,
9
The District Court invoked these policy concerns when it
found that submitting to an arbitrator the issue of which
arbitration provision applies to the parties' dispute "would
possibly deter other Unions and employe[rs] from entering
into such agreements to arbitrate." Bell Atl.-Pa., 1998 WL
84017, at *10 n.8. The District Court's concern is simply
misplaced: Bell is bound to arbitrate the underlying dispute
no matter what the court decides. Allowing an arbitrator to
determine which procedure will be used does not force Bell
to arbitrate any disputes that it believed it was withholding
from arbitration--unlike the situation when the basic
determination of whether or not an underlying dispute is
arbitrable is sent to an arbitrator.
What Bell asks us to do here is to greatly expand the
class of substantive arbitrability cases. In its view, the
disagreement between the parties--whether a dispute will
be resolved through arbitration procedure A or arbitration
procedure B--is no different from the traditional
substantive arbitrability question--whether a dispute will
be resolved through an arbitration procedure or through
some other means, such as litigation, a strike, or a lockout.
This argument, however, has no logical limits. If the present
case involves substantive arbitrability, why not also a case
asking whether a dispute is to be resolved through an
arbitration procedure or an unexhausted grievance
procedure? See John Wiley & Sons, 376 U.S. at 556-57
(employer's argument that union must first submit dispute
to grievance procedure was a matter for the arbitrator to
decide).
_________________________________________________________________
neither party argued that this was an issue for the arbitrator and not for
the court to decide. Further, the union originally sought to litigate in
court the underlying dispute, arguing that none of the arbitration
provisions applied, presenting the court with a clear substantive
arbitrability problem. Finally, the court found that the arbitration
procedure that the union (subsequently) argued should be used clearly
and expressly did not apply to the underlying dispute. See id. at 931.
This distinguishes that provision from the regular arbitration provision
in the present case. Cf. PaineWebber, Inc. v. Hartmann, 921 F.2d 507,
513 (3d Cir. 1990) (holding that the "plain language" of the parties'
contract, which limited the cases "eligible for submission to
arbitration,"
rendered the underlying dispute not arbitrable).
10
We find the present case functionally indistinguishable
from (and controlled by) those cases in which the parties
agree that an underlying dispute is arbitrable, but disagree
about the effect of laches, waiver, exhaustion of pre-
arbitration steps, limitations periods, or other "procedural"
issues. See supra note 4. Bell and its Union agree that
disputes over the reorganization of administrative groups
may be resolved through arbitration; they simply disagree
on the procedures to be followed. The Union has asked that
both of these issues--the reorganization dispute and the
procedure to be followed--be submitted to an arbitrator,
and we hold that this is the proper course for the parties.
See John Wiley & Sons, 376 U.S. at 558 (holding that the
court must send the parties to arbitration in "cases in
which arbitrability of the subject matter is unquestioned
but a dispute arises over the procedures to be followed").8
The District Court's judgment will be reversed and this
case remanded for further proceedings consistent with this
opinion.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
_________________________________________________________________
8. Because we hold that the District Court erred in finding that the
question of which arbitration procedure should be followed was an issue
for the court, and not an arbitrator, to decide, we do not reach the other
issues decided by the District Court. This includes its holding that Bell
was not required to submit its allegation that the Union violated the CBA
to an arbitrator, and the District Court's ultimate determination
regarding the meaning of section 39.07 of the CBA. The first of these
issues is mooted by our resolution of this appeal, while the second issue,
as we have held above, is not for us (or the District Court), but for the
arbitrator to decide.
11
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If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
MATTHEW MIGDALEWICZ, UNPUBLISHED
January 28, 2020
Plaintiff-Appellant,
v No. 343981
Oakland Circuit Court
PERRY D. HOLLIE, LC No. 2017-157163-NI
Defendant-Appellee,
and
FORD MOTOR COMPANY and THE
AMERICAN ROAD INSURANCE COMPANY,
Defendants.
Before: RIORDAN, P.J., and SAWYER and JANSEN, JJ.
PER CURIAM.
In this third-party negligence case under the no-fault act, MCL 500.3101 et seq., plaintiff
Matthew Migdalewicz appeals by right the trial court’s order of judgment entering judgment
against plaintiff and in favor of defendant Perry D. Hollie based on the jury’s verdict that
defendant’s negligence was not a proximate cause of plaintiff’s injuries. We affirm.
I. BACKGROUND
This lawsuit stems from a vehicular accident that occurred when defendant, who was
driving an SUV, made a left-hand turn in front of plaintiff’s bicycle. Plaintiff was traveling
around 25 miles per hour, was not wearing a helmet, and was looking down at the speedometer
when the collision occurred. Plaintiff never saw defendant’s vehicle despite having around 150
feet of unobstructed view before impact. Defendant did not dispute factual causation, but did
dispute proximate cause. The matter proceeded to a jury trial on the issue of whether defendant
was a proximate cause of plaintiff’s injuries and the issue of damages.
-1-
At trial, plaintiff’s theory of the case was that defendant was not looking where he was
going when he made the left-hand turn and that, when he did so he cut the corner, veered into
plaintiff’s lane, and, traveling between five and eight miles per hour, cut right in front of
plaintiff. As a result, plaintiff collided with the front of defendant’s vehicle and sustained
serious injuries, including a fractured femur, a cervical fracture, a skull fracture and traumatic
brain injury, a facial laceration, and memory loss.
Plaintiff presented the testimony of a medical expert, Dr. Ronald Horowitz, who testified
that use of a helmet would not have prevented plaintiff’s injuries. Dr. Horowitz explained that
when plaintiff did a “face plant” on the vehicle’s windshield, the force of impact caused injuries
to plaintiff’s face, the fracture to plaintiff’s cervical spine, and the traumatic brain injury and,
further, that a helmet would not have prevented the broken leg. Dr. Horowitz also indicated that
a bike helmet would not have prevented plaintiff’s parietal skull fracture1 because the fracture
was located in an area not protected by a bike helmet.
Plaintiff’s accident reconstructionist, Daniel Lee, Ph.D., testified that in his expert
opinion, based on the angles of the marks left on defendant’s vehicle and the distance the bike
propelled backward upon impact, defendant’s car was moving between four and eight miles per
hour at the point of impact. Dr. Lee further indicated that plaintiff, having 150 feet between
when he turned onto Wicklow Road and when he reached the intersection of Wicklow Road and
Wicklow Court, would have been traveling around 29 feet per second and would have had
approximately five seconds to stop before impacting defendant’s car. According to Dr. Lee,
average reaction time is 1.5 seconds and plaintiff would not have had sufficient time to react to
defendant’s sudden turn in front of him.
Comparatively, defendant’s theory was that he had stopped his car before making the turn
and that plaintiff, who was looking at his speedometer, slammed into defendant’s stopped
vehicle. According to defendant, plaintiff was comparatively negligent in causing the accident
and his injuries because he was looking down at his speedometer, was not wearing a helmet, and
had ingested marijuana the night before the accident. Defendant testified that on the day of the
accident, he was returning home to his residence on Wicklow Court and was traveling about 10
miles per hour on Wicklow Road. Defendant testified that as he approached Wicklow Court he
did not see any oncoming traffic on Wicklow Road; he then put on his turn signal and rolled to a
stop for two to three seconds, with the front end of his car across center line, to look for children
in the cul-de-sac. According to defendant, he was still looking left into the cul-de-sac when his
car was suddenly struck by plaintiff.
Defendant also offered the testimony of Jennifer Yaek, Ph.D., who was qualified to
testify as an expert in accident reconstruction, biomechanics, and injury causation. Her
testimony was that plaintiff got his concussion and head injury when he came off the vehicle and
hit his head on the ground, not when his head impacted the glass. Dr. Yaek indicated that use of
1
The parietal bone of the skull is behind the frontal bone, and is essentially the back and upper
sides of the head.
-2-
a helmet would have reduced the risk of the parietal skull fracture and concussion when plaintiff
landed on the ground. She disagreed with Dr. Lee’s opinion that the vehicle was moving at
impact, concluding that the physical evidence did not support that conclusion and, instead, that
the bicycle basically “bounced” back upon impacting the vehicle. She further testified that
plaintiff would have had a clear view of the intersection from approximately 150 feet back,
giving him four to five seconds to see defendant’s vehicle and avoid the collision.
At the close of the proofs, plaintiff moved for a directed verdict, arguing that defendant
had admitted he was a proximate cause of plaintiff’s injury. The trial court denied the motion on
the basis that conflicting evidence existed on the issue of proximate cause. Ultimately, the jury
returned a verdict finding that defendant’s negligence was not the proximate cause of plaintiff’s
injuries. Plaintiff moved for judgment notwithstanding the verdict (JNOV) or a new trial, but the
trial court denied the motion and, subsequently, entered an order of judgment for defendant.
Plaintiff appeals.
II. MOTIONS FOR DIRECTED VERDICT, JNOV, AND NEW TRIAL
Plaintiff first argues that the denial of his motion for directed verdict and motion for
JNOV and/or new trial was improper because defendant admitted that he was a cause of the
accident. We disagree.
Michigan’s no-fault act generally abolished tort liability in motor vehicle accident cases.
Kreiner v Fischer, 471 Mich 109, 115; 683 NW2d 611 (2004). However, under MCL 500.3135,
“[a] person remains subject to tort liability for noneconomic loss caused by his or her ownership,
maintenance, or use of a motor vehicle only if the injured person has suffered death, serious
impairment of body function, or permanent serious disfigurement.” Known as a “third-party”
claim under the no-fault act, this section permits recovery of noneconomic losses, i.e., damages
for pain and suffering, against a third-party only if certain injury thresholds are met. Defendant
has admitted that plaintiff suffered a permanent serious disfigurement and, thus, defendant is
subject to plaintiff’s negligence claim for noneconomic losses.
To establish a common-law negligence claim, a plaintiff must prove: “(1) [t]he existence
of a legal duty by defendant toward plaintiff; [(2)] the breach of such duty; [(3)] the . . . causal
relation between the breach of such duty and an injury to the plaintiff[, i.e., causation]; and[; (4)]
the plaintiff must have suffered damages.” Lorencz v Ford Motor Co, 439 Mich 370, 375; 483
NW2d 844 (1992) (quotations omitted). Here, defendant has admitted that he owed a duty to
plaintiff, that he breached that duty, and that his negligence was a cause in fact of plaintiff’s
injuries. Defendant, however, disputed that his negligence was a proximate cause of plaintiff’s
injuries and the jury agreed, returning a defense verdict finding that plaintiff’s injuries were not a
proximate cause of defendant’s negligence.
The causation element of a negligence claim requires a plaintiff to prove both “cause in
fact and legal (or ‘proximate’) cause.” Craig v Oakwood Hosp, 471 Mich 67, 86; 684 NW2d
296 (2004). “The cause in fact element generally requires showing that ‘but for’ the defendant’s
actions, the plaintiff’s injury would not have occurred.” Id. at 86-87. A plaintiff must
adequately establish cause in fact in order for legal cause or ‘proximate cause’ to become a
relevant issue.” Skinner v Square D Co, 445 Mich 153, 163; 516 NW2d 475 (1994).
-3-
“On the other hand, legal cause or ‘proximate cause’ normally involves examining the
foreseeability of consequences, and whether a defendant should be held legally responsible for
such consequences.” Craig, 471 Mich at 86-87. “To establish legal cause, the plaintiff must
show that it was foreseeable that the defendant’s conduct may create a risk of harm to the victim,
and . . . [that] the result of that conduct and intervening causes were foreseeable.” Weymers v
Khera, 454 Mich 639, 648; 563 NW2d 647 (1997) (quotations and citation omitted). In other
words, “it must appear that the injury was the natural and probable consequence of the
negligence or wrongful act, and that it ought to have been foreseen in the light of the attending
circumstances.” Stoll v Laubengayer, 174 Mich 701, 705; 140 NW 532 (1913). Notably, there
can be more than one proximate cause. O’Neal v St John Hosp & Med Ctr, 487 Mich 485, 496-
497; 791 NW2d 853 (2010). When a number of factors contribute to produce an injury, one
actor’s negligence can still be a proximate cause if it was a substantial factor in bringing about
the injury. Brisboy v Fibreboard Corp, 429 Mich 540, 547; 418 NW2d 650 (1988).
A. MOTION FOR DIRECTED VERDICT
Plaintiff first argues that the denial of his motion for directed verdict was improper
because the trial court applied a “the” proximate cause standard and ample record evidence
supported that plaintiff’s injuries were the result of the accident that defendant admitted he
caused. A trial court’s decision on a motion for directed verdict is reviewed de novo. Krohn v
Home-Owners Ins Co, 490 Mich 145, 155; 802 NW2d 281 (2011). “In doing so, [this Court]
review[s] the evidence and all legitimate inferences in the light most favorable to the nonmoving
party.” Id. (quotations and footnote omitted). “A directed verdict is appropriately granted only
when no factual questions exist on which reasonable jurors could differ.” Aroma Wines &
Equip, Inc v Columbian Distribution Servs, 303 Mich App 441, 446; 844 NW2d 727 (2013)
(quotations and citation omitted). In asserting that the trial court’s denial of the directed verdict
was erroneous, plaintiff ignores the standard that the trial court was bound to apply and makes no
attempt to explain why factual issues on the issue of proximate cause did not exist, so as to
justify granting the motion in plaintiff’s favor.
Notwithstanding plaintiff’s failure, our review of the record shows that the trial court’s
denial of the motion for directed verdict was proper because factual issues existed on the issue of
proximate cause. Plaintiff, for example, presented evidence that defendant was traveling around
40 miles per hour down Wicklow Road, slowing to five or eight miles per hour at the time of the
turn, and was moving when the collision occurred. A reasonable inference from this testimony is
that defendant effectively ran into plaintiff because he was not looking for oncoming traffic.
Defendant on the other hand, presented testimony that he was stopped at the time of the accident,
that he had looked for oncoming traffic but did not see any, and that plaintiff had been looking
down and did not see defendant. An opposite inference can be drawn from this evidence—that
plaintiff was not looking where he was going and ran into defendant. Additionally, the parties
presented conflicting expert testimonies as to the cause of plaintiff’s injuries, with plaintiff’s
expert indicating that a helmet would not have prevented the injuries, while defendant’s expert
offered opposing testimony.
Having reviewed the trial record, questions of fact plainly existed as to proximate cause
that precluded a directed verdict. We, therefore, conclude that the trial court did not err by
-4-
finding that “there [had] been differing testimony” making proximate cause “simply a question
for the jury to decide.” The trial court properly denied the motion.
B. MOTION FOR JNOV/NEW TRIAL
Plaintiff makes the same argument with regard to the trial court’s denial of his motion for
JNOV and/or new trial, asserting that the trial court applied the wrong proximate cause standard
and that defendant’s own witnesses admitted defendant was a cause of the accident. “This Court
reviews de novo the trial court’s ruling on a motion for JNOV.” Farm Credit Servs v Weldon,
232 Mich App 662, 672; 591 NW2d 438 (1998). “In determining the propriety of the trial
court’s decision, [this Court must] review the evidence and all legitimate inferences in the light
most favorable to the nonmoving party.” Prime Financial Servs LLC v Vinton, 279 Mich App
245, 255; 761 NW2d 694 (2008). “[I]f reasonable jurors could have honestly reached different
conclusions, the jury verdict must stand.” Hecht v Nat’l Heritage Academies, Inc, 499 Mich 586,
605-606; 886 NW2d 135 (2016) (quotations and citation omitted).
“A trial court’s decision to grant or deny a motion for a new trial under MCR 2.611 is
reviewed for an abuse of discretion.” Gilbert v DaimlerChrysler Corp, 470 Mich 749, 761; 685
NW2d 391 (2004). A trial court abuses its discretion when it selects an outcome that is outside
the range of reasonable and principled outcomes. Saffian v Simmons, 477 Mich 8, 12; 727
NW2d 132 (2007). A new trial may be granted, on some or all issues, when a party’s substantial
rights are affected by a “verdict or decision [that is] against the great weight of the evidence or
contrary to law.” MCR 2.611(A)(1)(e). When a motion is premised on a verdict being against
the great weight of the evidence, the trial court’s function is to determine whether the verdict was
against the overwhelming weight of the evidence. Scott v Illinois Tool Works, 217 Mich App 35,
41; 550 NW2d 809 (1996). This inquiry requires review of the whole body of proofs. See Dawe
v Dr Reuvan Bar-Levav & Assoc, PC (On Remand), 289 Mich App 380, 401; 808 NW2d 240
(2010). The jury’s verdict should not be set aside if there is competent evidence to support it; the
trial court cannot substitute its judgment for that of the factfinder unless the record reveals a
miscarriage of justice. Ellsworth v Hotel Corp of America, 236 Mich App 185, 194; 600 NW2d
129 (1999).
With regard to the motion for JNOV, viewing the evidence most favorably to the verdict
shows that defendant was traveling around 10 miles per hour down Wicklow Road. As he
approached the intersection of Wicklow Road and Wicklow Court, defendant saw no oncoming
traffic, including plaintiff; but, as defendant neared Wicklow Court his gaze shifted to the cul-de-
sac, where defendant continued to look as he started his left-hand turn and then stopped over the
centerline of Wicklow Road for approximately two to three seconds, still looking into the cul-de-
sac. During the seconds that defendant focused on the cul-de-sac, plaintiff, traveling at 25 miles
per hour from a distance of 150 feet away, had an unobstructed view of the Wicklow Road-
Wicklow Court intersection, but was looking at his speedometer when he slammed into
defendant’s car.
The proximate cause inquiry requires the Court to consider, viewing the evidence most
favorably to the verdict, whether defendant should have reasonably foreseen that, by stopping
with the front end of his car in the lane of oncoming traffic, a person could be injured, including
a person who was not looking and did not see defendant’s car. Certainly, given that defendant
-5-
did not see any oncoming traffic, a person stopping their vehicle over the center line for two or
three seconds would reasonably anticipate based on ordinary human experience that there was no
oncoming traffic and that any traffic that did appear would see and avoid him—in this way, a
juror could honestly conclude that it was not reasonably foreseeable that stopping over the center
line would cause injury to another. On the other hand, the facts favorable to the verdict also
support a finding of proximate cause. It is also reasonably foreseeable in the instance that a
driver stops over the center line for two to three seconds after not initially seeing any oncoming
traffic, a collision causing injury could occur because, ordinary human experience would make
one reasonably anticipate that oncoming traffic may be similarly distracted. In other words, if
one places their vehicle within the lane of oncoming traffic and stops there, the negligence of
other vehicular traffic in avoiding a collision, and consequent injury as a result, is foreseeable.
Ultimately, because the jurors could have “honestly reached different conclusions [as to
proximate cause under these facts], the jury verdict must stand.” Hecht, 499 Mich at 605-606.
We thus conclude that the trial court’s denial of the plaintiff’s motion for JNOV was proper.
Likewise, the trial court did not abuse its discretion by denying plaintiff’s motion for a
new trial. Again, on balance after a review of the entire record, we note that the parties
presented conflicting accounts of the accident, but defendant presented sufficient competent
evidence to support the jury’s finding of no proximate cause. See Shuler v Mich Physicians Mut
Liability Co, 260 Mich App 492, 518; 679 NW2d 106 (2004) (a motion for a new trial based on
great weight of the evidence grounds should only be granted if “the evidence preponderates so
heavily against the verdict that it would be a miscarriage of justice to allow the verdict to stand”).
That the jury could have reached a verdict in favor of plaintiff on the evidence presented does
not render the evidence insufficient; rather, the jurors simply chose to believe the testimony and
evidence in favor of defendant. It was not for the trial court to re-weigh the evidence in
considering plaintiff’s motion and, given that competent evidence on the whole record existed to
support the defense verdict, the trial court did not err by finding that the verdict was not against
the overwhelming weight of the evidence. See Ellsworth, 236 Mich App at 194 (indicating that
the trial court may not substitute its judgment for the jury in considering a motion for new trial
based on great weight of the evidence grounds).
Plaintiff, as noted, argues that the trial court erred by denying his motion for JNOV
and/or new trial (and motion for directed verdict) because it applied an incorrect proximate cause
standard. Under Michigan common-law negligence principles, plaintiff explains, there can be
more than one proximate cause and the court allegedly used a standard requiring a single, or
most immediate and direct, proximate cause. In making this argument, plaintiff points out that
the court sometimes used the term “the” to describe proximate cause in ruling on his motions and
that the term “the” signifies that the court applied a single definite proximate cause standard.
Plaintiff is correct that the court sometimes used the term “the,” but the court’s
substantive analysis belies plaintiff’s assertion that the court applied the incorrect proximate
cause standard in considering plaintiff’s motions. In its written opinion and order denying the
motion for JNOV and/or a new trial, for example, the court recognized that more than one
proximate cause of plaintiff’s injuries could exist, including plaintiff’s own actions. Indeed,
absent from the court’s analysis is an evaluation of the evidence to support a single, most
immediate cause of plaintiff’s injuries or any statement of law defining proximate cause as the
one most direct to the injury. Moreover, the trial court properly instructed the jury on the law
-6-
that more than one proximate cause may exist. In sum, aside from the court’s syntactical
misstatement, plaintiff has not demonstrated how the court misapplied the law in denying the
motions for directed verdict and JNOV and/or new trial. Accordingly, we reject his claim of
legal error.
Next, plaintiff argues that the evidence, viewed most favorably to the verdict, supports a
finding that defendant’s negligence was a proximate cause of plaintiff’s injuries. In making this
argument, plaintiff ignores that all inferences must be drawn in favor of the verdict. As we have
explained, viewing the evidence in favor of defendant, a jury could draw a reasonable inference
to conclude that defendant was a proximate cause of plaintiff’s injuries and it could also draw a
reasonable inference to conclude that defendant’s negligence was not a proximate cause of
plaintiff’s injuries. We must draw those inferences in defendant’s favor and just because the
evidence also supports a finding of proximate cause does not mean the verdict should be
overturned. To agree with plaintiff would be to effectively usurp the jury’s role of assessing the
credibility of witnesses and weighing the evidence.
In additional support of this argument, plaintiff quotes from multiple witnesses’
testimonies, including those of defendant and Dr. Yaek, indicating that defendant’s negligence
was a cause of the accident, and asserts that those testimonies are direct evidence that defendant
admitted he was a proximate cause of plaintiff’s injuries. Plaintiff misconstrues this testimony,
as it was not probative on the issue of proximate cause; rather, it was relevant to cause in fact, a
component of causation to which defendant admitted. Similarly, plaintiff points to the
testimonies of medical experts that the accident caused plaintiff’s injuries; plaintiff again misses,
however, that the proximate cause analysis focuses on whether it was reasonably foreseeable that
the defendant’s negligent conduct would cause plaintiff’s injuries. The medical testimonies
merely indicate that the accident caused the injuries and nothing more.
Relatedly, plaintiff’s attempt to distinguish Cole v Austin, 321 Mich 548; 33 NW2d 78
(1948), on which defendant relies, suffers from this same blurring of cause in fact and proximate
cause. In Cole, the Supreme Court held that questions of fact existed on the issue of proximate
cause where the defendant driver was traveling at 25 miles per hour when he struck two kids on a
bike who were not looking where they were going. Id. at 550-551, 557. Because questions of
fact existed, the Court reversed the trial court’s grant of a directed verdict for the plaintiffs,
ruling that the issue was properly left to the jury. Id. at 577. Plaintiff says that Cole is
distinguishable because defendant here admitted that his negligence caused the accident. This
distinction and other factual differences are immaterial. Defendant did not admit that his
negligence was a proximate cause of plaintiff’s injuries and, just as in Cole, questions of fact
existed as to proximate cause given the conflicting testimonies on the issue. The trial court did
not err by denying plaintiff’s motions for directed verdict, JNOV, and/or new trial.
III. EVIDENTIARY DECISIONS
Plaintiff next makes four claims of evidentiary error on appeal, arguing that the trial court
erred by (1) admitting his marijuana test, (2) precluding Officer David Kemp from offering
expert opinion, (3) allowing defendant to impeach Dr. Horowitz using a journal article in
contravention of MRE 707, and (4) permitting defendant to use demonstrative evidence not
consistent with the circumstances of the accident. While plaintiff claims that these evidentiary
-7-
decisions were error or an abuse of discretion, at no point does plaintiff argue that these alleged
errors were outcome-determinative so as to warrant reversal. See Ykimoff v W A Foote Mem
Hosp, 285 Mich App 80, 103; 776 NW2d 114 (2009) (“Error in the admission of evidence is not
cause for reversal unless it affects a substantial right of the party opposing admission.” (citation
and quotations omitted)). Absent any argument in this regard, or explanation of how these
alleged errors affected the jury’s verdict to the detriment of plaintiff’s substantial rights, plaintiff
has abandoned these claims. See Yee v Shiawassee Co Bd of Comm’rs, 251 Mich App 379, 406;
651 NW2d 756 (2002) (“[W]here a party fails to brief the merits of an allegation of error, the
issue is deemed abandoned by this Court.”). Given plaintiff’s failure to argue that reversal is
required on the basis of any of these errors, we do not consider the substance of his claims.
IV. CLOSING ARGUMENT
Plaintiff also argues that the trial court erred by precluding his argument during closing
statements that Michigan’s seat belt statute was analogous to the facts of this case and that
plaintiff’s fault should be apportioned in accord with the statute. This Court “review[s] for an
abuse of discretion the trial court’s decisions concerning ‘[w]hat constitutes a fair and proper’
closing argument.” Lockridge v Oakwood Hosp, 285 Mich App 678, 693; 777 NW2d 511 (2009)
(citation omitted). “A trial court does not abuse its discretion when its decision falls within the
range of principled outcomes.” Rock v Crocker, 499 Mich 247, 255; 884 NW2d 227 (2016).
During plaintiff’s cross-examination of Dr. Yaek, plaintiff asked that the court take
judicial notice of Michigan’s seat belt statute, MCL 257.710e(8) . Defendant did not object and
the court stated, “Okay, there’s a seat belt statute.” That provision provides:
Failure to wear a safety belt in violation of this section may be considered
evidence of negligence and may reduce the recovery for damages arising out of
the ownership, maintenance, or operation of a motor vehicle. However, that
negligence shall not reduce the recovery for damages by more than 5%. [MCL
257.710e(8).]
Later, during closing argument, plaintiff attempted to argue that because the seat belt law
limits a plaintiff’s comparative negligence to five percent, the failure to wear a bike helmet
should be treated similarly. Defendant objected and the trial court precluded the argument.
“[A] trial [court] has wide discretion and power in matters of trial conduct, including
limiting closing argument.” Barnett v Hidalgo, 268 Mich App 157, 170; 706 NW2d 869 (2005)
(quotations omitted). “The purpose of closing argument is to allow attorneys to comment on the
evidence and to argue their theories of the law to the jury.” People v Stokes, 312 Mich App 181,
206; 877 NW2d 752 (2015), vacated in part on other grounds, 501 Mich 918 (2017). “[A]n
attorney may argue the facts and all reasonable inferences arising from the evidence admitted at
trial.” Id.
We see no abuse of discretion in the trial court’s decision precluding plaintiff’s argument
related to the seat belt law. Such an argument would not only carry the potential for confusion,
given that the statute is inapplicable to the present matter, but would also improperly inject
information regarding plaintiff’s level of fault based on a statute that is inapplicable. Plaintiff
-8-
asserts that the argument should have been permitted because the court took judicial notice of the
statute, citing a 1970’s Supreme Court case for the proposition that once a court takes judicial
notice of a statute it may be considered by the jury. That case, however, makes no such
pronouncement. See Winekoff v Pospisil, 384 Mich 260, 266; 181 NW2d 897 (1970) (“The right
to take judicial notice of some thing, or occurrence, or record, or other fact which may be
considered properly by the court or jury, does not mean that any such judicially noticeable matter
is admissible in evidence.” (emphasis added)). Taking judicial notice of a statute does not mean
it has been entered into evidence and, indeed, plaintiff never moved to admit the statute into
evidence until closing argument. Under these circumstances, the court’s decision limiting
plaintiff’s closing argument was within the range of principled outcomes. In any case, even if
the court did err, the error was harmless because the jury never reached the question of damages.
Reversal on this basis is not warranted.
V. JURY INSTRUCTIONS
Finally, plaintiff raises two claims of instructional error, asserting that the trial court erred
by (1) providing the jury with M Civ JI 12.01, which allowed the jury to infer that plaintiff was
negligent based on the marijuana test, and (2) giving the jury a special instruction that was not
supported by the evidence. Claims of instructional error are reviewed de novo. Cox v Bd of
Hosp Managers, 467 Mich 1, 8; 651 NW2d 356 (2002). “However, the trial court’s
determination that a jury instruction is accurate and applicable to the case is reviewed for an
abuse of discretion.” Hill v Hoig, 258 Mich App 538, 540; 672 NW2d 531 (2003).
“Instructional error warrants reversal if the error resulted in such unfair prejudice to the
complaining party that the failure to vacate the jury verdict would be inconsistent with
substantial justice.” Cox, 467 Mich at 8 (citation and quotations omitted).
A. M CIV JI 12.01
At the close of all the proofs, the court instructed the jury on the applicable law. Included
in the instructions, over plaintiff’s objection, was M Civ JI 12.01, Violation of Statute. As given
to the jury, that instruction provided:
We have a statute which provides that a person whether licensed or not shall not
operate a vehicle upon a highway or other place open to the general public or
generally accessible to motor vehicles including an area designated for the
parking of vehicles within this state if the person has in his or her body any
amount of a substance listed as schedule one which includes marijuana.
If you find that these circumstances existed in this case, you may infer that the
plaintiff was negligent. You must then decide whether such negligence was a
proximate cause of the occurrence.
Plaintiff objected on the ground that no evidence of the amount of marijuana in plaintiff’s system
had been presented and also that no evidence supported that plaintiff’s marijuana use had any
impact on the accident. In overruling plaintiff’s objection, the court noted that the underlying
statute allows an inference of negligence to be drawn if the person has any amount of marijuana
in their system.
-9-
On appeal, plaintiff argues that the instruction was wrongly given because there was no
evidence showing that marijuana was a contributing cause of the accident. In support, plaintiff
cites the testimony of witnesses indicating that marijuana did not have an impact on the accident,
mainly because plaintiff did not appear intoxicated. Plaintiff misses, however, that giving the
instruction does not require evidence supporting a conclusion that the presence of marijuana in a
person’s system contributed to the accident. Simply put, the instruction is applicable if a person
operates a motor vehicle with any amount of marijuana in their system, regardless of the amount
or other temporal considerations. Given that some evidence supported the instruction, it was not
error for the court to give it. See Cox, 467 Mich at 8 (“Jury instructions should include “all the
elements of the plaintiff’s claims and should not omit material issues, defenses, or theories if the
evidence supports them.” (emphasis added)).
B. SPECIAL INSTRUCTION
Plaintiff next argues that the trial court erred by providing the jury with defendant’s
special instruction because the instruction was not supported by the evidence and is inconsistent
with Michigan law. “When the standard jury instructions do not adequately cover an area, the
trial court is obligated to give additional instructions when requested, if the supplemental
instructions properly inform the jury of the applicable law and are supported by the evidence.”
Bouverette v Westinghouse Electric Corp, 245 Mich App 391, 401-402; 628 NW2d 86 (2001).
At the instruction conference, defense counsel objected to M Civ JI 10.9, which allows a
jury to infer that a plaintiff is not negligent if the plaintiff has a loss of memory caused by the
accident. Counsel requested that, in conjunction with M Civ JI 10.09, the court give the
following special instruction:
[I]f you find that plaintiff had a clear and unobstructed view of the intersection
prior to impact, any presumption of ordinary care is overcome and you may
presume that plaintiff saw the car approaching and by the exercise of ordinary
care and caution couldn’t avoid the accident.[2]
Plaintiff objected to this special instruction on the grounds that the standard instruction, M Civ JI
10.09, would suffice. The court disagreed, reasoning that the standard instruction did not
encompass a situation where the presumption of due care could be rebutted.
First, contrary to plaintiff’s contention, the instruction was plainly supported by the
evidence in this case. Testimony was introduced that plaintiff had 150 feet of unobstructed view
to see defendant’s vehicle and around five seconds to avoid the accident. Plaintiff’s second
argument—that the instruction is contrary to Michigan law—is really a repackaged argument
that the facts did not support the instruction. Mainly, plaintiff asserts that the instruction was
2
We note that this instruction, as it appears in the trial transcript, would seem to benefit plaintiff,
not defendant. But the instruction as requested by defendant, and from which plaintiff argues,
read “could have avoided the accident” rather than “couldn’t avoid the accident.” We presume
that this is a transcription error and that the instruction as read was “could have.”
-10-
based on Heckler v Laing, 300 Mich 139, 145-146; 1 NW2d 484 (1942), and because the facts of
Heckler are distinguishable, the instruction should not have been given.
In Heckler, 300 Mich at 149, the Michigan Supreme Court concluded that the decedent
driver was guilty of contributory negligence and that a directed verdict should have been granted
for the defendant driver. There, both drivers approached an intersection with an unobstructed
view of oncoming traffic. Id. at 142-144. The decedent driver, however, did not stop at a stop
sign and the defendant driver, who also did not see the decedent, collided with the decedent. Id.
In setting aside the judgment, the Court noted that decedent driver was presumed to have acted
with ordinary care, but that presumption was rebutted where the evidence showed that the
decedent had a “clear and unobstructed view” of the oncoming traffic; in this instance, the
decedent was presumed to have seen the oncoming traffic and “by the exercise of due care and
caution . . . [to] have avoided the accident.” Id. at 145-146.
The fact that plaintiff had the right-of-way, as plaintiff argues, does not make the
principle espoused in Heckler inapplicable. And, while plaintiff’s preferred interpretation of the
evidence may not support the special instruction, evidence presented at trial did support its
provision. We, therefore, conclude that the trial court did not err by providing the special
instruction to the jury.
Affirmed.
/s/ Michael J. Riordan
/s/ David H. Sawyer
-11-
|
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Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
08/18/2017 01:09 AM CDT
- 923 -
Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
STATE v. ROSS
Cite as 296 Neb. 923
State of Nebraska, appellee, v.
Michael L. Ross, appellant.
___ N.W.2d ___
Filed June 16, 2017. No. S-16-131.
1. Postconviction: Constitutional Law: Appeal and Error. In appeals
from postconviction proceedings, an appellate court reviews de novo a
determination that the defendant failed to allege sufficient facts to dem-
onstrate a violation of his or her constitutional rights or that the record
and files affirmatively show that the defendant is entitled to no relief.
2. Postconviction: Appeal and Error. Whether a claim raised in a post-
conviction proceeding is procedurally barred is a question of law. When
reviewing a question of law, an appellate court resolves the question
independently of the lower court’s conclusion.
3. Postconviction: Constitutional Law. An evidentiary hearing on a
motion for postconviction relief must be granted when the motion
contains factual allegations which, if proved, constitute an infringe-
ment of the movant’s rights under the Nebraska or federal Constitution.
However, if the motion alleges only conclusions of fact or law, or the
records and files in the case affirmatively show that the movant is
entitled to no relief, no evidentiary hearing is required.
4. ____: ____. Postconviction relief is a very narrow category of relief
available only to remedy prejudicial constitutional violations.
5. Postconviction: Appeal and Error. A motion for postconviction relief
cannot be used to secure review of issues which were or could have
been litigated on direct appeal.
6. Postconviction: Effectiveness of Counsel: Appeal and Error. When a
defendant is represented both at trial and on direct appeal by the same
lawyer, the defendant’s first opportunity to assert ineffective assistance
of counsel is in a motion for postconviction relief.
7. ____: ____: ____. To establish a right to postconviction relief based
on a claim of ineffective assistance of counsel, the defendant has the
burden, in accordance with Strickland v. Washington, 466 U.S. 668, 104
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Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
STATE v. ROSS
Cite as 296 Neb. 923
S. Ct. 2052, 80 L. Ed. 2d 674 (1984), to show that counsel’s perform
ance was deficient; that is, counsel’s performance did not equal that
of a lawyer with ordinary training and skill in criminal law. Next, the
defendant must show that counsel’s deficient performance prejudiced the
defense in his or her case.
8. Effectiveness of Counsel. Under the framework of Strickland v.
Washington, 466 U.S. 668, 104 S. Ct. 2052, 80 L. Ed. 2d 674 (1984),
a court may address the two elements, deficient performance and preju-
dice, in either order.
9. ____. Counsel’s failure to raise novel legal theories or arguments or to
make novel constitutional challenges in order to bring a change in exist-
ing law does not constitute deficient performance.
10. Constitutional Law: Criminal Law: Effectiveness of Counsel. The
Constitution guarantees criminal defendants only a fair trial and a com-
petent attorney. It does not ensure that defense counsel will recognize
and raise every conceivable constitutional claim.
Appeal from the District Court for Douglas County: Duane
C. Dougherty, Judge. Affirmed.
Gerald L. Soucie for appellant.
Douglas J. Peterson, Attorney General, and Kimberly A.
Klein for appellee.
Heavican, C.J., Wright, Miller-Lerman, Cassel, Stacy,
K elch, and Funke, JJ.
Stacy, J.
After a jury trial, Michael L. Ross was convicted of three
counts, including violation of Neb. Rev. Stat. § 28-1212.04
(Supp. 2009). We affirmed Ross’ convictions on direct appeal,1
and he moved for postconviction relief. The district court
denied his motion without conducting an evidentiary hear-
ing. In this appeal, Ross contends he should have received an
evidentiary hearing on his allegations (1) that § 28-1212.04
is unconstitutional both facially and as applied to him and
1
State v. Ross, 283 Neb. 742, 811 N.W.2d 298 (2012).
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Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
STATE v. ROSS
Cite as 296 Neb. 923
(2) that his trial and appellate counsel were ineffective for
failing to preserve constitutional challenges to § 28-1212.04.
We conclude Ross’ arguments are without merit, and affirm
the denial of postconviction relief.
FACTS
The facts of the underlying crimes are fully set forth in
Ross’ direct appeal.2 As relevant here, Ross argues the district
court erred in denying an evidentiary hearing on his motion
for postconviction relief. His arguments are premised on the
constitutionality of § 28-1212.04, which at the time of his
crime prohibited
[a]ny person, within the territorial boundaries of any
city, incorporated village, or county containing a city of
the metropolitan class or primary class [from] unlawfully,
knowingly, and intentionally or recklessly discharg[ing] a
firearm, while in or in the proximity of any motor vehicle
that such person has just exited, at or in the general direc-
tion of any person, dwelling, building, structure, [or]
occupied motor vehicle . . . .
Violation of § 28-1212.04 is a Class IC felony.
Ross’ trial counsel did not move to quash the information
charging a violation of § 28-1212.04 and did not raise any
argument that the statute was unconstitutional. After a jury
trial, Ross was convicted of violating § 28-1212.04, as well as
other felonies. Ross appealed his convictions, asserting that the
evidence was insufficient. He was represented on appeal by the
same counsel, who did not raise any issue regarding the consti-
tutionality of § 28-1212.04.
After his convictions and sentences were affirmed on appeal,
Ross moved for postconviction relief. As relevant to this
appeal, Ross alleged that § 28-1212.04 is both facially uncon-
stitutional and unconstitutional as applied to him, based on
theories of special legislation and equal protection. Generally,
2
Id.
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Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
STATE v. ROSS
Cite as 296 Neb. 923
he alleged § 28-1212.04 is special legislation in violation
of Neb. Const. art. III, § 18, because it criminalizes behav-
ior in certain geographic areas but not in others. He alleged
§ 28-1212.04 violates the Equal Protection Clause of the U.S.
and Nebraska Constitutions for essentially the same reason,
and because the areas of enforcement resulted in the statute’s
being disproportionately applied against African-Americans
and other minorities.
Ross also alleged he received ineffective assistance of trial
and appellate counsel because counsel failed to “investigate,
allege, research, present, argue, and thereby preserve” the
constitutional claims. Ross alleged he was prejudiced by his
trial counsel’s failure to file a motion to quash because either
the district court would have granted the motion based on the
unconstitutionality of § 28-1212.04 or the constitutional issues
would have been preserved for appeal and the appellate court
would have found § 28-1212.04 unconstitutional.
The district court denied postconviction relief without con-
ducting an evidentiary hearing. It found Ross’ direct chal-
lenges to the constitutionality of § 28-1212.04 were procedur-
ally barred because those challenges could have been raised at
trial or on direct appeal. And, relying on State v. Sanders,3 it
found Ross’ counsel was not ineffective for failing to raise or
preserve constitutional challenges to § 28-1212.04. In Sanders,
we expressly held trial counsel was not ineffective for failing
to raise a constitutional challenge to § 28-1212.04, because
counsel cannot perform in a deficient manner by failing to
raise novel legal arguments or assert changes to existing law.
Ross filed this timely appeal.
ASSIGNMENTS OF ERROR
Ross assigns, restated and consolidated, that the district
court erred in (1) denying an evidentiary hearing on his allega-
tion that § 28-1212.04 is facially unconstitutional, in violation
3
State v. Sanders, 289 Neb. 335, 855 N.W.2d 350 (2014).
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296 Nebraska R eports
STATE v. ROSS
Cite as 296 Neb. 923
of Neb. Const. art. III, § 18; (2) denying an evidentiary hearing
on his allegation that § 28-1212.04 is facially unconstitutional
on equal protection grounds because it treats identical geo-
graphic areas differently; (3) denying an evidentiary hearing
on his allegation that § 28-1212.04 is facially unconstitutional
on equal protection grounds because it discriminates against
African-Americans; (4) denying an evidentiary hearing on
his allegation that the § 28-1212.04 is unconstitutional as
applied to him; and (5) denying an evidentiary hearing on his
allegation that he received ineffective assistance of trial and
appellate counsel when counsel failed to move to quash the
amended information.
STANDARD OF REVIEW
[1] In appeals from postconviction proceedings, an appel-
late court reviews de novo a determination that the defendant
failed to allege sufficient facts to demonstrate a violation of his
or her constitutional rights or that the record and files affirma-
tively show that the defendant is entitled to no relief.4
[2] Whether a claim raised in a postconviction proceeding
is procedurally barred is a question of law.5 When reviewing a
question of law, an appellate court resolves the question inde-
pendently of the lower court’s conclusion.6
ANALYSIS
[3] An evidentiary hearing on a motion for postconvic-
tion relief must be granted when the motion contains factual
allegations which, if proved, constitute an infringement of the
movant’s rights under the Nebraska or federal Constitution.
However, if the motion alleges only conclusions of fact or
law, or the records and files in the case affirmatively show
4
State v. Nolan, 292 Neb. 118, 870 N.W.2d 806 (2015); State v. Cook, 290
Neb. 381, 860 N.W.2d 408 (2015).
5
State v. Harris, 292 Neb. 186, 871 N.W.2d 762 (2015); State v. Thorpe,
290 Neb. 149, 858 N.W.2d 880 (2015).
6
State v. Molina, 279 Neb. 405, 778 N.W.2d 713 (2010).
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STATE v. ROSS
Cite as 296 Neb. 923
that the movant is entitled to no relief, no evidentiary hearing
is required.7
Constitutional Challenges A re
Procedurally Barred
[4,5] In his first four assignments of error, Ross alleges the
district court erred in failing to grant an evidentiary hearing
on his allegations raising direct constitutional challenges to
§ 28-1212.04. We conclude the district court properly found
these allegations were procedurally barred, because they could
have been raised at trial or on direct appeal. Postconviction
relief is a very narrow category of relief available only to rem-
edy prejudicial constitutional violations.8 A motion for postcon-
viction relief cannot be used to secure review of issues which
were or could have been litigated on direct appeal.9 We there-
fore affirm the denial of postconviction relief as to the direct
constitutional challenges.
Counsel Was Not Ineffective
[6] Although a motion for postconviction relief cannot be
used to secure review of issues which were or could have been
litigated on direct appeal, when a defendant was represented
both at trial and on direct appeal by the same lawyer, the
defendant’s first opportunity to assert ineffective assistance of
counsel is in a motion for postconviction relief.10 Ross’ ineffec-
tive assistance of counsel claim is properly before us.
[7,8] To establish a right to postconviction relief based on
a claim of ineffective assistance of counsel, the defendant has
7
State v. Ware, 292 Neb. 24, 870 N.W.2d 637 (2015); State v. Sellers, 290
Neb. 18, 858 N.W.2d 577 (2015).
8
State v. Hessler, 282 Neb. 935, 807 N.W.2d 504 (2011).
9
State v. Sellers, supra note 7; State v. Marshall, 269 Neb. 56, 690 N.W.2d
593 (2005).
10
State v. Armendariz, 289 Neb. 896, 857 N.W.2d 775 (2015); State v.
Robinson, 285 Neb. 394, 827 N.W.2d 292 (2013).
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STATE v. ROSS
Cite as 296 Neb. 923
the burden, in accordance with Strickland v. Washington,11 to
show that counsel’s performance was deficient; that is, coun-
sel’s performance did not equal that of a lawyer with ordi-
nary training and skill in criminal law.12 Next, the defendant
must show that counsel’s deficient performance prejudiced the
defense in his or her case.13 Under the Strickland v. Washington
framework, a court may address the two elements, deficient
performance and prejudice, in either order.14
Ross makes a novel argument in this regard based on Hall v.
State.15 In Hall, the defendant, after being convicted of second
degree murder, attempted to challenge the constitutionality of
the Nebraska homicide statutes via declaratory judgment. We
held the procedure was improper because declaratory judgment
does not lie where another equally serviceable remedy is avail-
able. We stated:
This [constitutional] issue could have been raised by
conventional forms of remedy within the criminal pros-
ecution. In a criminal prosecution, a defendant can bring
a constitutional challenge to the facial validity of the stat-
ute under which he or she is charged by filing a motion
to quash or a demurrer. . . . In the event the defendant’s
counsel fails to make such a challenge, the defendant can
allege ineffective assistance of counsel either on direct
appeal or in an action for postconviction relief.16
Ross argues that this language from Hall established a rule
that any time counsel fails to file a motion to quash challeng-
ing the constitutionality of a statute, a defendant has a valid
11
Strickland v. Washington, 466 U.S. 668, 104 S. Ct. 2052, 80 L. Ed. 2d 674
(1984).
12
State v. Armendariz, supra note 10.
13
Id.
14
State v. Torres, 295 Neb. 830, 894 N.W.2d 191 (2017).
15
Hall v. State, 264 Neb. 151, 646 N.W.2d 572 (2002).
16
Id. at 158, 646 N.W.2d at 578.
- 930 -
Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
STATE v. ROSS
Cite as 296 Neb. 923
ineffective assistance of counsel claim in a postconviction
action. We disagree. Hall simply recognized the proper proce-
dure for raising a constitutional claim within a criminal pros-
ecution—it spoke to the procedure for alleging such claims. It
did not, as Ross suggests, presume the validity of such claims.
Whenever a claim of ineffective assistance is raised, a court
must analyze whether the defendant has sufficiently alleged
deficient performance resulting in prejudice.17
We focus here on whether Ross has sufficiently alleged that
his trial and appellate counsel performed deficiently. Ross’
postconviction motion alleged his counsel was deficient for
failing to raise a constitutional challenge to § 28-1212.04.
[9] We addressed a nearly identical postconviction claim
in State v. Sanders.18 There, we held that trial counsel did not
perform in a deficient manner when he failed to raise a con-
stitutional challenge to § 28-1212.04. We reasoned “counsel’s
failure to raise novel legal theories or arguments or to make
novel constitutional challenges in order to bring a change in
existing law does not constitute deficient performance.”19
That same rationale applies to this case. Ross was tried in
2010, and his direct appeal was decided in 2012. At that time,
no appellate court had been presented with a constitutional
challenge to § 28-1212.04. We decided Sanders 2 years later.
Given our holding in Sanders that counsel’s failure to raise a
novel constitutional challenge to § 28-1212.04 did not consti-
tute deficient performance, we fail to see how Ross’ trial coun-
sel could be found deficient for not asserting such a challenge
even earlier.
[10] “‘The Constitution guarantees criminal defendants only
a fair trial and a competent attorney. It does not [e]nsure that
defense counsel will recognize and raise every conceivable
17
See Strickland v. Washington, supra note 11.
18
State v. Sanders, supra note 3.
19
Id. at 343, 855 N.W.2d at 357.
- 931 -
Nebraska Supreme Court A dvance Sheets
296 Nebraska R eports
STATE v. ROSS
Cite as 296 Neb. 923
constitutional claim.’”20 Ross’ postconviction motion did not
contain factual allegations which would constitute deficient
performance under Strickland v. Washington. No evidentiary
hearing was required.21
CONCLUSION
For the foregoing reasons, we find Ross’ direct challenges to
the constitutionality of § 28-1212.04 are procedurally barred.
And we conclude his ineffective assistance of counsel claim
does not entitle him to an evidentiary hearing, because the
allegations cannot support a finding of deficient performance.
We affirm the denial of postconviction relief.
A ffirmed.
20
Id. at 342, 855 N.W.2d at 356, quoting Engle v. Isaac, 456 U.S. 107, 102
S. Ct. 1558, 71 L. Ed. 2d 783 (1982).
21
See, State v. Ware, supra note 7; State v. Sellers, supra note 7.
|
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FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
TENTH CIRCUIT October 15, 2015
_________________________________
Elisabeth A. Shumaker
Clerk of Court
LILA ADAMS,
Plaintiff - Appellant,
v. No. 14-4135
(D.C. No. 2:13-CV-00760-BSJ)
CAROLYN W. COLVIN, Acting (D. Utah)
Commissioner of the Social Security
Administration,
Defendant - Appellee.
_________________________________
ORDER AND JUDGMENT*
_________________________________
Before KELLY, BALDOCK, and GORSUCH, Circuit Judges.
_________________________________
Lila Adams applied for disability benefits claiming that back and leg pain and
other medical problems kept her from working. Following a hearing and with the
benefit of testimony from a vocational expert, an administrative law judge
determined that Ms. Adams retained the residual functional capacity to perform
sedentary-to-light work. At step four of the Social Security Administration’s
five-step evaluation process for cases like this one, the ALJ further held that in light
*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist in the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral
estoppel. It may be cited, however, for its persuasive value consistent with
Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
of Ms. Adams’s residual functional capacity she was able to resume her past work as
an electronic scanner operator — at least under the conditions generally associated
with that type of job in the national economy. See Wall v. Astrue, 561 F.3d 1048,
1052 (10th Cir. 2009) (explaining the five-step process). Alternatively, at step five in
the evaluation process the ALJ concluded that Ms. Adams’s residual functional
capacity and the skills she developed while working as a cashier supervisor also
enabled her to obtain employment as a personnel scheduler, timekeeper, or order
clerk. For both reasons, the ALJ denied her claim for disability benefits. Later, the
Appeals Council denied review, the district court affirmed the ALJ’s order, and
Ms. Adams appealed to this court.
Now before us, Ms. Adams challenges the ALJ’s determinations at both steps
four and five. But most of the arguments Ms. Adams seeks to present on appeal
weren’t raised before the district court. For example, in the district court she didn’t
challenge the ALJ’s determination that she is able to perform sedentary-to-light
work. Neither did she challenge the sufficiency of the ALJ’s findings regarding the
physical and mental demands of her relevant past work. And because Ms. Adams has
offered no compelling reason to excuse her failure to present these arguments earlier,
they are forfeited and we limit our review “to the issues the claimant properly
preserve[d] in the district court.” Berna v. Chater, 101 F.3d 631, 632 (10th Cir.
1996); see also Crow v. Shalala, 40 F.3d 323, 324 (10th Cir. 1994).
What remains? Ms. Adams preserved in the district court and has briefed here
only two claims of error. First, she contends there is insufficient evidence to support
2
the ALJ’s determination at step four that she is able to return to work as an electronic
scanner operator. Second, she disputes the ALJ’s finding that she acquired skills
during her time as a cashier that she might now transfer to other available jobs.
Turning to the first argument, at step four it is Ms. Adams’s burden to
establish that she is unable to perform her past relevant work as a scanner operator
both as she actually performed that work in the past and as it is generally performed
in the national economy. See O’Dell v. Shalala, 44 F.3d 855, 859-60 (10th Cir.
1994); Andrade v. Sec’y of Health & Human Servs., 985 F.2d 1045, 1051 (10th Cir.
1993). The ALJ found — based on Ms. Adams’s description of her past job duties
and the vocational expert’s testimony — that her past work as a scanner operator
with the Salt Lake City police fell within the definition of “scanner operator,” as that
job is defined by the Dictionary of Occupational Titles (DOT). In categorizing
Ms. Adams’s work as he did, moreover, the ALJ was presumptively entitled to rely
on the DOT. See Andrade, 985 F.2d at 1051-52. The ALJ then proceeded to find
that Ms. Adams had the residual functional capacity to perform the work typically
required of a scanner operator, at least as that job is performed in the national
economy. And at that point it became incumbent on Ms. Adams to show either that
she couldn’t perform that work or that the duties of her past job were “sufficiently
distinct” from those “described in the Dictionary [as] to constitute a different line of
work” altogether. Id. at 1052 (internal quotation mark omitted). This much,
however, Ms. Adams has not done. For she has given no persuasive reason to
conclude that despite the ALJ’s findings about her residual functional capacity she’s
3
incapable of performing the duties of a scanner operator as it’s generally performed
in the national economy — or that this position is sufficiently more challenging or
burdensome than her past job that it might qualify as a different line of work.
Because we discern no grounds for overturning the finding of no disability at
step four, we need not reach the ALJ’s alternative step-five determination. Lax v.
Astrue, 489 F.3d 1080, 1084 (10th Cir. 2007) (“If a determination can be made at any
of the steps that a claimant is or is not disabled, evaluation under a subsequent step is
not necessary.” (internal quotation marks omitted)); 20 C.F.R. § 404.1520(a)(4)
(same). The judgment of the district court is affirmed.
ENTERED FOR THE COURT
Neil M. Gorsuch
Circuit Judge
4
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105 F.Supp. 411 (1952)
REPUBLIC OF CHINA
v.
PANG-TSU MOW et al.
Civ. A. No. 4741-51.
United States District Court District of Columbia.
April 19, 1952.
*412 William E. Leahy and William J. Hughes, Jr., Washington, D. C., Robert P. Patterson, New York City, for plaintiff.
William A. Roberts and Warren Woods, Washington, D. C., for defendants.
MORRIS, District Judge.
The defendants, in their answer, assert two counter-claims, one for libel, alleged to have been committed by the plaintiff with respect to the defendants, and the other for monies in the sum of $614,320.50, which monies are alleged to have been held by the defendant Mow for certain persons other than the plaintiff, but which sums of money it is alleged were obtained improperly by the plaintiff, and for which the defendants say they are entitled to an accounting from the plaintiff. The plaintiff, by motion, seeks to have these counter-claims dismissed on the ground that the plaintiff is a sovereign state, and that it is immune from suit by way of counter-claim for libel and counter-claim for unlawful conversion. A hearing was had upon said motion, and memorandum briefs have been filed by counsel for all parties at the request of the Court.
Subsequent to the filing of the counter-claims and the motions to dismiss the same, the Court, upon motion of the plaintiff, and as a sanction for the wilful failure of the defendant Pang-Tsu Mow to appear for the taking of depositions, as ordered by the Court, has stricken all pleadings of the said defendant Mow. Therefore, the orders on the instant motions are with respect to said counter-claims only as they are pleadings of the defendant Ve-Shuen Hsiang.
A sovereign state entering the courts of a friendly foreign nation subjects itself to counter-claim with respect to matters arising out of the same transaction as that upon which the original suit brought by it is based, to the extent that it affords recoupment against said sovereign state, but not beyond the point where affirmative relief is to be granted. In this view, I conclude that the counter-claim for libel should be dismissed, as I do not consider it to be a claim arising out of the same transaction as that upon which the suit brought by the Republic of China is based, although the alleged libel may have had reference or some relation to the claims asserted by the plaintiff.
As to the counter-claim for conversion, the pleadings are not sufficiently clear to enable the Court, in this posture of the case, to determine whether or not such counter-claim does arise out of the same transaction upon which the claims of the Republic of China are based. In argument and in affidavit there was statement made that the monies referred to in the counter-claim were part of the monies of the plaintiff, held by the defendants, which have been accounted for, and have been credited by the Republic of China to the *413 defendants, and are not sought to be recovered in the instant case. As this is a motion to dismiss rather than a motion for summary judgment, I can look no further than the pleadings, and I am of the view that appropriate showing in the pleadings should be made with respect to the counter-claims, and, if any genuine issue of fact develops, such should be determined by the Court. The motion to dismiss said counter-claim for conversion is denied.
Counsel will prepare an appropriate order carrying these decisions into effect.
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14 So.3d 1228 (2009)
Minerva MIESES, Appellant,
v.
APPLEBEE'S and Chubb Group of Insurance Companies, Appellees.
No. 1D08-4690.
District Court of Appeal of Florida, First District.
June 30, 2009.
David M. Cohen, Miami, and Bill McCabe, Longwood, for Appellant.
Beth J. Leahy of Walton Lantaff Schroeder & Carson, LLP, Fort Lauderdale, for Appellees.
PER CURIAM.
Claimant appeals, and the employer/carrier (E/C) cross-appeals, the Judge of Compensation Claims' (JCC) order on temporary benefits, penalties, and interest. *1229 Claimant's argument has merit, and the E/C's argument has merit in part.
Claimant filed multiple petitions for benefits (PFBs). The relevant PFBs for this opinion were filed May 4, 2004; May 5, 2004; and August 19, 2004. Respectively, these PFBs sought temporary benefits, penalties, and interest, from April 2, 2004, and continuing; April 1, 2004, and continuing; and September 18, 2003 (the date of accident), and continuing. On June 19, 2006, Claimant filed a single piece of paper "dismissing] all pending Petitions for Benefits." Thereafter, Claimant filed three more PFBs, two of which requested temporary benefits, penalties, and interest, from the date of accident and continuing.
The JCC ruled on penalties and interest for the following time periods, as follows: Awarded penalties and interest for April 2 through 20, 2004; awarded temporary benefits and penalties and interest for May 1, 2004; denied penalties and interest for August 13 through 26, 2004; denied penalties and interest for July 27 through November 16, 2005; and awarded penalties and interest for March 31 through July 14, 2006.
On appeal, Claimant argues penalties and interest should have been granted for July 27 through November 16, 2005. Her argument has merit.
The record shows Claimant was eligible for temporary benefits from July 27 through November 16, 2005: No payments were made during that time; Claimant was not MMI during that time; and Claimant could work only sedentary jobs during that time. See Xerographics & Claims Ctr. v. Bender, 558 So.2d 514, 515 (Fla. 1st DCA 1990). Moreover, during that time period, her entitlement to temporary benefits was not barred by the 104-week limit. § 440.15(2)(a), (4)(b), Fla. Stat. (2003). As of July 27, 2005, Claimant had not yet received 104 weeks of temporary benefits (and payment of such benefits through November 16, 2005, would not have exhausted the 104-week "bank"). The fact that Claimant was never awarded temporary benefits for that time does not bar penalties and interest, because temporary benefits are payable without an award, and were due regardless of any ruling. Consequently, late payment entitles Claimant to penalties and interest. See § 440.20(6), (8), Fla. Stat. (2003).
On cross-appeal, the E/C argues the prior voluntary dismissals barred the awards.[*] The E/C's argument has merit in part.
"A claim or petition may be dismissed by the claimant or petitioner without an order by filing a notice of voluntary dismissal.... [A] second notice of voluntary dismissal shall operate as an adjudication of denial of any claim or [PFB] previously the subject of a voluntary dismissal." Fla. Admin. Code R. 60Q-6.116(2). The JCC declined to apply this "two-dismissal" rule, finding, "only a single notice of voluntary dismissal was served on June 19, 2006."
The JCC's reading of this rule is overly literal. The rule provides that "a [single] claim or petition" may be dismissed without prejudice. Logic suggests the second dismissal of that claim or petition would operate as an adjudication of denial. No rule precludes dismissing multiple claims by filing a single piece of paper; thus, Claimant's filing contains multiple notices of voluntary dismissal. Consequently, the JCC erred in concluding, from the fact that only one piece of *1230 paper was filed to dismiss multiple claims, that rule 60Q-6.116(2) could not apply.
The two-dismissal rule bars the awards for the time periods of April 2, 2004, through April 20, 2004, and May 1, 2004. The dismissed PFBs of May 4, May 5, and August 19, 2004, included claims for temporary benefits, penalties, and interest, for those periods. Under the rule, Claimant's second dismissal of these claims operated as an adjudication of denial of these claims. Consequently, the JCC erred in granting an award as to these time periods.
In contrast, the two-dismissal rule does not bar awards of penalties and interest for July 27 through November 16, 2005, and March 31 through July 14, 2006. Claimant's voluntary dismissals were of PFBs filed before these time periods. It is impossible for PFBs that predated these time periods to have included claims for penalties and interest based on late payment of benefits due during these time periods, because Claimant could not have known the payments would be late. In other words, Claimant cannot seek penalties and interest for future, and, therefore, speculative, late payments.
Consequently, we reverse the awards pertaining to April 2 through 20, 2004, and May 1, 2004; we reverse the denial of penalties and interest for July 27 through November 16, 2005; and we affirm the award of penalties and interest for March 31 through July 14, 2006. All other aspects of the order on review are affirmed.
AFFIRMED in part, REVERSED in part, and REMANDED for proceedings consistent with this opinion.
DAVIS, BROWNING and THOMAS, JJ., concur.
NOTES
[*] The denial of penalties and interest due for late payments between August 13 and 26, 2004, is not challenged by either party.
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962 F.2d 13
NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel.Eddie Lee FAIN, Plaintiff-Appellant,v.Frank WALLACE; Dean Johnson, Officer; Robert Borg,Defendants-Appellees.
No. 91-15374.
United States Court of Appeals, Ninth Circuit.
Submitted May 5, 1992.*Decided May 7, 1992.
Before HUG, DAVID R. THOMPSON and FERNANDEZ, Circuit Judges.
1
MEMORANDUM**
2
Eddie Lee Fain appeals pro se the district court's summary judgment in his civil rights action under 42 U.S.C. § 1983. Fain contends that he is entitled to summary judgment because the defendants violated his constitutional rights by tampering with and opening his legal mail outside his presence. We have jurisdiction under 28 U.S.C. § 1291. We review de novo the district court's grant of summary judgment, Harper v. Wallingford, 877 F.2d 728, 731 (9th Cir.1989), and affirm.
3
To state a section 1983 claim, the plaintiff must allege facts showing a person acting under color of state law deprived the plaintiff of a right, privilege, or immunity secured by the Constitution or federal law. Parratt v. Taylor, 451 U.S. 527, 535 (1981), overruled on other grounds, Daniels v. Williams, 474 U.S. 327 (1986). "[T]he Due Process Clause is simply not implicated by a negligent act of an official causing unintended loss of or injury...." Daniels, 474 U.S. at 328 (emphasis in original); see Stevenson v. Koskey, 877 F.2d 1435, 1441 (9th Cir.1989).
4
Here, defendants admitted that two legal letters addressed to Fain were opened outside his presence. The defendants asserted, however, that these documents were opened inadvertently. They also asserted that they had not thrown away any mail addressed to Fain. Fain, in turn, submitted numerous grievances he had filed with various officials, affidavits from several inmates/detainees claiming that defendants Raymond and Folk opened and read Fain's confidential letters, and copies of the envelopes which contained the confidential material.
5
Despite these submissions, Fain failed to raise any triable issue of material fact as to whether the defendants acted beyond mere negligence. See Stevenson, 877 F.2d at 1441. The affidavits lacked specificity and merely made conclusory statements asserting that the defendants had opened and read Fain's confidential letters. The envelopes, although displaying return addresses to legal and political organizations, were not marked in any way to signal clearly the confidential nature of their contents. Therefore, Fain's assertions did not support a claim under section 1983. See id.
6
AFFIRMED.
*
The panel unanimously finds this case suitable for decision without oral argument. Fed.R.App.P. 34(a); 9th Cir.R. 34-4
**
This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3
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Cite as 2014 Ark. 490
SUPREME COURT OF ARKANSAS
No. CR-14-921
CEDRICK PASCHAL Opinion Delivered November 20, 2014
APPELLANT
APPEAL FROM THE COLUMBIA
V. COUNTY CIRCUIT COURT
[NO. CR-2009-263A-5]
STATE OF ARKANSAS HONORABLE HAMILTON H.
APPELLEE SINGLETON, JUDGE
MOTION FOR RULE ON CLERK
TREATED AS MOTION FOR
BELATED APPEAL; GRANTED.
PER CURIAM
Appellant Cedrick Paschal, by and through his attorney, N. Mark Klappenbach, has
filed a motion for rule on clerk with this court. He is seeking to appeal the sentencing order
entered on August 1, 2014, revoking his suspended sentence for the offense of possession of
a controlled substance for which he was sentenced to fifteen years in prison. Klappenbach,
in the motion for rule on clerk, admits that the notice of appeal was untimely filed on
September 10, 2014, due to his error with no fault attributable to the appellant. Because a
timely notice of appeal was not filed, we treat the motion for rule on clerk as a motion for
belated appeal, pursuant to Rule 2(e) of the Rules of Appellate Procedure–Criminal (2014).
See Holcomb v. State, 2013 Ark. 313 (per curiam); Gray v. State, 2010 Ark. 216 (per curiam);
Johnson v. State, 342 Ark. 709, 30 S.W.3d 715 (2000) (per curiam).
This court clarified its treatment of motions for rule on clerk and motions for belated
Cite as 2014 Ark. 490
appeals in McDonald v. State, 356 Ark. 106, 146 S.W.3d 883 (2004). In that case, we said that
there are only two possible reasons for an appeal not being timely perfected: either the party
or attorney filing the appeal is at fault, or, there is “good reason.” Id. at 116, 146 S.W.3d at
891. We explained as follows:
Where an appeal is not timely perfected either the party or attorney filing the
appeal is at fault, or there is good reason that the appeal was not timely
perfected. The party or attorney filing the appeal is therefore faced with two
options. First, where the party or attorney filing the appeal is at fault, fault
should be admitted by affidavit filed with the motion or in the motion itself.
There is no advantage in declining to admit fault where fault exists. Second,
where the party or attorney believes there is good reason the appeal was not
perfected, the case for good reason can be made in the motion, and this court
will decide whether good reason is present.
Id. at 116, 146 S.W.3d at 891 (footnotes omitted). While this court no longer requires an
affidavit admitting fault before we will consider the motion, an attorney should candidly admit
fault where he has erred and is responsible for the failure to perfect the appeal. Here, in
accordance with McDonald, Mr. Klappenbach has candidly admitted fault. Therefore, the
motion for belated appeal is granted, and a copy of this opinion will be forwarded to the
Committee on Professional Conduct.
It is so ordered.
N. Mark Klappenbach, for appellant.
No response.
2
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727 F.2d 494
Sara PRICE, Plaintiff-Appellant,v.David M. WESTMORELAND, et al., Defendants,Utah Carriers, Inc., Defendant-Appellee.
No. 83-1440Summary Calendar.
United States Court of Appeals,Fifth Circuit.
March 19, 1984.
Thomas J. Griffith, Ralph H. Brock, Lubbock, Tex., for plaintiff-appellant.
Richards, Caine & Richards, John T. Caine, Ogden, Utah, for defendant-appellee.
Appeal from the United States District Court for the Northern District of Texas.
Before GEE, POLITZ and JOHNSON, Circuit Judges.
GEE, Circuit Judge:
1
Plaintiff Sara Price was injured in a truck accident caused by the negligent driving of defendant David Westmoreland, a truck driver for defendant Utah Carriers, Inc., an interstate trucking company. The district court found that Westmoreland was negligent and that plaintiff sustained damages in the amount of $125,000, but applied Texas common law of agency to deny any recovery against Utah Carriers.
2
Plaintiff appeals, arguing that although this is a diversity case, federal regulation of interstate carriers preempts state law and renders Utah Carriers liable as a matter of law, citing Simmons v. King, 478 F.2d 857 (5th Cir.1973). We agree and reverse, holding that under the applicable federal law Utah Carriers is vicariously liable as a matter of law.
I.
3
Utah Carriers is a common carrier incorporated in Utah and operating interstate under authority of the Interstate Commerce Commission (ICC).1 The driver in this case, David H. Westmoreland, was an owner/operator who had leased his tractor to Utah Carriers pursuant to ICC requirements, making him a statutory employee of the company. At the time of the accident that gave rise to this suit, he was hauling a load of lumber from Sheridan, Wyoming, to Dallas, Texas, for Utah Carriers.
4
Westmoreland met Price on January 7, 1980, at a truck stop in Sheridan where she was a waitress. He told her that he was following his assigned route to Oklahoma City and that if she came with him she could become a truck driver for Utah Carriers by attending a truck driver's school in Oklahoma City, with pay, before qualifying as a truck driver herself. Price agreed to ride with him to Oklahoma City. Contrary to Westmoreland's representations to Price, Utah Carriers had not given Westmoreland permission to transport unauthorized passengers while working for Utah Carriers or to solicit employees for the company. No one in Utah Carriers' offices had any contact with plaintiff before her injuries concerning her training as a truck driver or her employment with Utah Carriers.
5
By January 10, 1980, Westmoreland and his passenger, following the assigned route south, had reached the junction of Interstate Highway 40 East at Amarillo, Texas, which would take them toward Oklahoma City. Westmoreland was speeding. As he manuevered a sharp curve of the on-ramp to change highways to Interstate 40, Westmoreland's load shifted causing the cab and its trailer to overturn. As a result of the accident, Price sustained multiple fractures including a fractured vertebrae, sternum and pelvis, together with extensive bruises and a ripped left ear.
6
The district court, sitting without a jury, found that Westmoreland was negligent in the handling of his truck and trailer at the time of the accident, in operating it at an excessive, dangerous, and unreasonable speed under the circumstances, in failing to reduce his speed in obedience to the warning sign posted on the on-ramp, and in failing properly to arrange, stack, and secure a cargo on a trailer for highway travel so that it would not shift or change its center upon the stress of turning sharp curves. Furthermore, the district court found that Westmoreland's negligence was the proximate cause of plaintiff's injuries and that she incurred damages in the amount of $125,000 for (a) pain and suffering, (b) diminished earning capacity, (c) loss of past wages, (d) reasonable and necessary future medical expenses. However, the district court then applied Texas common law of agency to absolve Utah Carriers of any liability to plaintiff on the ground that Westmoreland, whom the court found to be the company's agent, exceeded the bounds of his actual or apparent authority when he induced Price to ride with him. Plaintiff argues that the district court erred in applying Texas common law and that under the ICC regulations which govern this case, Utah Carriers is vicariously liable as a matter of law.II.
7
In order to protect the public from the tortious conduct of judgment-proof operators of interstate motor carrier vehicles, Congress in 1956 amended the Interstate Common Carrier Act to require a motor carrier to assume full direction and control of leased vehicles. 49 U.S.C. Secs. 10927(a)(2) and 11107(a)(4) (formerly 49 U.S.C. Secs. 315 and 304(e)(2) respectively).2 Pursuant to these regulations the ICC has promulgated written lease requirements for interstate carriers such as Utah Carriers which require the carrier lessee to "assume complete responsibility for the operation of the equipment for the duration of the lease." 49 C.F.R. Sec. 1057.12(d)(1).3 These regulations are valid and constitutional, American Trucking Associations v. United States, 344 U.S. 298, 73 S.Ct. 307, 97 L.Ed. 337 (1953). In Simmons v. King, 478 F.2d 857, 860 and 866 (5th Cir.1973),4 we held that they preempt state law in tort actions in which a member of the public is injured by the negligence of a motor carrier's employee while operating an interstate carrier vehicle, observing that "it is critical that ICC regulations and the lease mandated by them have supreme controlling significance."5
8
Adopting the language and holding of the United States District Court for the District of Delaware in Cosmopolitan Mutual Insurance Company v. White, 336 F.Supp. 92, 98 (D.Del.1972), Simmons held that "the ICC carrier's liability for equipment and drivers covered by leasing arrangements is not governed by the traditional common law doctrine of master-servant relationships and respondeat superior." 478 F.2d at 867. The Simmons court went on to hold that under the statutorily mandated terms of the lease, the carrier lessee had "assumed exclusive possession, control, and use of the vehicle and responsibility to the public, [the driver] became his statutory employee, and as such [the carrier] was vicariously liable as a matter of law for the negligence of [the driver]." Id. (emphasis added).
9
Simmons governs this case. Since Sec. 1057.12(d)(1) required Utah Carriers' lease to provide that it was to have "exclusive possession, control and use of the equipment for the duration of the lease," and that it was to "assume complete responsibility for the operation of the equipment for the duration of the lease," Westmoreland became Utah Carriers' statutory employee. Under Simmons, that made Utah Carriers vicariously liable as a matter of law for Westmoreland's negligence and the traditional common law doctrine of master-servant relationships and respondeat superior does not apply.6
10
Utah Carriers argues that the exception to the Simmons rule for co-employees established in White v. Excalibur Insurance Co., 599 F.2d 50, 55 (5th Cir.), cert. denied, 444 U.S. 965, 100 S.Ct. 452, 62 L.Ed.2d 377 (1979), should be extended to allow it to escape liability to Price for Westmoreland's negligence. In White, we held that the policy underlying the ICC regulations and the Simmons rule did not apply to co-employees of motor carriers injured by their fellows' negligence since they could recover from their employer in workmen's compensation. However, as we restated in White, those of "the public who are not directly engaged in furthering the economic interest of the carrier ... are made its responsibility under Sec. 304." 599 F.2d at 55. Extension of the co-employee exception to members of the public such as Price would defeat the statutory mandate that the pertinent ICC regulations imposing liability on the carrier are "to protect the public." 49 U.S.C. Sec. 10927(a)(2).
11
We hold that plaintiff may recover from Utah Carriers. The judgment of the district court is
12
REVERSED.
1
The description of facts is taken from the district court's findings of fact which are in no part contested
2
49 U.S.C. Sec. 10927(a)(2) provides, in pertinent part:
* * * To protect the public, the Commission may require any such motor carrier to file the type of security that a motor carrier is required to file under paragraph (1) of this subsection.
Paragraph (1) specifies an insurance policy as a type of security. Transport Indemnity Company v. Paxton National Insurance Company, 657 F.2d 657, 659, n. 3 (5th Cir.1981).
49 U.S.C. Sec. 11107(a)(4) requires an authorized carrier to:
(4) have control of and be responsible for operating those motor vehicles in compliance with requirements prescribed by the Secretary of Transportation on safety of operations and equipment, and with other applicable law as if the motor vehicles were owned by the motor carrier.
Section 11107 was amended by P.L. 96-296, Sec. 15(d), 94 Stat. 809, (1980), and this provision was codified without change as 49 U.S.C. Sec. 11107(a)(4).
3
49 C.F.R. Sec. 1057.12(d)(1) provides:
(1) The lease shall provide that the authorized carrier lessee shall have exclusive possession, control, and use of the equipment for the duration of the lease. The lease shall further provide that the authorized carrier lessee shall assume complete responsibility for the operation of the equipment for the duration of the lease.
Section 1057 was reorganized and revised, 44 F.R. 4681 (January 23, 1979), effective March 26, 1979, 44 F.R. 11070 (February 27, 1979). Section 1057.12(d)(1) replaced the former Sec. 1057.4(a)(4), which controlled Simmons v. King, infra.
Section 1057.12(d) was revised again, effective March 31, 1980, 45 F.R. 13092, 13093 (Feb. 28, 1980), after this cause of action arose, but subdivision (d)(1) was not affected by that revision. As the ICC said in its proposal, "We do not intend for this revision to change substantively any of the Commission's leasing regulations which were in effect prior to the institution of this proceeding." 44 F.R. 18465 (March 27, 1979).
4
Simmons, like this case, was a diversity action. 478 F.2d at 859
5
An analogous result might well obtain under Texas law, in any event, since Texas in 1953 enacted a statute that, like the ICC regulations, abrogates the common law doctrine of agency and respondeat superior and makes the motor carrier liable for injury to the public caused by the negligence of its drivers. Tex.Rev.Civ.Stat.Ann. art. 67016-1; see Greyhound Van Lines v. Bellamy, 502 S.W.2d 586 (Tex.Civ.App.--Waco, 1973, no writ hist.)
6
It is thus irrelevant that Utah Carriers had not given its permission for Westmoreland to carry plaintiff as a passenger in the truck, or even that Utah Carriers was unaware of her presence. See, e.g., Rodriguez v. Ager, 705 F.2d 1229 (10th Cir.1983), (where truck leased to a licensed ICC carrier and bearing carrier's insignia and ICC number was being driven for personal use, ICC regulations rendered carrier nonetheless liable for the driver's negligence); Mellon National Bank & Trust Company v. Sophie Lines, Inc., 289 F.2d 473, 475 (3d Cir.1961) (ICC carrier liable for negligence of driver using truck for personal use); see also Cox v. Bond Transportation, Inc., 53 N.J. 186, 249 A.2d 579 (1969); Turnbow v. Hays Freight Lines, Inc., 15 Ill.App.2d 57, 145 N.E.2d 377 (1957); National Trailer Convoy, Inc. v. Saul, 375 P.2d 922 (Okl.1962); Felbrant v. Able, 80 N.J.Super. 587, 194 A.2d 491 (1963) (same)
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[Cite as State v. Paxon, 2019-Ohio-3551.]
IN THE COURT OF APPEALS
ELEVENTH APPELLATE DISTRICT
TRUMBULL COUNTY, OHIO
STATE OF OHIO, : OPINION
Plaintiff-Appellee, :
CASE NO. 2019-T-0011
- vs - :
KC ANNE ELIZABETH PAXON, :
Defendant-Appellant. :
Criminal Appeal from the Trumbull County Court of Common Pleas, Case No. 2018 CR
00485.
Judgment: Affirmed.
Dennis Watkins, Trumbull County Prosecutor, and Ashleigh Musick, Assistant
Prosecutor, Administration Building, Fourth Floor, 160 High Street, N.W., Warren, Ohio
44481-1092 (For Plaintiff-Appellee).
Michael A. Partlow, 112 South Water Street, Suite C, Kent, Ohio 44240 (For Defendant-
Appellant).
THOMAS R. WRIGHT, P.J.
{¶1} Appellant, KC Anne Elizabeth Paxon, appeals her conviction after pleading
guilty to aggravated possession of drugs. We affirm.
{¶2} Paxon raises one assignment of error:
{¶3} “The trial court erred by sentencing appellant to incarceration rather than
imposing a community control sanction.”
{¶4} Paxon contends her sentence is contrary to law because the court was
required to impose a community control sanction pursuant to R.C. 2929.13(B)(1)(a) since
she met the stated conditions, and the court failed to find that an exception applied
consistent with the statute. We disagree.
{¶5} Our standard of review is delineated in R.C. 2953.08(G)(2):
{¶6} “The appellate court may increase, reduce, or otherwise modify a sentence
that is appealed under this section or may vacate the sentence and remand the matter to
the sentencing court for resentencing. The appellate court's standard for review is not
whether the sentencing court abused its discretion. The appellate court may take any
action authorized by this division if it clearly and convincingly finds either of the following:
{¶7} “(a) That the record does not support the sentencing court's findings under
[certain sections] of the Revised Code, whichever, if any, is relevant;
{¶8} “(b) That the sentence is otherwise contrary to law.”
{¶9} Paxon pleaded guilty to aggravated possession of drugs, a fifth-degree
felony, in violation of R.C. 2925.11(A) and (C)(1)(a).
{¶10} The applicable version of R.C. 2929.13(B)(1)(a), effective October 17,
2017, states in part:
{¶11} “Except as provided in division (B)(1)(b) of this section, if an offender is
convicted of or pleads guilty to a felony of the fourth or fifth degree that is not an offense
of violence or that is a qualifying assault offense, the court shall sentence the offender to
a community control sanction of at least on year’s duration if all of the following apply * *
*.” (Emphasis added.)
{¶12} The exception in subsection (B)(1)(b) of R.C. 2929.13 states:
2
{¶13} “The court has discretion to impose a prison term upon an offender who is
convicted of or pleads guilty to a felony of the fourth or fifth degree that is not an offense
of violence or that is a qualifying assault offense if any of the following apply:
{¶14} “* * *
{¶15} “(iii) The offender violated a term of the conditions of bond as set by the
court.
{¶16} “* * *
{¶17} “(xi) The offender committed the offense while under a community control
sanction, while on probation, or while released from custody on a bond or personal
recognizance.” (Emphasis added.)
{¶18} Contrary to Paxon’s argument, the statute does not require a court to
explicitly make a finding before it has discretion to impose prison. Instead, a plain reading
of the applicable version of R.C. 2929.13(B)(1)(b) confirms that if any of the factors apply,
the court has discretion to impose a prison term. No explicit findings are required.
{¶19} Ohio courts have consistently held that a sentencing court is only required
to make findings when the applicable statutes require findings. For example, the failure
to make the required findings to impose consecutive sentences in R.C. 2929.14(C)(4) at
the sentencing hearing renders the sentence contrary to law. State v. Barajas-Anguiano,
11th Dist. Geauga No. 2017-G-0112, 2018-Ohio-3440, ¶ 19, citing State v. Bonnell, 140
Ohio St.3d 209, 2014-Ohio-3177, 16 N.E.3d 659; accord State v. Koeser, 11th Dist.
Portage No. 2013-P-0041, 2013-Ohio-5838, ¶ 24, aff'd, 140 Ohio St.3d 1409, 2014-Ohio-
3785, 15 N.E.3d 879. And R.C. 2929.14(C)(4) states in pertinent part that a court “may
require the offender to serve the prison terms consecutively if the court finds that the
3
consecutive service is necessary to protect the public from future crime or to punish the
offender and that consecutive sentences are not disproportionate to the seriousness of
the offender's conduct and to the danger the offender poses to the public, and if the court
also finds * * * [one of the factors in (C)(4)(a)-(c) applies.]” (Emphasis added.)
{¶20} As evidenced in the transcript of proceedings and pointed out by the state,
Paxon was on probation at the time of her guilty plea, and she violated the conditions of
her bond during the proceedings, which resulted in the court revoking her bond. Thus,
the trial court had discretion to impose prison because two of the factors in R.C.
2929.13(B)(1)(b) applied. State v. Cyrus, 63 Ohio St.3d 164, 166, 586 N.E.2d 94 (1992)
(“The burden is on the defendant to come forward with evidence to rebut
the presumption that the trial court considered the sentencing criteria.”); State v. Carter,
11th Dist. Portage No. 2003-P-0007, 2004-Ohio-1181, ¶ 46 (finding that the trial court’s
consideration of the factors enumerated in R.C. 2929.12 can be derived from the
sentencing transcript or the sentencing entry).
{¶21} Moreover, the cases Paxon relies on address prior versions of the statute
that explicitly required findings. Former R.C. 2929.13(B)(2)(a), effective to January 1,
2007, required a court to make three findings before imposing a prison term. State v.
Bradley, 2nd Dist. Greene No. 04CA0091, 2005-Ohio-3056, ¶ 7; State v. Lockett, 2nd
Dist. Montgomery No. 20694, 2005-Ohio-5232, ¶ 5 (“R.C. 2929.13(B)(2)(b) mandates
community control sanctions for felonies of the fourth and fifth degree when the court
makes both of the findings contemplated by that section. R.C. 2929.13(B)(2)(a) mandates
a prison term for felonies of the fourth and fifth degree when the court makes all three
findings contemplated by that section * * *.”) These cases are inapplicable here.
4
{¶22} Accordingly, Paxon’s sole assigned error lacks merit, and the trial court’s
decision is affirmed.
TIMOTHY P. CANNON, J.,
MATT, LYNCH, J.
concur.
5
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164 Ill. App.3d 660 (1987)
518 N.E.2d 218
DONALD D. HAHN et al., Defendants and Counterplaintiffs-Appellants,
v.
A.G. BECKER PARIBAS, INC., et al., Plaintiffs and Counterdefendants-Appellees.
No. 87-225.
Illinois Appellate Court First District (2nd Division).
Opinion filed December 1, 1987.
*661 *662 Howard J. Stein and James E. Hanlon, Jr., both of Katten, Muchin, Zavis, Pearl, Greenberger & Galler, of Chicago, for appellants.
Michael J. Koenigsknecht and Paul J. Novack, both of Gardner, Carton & Douglas, of Chicago, for appellees.
Judgment affirmed.
JUSTICE HARTMAN delivered the opinion of the court:
Defendants-counterplaintiffs Donald D. Hahn, an individual, and Hahn, Holland & Grossman, a partnership (collectively Hahn), appeal from orders: (1) granting the motion for summary judgment of plaintiffs-counterdefendants A.G. Becker Paribas, Inc., a corporation, Becker Paribas Incorporated, a corporation, and Merrill Lynch, Pierce, Fenner & Smith, Inc., a corporation (sometimes collectively Becker), denying Hahn's motion for summary judgment, vacating an arbitration award entered in Hahn's favor, and remanding the parties' claims and counterclaims for arbitration de novo; and (2) denying Hahn's motion for reconsideration.
*663 On appeal, we are asked to consider as issues whether: (1) the circuit court erred in granting Becker's motion for summary judgment and denying Hahn's motion for summary judgment (Ill. Rev. Stat. 1985, ch. 110, par. 2-1005); and (2) the circuit court erred in denying Hahn's motion for reconsideration (Ill. Rev. Stat. 1985, ch. 110. par. 2-1203).
On July 28, 1983, Becker entered into a written contract with Hahn, which would prepare and furnish stock market research materials for Becker and, in return, Hahn would receive an annual fee of $600,000, payable in monthly installments, for a two-year period. The contract also provided that "[a]ny disputes, controversies or claims arising under or in regard to this Agreement shall be settled by arbitration under the applicable rules and regulations of the [National Association of Securities Dealers]" (NASD).
At some point between July 28, 1983, and November 5, 1984, coplaintiff-counterdefendant Merrill Lynch, Pierce, Fenner & Smith, Inc., purchased Becker and Becker apparently ceased to exist; it was succeeded by coplaintiff-counterdefendant Becker Paribas, Inc.
Becker terminated the contract by letter on November 5, 1984. Hahn filed a statement of claim with NASD on March 19, 1985, alleging that Becker terminated the contract without cause and, as a result of the breach, Hahn suffered monetary damages of at least $450,000. Becker filed an answer and counterclaim with NASD on May 3, 1985, denying liability under the contract and alleging a misappropriation of certain proprietary information by Hahn.
Hearings were conducted before a NASD-appointed arbitration panel (the panel) on December 10, 1985, February 4, 1986, and February 5, 1986. At the December 10, 1985, hearing, Becker immediately admitted its breach of the contract and liability for the breach. The issues remaining before the panel, therefore, were the extent of damages suffered by Hahn as a result of the breach, and Becker's counterclaim. Hahn requested $443,259 in damages; Becker maintained that Hahn was entitled to only $237,310.
At the hearing of February 4, 1986, Hahn's counsel presented records purporting to reflect attorney fees incurred by Hahn as a result of the arbitration. The records were marked for identification as "Exhibit 19." Hahn's counsel stated that the amount of fees identified in exhibit 19 was not complete. According to Hahn's attorney, legal fees incurred by Hahn through February 3, 1986, amounted to $21,267.65, a sum greater than the amount recorded in exhibit 19. There is no indication in the record that Hahn moved to admit exhibit 19 into evidence. Becker did not object to Hahn's request for fees.
*664 Following the conclusion of hearings on February 5, 1986, the panel apparently determined that Hahn's award should include attorney fees incurred through the end of the hearings. The panel instructed a NASD staff attorney, Linda Garofola (Garofola), to obtain an updated statement of fees from Hahn's attorney, including fees claimed through the hearing process. The panel also instructed Garofola not to notify Becker of this request.
Garofola telephoned Hahn's counsel on the next day, February 6, advising him of the panel's request; he responded by letter the same day, stating that the records tendered at the February 4, 1986, hearing reflected $21,267.75 in fees incurred by Hahn through January 24, 1986, but fee services rendered to Hahn from January 25, 1986, through February 5, 1986, amounted to an additional $8,851, totalling $30,118.65 in legal fees. Neither the panel nor Garofola nor Hahn's counsel notified Becker of the panel's request or of the letter and fee statement mailed to Garofola by Hahn's counsel.
Garofola drafted the arbitration decision and submitted it to the panel for their signatures. The written decision was mailed to the parties on February 26, 1986. Hahn was awarded $333,120.53 in damages: $292,050 assessed against Becker for the breach; $10,951.88 in interest; and $30,118.65 in legal fees incurred by Hahn as a result of the arbitration.
Becker's counsel received a copy of the decision on February 26, 1986, and telephoned Garofola the following day to question the legal fees assessed against Becker. Garofola replied in writing, enclosing a copy of the fee statement prepared by Hahn and informing Becker's counsel that he could request a reopening of the hearings, but such hearings would be limited to the amount of attorney fees included in the award; the panel would not reconsider the initial determination to award legal fees to Hahn.
Becker filed a complaint against Hahn on April 17, 1986. Citing sections 12(a)(1), (a)(2) and (a)(3) of the Uniform Arbitration Act (the Act) (Ill. Rev. Stat. 1985, ch. 10, pars. 112(a)(1), (a)(2), (a)(3)), Becker alleged: the panel exceeded its authority in awarding attorney fees to Hahn; ex parte communications between NASD staff and Hahn's counsel were not revealed to Becker; Hahn received $8,000 more in attorney fees than were requested at the hearing; ex parte materials were solicited and received by the panel after the conclusion of the hearings and without Becker's knowledge; and the foregoing acts amounted to "undue means" within the meaning of the Act and misconduct prejudicial to Becker. Becker requested a vacatur of the award.
*665 Hahn filed an answer and verified counterclaim in response, Hahn admitted supplying additional evidence to the panel but denied any misconduct or use of undue means prejudicial to Becker. Hahn also raised several affirmative defenses, arguing that: Becker waived any objection to the award; the complaint failed to state a cause of action; and the complaint was filed without reasonable cause, entitling Hahn to have attorney fees assessed against Becker. Hahn's counterclaim alleged that the award was final and binding on the parties and that Becker refused to pay the damages assessed against it. Hahn requested judgment confirming the panel's decision and a further award of fees, costs and interest.
Becker submitted a verified answer to Hahn's counterclaim on June 2, 1986, claiming that the award was not final and binding on the parties and should be vacated or modified.
On July 16, 1986, Becker moved the circuit court for partial summary judgment, contending that the panel exceeded its authority in awarding the fee and urged that the fee portion of the award be vacated. Hahn also filed a motion for summary judgment on July 16, refuting the existence of any grounds for vacating the award or genuine issues of material fact. Becker moved the circuit court for summary judgment anew on October 10, 1986, this time requesting vacatur of the entire arbitration award.
Following a hearing on November 17, 1986, the circuit court granted Becker's motion for summary judgment, denied Hahn's motion, vacated the award in its entirety and remanded the cause for arbitration de novo. At the hearing, the circuit court announced the following findings: the panel initiated ex parte contracts with Hahn's attorney and received additional evidence without notice to Becker. Also unbeknownst to Becker, the panel rendered an award which included the ex parte submission and its fee calculations. Such ex parte contacts call into question the fairness of the decision-making process and undermine the objectivity which must prevail at arbitration hearings. Solicitation of evidence following the hearings, without notice to opposing parties, is precisely the kind of conduct which justifies vacating the award under section 12 of the Act. The gravity of the misconduct, moreover, tainted the entire process and vacatur of the award could not be limited to the fee portion alone. Finally, the court concluded that the panel exceeded its authority in awarding the fees, which also warranted vacating the award.
On December 17, 1986, Hahn moved the circuit court for reconsideration, asserting that the court "misperceived" the chronology of events surrounding the ex parte submission: the panel received the *666 additional evidence after it decided to award full attorney fees to Hahn. Therefore, the fee statement submitted by Hahn "could not have played any part in the award other than to quantify the amount of fees requested." Hahn's motion was denied on January 12, 1987.
Hahn's notice of appeal, filed on January 16, 1987, appealed the order entered November 17, 1986, ruling on the cross-motions for summary judgment and vacating the award, and the order of January 12, 1987, denying Hahn's motion to reconsider.
I
Hahn contends that the circuit court erred in granting Becker's motion for summary judgment and denying Hahn's motion for summary judgment, insisting that the panel's solicitation of ex parte evidence does not warrant vacating the entire award and also argues that the award is entitled to enforcement as a matter of law. See Ill. Rev. Stat. 1985, ch. 10, par. 111.
1 Although arbitration is intended to achieve a final disposition of differences in a manner simpler, more expeditious and less expensive than litigation (Pillott v. Allstate Insurance Co. (1977), 48 Ill. App.3d 1043, 1046-47, 363 N.E.2d 460; Wilcox Co. v. Bouramas (1979), 73 Ill. App.3d 1046, 1050, 392 N.E.2d 198), nothing in this form of dispute resolution, either by statute or case law, suggests any relaxation of ethical standards by which the proceedings undertaken are to arrive at a conclusion. The Act identifies three bases warranting vacatur of the award, which are grounded upon violations of what are commonly recognized as ethical standards (Ill. Rev. Stat. 1985, ch. 10, pars. 112(a)(1), (a)(2), (a)(3)):
"(1) The award was procured by corruption, fraud or other undue means;
(2) There was evident partiality by an arbitrator appointed as a neutral or corruption in anyone of the arbitrators or misconduct prejudicing the rights of any party;
(3) The arbitrators exceeded their powers."
2 Hahn notes correctly that the circuit court's oral findings appeared to limit its decision to violations of sections 12(a)(2) and (a)(3), although the order vacating the award and ruling on the cross-motions for summary judgment did not specifically identify the statutory grounds underpinning its conclusions. An appellee, however, may raise an issue not previously ruled upon by the circuit court if the necessary factual basis for determination of the issue is in the record. (Kravis v. Smith Marine, Inc. (1975), 60 Ill.2d 141, 147, 324 N.E.2d 417.) Here, the facts identified by Becker additionally indicate a violation *667 of section 12(a)(1) of the Act, procurement of an award by "undue means." (Ill. Rev. Stat. 1985, ch. 10, par. 112(a)(1).) The facts so related are identical to those relied upon by the circuit court in vacating the award.
3, 4 "Undue means" has been interpreted as akin to fraud and corruption; it refers to some aspect of the arbitrator's decision or decision-making process which was obtained in an unfair manner and beyond the normal processes contemplated by the act. (Henley v. Economy Fire & Casualty Co. (1987), 153 Ill. App.3d 66, 73, 505 N.E.2d 1091; Seither & Cherry Co. v. Illinois Bank Building Corp. (1981), 95 Ill. App.3d 191, 196-97, 419 N.E.2d 940.) Ex parte contact involving disputed issues raises a presumption that the arbitration award was procured by fraud, corruption, or other undue means. Crosby-Ironton Federation of Teachers, Local 1325 v. Independent School District No. 182, Crosby Ironton (Minn. 1979), 285 N.W.2d 667, 670.[1]
Hahn urges that the construction of "undue means" in City of Manitowoc v. Manitowoc Police Department (1975), 70 Wis.2d 1006, 236 N.W.2d 231, should govern. In Manitowoc, the court found that "undue means" contemplated a more comprehensive area of fraudulent and corrupt acts, and simultaneously restricted this expanded area of behavior to those actions which are inappropriate, unjustified or improper methods of procuring an arbitration award. (Manitowoc, 70 Wis.2d at 1019, 236 N.W.2d at 238.) Furthermore, ex parte contacts do not justify vacating an arbitration award per se; there must also be a showing of improper intent or influence. (Manitowoc, 70 Wis.2d at 1019, 236 N.W.2d at 239.) The Wisconsin arbitration statute, however, although in some respects similar to the Act, is not the same legislation adopted in Illinois and Minnesota. (Compare Ill. Rev. Stat. 1985, ch. 10, par. 101 et seq. and Minn. Stat. Ann. § 572.08 et seq. (West Supp. 1987) with Wis. Stat. Ann. § 788.01 et seq. (West 1981).) Where a court has access to decisions from Illinois and other States interpreting the Act, Manitowoc assumes the lowest position in the hierarchy of preferable case law.
5 In the case sub judice, the ex parte communications between the panel and Hahn clearly constitute "undue means." First, there was no basis whatsoever in the dispute to justify an award of attorney *668 fees. The panel was bound to recognize that under section 10 of the Act (Ill. Rev. Stat. 1985, ch. 10, par. 110), attorney fees were not to be included in the award unless otherwise provided in the agreement to arbitrate. (Himco Systems, Inc. v. Marquette Electronics, Inc. (1980), 86 Ill. App.3d 476, 480, 407 N.E.2d 1013; Board of Education v. Champaign Education Association (1973), 15 Ill. App.3d 335, 340, 304 N.E.2d 138; School Committee v. Dever (1979), 8 Mass. App. 920, 921, 395 N.E.2d 900, 900; see also Doherty v. School Committee (1973), 363 Mass. 885, 885, 297 N.E.2d 494, 495; Bingham County Comm'n v. Interstate Electric Co. (1983), 105 Idaho 36, 42, 665 P.2d 1046, 1052; Beach Resorts International, Inc. v. Clarmac Marine Construction Co. (Fla. App. 1976), 339 So.2d 689, 690-91; County of Clark v. Blanchard Construction Co. (1982), 98 Nev. 488, 492, 653 P.2d 1217, 1220.) The agreement to arbitrate in this case contained no such authority.
Furthermore, Hahn had marked as exhibit 19 for identification copies of its attorney fees invoices for legal services. Hahn's attorney noted that the total amounted to $21,267.65; however, no testimony concerning the hours, services rendered or reasonableness of the charges appears in the record. One of Hahn's witnesses merely concluded that the bills were not duplicative of other bills for legal services. There is no showing in the record that exhibit 19 for identification was ever offered or received in evidence before the panel. This enigmatic state of affairs was compounded by the ex parte solicitation by Garofola on behalf of the panel for updated attorney fees from Hahn's counsel, with directions not to notify Becker, so that additional fees would be improperly added onto fees which the panel has no authority to award in the first place and for which there was no evidence received by the panel. These procedures well qualify for the appellation "undue means" as an aspect of the decision-making process which was beyond the normal process contemplated by the Act. (Henley, 153 Ill. App.3d at 73; Seither, 95 Ill. App.3d at 196-97.) The fee statement submitted by Hahn to the panel clearly was an aspect of the decision-making process since, in a deposition submitted in support of Becker's motion for summary judgment, Garofola indicated that the panel's decision was rendered after Garofola received the solicited fee statement and Hahn's additional $8,851 bill was included in the award assessed against Becker.
Second, from the foregoing account, it is clear that the panel's method in obtaining the evidence was contrary to section 5(b) of the Act, which provides that disputes will be subject to a hearing where "parties are entitled to be heard, to present evidence material to the *669 controversy and to cross-examine witnesses appearing at the hearing." (Ill. Rev. Stat. 1985, ch. 10, par. 105(b).) Soliciting evidence ultimately material to the arbitration award, without granting opposing counsel the opportunity to challenge that evidence, ineluctably contravenes the hearing procedure prescribed by the Act.
II
6 The next issue we must consider is whether the ex parte submission also constituted misconduct prejudicing Becker's rights. (Ill. Rev. Stat. 1985, ch. 10, par. 112(a)(2).) Hahn maintains that mere ex parte contacts, without more, are not "misconduct," and that solicitation of the fee statement was not prejudicial to Becker's interests. Further, Hahn claims that Becker waived this issue.
Ex parte acts by arbitrators have been held to constitute misconduct. (In re State v. Davidson & Jones Construction Co. (1984), 72 N.C. App. 149, 153, 323 S.E.2d 466, 469; Carolina-Virginia Fashion Exhibitors, Inc. v. Gunter (1976), 291 N.C. 208, 221, 230 S.E.2d 380, 389.) Furthermore, in Totem Marine Tug & Barge, Inc. v. North American Towing, Inc. (5th Cir.1979), 607 F.2d 649, 653, the court held that the ex parte receipt of evidence by arbitrators from one party, without notice to the other party, was "misbehavior"[2] prejudicial to the innocent party's rights. In each of the foregoing decisions, ex parte contacts were held to violate fundamental principles of fairness enunciated in the arbitration statutes: awards must be based solely on evidence presented at the hearings, with all parties in attendance. (Totem Marine Tug & Barge, Inc. v. North American Towing, Inc., 607 F.2d at 653; In re State v. Davidson & Jones Construction Co., 72 N.C. App. at 153, 323 S.E.2d at 469; Carolina-Virginia Fashion Exhibitors, Inc. v. Gunter, 291 N.C. at 221, 230 S.E.2d at 389.) As in the procurement of evidence by "undue means," this type of misconduct undermines the objectivity which must prevail if the arbitration process is to succeed.
7 The submission of the additional fee statement cannot be construed *670 as other than prejudicial to Becker's interests. Garofola's deposition testimony admitted delaying final computation of the award until the additional information was received. That ex parte fee statement from Hahn was included in the ultimate sum assessed against Becker, thereby having a direct, monetary impact on Becker, without an opportunity for Becker to challenge that evidence.
8 Hahn's waiver argument is based upon Becker's silence: at the February 4, 1986, hearing, when Hahn introduced a statement of legal fees allegedly incurred as a result of the litigation; when Hahn stated its intention of recouping legal fees charged to Hahn through the end of the arbitration process; and when, in closing argument, Hahn reiterated its belief that it was entitled to attorney fees. When a party intentionally relinquishes a known right, either expressly, as by objection, or by conduct such as silence, inconsistent with an intent to enforce that right, waiver may be inferred. Tri-City Jewish Center v. Blass Riddick Chilcote (1987), 159 Ill. App.3d 436, 440, 512 N.E.2d 363; Wilcox Co. v. Bouramas, 73 Ill. App.3d at 1052; Jean A. McCoy & Sons, Inc. v. La Salle County (1977), 48 Ill. App.3d 802, 804, 363 N.E.2d 442.
9 In the present case, Hahn's contention that Becker waived the right to object to the fee award is without merit. As previously noted, although the fee statement was marked for identification as exhibit 19, Hahn never moved to have it admitted into evidence. During the course of the hearing, when Hahn's documents were received into evidence, the following procedure was established: Hahn's attorney moved to admit the documents; the panel chairman asked for objections or Becker's counsel objected of his own accord; if any objections made were not sustained, the evidence was admitted. Becker's failure to object to the fee records, therefore, did not constitute waiver because Hahn never moved to admit this evidence.
10 Hahn also contends that Becker waived its right to have the award vacated by failing to request that the hearings be reopened, noting that Garofola's letter to Becker, dated February 27, 1986, invited Becker to seek a reopening of the hearings to address the attorney fee issue. By refusing to request further arbitration, Hahn asserts, Becker waived the right to later challenge the award. Section 12 of the Act does not condition a court's right to vacate an award on a prior petition to reopen hearings; a party need only believe that one of the five grounds to vacate an award exists in order to apply for a vacatur. (Ill. Rev. Stat. 1985, ch. 10, pars. 112(a)(1), (a)(2), (a)(3).) Moreover, section 12(b) indicates that the proper procedure to follow, once the decision is delivered, is to move to vacate the award. Ill. *671 Rev. Stat. 1985, ch. 10, par. 112(b).
III
Does the additional information received by the panel mandate vacatur of the entire arbitration award, as was done by the circuit court? Hahn advocates restraint and argues that vacatur, if any, should be limited to the $30,118.65 in legal fees. At the November 17, 1986, hearing, the circuit court expressed its belief that the "taint" of the panel's misconduct was so broad that a remand of all claims for arbitration de novo was unavoidable.
As we view the posture of this case, had the panel merely exceeded its power in awarding the fees, the appropriate remedy would have been to vacate and remand only that part of the award which represented their usurpation of authority. (Saville International, Inc. v. Galanti Group, Inc. (1982), 107 Ill. App.3d 799, 801, 438 N.E.2d 509; Board of Education v. Champaign Education Association, 15 Ill. App.3d at 340.) The panel's use of undue means and misconduct, however, calls into question the fairness and objectivity of the entire arbitration process. In Goldsberry v. Hohn (1978), 120 Ariz. 40, 583 P.2d 1360, the court vacated the award in its entirety, although only one of the issues raised on appeal addressed ex parte communications by the arbitrators. Similarly, in Ministrelli Construction Co. v. Sullivan Brothers Excavating, Inc. (1979), 89 Mich. App. 111, 279 N.W.2d 593, the arbitrators heard claims and counterclaims raised by both parties, but ex parte activities by the arbitrators were held to justify vacatur of the whole award. See also Carolina-Virginia Fashion Exhibitors, Inc. v. Gunter, 291 N.C. at 221, 230 S.E.2d at 389.
11 Hahn insists that vacatur of the entire award was improper since the conduct of which complaint is made was based upon a single incident the ex parte communication. As has been shown, however, no award of attorney fees was authorized to begin with. Further, the panel had not received in evidence any factual basis for its decision. Lastly, the panel directed its staff to refrain from advising Becker of its action. We cannot conclude from the foregoing that the circuit court had no bases upon which to consider the entire arbitration proceeding as tainted. (See Crosby-Ironton, 285 N.W.2d at 670; Stefano Berizzi Co. v. Krausz (1925), 239 N.Y. 315, 146 N.E. 436.) The circuit court here properly vacated the award in its entirety.
IV
Hahn also appeals the circuit court's denial of its motion for reconsideration. Hahn moved the court to reconsider its ruling on the *672 cross-motions for summary judgment and vacatur of the arbitration award, asserting that the court misperceived the chronology of events leading to the panel's request for an additional fee statement from Hahn.
Garofola, in an affidavit submitted in support of Hahn's summary judgment motion, averred that the panel solicited the fee statement only after it decided to grant Hahn legal fees through the end of the hearings. Therefore, argued Hahn, any ex parte communications followed the panel's decision to award the fees; the ex parte contacts "played no other part in the award other than to quantify the amount of fees requested." The case law cited by Becker in support of its arguments, Hahn continued, involved ex parte communications completed before the arbitrators reached their decision and thus affected the award.
12 Whether a motion for reconsideration should be granted is within the circuit court's discretion (Freeman v. Augustine's Inc. (1977), 46 Ill. App.3d 230, 236, 360 N.E.2d 1245), and its decision will not be reversed absent an abuse of that discretion (Bethlehem Steel Corp. v. Tishman-Adams, Inc. (1977), 45 Ill. App.3d 1003, 1010, 360 N.E.2d 475). Hahn's motion did not purport to raise any new evidence, but merely reiterated facts already before the court. Hahn's attempt to distinguish this case from cases cited by Becker does not persuade: the instant panel solicited and received ex parte evidence from Hahn and intentionally denied notice thereof to Becker; the evidence sought and received ex parte related to an issue which the panel had no authority to consider ab initio; that evidence figured in the award ultimately issued by the panel; Becker had no opportunity to refute or challenge the additional evidence as prescribed by the Act. We find no abuse of the circuit court's discretion in denying Hahn's motion for reconsideration under these facts.
For the reasons above stated, the judgment of the circuit court must be affirmed.
Affirmed.
STAMOS and BILANDIC, JJ., concur.
NOTES
[1] Section 20 of the Act states: "This Act shall be so construed as to effectuate its general purpose to make uniform the law of those states which enact it." (Ill. Rev. Stat. 1985, ch. 10, par. 120.) Minnesota has adopted the Act. (Minn. Stat. Ann. § 572.08 et seq. (West Supp. 1987).) Thus, Crosby-Ironton and cases from other States adopting the Act are entitled to greater than usual deference in interpreting the statute. Garver v. Feguson (1979), 76 Ill.2d 1, 389 N.E.2d 1181.
[2] The grounds for vacating an arbitration award under the Act and the Federal arbitration statute are nearly identical. The Federal statute reads in relevant part (9 U.S.C. § 10(c) (1982)):
"In either of the following cases the United States court in and for the district wherein the award was made may make an order vacating the award upon the application of any party to the arbitration
* * *
(c) Where the arbitrators were guilty of * * * any other misbehavior by which the rights of any party have been prejudiced."
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37 F.3d 635
Moorev.Singletary**
NO. 92-3036
United States Court of Appeals,Eleventh Circuit.
Sept 20, 1994
1
Appeal From: N.D.Fla.
2
AFFIRMED.
**
Local Rule 36 case
|
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IN THE
TENTH COURT OF APPEALS
No. 10-18-00368-CR
JONATHAN E. ROGERS,
Appellant
v.
THE STATE OF TEXAS,
Appellee
From the 13th District Court
Navarro County, Texas
Trial Court No. D36062-CR
ABATEMENT ORDER
The appellant’s brief is overdue in this appeal.
We abate this appeal to the trial court to conduct any necessary hearings within
30 days of the date of this Order pursuant to Texas Rule of Appellate Procedure
38.8(b)(2) and (3). TEX. R. APP. P. 38.8(b)(2), (3).
The supplemental clerk’s and reporter’s records required by the rule, if any, are
ordered to be filed within 45 days of the date of this Order. See id.
PER CURIAM
Before Chief Justice Gray,
Justice Davis, and
Justice Neill
Appeal abated
Order issued and filed April 3, 2019
Do not publish
Rogers v. State Page 2
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342 F.2d 485
Edward Meyers CALDWELL, Appellant,v.J. Reuel ARMSTRONG, Trustee in Bankruptcy, United States of America, and Dixie Faye Caldwell Shea, Appellees.
No. 7768.
United States Court of Appeals Tenth Circuit.
March 17, 1965.
COPYRIGHT MATERIAL OMITTED Byron Hirst, Cheyenne, Wyo. (James L. Applegate and Richard V. Thomas, Cheyenne, Wyo., were with him on the brief), for appellant.
Joseph Kovner, Atty., Dept. of Justice (Louis F. Oberdorfer, Asst. Atty. Gen., Lee A. Jackson and Fred E. Youngman, Attys., Dept. of Justice, and Robert Chaffin, U. S. Atty., and LeRoy V. Amen, Asst. U. S. Atty., were with him on the brief), for appellee United States.
Richard F. Pickett, Cheyenne, Wyo., and Harold M. Johnson, Rawlins, Wyo. (Loomis, Lazear, Wilson & Pickett, Cheyenne, Wyo., were with them on the brief), for appellees J. Reuel Armstrong, trustee in bankruptcy, and Dixie Faye Caldwell Shea.
Before MURRAH, Chief Judge, BREITENSTEIN, Circuit Judge, and DAUGHERTY, District Judge.
BREITENSTEIN, Circuit Judge.
1
Divorce and bankruptcy combine here to present vexatious legal problems. Appellant Caldwell, the bankrupt, appeals from the affirmation of a referee's order excluding from the bankruptcy estate the proceeds of a matured policy insuring his life. Appellees Dixie Faye Caldwell Shea and the United States assert liens against those proceeds — Dixie because of a Wyoming divorce decree and the United States because of levies for unpaid federal income tax.
2
Caldwell owned a matured, single-premium endowment policy on his life. The policy was issued by New England Mutual Life Insurance Company, the insurer, which has never been a party to any of these proceedings. The policy provided that Caldwell could withdraw the entire amount, "if living, after having attained the age of thirty-five (35) years." Caldwell became 35 on April 2, 1963. The value of the policy was about $6,300.
3
The marriage between Caldwell and Dixie was terminated by a divorce decree entered by a Wyoming state court on January 8, 1963. So far as pertinent the decree awarded Dixie $4,056.33 and her attorney $407, all payable out of the policy proceeds. Caldwell was ordered to execute a partial assignment of the policy proceeds to Dixie and to exercise his right to withdraw such proceeds on April 2, 1963. The policy was delivered to the clerk of the court. The decree provided that upon the failure of Caldwell to do what was needed to pay the award out of the policy proceeds "then this Decree shall have the full force and effect in law and equity of the partial assignments or any other paper or instrument which may be required by said Insurance Company to properly authorize and cause the payment of said sums to be made * * *." Also, the decree enjoined Caldwell from taking any action which would render the decree ineffective.
4
On February 15, 1963, the United States filed a notice of levy on the insurer in the amount of $2,591.49 on account of federal income taxes assessed against Caldwell and unpaid. Additional levies were made later.
5
Caldwell filed a voluntary petition in bankruptcy in Wyoming federal court on May 31, 1963, and appellee Armstrong was named trustee. The petition listed the insurance policy as an asset. Dixie filed a proof of claim in the amount of the divorce award and asserted that payment was secured by the policy. On recommendation of the trustee the referee held that the policy was not part of the estate. The bankrupt filed a petition for review and the district court upheld Dixie's lien but ordered the balance paid into the bankruptcy estate. The United States then filed a motion for new trial because of the disregard of its levies. Meanwhile Dixie and the United States had made a written agreement that out of the policy proceeds Dixie should receive $4,093.32 and the United States $2,221.14. On reconsideration the district court upheld Dixie's lien and the United States' levies and approved the division of the policy proceeds between them in accordance with the agreement. The bankrupt then brought this appeal.
6
Dixie and the trustee have moved to dismiss the appeal on the ground that the bankrupt is not an aggrieved person within the meaning of the Bankruptcy Act, and hence not entitled either to petition for review of the referee's order or to appeal from the court's order of affirmance.1 In ordinary circumstances a bankrupt is not an aggrieved party with rights of review,2 because the adjudication absolves him of liability and he has no interest in the distribution of his estate,3 and because his property has passed to the trustee by operation of the Bankruptcy Act.4 The bankrupt says that the case at bar is an exception to the general rule.
7
The issue is whether the proceeds of the policy shall be included within the bankruptcy estate. If included, the assets will be sufficient to pay the tax claims. If not included, bankrupt will be left with a tax liability of about $1,400 which is not dischargeable in bankruptcy.5 Rather than being absolved of all liability the bankrupt, if the order is affirmed, will be left with a substantial financial burden which will detrimentally affect his rights. This is enough to make him an aggrieved person within the meaning of the statute.6 He cannot rely on the trustee to protect his rights because the trustee has recommended that the policy proceeds be not included in the bankruptcy estate and has aligned himself with Dixie and the United States. The motion to dismiss is not well taken.
8
We are concerned with the validity of the liens claimed by the United States and Dixie. If valid, they cover all the policy proceeds. Little need be said about the tax liens of the United States. The bankrupt does not contest his liability for the taxes. Indeed he cannot consistently do so because he must rely on the undischarged tax liability to sustain his claim of aggrievement. The bankrupt does contend that the levy is faulty.7 We held in Kirby v. United States, 10 Cir., 329 F.2d 735, that contingent property rights of a taxpayer are subject to federal tax lien and levy. In any event the bankrupt is in no position to complain about the levies. They did not add to the amount of the federal tax claim and served only to free the tax claim from the priorities accorded by § 64, sub. a(1), (2), and (3) of the Bankruptcy Act.8 Claims having such priorities are represented by the trustee — not by the bankrupt. The trustee has agreed to the effectiveness of the federal tax levies.
9
The main thrust of the bankrupt's argument is directed against the trial court's holding that the divorce decree gave Dixie an equitable lien on the policy proceeds which excluded the amount of such lien from the bankruptcy estate. The attack is made on so many fronts that simple disposition is impossible.
10
On January 8, 1963, the date of the divorce decree, the bankrupt owned the policy with right to enjoyment, except as to current income, postponed until the occurrence of his 35th birthday on April 2, 1963. A Wyoming statute9 authorizes a divorce court of that state to "make such order * * * as shall seem just and equitable" on property, rights or interests, or money "due or to become due" to the husband and to enforce such order "by attachment, commitment, injunction or by other means, according to the usages of courts."10 Another Wyoming statute11 provides that a divorce court may decree a specific sum to be paid by the husband to the wife, "and use all necessary legal and equitable processes to carry its decrees into effect." Rule 70 of the Wyoming Rules of Civil Procedure, which is similar to Rule 70, F.R.Civ.P., authorizes coerced conveyances of property.
11
Because the parties to the divorce were residents of Wyoming, the only problem is whether the power of the court may be exercised in regard to property which is in Massachusetts where the insurer has its office. The answer is that for purpose of ownership and transfer the situs of personal property is that of the domicile of the owner.12 Accordingly, a Wyoming court with its broad statutory powers could order an assignment of the fund, and create a lien in favor of the assignee, to effectuate an award to the divorced wife.
12
Caldwell, the bankrupt, next contends that if the state court had power to reach the insurance fund, it did not effectively exercise that power. Its decree ordered Caldwell to exercise his right to withdraw the policy proceeds available to him on April 2, 1963, and to execute a partial assignment to Dixie within five days of that date. If he did not do so, the decree was to operate as such assignment. Caldwell was restrained from actions which would render the decree ineffective. Dixie says that the decree created an equitable assignment or equitable lien as of January 8, 1963. Caldwell says that the decree amounts to nothing more than an order requiring him to pay a debt out of a particular fund.
13
As we read the state court decree, the court intended not to rely on the personal liability of Caldwell but did intend to attach some definite obligation to the insurance fund. The only way in which Caldwell could have defeated the operation of the decree would have been by dying before his 35th birthday. If he lived, the fund was subject to the charge imposed by the court; and if he did not make the assignment, the decree was self-executing.
14
An equitable lien is a creature of equity, is based on the equitable doctrine of unjust enrichment, and is the right to have a fund or specific property applied to the payment of a particular debt.13 Such a lien may be declared by a court of equity out of general considerations of right and justice as applied to the relationship of the parties.14 In the instant case the divorce court found a specific amount due Dixie and ordered payment thereof from a specific fund. This is not a case like First Nat'l Bank v. Ennis, 44 Wyo. 497, 14 P.2d 201, where the court considered an agreement to pay out of a particular fund. Here the court, in order to do justice between the parties, ordered everything necessary to satisfaction of the wife's debt to be done and provided that if it was not done, the decree should be self-executing. The injunctive provisions of the decree accomplished the same divestment of control by the husband as might have been accomplished by delivery of possession of a tangible to the wife. We conclude that the Wyoming court exercised its broad statutory powers so as to charge the fund with the debt due the wife and that by its action the fund was subject to an equitable lien in favor of the wife.15
15
The bankrupt next argues that if the divorce decree did charge the insurance fund with an equitable lien in favor of Dixie it did not become effective until April 2, 1963, the date on which he became eligible to exercise his withdrawal right. Because that date is within four months of bankruptcy, he says that the lien is a voidable preference.
16
The Tenth Circuit has held that a lien becomes effective when the right to a fund materializes or when the fund comes into existence. In Underwood v. Phillips Petroleum Co., 10 Cir., 155 F.2d 372, the court construing Oklahoma law said that a contract under which a party is to receive compensation out of a particular fund if and when realized gives such party an equitable lien on the fund, when created, in the hands of one having notice of the contract. A similar rule was announced in Mitchell v. Bowman, 10 Cir., 123 F.2d 445, a case arising in Colorado. In Porter v. Searle, 10 Cir., 228 F.2d 748, a debtor agreed "immediately to execute" a chattel mortgage and failed to do so. The court applying Utah law held that an equitable lien attached at the time when the debtor refused to give the mortgage, and that because he had agreed to execute the mortgage immediately, the lien became effective immediately. We know of no reason why the same principles should not govern in Wyoming.
17
In the case at bar the fund was in existence and was owned by Caldwell subject to postponed right of enjoyment. The equitable right to the fund materialized when the divorce court entered its decree and could have been defeated only by the death of Caldwell. We are convinced that in the circumstances presented the lien was effective on the entry of the divorce decree.16
18
The final argument of the bankrupt is that Dixie did not perfect her lien so as to withstand the powers of the trustee to avoid preferences. Section 60, sub. a(6) of the Bankruptcy Act17 declares a policy against the recognition of equitable liens in bankruptcy except where such liens could not have been perfected by some available means or except where the debtor's interest is only equitable. Here we have a situation in which Dixie could do no more than she did to perfect the lien. She obtained the decree and notified the insurer. Our attention is called to no procedure under Wyoming law which either required or permitted her to do more. No garnishment of the insurer would have been possible until after April 2, 1963. In our opinion notice to the insurer was sufficient to protect her against subsequent assignees and against the trustee.18 We find nothing in such conclusion which violates the policy declared by § 60, sub. a(6).19 Additionally the requirements of § 60, sub. a(2) are satisfied because Dixie's lien was so perfected that no subsequent lien obtainable by legal or equitable proceedings on a simple contract could become superior to her rights.
19
The motion to dismiss is denied and the judgment is affirmed.
Notes:
1
Section 39, sub. c of the Bankruptcy Act, 11 U.S.C. § 67, sub. c provides that a person "aggrieved" by a referee's order may petition for review. Section 25, 11 U.S.C. § 48, provides for an appeal to a court of appeals after written notice to the "aggrieved" party
2
See Manda v. Sinclair, 5 Cir., 278 F.2d 629, 630, certiorari denied 364 U.S. 908, 81 S.Ct. 271, 5 L.Ed.2d 224
3
See Hartman Corp. of America v. United States, 8 Cir., 304 F.2d 429, 430
4
See In re Pramer, 7 Cir., 131 F.2d 733, 735
5
The provision that liability for alimony is not dischargeable in bankruptcy, 11 U.S.C. § 35, sub. a(2), has no application because we are convinced that the divorce decree made a property settlement and did not order alimony. A property settlement may be discharged in bankruptcy. In re Alcorn, N.D.Cal., 162 F.Supp. 206, 209
6
See Klein v. Rancho Montana De Oro, Inc., 9 Cir., 263 F.2d 764, 771; Menick v. Hoffman, 9 Cir., 205 F.2d 365, 367. In re Tyne, 7 Cir., 261 F.2d 249, 251-252, certiorari denied sub nom. Tyne v. Venetucci, 359 U.S. 974, 79 S.Ct. 892, 3 L.Ed.2d 841, recognizes that a bankrupt may have an appealable interest if the equity in the property to be recaptured would create a surplus above his debts
7
The bankrupt says that the tax levies were made within four months of bankruptcy. The statutory provisions on liens and fraudulent transfers do not apply to federal tax liens. See § 67, sub. b of the Bankruptcy Act, 11 U.S.C. § 107, sub. b
8
11 U.S.C. § 104, sub. a(1), (2), and (3). These relate to administrative expenses, claims for wages earned within three months of bankruptcy, and the expenses of certain creditors' actions
9
Wyo.Stat.Ann. (1957) § 20-59
10
In Wyoming expectancies or contingent interests are alienable property. See Wyo.Stat.Ann. (1957) § 1-974
11
Wyo.Stat.Ann. (1957) § 20-63
12
Vogel v. New York Life Ins. Co., 5 Cir., 55 F.2d 205, 208, certiorari denied 287 U.S. 604, 53 S.Ct. 9, 77 L.Ed. 525. See also Roberts v. Bathurst, 5 Cir., 112 F.2d 543, 545, certiorari denied 311 U.S. 709, 61 S.Ct. 317, 85 L.Ed. 460. Compare State of Texas v. State of New Jersey, 85 S.Ct. 626, decided February 1, 1965
13
United States v. Adamant Co., 9 Cir., 197 F.2d 1, 10, certiorari denied sub nom. Bullen v. Scoville, 344 U.S. 903, 73 S. Ct. 283, 97 L.Ed. 698
14
Cleveland Clinic Foundation v. Humphrys, 6 Cir., 97 F.2d 849, 856, 121 A.L. R. 163, certiorari denied 305 U.S. 628, 59 S.Ct. 93, 83 L.Ed. 403
15
The United States does not contest the lien claim of Dixie and nothing in the record suggests that such lien claim is questioned by the insurer
16
No point is made of notice to the insurer. The record shows that it was notified of the divorce decree on January 16, 1963
17
11 U.S.C. § 96, sub. a(6)
18
See Michigan Fire & Marine Ins. Co. v. Genie Craft Corp., D.C.Md., 195 F. Supp. 222, 229
19
See Porter v. Searle, 10 Cir., 228 F.2d 748, 755
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593 F.3d 886 (2010)
FISHERMEN'S FINEST INC; U.S. Fishing LLC; North Pacific Fishing Inc, Plaintiffs-Appellants,
v.
Gary LOCKE,[*] as he is the Secretary of the United States Department of Commerce, Defendant-Appellee.
No. 08-36024.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted November 6, 2009.
Filed January 19, 2010.
*888 Linda R. Larson and Jessica K. Ferrell, Marten Law Group PLLC, Seattle, WA, for the plaintiffs-appellants.
Charles R. Scott, United States Department of Justice, Environment & Natural Resources Division, Washington, D.C., for the defendant-appellee.
Before: ARTHUR L. ALARCÓN, ANDREW J. KLEINFELD and RICHARD R. CLIFTON, Circuit Judges.
Opinion by Judge ALARCÓN; Dissent by Judge CLIFTON.
ALARCÓN, Senior Circuit Judge:
Fishermen's Finest, Inc., North Pacific Fishing, Inc., and U.S. Fishing, LLC, ("Fishermen's") appeal from the district court's order granting summary judgment in favor of the Secretary of the United States Department of Commerce. Fishermen's challenges the Secretary's issuance of a final rule adopting Amendment 85 ("A85") to the Fishery Management Plan ("FMP") for Groundfish of the Bering Sea *889 and Aleutian Islands Management Area ("BSAIMA").
The Government allocates Pacific cod in the BSAIMA among different sectors of the fishing industry. Fishermen's belongs to the trawl Catcher/Processor ("CP") sector. It contends that the most recent allocation, which reduced its share of the Pacific cod fishery, did not comport with applicable law.
We affirm because we agree with the district court that the Secretary did not act arbitrarily and capriciously in adopting Amendment A85.
I
Fishermen's operates two medium-sized vessels that fish for Pacific cod, flatfish, rockfish and Atka mackerel in the BSAIMA. The BSAIMA fishery is located off the northwest coast of Alaska. It is this nation's largest in terms of harvest and area. Pollock is the most lucrative and largest fishery in the BSAIMA; Pacific cod is second. Different means of fishing are employed in the BSAIMA. Allocations are made among different methods of fishing, because of their individualized environmental and socioeconomic impact. A trawler is a fishing vessel that fishes by dragging a large net or trawl through the water. CP vessels process fish by removing the head and gut as soon as they are caught, hence Fishermen's belongs to a sector colloquially known as the "Head & Gut" sector.
A
To understand the substance of Fishermen's claims requires an overview of the Government's regulation of fishing. Finding that "[c]ertain stocks of fish have declined to the point where their survival is threatened," 16 U.S.C. § 1801(a)(2)(A), Congress enacted the Magnuson-Stevens Fishery Conservation and Management Act ("MSA") in 1976 to "conserve and manage fishery resources" and to "achieve and maintain, on a continuing basis, the optimum yield from each fishery." Id. § 1801(b)(1) & (4). In order to achieve these ends the MSA established eight regional Fishery Management Councils ("Councils"), which could set the Total Allowable Catch ("TAC") for each fish species in different fishing zones. See id. §§ 1852(b) & (c), 1801(b)(5); 1852(h)(1). The FMP's, and amendments thereto, do not become effective, however, until they are approved by the Secretary. See 16 U.S.C. §§ 1854(a)-(b), 1855. The Secretary has delegated this responsibility to the National Marine Fisheries Service ("NMFS"), which only promulgates the regulation after ensuring the FMP's and amendments are consistent with the MSA's ten National Standards, inter alia, 16 U.S.C. § 1854(a)-(b), and after a period of public comment. Id. §§ 1854(a)(1)(B) & (b)(1)(A).
Fishermen's complains that the most recent allocations of the Pacific cod TAC in amendment A85 to the current FMP of the BSAIMA violated National Standard 2 and National Standard 4 of the MSA. National Standards 2 and 4 provide that:
(2) Conservation and management measures shall be based upon the best scientific information available.
...
(4) Conservation and management measures shall not discriminate between residents of different states. If it becomes necessary to allocate or assign fishing privileges among various United States fishermen, such allocation shall be (A) fair and equitable to all such fishermen; (B) reasonably calculated to promote conservation; and (C) carried out in such a manner that no particular individual, corporation, or other entity *890 acquires an excessive share of such privileges.
16 U.S.C. § 1851(a)(2) & (4). The MSA requires the NMFS to promulgate guidelines interpreting the National Standards. Id. at § 1851(b). According to the guidelines, National Standard 2 "best scientific information" "includes, but is not limited to, information of a biological, ecological, economic, or social nature." 50 C.F.R. § 600.315(b)(1) (2006). Further, FMPs and amendments must "take into account" the "best scientific information available at the time of preparation" and if new information becomes available between initial drafting and NMFS review, it "should be incorporated into the final FMP where practicable." Id. § 600.315(b). Where there are conflicting facts and opinions, the Fishery Management Councils may choose what to consider "but should justify the choice." Id. § 600.315(b)(1).
With regards to National Standard 4, allocations are "fair and equitable" if they are "rationally connected to the achievement of [optimum yield] or with the furtherance of a legitimate FMP objective." Id. § 600.325(c)(3)(i)(A). Further, "[i]nherent in an allocation is the advantaging of one group to the detriment of another." Id. Thus, "[a]n allocation of fishing privileges may impose a hardship on one group if it is outweighed by the total benefits received by another group or groups." Id. § 600.325(c)(3)(i)(B). For example, section 305 of the MSA sets aside a portion of TAC for eligible villages as part of the Western Alaska Community Development Quota Program. See 16 U.S.C. § 1855(i)(1)(A).
Fishermen's also argues that A85's TAC allocation violates 211(a) of the American Fisheries Act ("AFA") by creating an "adverse impact" on non-AFA fishing vessels. In 1998, the AFA created a monopoly in fishing rights to pollock assigned to specific vessels that met a past participation test in that industry. AFA § 208. Fishermen's does not belong to this group. It is referred to as a non-AFA participant in BSAIMA fishing. The vessels granted a monopoly by the AFA operate as cooperatives that also engage in fishing for other species, as was anticipated and approved of by the AFA. Because of the competitive advantage the specific AFA vessels gained due to their pollock monopoly, Congress sought to limit their impact on other fisheries by dictating that Councils:
shall recommend for approval by the Secretary such conservation and management measures as it determines necessary to protect other fisheries under its jurisdiction and the participants in those fisheries, including processors, from adverse impacts caused by this Act or fishery cooperatives in the directed pollock fishery.
AFA § 211(a) (emphasis added). Congress also built in protections in the AFA against unfair competitive advantages for the AFA vessels by imposing "sideboards," which are limits on how much fish of other species AFA vessels are allowed to catch. AFA § 211(b)(2) & (C). For example, in the Pacific cod fishery, AFA trawl CP vessels operated under a sideboard limit of 6.1% of TAC and AFA trawl CV vessels operated under a sideboard limit of 20.2% of TAC. As a result of the AFA, non-AFA vessels increased their harvest of non-pollock species, as they were now excluded from pollock. A80 Final Rule, 72 Fed. Reg. at 52, 668.
B
An FMP for the BSAIMA was first promulgated in 1981. 46 Fed.Reg. 63, 295 (Dec. 31, 1981). It includes annual TACs for each of seventeen target species, including Pacific cod. In 1994, for the first time, Amendment 24 allocated the Pacific *891 cod TAC, 44% to the "fixed gear" (hook-and-line and pot) sector, 54% to the trawl sector, and 2% to the jig gear sector (fishing lure methods). 59 Fed.Reg. 4009, 4010 (Jan. 28, 1994). These allocations reflected the harvests in those sectors from 1991 to 1993, with the exception that the jig gear's allocations was increased to encourage growth. Amendment 24 also gave the NMFS authority to "reallocate Pacific cod from vessels [from one sector to another] anytime ... the [NMFS] determines that one gear group or the other will not be able to harvest its allocation of Pacific cod." 59 Fed.Reg. at 4010.
In 1997, Amendment 46 divided the trawl allocation between catcher vessels ("CV") and catcher-processors ("CP") and allocated 51% to fixed gear, 47% to trawl gear (divided equally), and 2% for jig gear. 61 Fed.Reg. 59029 (Nov. 20, 1996)(codified at 50 C.F.R. pt. 679). Amendments 64 and 77, passed in 2000 and 2003, respectively, further refined sector subdivisions from the original fixed gear sector into five groups. See 65 Fed.Reg. 51553 (Aug. 24, 2000)(codified at 50 C.F.R. pt. 679); 68 Fed.Reg. 49416 (Aug. 18, 2003)(codified at 50 C.F.R. pt. 679). These amendments did not alter the TAC allocated to the trawl CP group. See 72 Fed.Reg. 5654, 5655 (February 7, 2007) (proposed rule) (noting a 23.5% TAC quota for trawl CPs between 1997 and A85).
On September 4, 2007, the NMFS updated the FMP for groundfish of the BSAIMA with Amendment 85, which sets forth new allocations for the TAC of Pacific cod that each of nine sectors may catch annually. Fisheries of the Executive Economic Zone Off Alaska, Pacific Cod Allocations in the Bering Sea and Aleutian Island Management Area, 72 Fed.Reg. 50788 (September 4, 2007) (codified at 50 C.F.R. pt. 679). For the first time since the MSA, trawl CPs were divided between AFA trawl catcher processors (part of the fleet granted pollock fishing rights under the AFA) and non-AFA trawl catcher processors (those who had no pollock fishing rights). 72 Fed.Reg. at 50788. Because AFA trawl CP vessels were now limited in their amount of Pacific cod by a direct allocation, there was no longer a need for the 6.1% sideboard limit imposed by the AFA. The sideboard was phased out.
The North Pacific Council, which has authority over the BSAIMA, sought the adoption of A85 because "[g]rowing demand for Pacific cod, a fully exploited fishery, and other distributional concerns among sectors led the Council to consider a[n] ... action to revise allocations of Pacific cod among the many BSAI[MA] groundfish sectors." 72 Fed.Reg. at 5657. Revision of allocations had become necessary because current allocations meant that "one or more sectors are typically unable to harvest their annual allocation of the Pacific cod TAC." 72 Fed.Reg. at 5655. "Thus, to provide an opportunity for the full harvest of BSAI Pacific cod non-CDQ TAC, existing allocations of Pacific cod that are projected to be unharvested by some sectors are annually reallocated by NMFS to other sectors." Id. "Since BSAI Pacific cod sector allocations have been in effect, NMFS has reallocated Pacific cod each year from the trawl and jig sectors to fixed gear sectors." Id.; See also Fishery Management Council, Public Review Draft: Environmental Assessment/Regulatory Impact Review/Initial Regulatory Flexibility Analysis for Proposed Amendment 85 iii-iv and Table E-1 (March 12, 2006) (hereinafter "EA/RIR/IRFA") (noting that between 2000 and 2004, trawl CPs reallocated 19% of their sector's quota). The NMFS also carried out other more minor reallocations. Id.
The problem statement setting forth the objectives of A85 reads as follows:
*892 The BSAIMA Pacific cod fishery is fully utilized and has been allocated among gear groups and to sectors within gear groups. The current allocations among trawl, jig, and fixed gear were implemented in 1997 (Amendment 46) and the CDQ [Community Development Quota] allocation was implemented in 1998. These allocations are overdue for review. Harvest patterns have varied significantly among the sectors resulting in annual in-season re-allocations of TAC. As a result, the current allocations do not correspond with actual dependency and use by sectors.
Participants in the BSAIMA Pacific cod fishery who have made significant investments and have long-term dependence on the resource need stability in the allocations to the trawl, jig, fixed gear and CDQ sectors. To reduce uncertainty and provide stability, allocations should be adjusted to better reflect historic use by sector. The basis for determining sector allocations will be catch history as well as consideration of socio-economic and community factors.
As other fisheries in the BSAIMA and GOA are incrementally rationalized, historical participants in the BSAIMA Pacific cod fishery may be put at a disadvantage. Each sector in the BSAIMA Pacific cod fishery currently has different degrees of license requirements and levels of participation. Allocations to the sector level are a necessary step on the path towards comprehensive rationalization. Prompt action is needed to maintain stability in the BSAIMA Pacific cod fisheries.
72 Fed.Reg. at 5657. In pursuing socioeconomic factors, the North Pacific Council stated that it was particularly interested in expanding entry-level, local opportunities to fish cod for coastal Alaskan communities that may be under-represented due to the high fixed cost barrier to entry present in other fishing methods. Id.
The Council aimed to allocate Pacific cod based on the average of catch history. The pre-A85 and post-A85 allocations can be summarized as follows (all numbers are a percentage of TAC):
---------------------------------------------------------------------------
Average Recent Average
Retained Harvest Retained Harvest
SECTOR Pre-A85 A85 (1995-2003) (2000-2003)
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Jig 2.0 1.4 0.1 0.1
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Hook-and-line/pot-CV 0.7 2.0 0.4 0.7
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Hook-and-line CP 40.8 48.7 49.1 49.4
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Pot CV (60 ft +) 7.6 8.4 8.6 9.0
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AFA Trawl CP 2.2 1.5
23.5 2.3
---------------------- -----------------------------------------
Non-AFA Trawl CP 13.4 13.4 16.0
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Trawl CV 23.5 22.1 24.0 21.6
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72 Fed.Reg. at 5659, Table 3: Current and Proposed Allocations of BSAIMA Pacific cod non-CDQ TAC and Average Harvest Share by Sector (percent) (emphasis added). When it began its analysis in 2003, the Council considered alternative options for the data that should be used in determining the historical catch. The Council selected the most expansive set of years, choosing to analyze catch history data from 1995, when allocations began, to 2003. In April 2006, the Council voted to take final action and propose new sector allocations, including providing the non-AFA trawl CP sector with a 13.4% share of the TAC. Fishermen's points out that these *893 allocations have a significant financial impact on fisheries as each percent of the TAC allocated represents approximately $2 million in revenue.
By that time further catch history data from 2004 and 2005 was available. The non-AFA trawl CP sector had an average of 17.7 percent of the retained harvest between 2004 and 2005. 72 Fed.Reg. at 5660, Table 4: Average Share (percent) of Retained Harvest 2004-2005. Whereas the data from 1995 to 2003 was processed based on fish tickets, which issue only upon sale or transfer of fish, the 2004 and 2005 data was extrapolated from observer estimates. Further, observer coverage varied between sectors. Id.
The Council disregarded the 2004 and 2005 data because it considered it inequitable to favor the trawl CP sector, which in response to high market demand for Pacific cod and in anticipation of A85's evaluation of usage, had been able, thanks to its prior over-allocation, to increase steadily its Pacific cod fishing, while other sectors which suffered from under-allocation, remained limited to smaller usage. Thus, the Council "considered [the 2004-2005] data ... to illustrate recent harvest trends," but did not rely upon them in establishing allocations.
Consistent with the problem statement, the Council allocated higher than the average historical catch to those sectors that would most benefit coastal Alaskan communities: the small fixed gear sector, 77% of which is comprised of residents of coastal Alaskan communities, and the jig sector, which uses coastal processing facilities. In justifying the non-AFA trawl CP sector's allocation, the Council also noted that the trawl sectors had never "funded" allocation increases for the entry-level small fixed gear CV sector above its historic average, that CV sectors contribute more to the economy of coastal communities than CP sectors (because of onshore processing), and that CV sectors had suffered greater impacts from restrictions to protect Stellar sea lions.
Re-allocations also occurred based on the need to preserve a "directed cod" fishery for various sectors. The term "directed" fishery refers to whether vessels intend to catch that particular species of fish or whether the fish is caught incidentally. Fish caught incidentally are known as "bycatch." Vessels previously would discard the dead or dying bycatch back into the sea although some were kept for sale. Because of the waste and detrimental environmental effects of this practice, MSA National Standard 9 requires that bycatch be minimized. 16 U.S.C. § 1851(a)(9). Accordingly, in 1997, the NMFS required vessels to retain all, or specified amounts of, pollock and Pacific cod, by adopting Amendment 49 for the BSAIMA FMP. 62 Fed.Reg. 63, 880, 63, 890 (Dec. 3, 1997) (codified at 50 C.F.R. § 679.27). In proposing A85, the Council sought to allocate enough Pacific cod TAC to the AFA trawl CP sector so it could maintain the "minimum necessary" for a directed Pacific cod fishery. The Council was motivated by the fact that the AFA trawl CP sector was efficient in its Pacific cod fishing, with a higher percentage of its allocation being used up by directed fishing. The Council also made the decision to favor those with less bycatch by counting pre-1997 historical catch data even though that data did not include bycatch.
Fishermen's contends that the North Pacific Council allocated Pacific cod TAC to the AFA trawl CP sector as part of an impermissible and arbitrary political compromise in order to ensure that one sole vessel of that fleet, the Katie Ann, had a directed cod fishery. Councilman Fuglvog expressed concern about whether the AFA trawl CP sector allocation would be sufficient *894 to allow the Katie Ann to continue its directed cod fishery. In response, Councilwoman Salveson stated that "this action is intended to ... establish allocation to better reflect historic use by sector ... not to provide for a directed fishery for any one vessel." Final allocations to the AFA trawl CP sector were within the range calculated based on historic use.
On February 7, 2007, the NMFS published its proposed rule and request for comments. 72 Fed.Reg. at 5654. On September 4, 2007, it promulgated its final rule and published the comments and responses. 72 Fed.Reg. at 50788. There were numerous comments addressing the allocation of cod to non-AFA trawl CPs. See, e.g., 72 Fed.Reg. at 50793 (Comment 3), 50795 (Comments 6 and 9), 50796 (Comment 11), 50798 (Comment 16).
On October 4, 2007, Fishermen's filed this action in federal court challenging A85 under the judicial review powers over regulations promulgated under the MSA, including FMPs, granted by the APA. 16 U.S.C. § 1855(f)(1) & (2). The district court upheld Secretary's decision in a summary judgment order on December 5, 2008. It held that (1) A85's allocations were rationally connected to the objectives set forth in the problem statement and resulted in a fair and equitable result as required by National Standard 4; (2) the inclusion of the 1995-1997 years and exclusion of the 2004-2005 years in calculating historical catch data was not a failure to consider the best scientific information available under National Standard 2; (3) the allocation to the AFA trawl CP sector was not a political compromise merely for the benefit of the Katie Ann; and (4) the allocations did not create an adverse impact in violation of the AFA by robbing the non-AFA trawl CP sector to benefit the AFA trawl CP sector. Fishermen's has timely appealed. This Court has jurisdiction under 28 U.S.C. §§ 1291 and 1294(1).
II
A
Fishermen's contends that the Secretary violated National Standard 2 and National Standard 4 in promulgating A85. Further, Fishermen's contends that A85 creates an adverse impact on non-AFA vessels in violation of the AFA.
"This Court reviews a district court's decision to grant summary judgment de novo with all facts read in the light most favorable to the non-moving party." Yakutat, Inc. v. Gutierrez, 407 F.3d 1054, 1066 (9th Cir.2005)(quoting Covington v. Jefferson County, 358 F.3d 626, 641 n. 22 (9th Cir.2004)). In reviewing regulations promulgated under the Magnuson Act, "our only function is to determine whether the Secretary [of Commerce] `has considered the relevant factors and articulated a rational connection between the facts found and the choice made.'" Alliance Against IFQs v. Brown, 84 F.3d 343, 345 (9th Cir.1996) (quoting Wash. Crab Producers, Inc. v. Mosbacher, 924 F.2d 1438, 1440-41 (9th Cir.1990)). "We determine only if the Secretary acted in an arbitrary and capricious manner in promulgating such regulations." Alliance Against IFQs, 84 F.3d at 345. "Under the APA, we will reverse the agency action only if the action is arbitrary, capricious, an abuse of discretion, or otherwise contrary to law." Lands Council v. Powell, 379 F.3d 738, 743 (9th Cir.2004), amended by 395 F.3d 1019 (9th Cir.2005).
B
To be valid A85 must be consistent with the National Standards presented in the Magnuson-Stevens Act. 16 U.S.C. § 1854; see Yakutat, 407 F.3d at 1058 *895 (The Fishery Management Plans ... must be consistent with the "national standards" described in the Magnuson Act.). The regulations implementing National Standard 4 require that motives for new allocations be "justified in terms of the objectives of the FMP." 50 C.F.R. § 600.325(c)(3)(i)(A). Fishermen's argues that, because A85 reduces the non-AFA trawl CP allocation below Fishermen's definition of "historical use," the changed quota fails to meet the stated objectives. Fishermen's contrasts the problem statement, which points out that pre-A85 allocations did not reflect "actual dependency and use," with the new regulations that reduce their share below their actual average usage in 2004 and 2005. 72 Fed.Reg. at 5657. Fishermen's narrowly focuses on this one clause at the expense of a more comprehensive, coherent reading of the entire statement. While the final problem statement does begin describing, among other concerns, a discrepancy between allocations and actual use, it specifically provides that the basis for future allocations "will be catch history" and other socioeconomic considerations. 72 Fed.Reg. at 5657. Fishermen's was allocated an annual TAC that was the average of their historic usage of Pacific cod from 1995 to 2003. In terms of socioeconomic and community factors, their share was reduced in part to fund the entry-level small fixed gear sector of coastal Alaskan residents.
Fishermen's also attempts a novel combination of National Standard 4 of the MSA with 211(a) of the AFA. Fishermen's points out that National Standard 4 forbids excessive privileges to one group while 211(a) forbids adverse impacts caused by any unfair advantages to the AFA vessels. Fishermen's then would have us conclude that A85, by shifting percentage points in its final allocation from the non-AFA trawl CP sector to the AFA trawl CP sector, violated both. The Council, however, may under National Standard 4, "impose a hardship on one group if its outweighed by the total benefits received by another group or groups." Id. § 600.325(c)(3)(i)(B). As noted above, part of the reduction was due to socioeconomic factors leading the Council to fund sectors that favor growth for coastal Alaskan residents. Further, whatever shift in percentage points that could be "traced" from the non-AFA trawl CP sector to the AFA trawl CP sector was rationally justified by the need to preserve the more efficient directed cod fishery of the latter. As for 211(a), we discuss it separately and do not believe there is any statutory confluence that requires special treatment of 211(a) with National Standard 4.
Fishermen's attempts to combine the requirements of AFA 211(a) with National Standard 4, by claiming the NMFS was required to analyze specifically any adverse impact A85 would have on the non-AFA trawl CP sector caused by benefitting the AFA trawl CP sector. As explained below, however, if anything, A85 had an adverse impact on the AFA trawl CP sector, thus, there can be no reasonable expectation that the NMFS should analyze a non-existent harm.
Fishermen's has failed to demonstrate that the allocation, although disadvantageous to them, was not fair or equitable in furthering the beneficial objectives of the FMP. Thus, A85 comports with National Standard 4.
Fishermen's makes a related argument that the NMFS failed to analyze the impact of the allocations under National Standard 4 by failing to consider its "potential" loss of a directed cod fishery. The regulations state that "the Council should make an initial estimate of the relative benefits and hardships imposed by the allocation." 50 C.F.R. § 600.325(c)(3)(i)(B). *896 However, the EA/RIR/IFRA demonstrates that the Council did consider the impact of the changes on the non-AFA trawl CP sector. For example, the Council considered the extent limitations on bycatch would prevent a direct cod fishery for the trawl sector, and noted that separate allowances would prevent the non-AFA trawl sector from closing down directed cod fishing for the entire trawl sector. Further, the responses to the comments published with the final rule show that the NMFS determined that, even under a "worst case scenario," the non-AFA trawl CP sector would be able to maintain a directed cod fishery. See 72 Fed.Reg. at 50799, 50801. The National Standards do not require any particular outcome with respect to allocations; rather, they provide a framework for the Council's analysis. There is nothing in the MSA that guarantees Fishermen's a directed cod fishery. Fishermen's is to a certain extent a victim of its own success, because the greater its operations for other fish species, inevitably the greater its incidental bycatch of Pacific cod. One of the BSAIMA FMP's objectives under the MSA is "conservation and management." Accordingly, under National Standard 9, the FMPs, and the amendments thereto, must minimize bycatch. The Council is not tied down by the need to allocate in order to preserve directed cod fisheries for participants with high levels of bycatch. The Council fulfilled its obligations under the framework by analyzing the impact of the new allocations on the non-AFA trawl CP sector. Thus, none of the Secretary's actions on this issue were arbitrary or capricious. Alliance Against IFQs, 84 F.3d at 345.
C
Under National Standard 2, conservation and management measures "shall be based upon the best scientific information available," 16 U.S.C. § 1851(a)(2), which, "includes, but is not limited to, information of a biological, ecological, economic, or social nature." 50 C.F.R. § 600.315(b)(1). Fishermen's argues that the Council failed to consider the most relevant data in developing the new allocations. Fishermen's asserts that the Council considered data that was too old and no longer relevant to reallocation information, and failed to consider the relevance of the most recent available data. Fishermen's further argues that instead of basing the decision on "scientific analysis" it was an "arbitrary political compromise."
Fishermen's maintains that the older catch history data analyzed by the Council was irrelevant. They argue that any data collected before 1998 is particularly misleading because catch regulations changed in 1998. In support, Fishermen's point out that in A80, a concurrent amendment designed to reorganize all species fishing in the BSAIMA, pre-1998 data was ignored because there was a concern the data would fail to best "represent the traditional harvest patterns of the [A]80 sector." 72 Fed.Reg. at 52688 (A80 Final Rule). The Council, however, stated its rationale for including the older data in A85. The year of 1995 was selected as a starting point because it immediately followed the first Magnuson-Stevens Act allocations. The Council acknowledged that there were intervening events that may have changed the circumstances of the allocations, in particular the 1998 AFA legislation and 2001 attempts to protect the Steller sea lion. For example, the passing of the AFA legislation pushed the non-AFA trawl sector into increased cod fishing. The AFA, however, pushed all non-AFA Pacific cod participants into increased Pacific cod use, not just Fishermen's. The key difference is that because Fishermen's belonged to a sector with one of the most significant over-allocations prior to A85, it was one of *897 the few who could increase its usage without being limited by its allocation in response to the AFA. If the Council focused exclusively on post 1999 data, it would benefit Fishermen's unfairly while ignoring long-term harvest trends for the industry as a whole not just Fishermen's sector.
Further, the data Fishermen's disputed was not the only National Standard 2 data the Council was allowed to rely on in making its decision, considering the objectives of the FMP. The Council also made reallocations based on sociological data, which pointed towards increasing allocations to the small gear sector that consisted mainly of coastal Alaskan residents.
Finally, it is evident that the Council examined several potential data sets before selecting the range including 1995 to 1998. Even with regards to the selection of the years in question, the Council determined that a smaller set of years would produce skewed results based on a too narrow view of market demand for cod in those years. In other words, although the AFA legislation and Stellar sea lion protection measures were significant variables that did threaten to render pre-1998 data misleading, the Council "justified its choice," as required by 50 C.F.R. § 600.315(b)(1), to include the pre-1998 data because it believed a host of other variables were influencing catch history and a more accurate representation could only be reached by broadening the set of years to include all years with comparable data since allocations began. Ultimately, any selection of data inherently places one party at a disadvantage; Fishermen's has failed to demonstrate how this selection of this data was arbitrary or capricious. The Council stated a permissible rationale for including pre-1998 data and nothing in the record of the Council's deliberations on this issue appears capricious or contrary to the evidence. See Yakutat, Inc., 407 F.3d at 1067 (Council "drew a rational line" by omitting 1999 from analysis of which boats to include in Pacific cod fishery because those boats omitted as a result not dependent on that one species).
D
Fishermen's argues that the Council failed adequately to consider data from the two most recent catch years (2004 and 2005). Fishermen's relies on the requirement that FMP's must incorporate new information as it becomes available where practicable. 50 C.F.R. § 600.315(b)(2). The Secretary concluded that, "[t]he Council and NMFS considered more recent (2004 and 2005) harvest data from the NMFS catch accounting database in reviewing harvest history to illustrate recent harvest trends as that information became available, but it was not available in the same format as the data from 1995 through 2003." See 72 Fed.Reg. at 50793-94 (Comment 3 and Response). For 1995 to 2003, the Council had data from Federal Weekly Production Reports and Alaska Department of Fish and Game fish tickets. The NMFS noted that using a set based on retained harvest from 1995-2003 was more accurate than using data from later years because the latter is based on observer estimates. 72 Fed.Reg. at 50793. To use observer data would be inequitable because certain sectors, such as the AFA trawl CP group, are observed more carefully than others who would have to rely on extrapolated data. Id. In fact, fish tickets only became available in raw data form for the 2004 and 2005 years in March 2006, a month prior to the Council issuing its proposed allocations. Given the time needed to process the information, and the fact that the Council's deliberations were coming to a close after more than two years, incorporating the new information was not "practicable" and so need not have *898 been considered under National Standard 2. See 50 C.F.R. § 600.315(b) (if new information becomes available between initial drafting and NMFS review, it "should be incorporated into the final FMP where practicable.") (emphasis added).
The Secretary also contends that the Council did take into account data for 2004 and 2005, even if those numbers did not form the basis for the final historical catch numbers. As a review of the Secretarial Review Draft of A85 demonstrates, data from 2004 and 2005 was analyzed. The Council noted that the non-AFA trawl CP sector had a harvest share in 2004 that was greater than any other year. Id. at 273. However, the NMFS noted that, despite this increase in harvest, the higher 2004 and 2005 numbers did not mean that the combined trawl CP sector was catching its entire allocation. 72 Fed.Reg. at 50794. In part, the Council discounted this recent data because of unusually high market demand for Pacific cod in those years, as well as "the likelihood of competition for Pacific cod among sectors in anticipation of this action." Because of its prior over-allocation, Fishermen's belonged to a sector that could increase its usage in response to these incentives, unlike other sectors. The Secretary provided a rational explanation for the Council's action: the Council did not wish to reward Fishermen's sector for their prior over-allocation by perpetuating it while telling the other sectors they did not need bigger allocations because they had maximized their current allocations.
The record shows that the Council also considered the best available sociological data, which indicated that TAC percentage needed to be subtracted from other sectors to benefit the coastal Alaskan communities. The need to maintain consistency in data and treat all sectors equally is an ample justification for using the 1995-2003 data. It was not practicable to include the 2004-2005 data. The Secretary's decision in this regard was neither arbitrary nor capricious.
E
Fishermen's point to the Council's treatment of the Katie Ann, an AFA trawl CP vessel, for the argument that inappropriate political considerations interfered with rational decision making. Regulations that are "a product of pure political compromise" in the absence of scientific justification will generally be viewed as arbitrary and capricious. Midwater Trawlers Co-operative v. Dep't of Commerce, 282 F.3d 710, 720-21 (9th Cir. 2002) (specific allocation of fishing rights to Indian tribe not based on scientific rationale in violation of MSA). While the Council had considered allocating 1.5% of the TAC to the AFA trawl CP sector, they increased the quota to this sector to 2.3% based, in part, on the concern that the Katie Ann would not be able to maintain its directed cod fishery. In other words, absent an increased allocation, ships like the Katie Ann would only be able to catch cod as bycatch during their directed pollock fishery. A Council member noted there were "negotiations and discussions" that led to the increased allocation. Reading the record as a whole, it is clear that the Council considered not just the Katie Ann in the context of maintaining a directed cod fishery, but the sector as a whole and its historic use. As the Secretary points out, however, ample rational and scientific reasons supported the final allocations, which reflected Fishermen's historic usage. In fact, the agency acted consistently with its original position, which had always been to allocate the AFA trawl sector between 0.9% and 3.7% and the non-AFA trawl CP sector between 12.7% and 16.2%, based on historical usage. Furthermore, the AFA trawl CP *899 sector, with a much smaller allocation than the non-AFA trawl CP sector, was managing to maintain a directed cod fishery because it had less bycatch as a proportion of its Pacific cod fishery. Under National Standard 9, which requires bycatch to be minimized, the Council's decision to ensure the continuance of the directed cod fishery had practical conservation and management objectives, not political ones. Thus, political concerns did not predominate as they did in Midwater Trawlers Co-operative, 282 F.3d at 720-21, where the final agency decision was pure political compromise, as the agency did not engage in any scientific analysis.
F
The AFA requires that the Council shall manage the BSAIMA in a way to protect non-AFA vessels from adverse impacts of the directed pollock monopoly. 16 U.S.C. § 1851, note, AFA 211(a).[1] Fishermen's claims A85 has such an adverse impact because it "robs" the non-AFA trawl CP sector to benefit the AFA trawl CP sector. Before A85, the trawl CPs were one sector allocated 23.5% of the TAC. See 72 Fed. Reg. at 5659. The AFA itself protected the non-AFA trawl CP sector by allocating to the AFA trawl CP sector a "sideboard" limit of 6.1% of Pacific cod catch. AFA § 211(b)(2)(A). A85 effectively replaces this protection by splitting the two sectors and allocating each a set allocation, with the non-AFA trawl CP sector limited to 13.4% and the AFA trawl CP sector to 2.3%. The substance of Fishermen's argument is that A85 causes "adverse impact" as defined in 211(a) because the historic catch of the non-AFA sector was higher than its A85 allocation whereas the historic catch of the AFA sector was lower than its A85 allocation. Fishermen's argument that they were injured in violation of 211(a) ignores the fact that 211(a) as defined in the AFA permitted greater impact by the AFA sector on the non-AFA sector than A85 effectuates. The AFA-imposed sideboard permitted the AFA sector to fish for 26%[2] of the total Pacific cod of the trawl CP sector, whereas of the total post-A85 allocation, the AFA trawl CP sector had only 14.6%[3] of the total. Thus, the AFA trawl CP sector's supposed encroachment on the non-AFA trawl CP sector was actually greatly reduced by A85 as compared to the AFA itself, which is the source of rights Fishermen's would supposedly have us rely on. The question is not whether the A85 limits on AFA vessels are less restrictive than historical usage, but whether they are greater than the impact legally allowed by the AFA. They are not. Hence, A85 does not run afoul of the American Fisheries Act.
CONCLUSION
We are persuaded that the Secretary did not act arbitrarily and capriciously in approving Amendment A85. As we noted in Alliance, "[t]he Secretary is allowed, under [controlling precedent], to sacrifice the interest of some groups of fishermen for the benefit as the Secretary sees it of the fishery as a whole." 84 F.3d at 350. Here the interests of Fishermen's were sacrificed for the benefit of the fishery *900 as a whole, as the Secretary favored sectors that benefitted coastal Alaskan residents, and selected data that would reduce prior unintended favoritism to the non-AFA trawl CP sector, to which Fishermen's belonged.
AFFIRMED.
CLIFTON, Circuit Judge, dissenting:
The American Fisheries Act of 1998 ("AFA") granted a lucrative monopoly in pollock fishing rights to 20 vessels operating in the BSAIMA (described as "AFA trawl CP vessels"). The AFA compensated fishing vessels not favored by the pollock monopoly ("non-AFA vessels") by charging the North Pacific Council with protecting them from the monopoly's adverse effects. Specifically, the Council's Fishery Management Plans ("FMPs") must "protect other fisheries under its jurisdiction and the participants in those fisheries, including processors, from adverse impacts caused by this Act or fishery cooperatives in the directed pollock fishery." 16 U.S.C. § 1851, note, AFA § 211(a). I conclude that Amendment 85 ("A85") violates this protective mandate by directly allocating Pacific cod to the AFA sector to the detriment of the non-AFA trawl CP sector. Additionally, the Council's use of pre-AFA data to calculate "catch history" violates National Standard 2 of the Magnuson-Stevens Act ("MSA"), a requirement that FMPs employ "the best scientific information available." 16 U.S.C. § 1851(a)(2). As a result, I respectfully dissent.
I. AFA § 211(a)
In A85, the Secretary and the Council abdicated their responsibility to protect non-AFA vessels by granting the already privileged AFA trawl CP sector, for the first time, a direct allocation of the total authorized catch ("TAC") of Pacific cod. That allocation was made at the expense of, among others, the non-AFA trawl CP sector, which of necessity relies more heavily on Pacific cod after being pushed out of the pollock fishery by the AFA.
Specifically, A85 grants the AFA trawl CP sector a direct allocation of 2.3% of the Pacific cod TAC-a portion well above that sector's historic Pacific cod harvest. At the same time, A85 reduces the non-AFA trawl CP sector's allocation to 13.4% of the Pacific cod TAC-a portion well below that sector's recent harvests and below even its historic average as calculated by the Council. (As discussed below, there is reason to question the Council's calculation.) The historic character of the new allocations calls into question the Council's professed goal for A85 of "better reflect[ing] historic use by sector." More importantly, by any reasonable measure the new allocations adversely impact the non-AFA trawl CP sector at the same time that they benefit the sector already favored with the pollock monopoly granted under the AFA.
The majority opinion seeks to rebut this assessment of A85's adverse impact on the non-AFA trawl CP sector by comparing the 6.1% "sideboard" limit formerly imposed on the AFA trawl CP sector's Pacific cod harvest to the smaller allocation made by A85 to the AFA sector. Supra at 899. That misinterprets the function of the sideboard limit, which imposed a hard cap on the AFA trawl CP sector's harvest rather than granting it a direct allocation like the one the sector now enjoys under A85. The majority opinion's statement that "[t]he AFA-imposed sideboard permitted the AFA sector to fish for 26% of the total Pacific cod [allocated to the combined] trawl CP sector" is imprecise and misleading. Id. Instead, the 6.1% sideboard allowed the AFA sector to harvest no more than 26% of the combined trawl CP sector's allocation; it did not actually guarantee *901 the AFA sector any fraction of the total trawl CP harvest. Prior to A85, the AFA sector and the non-AFA trawl CP sector were treated as one group, subject to a single allocation. As the Secretary acknowledges, "[p]rior to A85, the non-AFA trawl CP sector could theoretically [have] harvest[ed] the entire 23.5% allocation of the Pacific cod TAC that it shared with the AFA trawl CP sector (because the AFA trawl CP sector's 6.1% sideboard was a limit rather than an exclusive allocation)."
In fact, the AFA sector never came close to harvesting 6.1% of the Pacific cod TAC. Between 1995 and 2003, the years on which the Council based its reallocation, the AFA sector's average harvest was just 1.7% of the TAC. By contrast, the non-AFA CP trawl sector's average harvest during the 1995-2003 period was 13.6% of the TAC. The allocations assigned to those sectors by A85 are 2.3% and 13.4%, respectively. Thus, even using the range of years the Council relied on to calculate "catch history" as the basis for comparison, A85 assigned the AFA sector a share of the Pacific cod fishery above historic levels while curtailing the non-AFA sector's Pacific cod fishing rights below its historic share.
If attention is focused on the years since adoption of the AFA, A85's adverse impact on the non-AFA trawl CP sector is even worse. In post-AFA years, between 1998 and 2003, the AFA sector's average harvest of Pacific cod was just 1.5%, substantially lower than A85's allocation of 2.3%. During those years the non-AFA trawl CP sector harvested 15.7% of TAC, yet A85 allocates only 13.4% to that group.
These numbers contradict the majority opinion's conclusion that "A85 had an adverse impact on the AFA trawl CP sector" or that the non-AFA sector is complaining of a "non-existent harm." Supra at 899 n. 1. Instead, A85 grants the favored AFA sector the additional boon of independence from the formerly combined trawl CP sector's Pacific cod allocation with a margin for expansion beyond its historic Pacific cod harvest, and it inflicts on the non-AFA trawl CP sector an unmitigated loss of the Pacific cod market share (both allocated and actual) that sector cultivated in the years following its exclusion by the AFA from the pollock fishery. In sum, A85's redistribution of the Pacific cod TAC imposes on the non-AFA trawl CP sector an adverse impact that § 211(a) requires the Council to guard against.
II. The Relevant History
The Council adopted the purpose of "better reflect[ing] historic use by sector" and declared "catch history" as one of three bases for determining sector allocations. Having done so, the Council was required by National Standard 2 to use "the best scientific information available" in furtherance of its stated goals. 16 U.S.C. § 1851(a)(2). Determining what time period to consider as relevant history was obviously important in evaluating historic use. The Council calculated catch history based on the years 1995 to 2003. That selection brings to mind Mark Twain's observation:
Figures often beguile me, particularly when I have the arranging of them myself; in which case the remark attributed to Disraeli would often apply with justice and force: "There are three kinds of lies: lies, damned lies and statistics."[1]
*902 The AFA was adopted in 1998. Prior to that time, pollock was not reserved to the chosen few fishing vessels. After the AFA changed the rules of the game by granting the AFA sector its pollock monopoly, other fishermen were required to focus on other species, notably including Pacific cod. To no one's surprise, in later years, when they couldn't catch pollock, they caught more cod. Yet the Council defined "catch history" to include several years before the AFA changed the rules.
The Council's problem statement explained its reliance on pre-AFA data by stating that
Consideration of just three or four recent years does not show dependency of the sectors over time and may be unduly biased because of increased market demand for Pacific cod in recent years for some products, potential decreased participation due to BSAI crab rationalization, and the likelihood of competition for Pacific cod among sectors in anticipation of this action.
But these post-AFA market stimuli should make pre-AFA data less, not more, useful in reallocating Pacific cod going forward. Most importantly, the passage of the AFA in 1998 forced the non-AFA trawl CP sector to expand its Pacific cod operations to compensate for its exclusion from the pollock fishery, as the TAC shares discussed above confirm. That sector is still excluded from the pollock fishery by the AFA. The fishermen cannot go back to 1995-1998 circumstances. The Council should not pretend that they can, but that is exactly what A85 does. Relying on pre-AFA data to calculate the catch history of post-AFA players, without making any effort to adjust for the impact of the AFA, is manifestly unreasonable.
The decisions of the Secretary and the Council are entitled to great deference, but that deference is not unchecked. I would hold that in curtailing the non-AFA vessels' rights to harvest Pacific cod while expanding those rights in AFA vessels, the adoption of A85 violated § 211(a) of the AFA, and in using pre-AFA data to calculate "historic" catch it violated National Standard 2 of the MSA.
NOTES
[*] Gary Locke is substituted for his predecessor as Secretary of the United States Department of Commerce. Fed. R.App. P. 43(c)(2).
[1] Fishermen's attempts to combine the requirements of AFA 211(a) with National Standard 4, by claiming the NMFS was required to analyze specifically any adverse impact A85 would have on the non-AFA trawl CP sector caused by benefitting the AFA trawl CP sector. As explained below, however, if anything, A85 had an adverse impact on the AFA trawl CP sector, thus, there can be no reasonable expectation that the NMFS should analyze a non-existent harm.
[2] 6.1% divided by 23.5%.
[3] 2.3% divided by (2.3% + 13.4%).
[1] Mark Twain, Chapters from My Autobiography, 185 North American Review, No. DCXVIII., July 5, 1907, at 465, 471. There is doubt as to whether the attribution of the saying to Disraeli is correct.
|
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TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-98-00008-CV
William Walter Pyle, Jr., Appellant
v.
First National Bank in Cameron, Appellee
FROM THE DISTRICT COURT OF MILAM COUNTY, 20TH JUDICIAL DISTRICT
NO. 22,885, HONORABLE CHARLES E. LANCE, JUDGE PRESIDING
William Walter Pyle, Jr. appeals from the trial court judgment rendered against him
in First National Bank's (the Bank) suit to set aside a transfer of land as fraudulent. We will
modify and affirm the judgment.
Factual and Procedural History
This suit arises out of loans the Bank made to Pyle, which he did not repay when
due. The Bank filed suit in cause number 22,428, First National Bank in Cameron v. Pyle, 20th
Judicial District Court of Milam County. On September 18, 1991, the trial court rendered
summary judgment against Pyle in that suit for $164,465.38, $163.00 in court costs, post-judgment interest, and attorneys' fees. Pyle did not appeal that judgment, which therefore became
final October 18, 1991. (1)
On September 17, 1991, Pyle transferred the disputed property to a partnership
called Pyco Joint Venture. Pyco had four general partners: Karen Pyle, Lee Allen Pyle, William
Walter Pyle III, and appellant Pyle. The three other partners are Pyle's children. The transfer
to the partnership consisted of three tracts of land including Pyle's 64% undivided interest in
1,419 acres and fee simple interest in 272.71 acres, and also all of his non-exempt equipment and
vehicles. Each child's undivided interest in the 1,419 acres was transferred to Pyco as well. The
partnership agreement creating Pyco allowed the other partners to buy out Pyle's interest in the
partnership for $100.00.
Shortly after the transfer, the Bank filed the current suit. The final judgment in this
suit consists of several partial summary judgments and a jury verdict on attorneys' fees. All trial-court parties other than Pyle have settled and are no longer parties to this appeal. On appeal, Pyle
presents six issues contending that the trial court erred in: granting a judgment for attorneys' fees
when the party recovering those fees did not request or receive relief under the statute asserted
as the basis for the fee recovery; granting summary judgment based on superseded pleadings;
granting summary judgment when that judgment adjudicated issues of fact regarding intent,
solvency of a debtor, and value of property; rendering a final judgment that granted two
inconsistent forms of relief; striking pleadings without a written request to do so; and striking
pleadings for alleged misconduct, unrelated to the merits of that party's claims, which had been
separately punished. We begin with appellant's second issue.
Amended Pleadings
In his second issue, Pyle contends that the court erred in rendering a final judgment
based in part upon a partial summary judgment because the pleadings upon which the partial
summary judgment was based were superseded. Although the Bank amended its pleadings after
the partial summary judgment disposing of the fraudulent transfer issue, the final judgment could
rely on the partial summary judgment.
Pyle relies upon cases which present the issue of omission of claims or parties
through amendment. For example, in Sosa v. Central Power & Light, 909 S.W.2d 893, 894
(Tex. 1995), the defendant moved for summary judgment based on facts in the plaintiff's
pleadings that showed limitations barred the suit. Before the hearing on summary judgment,
however, plaintiff amended his pleadings to delete those factual allegations. The trial court struck
the second petition as untimely and granted summary judgment for defendant. See id. at 895.
The supreme court held the amended pleadings had been timely. Therefore, the summary
judgment based on the omitted judicial admissions was improper. See id.
In Radelow-Gittens Real Property Management v. Pamex Foods, 735 S.W.2d 558,
559 (Tex. App.--Dallas 1987, writ ref'd n.r.e.), the court dealt with the effect on the ability to
appeal when a party was omitted from amended pleadings. The court granted a partial summary
judgment in Pamex's favor. Radelow-Gittens then filed second and third amended petitions,
neither of which contained any claim against Pamex. See id. After entry of final judgment,
Radelow-Gittens attempted to appeal the partial summary judgment in favor of Pamex. The court
held that Radelow-Gittens could not appeal because it had abandoned its claim against Pamex by
the time of the final judgment. See id. at 560. The court noted that Radelow-Gittens could have
appealed if it had not abandoned its claims against Pamex. See id.; see also Frias v. Atlantic
Richfield Co., 999 S.W.2d 97, 102 (Tex. App.--Houston [14th Dist.] 1999, pet. filed) (second
amended motion for summary judgment did not incorporate grounds in first amended motion for
summary judgment; appeal could not review denial of first motion because those grounds not
before it due to amendment).
In contrast, all grounds upon which the partial summary judgment was based
remained before the court after the Bank amended its pleading, and the final judgment could rely
on the partial summary judgment. We overrule issue two.
Fraudulent Transfer
In issue three, Pyle contends that the partial summary judgment in the Bank's favor
voiding the transfer as fraudulent was improper because there were material disputed fact issues
concerning his intentions, his financial condition at the time of the transfers, and the value
received in exchange for the transfers. Pyle contends that any or all of these three issues are
unlikely candidates for determination by summary judgment, citing Quinn v. Dupree, 303 S.W.2d
769, 774 (Tex. 1957) (intent to defraud creditors is ordinarily a question for the jury); In re
Fairchild Aircraft Corporation, 6 F.3d 1119, 1125 n.5 (5th Cir. 1993) (reasonably equivalent
value is inherently fact laden); and Sunbelt Savings, F.S.B v. Bank One Texas, N.A., 816 S.W.2d
106, 111 (Tex. App.--Dallas 1991) (summary judgment on insolvency improper), rev'd on other
grounds, 824 S.W.2d 557 (Tex. 1992). That certain issues are not usually amenable to summary
judgment, however, does not mean that summary judgment is always inappropriate.
Summary judgment is properly granted only when a movant establishes there are
no genuine issues of material fact to be decided and that it is entitled to judgment as a matter of
law. See Tex. R. Civ. P. 166a(c); Memorial Med. Ctr. v. Howard, 975 S.W.2d 691, 692 (Tex.
App.--Austin 1998, pet. denied). In reviewing the grant of summary judgment, we view the
evidence in the light most favorable to the non-movant and make every reasonable inference and
resolve all doubts in favor of the non-movant. See Nixon v. Mr. Property Management Co., 690
S.W.2d 546, 548-49 (Tex. 1985); Howard, 975 S.W.2d at 693. When the trial court's order
granting summary judgment does not specify the grounds relied upon, we will affirm the judgment
if it is supported by any of the grounds put forth by the movant. See Bradley v. State ex rel.
White, 990 S.W.2d 245, 247 (Tex. 1999); Howard, 957 S.W.2d at 693.
A transfer may be fraudulent if the debtor made the transfer without receiving a
reasonably equivalent value in exchange and the debtor was insolvent or became insolvent because
of the transaction. See Tex. Bus. & Com. Code Ann. § 24.006 (West 1987). (2) Pyle estimated the
value of the land at $900 per acre. He had a 64% undivided interest in 1419 acres; and sole
ownership in 272 acres. The evidence concerning the value of Pyle's interest in Pyco, the
transferee, was the $100.00 buyout provision in the joint venture agreement. The evidence
presented shows a significant disparity between the valuation of the land per acre, that is, the asset
transferred, and the price for which his share of the joint venture could be purchased, that is, the
value received. (3) In our opinion, the Bank has established this element of a fraudulent transfer
as a matter of law.
The other element of a fraudulent transfer that the Bank needed to establish was
Pyle's insolvency at the relevant time. Within ninety days of the transfer to Pyco, Pyle filed for
bankruptcy. (4) A bankrupt debtor is judicially estopped from refuting statements made in
bankruptcy at a later time. See Stewart v. Hardie, 978 S.W.2d 203, 208 (Tex. App.--Fort Worth
1998, pet. denied). In general, pleadings in a particular case are regarded as formal judicial
admissions. See Dowelanco v. Benitez, 4 S.W.3d 866, 871 (Tex. App.--Corpus Christi 1999, no
pet.); Cameron County v. Velasquez, 668 S.W.2d 776, 782-83 (Tex. App.--Corpus Christi 1984,
writ ref'd n.r.e.). Pleadings in another case that are inconsistent with a party's position in a
present action are quasi-admissions. See Dowelanco, 4 S.W.3d at 871; Velasquez, 668 S.W.2d
at 782-83. Quasi-admissions are treated as judicial admissions when it appears: (1) the
declaration was made during the course of a judicial proceeding; (2) the statement is contrary to
an essential fact embraced in the declarant's theory of recovery or defense; (3) the statement is
clear, deliberate, and not a mistake; (4) giving conclusive effect to the admission will not be
contrary to the public policy on which the rule is based; and (5) the statement is not destructive
of the offering party's theory of recovery. See Mendoza v. Fidelity & Guar. Ins. Underwriters,
Inc., 606 S.W.2d 692, 694 (Tex. 1980); Dowelanco, 4 S.W.3d at 871.
Any transfer of an interest in property that benefits a creditor may be avoided if
the transfer is made within ninety days before the date of the filing of the bankruptcy petition.
See 11 U.S.C. § 547(b) (1988). For purposes of such avoidance, the bankruptcy code presumes
insolvency during that period. See id. at § 547(f). Pyle's bankruptcy filing stated that any claims,
liens or abstracts of judgment held by the Bank that were based on the judgment on the note were
voidable preferences. By asserting that the Bank's claims would be voidable, Pyle invoked the
presumption that he was insolvent during this period, which was the period of the transfers to
Pyco. Pyle's bankruptcy statement fits the test for a judicial admission: it was made during the
course of a judicial proceeding; it is contrary to an essential fact in his theory of defense (the
claim of solvency as a defense to fraudulent transfer); giving conclusive effect to the statement
fits the policy behind the rule; and, the statement was clear and deliberate and does not destroy
the Bank's theory of recovery. Accordingly, we hold that Pyle conclusively admitted insolvency
based on his prior bankruptcy pleadings.
Additionally, one definition for insolvency under Texas law is "generally not being
able to pay debts as they come due." Tex. Bus. & Com. Code Ann. § 24.003(b) (West Supp.
2000). Pyle, in response to a question during his deposition about whether he was paying debts,
answered he was not because he "just ha[s]n't had the money." When asked about the land, he
replied, "haven't got the land." Pyle asserted that he was solvent and that his assets and liabilities
were "about the same." However, those assertions find no evidentiary support because his
bankruptcy pleadings showed he was not paying his creditors.
Pyle asserts that intent is not amenable to summary judgment, but intent is not an
element of fraudulent transfer under section 24.006. Compare Tex. Bus. & Com. Code Ann.
§ 24.006 with Tex. Bus. & Com. Code Ann. § 24.005(a) (actual intent to defraud or hinder
creditor required). The Bank pleaded more than one fraudulent transfer theory, and has offered
proof of a fraudulent transfer upon which the court could properly have granted summary
judgment. We overrule the third issue presented.
"Double Recovery"
In his fourth issue, Pyle complains that the judgment is fatally inconsistent because
it both voids the real estate transfer from Pyle to Pyco and awards the Bank monetary relief. He
argues that setting aside the allegedly fraudulent transfer was one form of relief potentially
available to the Bank under the fraudulent transfer statute. See Tex. Bus. & Com. Code Ann.
§ 24.008(a)(1) (West 1987). He contends that judgment against the transferee for the value of the
asset transferred (or the amount of the Bank's claim, whichever is less) was a second form of
relief potentially available to the Bank, but only as an alternative to voiding the transfer. See id.
at § 24.009(b). (5)
Pyle is attempting to invoke the doctrine of election of remedies. The election of
remedies doctrine bars relief only when (1) one has made an informed choice (2) between two or
more remedies, rights, or states of facts (3) which are so inconsistent as to (4) constitute manifest
injustice. See Bocanegra v. Aetna Life Ins. Co., 605 S.W.2d 848, 851 (Tex. 1980). The purpose
of the election of remedies doctrine is to prevent double recovery for a single wrong. See Green
Oaks, Ltd. v. Cannan, 749 S.W.2d 128, 131 (Tex. App.--San Antonio 1987), writ denied per
curiam, 758 S.W.2d 753 (Tex. 1988). A plaintiff is entitled to only one satisfaction for injuries
sustained. See Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 7 (Tex. 1992). The "one
satisfaction" rule applies to prevent a plaintiff from obtaining more than one recovery for the same
injury. See id. That a judgment awards more than one form of relief does not automatically mean
a "double recovery" has occurred.
In Green Oaks, Ltd., the plaintiff sought to void an illegal foreclosure and to
recover monetary damages caused as a result of the foreclosure. 749 S.W.2d at 129. The
plaintiff was successful in having the foreclosure declared void. See id. The defendant contended
that by voiding the sale the plaintiff had elected his remedy and was precluded from seeking
money damages. See id. at 131. The court held that no election of remedies was required
because there was no inconsistency between allowing a plaintiff to recover a title taken wrongfully
and for the damages suffered while the property was wrongfully withheld. See id.
One problem with Pyle's argument is that he has misinterpreted the judgment. The
judgment set aside the transfer with regard to the Bank's claim. It did not, however, attempt to
award the land to the Bank; it simply returned the land to the status of an asset of Mr. Pyle.
Merely setting aside the transfer did not satisfy the Bank's claim. The monetary relief awarded
in this judgment was not an award of the value of the asset transferred. The Bank brought this
suit to enforce an existing judgment. The judgment in this second suit basically "incorporated"
that first judgment, added the accrued interest, and awarded that monetary relief to the Bank.
Accordingly, the judgment in this cause does not award a double recovery. We overrule the
fourth issue presented.
Attorneys' Fees
In his first issue presented, Pyle complains that no basis exists for the award of
attorneys' fees. The Bank responds that attorneys' fees are authorized because this is a suit to
collect a judgment. See Tex. Civ. Prac. & Rem. Code Ann. § 31.002 (West Supp. 2000) (the
turnover statute). Although section 31.002(e) authorizes attorneys' fees, its scope is not broad
enough to do so in this cause because this is not a proceeding under the turnover statute. See
§ 31.002 (e). (6)
Section 31.002, the "turnover" statute, is not a general authorization for attorneys'
fees in any proceeding to collect a judgment. The turnover statute is a purely procedural statute
whose purpose is to ascertain whether an asset is in either the judgment debtor's possession or
subject to the debtor's control. See Beaumont Bank, N. A. v. Buller, 806 S.W.2d 223, 227 (Tex.
1991). It does not allow for a determination of the substantive rights of involved parties. See
Cross, Kieschnick & Co. v. Johnston, 892 S.W.2d 435, 439 (Tex. App.--San Antonio 1994, no
writ); Republic Ins. Co. v. Millard, 825 S.W.2d 780, 783 (Tex. App.--Houston [14th Dist.] 1992,
orig. proceeding); Craven, Dargan & Co. v. Travers Co., Inc., 770 S.W.2d 573, 576 (Tex.
App.--Houston [1st Dist.] 1989, writ denied) (turnover statute improper vehicle to determine
whether debtor owned funds deposited with State Board of Insurance); see also RTC v. Smith, 53
F.3d 72, 77 (5th Cir. 1995) (applying Texas law). In order to obtain attorneys' fees under this
section, the creditor must be successful in obtaining turnover relief. See Boudreax Civic Ass'n
v. Cox, 882 S.W.2d 543, 550 (Tex. App.--Houston [1st Dist.] 1994, no writ); Daniels v. Pecan
Valley Ranch, Inc., 831 S.W.2d 372, 386 (Tex. App.--San Antonio 1992, writ denied).
Although the Bank's pleadings asked for attorneys' fees in reliance on section
31.002, we cannot construe the judgment in this cause as awarding turnover relief to the Bank.
As we have discussed, the judgment set aside the transfer of Pyle's assets to Pyco to the extent
necessary to satisfy the Bank's judgment against Pyle. (7) The substance of this action is a
fraudulent transfer action, not a turnover action. Perhaps in theory, the setting aside of the
transfer could be viewed as "otherwise applying the property to the satisfaction of the judgment"
as provided for in section 31.002(2), but that theory runs afoul of the caselaw that prohibits a
turnover action from being used to determine substantive property rights. Accordingly, as the
Bank claims no other basis for an award of attorneys' fees and we find none, we sustain Pyle's
first issue presented, and modify the judgment to eliminate the award of attorneys' fees in this
cause.
Remaining Points
In issue five, Pyle contends that the trial court improperly struck his pleadings
because there was no written request to strike the pleadings. In issue six, he claims that the trial
court improperly struck his pleadings for alleged misconduct unrelated to the merits of his claim.
These events occurred after rendition of judgment in this cause and were based on Pyle's violation
of an injunction against the transfer of certain assets. Because we will modify and affirm the trial
court judgment based on the entire record of the case as it existed before the court struck Pyle's
pleadings, we need not consider whether there was any error in post-judgment events.
Accordingly, we overrule issues five and six without further discussion.
Conclusion
We have overruled all of Pyle's issues presented, except for the issue concerning
attorneys' fees, which we have sustained. Accordingly, we modify the judgment to delete the
award of $158,000 in attorneys' fees, and, as modified, affirm.
Mack Kidd, Justice
Before Chief Justice Aboussie, Justices Kidd and Smith
Modified and, as Modified, Affirmed
Filed: April 20, 2000
Do Not Publish
1. The trial court in the current cause took judicial notice of all of the papers and pleadings
contained within cause number 22,428.
2. There is no dispute that the Bank was a creditor or that the claim arose before the transfer
was made, other elements of this provision.
3. Pyle also transferred some farm equipment to the joint venture, which would increase the
value transferred to Pyco.
4. Pyle's bankruptcy case terminated before the final judgment in this cause. During the
pendency of this appeal, Pyco, while still a party to the appeal, filed bankruptcy, causing an
abatement of this appeal. Pyco has since settled with the Bank.
5. However, this section concerns a judgment against a transferee. Mr. Pyle is not a transferee
against whom relief has been awarded. Pyco, the transferee, has settled with the Bank and is not
an appellant.
6. This issue concerns the award of $158,000 in attorneys' fees in trial court cause 22,885, the
cause on appeal. It does not concern any award of attorneys' fees in cause 22,428, the suit to
collect on the note.
7. Because all other parties have settled, we do not address any issues about the judgment's
assessment of liability against Pyle and the others in their capacity as joint venturers in Pyco.
App.--San Antonio 1994, no
writ); Republic Ins. Co. v. Millard, 825 S.W.2d 780, 783 (Tex. App.--Houston [14th Dist.] 1992,
orig. proceeding); Craven, Dargan & Co. v. Travers Co., Inc., 770 S.W.2d 573, 576 (Tex.
App.--Houston [1st Dist.] 1989, writ denied) (turnover statute improper vehicle to determine
whether debtor owned funds deposited with State Board of Insurance); see also RTC v. Smith, 53
F.3d 72, 77 (5th Cir. 1995) (applying Texas law). In order to obtain attorneys' fees under this
section, the creditor must be successful in obtaining turnover relief. See Boudreax Civic Ass'n
v. Cox, 882 S.W.2d 543, 550 (Tex. App.--Houston [1st Dist.] 1994, no writ); Daniels v. Pecan
Valley Ranch, Inc., 831 S.W.2d 372, 386 (Tex. App.--San Antonio 1992, writ denied).
Although the Bank's pleadings asked for attorneys' fees in reliance on section
31.002, we cannot construe the judgment in this cause as awarding turnover relief to the Bank.
As we have discussed, the judgment set aside the transfer of Pyle's assets to Pyco to the extent
necessary to satisfy the Bank's judgment against Pyle. (7) The substance of this action is a
fraudulent transfer action, not a turnover action. Perhaps in theory, the setting aside of the
transfer could be viewed
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 05-7783
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
TERRENCE COLEMAN,
Defendant - Appellant.
Appeal from the United States District Court for the District of
South Carolina, at Columbia. Joseph F. Anderson, Jr., Chief
District Judge. (CR-01-506-JFA; CA-05-2133-JFA)
Submitted: April 26, 2006 Decided: June 2, 2006
Before MICHAEL, TRAXLER, and GREGORY, Circuit Judges.
Dismissed by unpublished per curiam opinion.
Terrence Coleman, Appellant Pro Se. Stacey Denise Haynes, OFFICE
OF THE UNITED STATES ATTORNEY, Columbia, South Carolina, for
Appellee.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
PER CURIAM:
Terrence Coleman seeks to appeal the district court's
order denying relief on his motion filed under 28 U.S.C. § 2255
(2000), and his motion to alter or amend judgement under Fed. R.
Civ. P. 59(e). The orders are not appealable unless a circuit
justice or judge issues a certificate of appealability. 28 U.S.C.
§ 2253(c)(1) (2000). A certificate of appealability will not issue
absent “a substantial showing of the denial of a constitutional
right.” 28 U.S.C. § 2253(c)(2) (2000). A prisoner satisfies this
standard by demonstrating that reasonable jurists would find that
his constitutional claims are debatable and that any dispositive
procedural ruling by the district court is likewise debatable. See
Miller-El v. Cockrell, 537 U.S. 322, 336-38 (2003); Slack v.
McDaniel, 529 U.S. 473, 484 (2000); Rose v. Lee, 252 F.3d 676, 683-
84 (4th Cir. 2001). We have independently reviewed the record and
conclude that Coleman has not made the requisite showing.
Accordingly, we deny a certificate of appealability and dismiss the
appeal. 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.
DISMISSED
- 2 -
|
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688 F.2d 832
Keysv.Cox
81-6523, 81-6524
UNITED STATES COURT OF APPEALS Fourth Circuit
9/10/82
1
W.D.Va.
VACATED AND REMANDED
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In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 19-1365
JEREMY LOWREY,
Plaintiff-Appellant,
v.
ANDREW TILDEN and WEXFORD
HEALTH SOURCES, INC.,
Defendants-Appellees.
____________________
Appeal from the United States District Court for the
Central District of Illinois.
No. 16-cv-1170 — Jonathan E. Hawley, Magistrate Judge.
____________________
No. 19-3145
SCOTT MCCRAY,
Plaintiff-Appellant,
v.
ROBERT WILKIE, Secretary of Veterans Affairs,
Defendant-Appellee.
____________________
2 Nos. 19-1365 & 19-3145
Appeal from the United States District Court for the
Eastern District of Wisconsin.
No. 18-cv-1637 — David E. Jones, Magistrate Judge.
____________________
SUBMITTED DECEMBER 12 & 9, 2019 —
DECIDED FEBRUARY 3, 2020
____________________
Before WOOD, Chief Judge, in chambers.
WOOD, Chief Judge. This court takes jurisdictional issues se-
riously—indeed, it is proud to have a reputation as a jurisdic-
tional hawk. As part of our routine procedure, we screen all
briefs filed before oral argument or submission on the briefs
to ensure that our jurisdiction is secure and to catch any po-
tential problems. Many such problems can easily be corrected,
and when they are, the judges of the court can proceed in con-
fidence to decide the case.
Our routine jurisdictional screening sometimes reveals re-
current problems that would benefit from a published opin-
ion. A few years ago, I addressed such an issue, when in Baez-
Sanchez v. Sessions, 826 F.3d 638 (7th Cir. 2017) (Wood, C.J., in
chambers), I reminded attorneys practicing before this court
that we rely on accurate jurisdictional statements. In Baez-
Sanchez, the problem was the failure on the part of many ap-
pellees to specify precisely whether, in counsel’s view, the ap-
pellant’s jurisdictional statement was complete and correct. I
emphasized that these are different requirements, and that
this is not the place for creative writing. Either the jurisdic-
tional statement is both complete and correct, or appellee
must furnish a comprehensive jurisdictional statement of its
own.
Nos. 19-1365 & 19-3145 3
Another recurring problem justifies the same approach. In
the two cases I have consolidated only for purposes of this
opinion, a magistrate judge issued the final judgment from
which the appeal has been taken. Circuit Rule 28(a)(2)(v) re-
quires an appellant in such a case to include in its jurisdic-
tional statement not only information about the magistrate
judge’s involvement, but also “the dates on which each party
consented in writing to the entry of final judgment by the
magistrate judge.” See also 28 U.S.C. § 636(c).
The information provided in each of these appeals fell
short of the requirements of Circuit Rule 28. In Lowrey v. Til-
den, No. 19-1365, the appellees informed the court in their ju-
risdictional statement that the parties had consented to have
a magistrate judge hear the case; they did so after observing
that the pro se appellant’s jurisdictional statement was not
complete and correct and appropriately moving on to provide
their own complete jurisdictional summary. See Circuit Rule
28(b). But counsel failed to provide the dates of consent of
each party to the magistrate judge’s jurisdiction. In McCray v.
Wilkie, No. 19-3145, counsel not only failed to provide the
dates of consent, but he also neglected to mention that the de-
cision from which the appeal was being taken had been ren-
dered by a magistrate judge.
The significance of the information about the magistrate
judge’s involvement and the consent of all parties to that
judge’s resolution of the merits cannot be overstated. See Cole-
man v. Labor & Indus. Rev. Comm’n of the State of Wis., 860 F.3d
461 (7th Cir. 2017) (a magistrate judge has no authority to is-
sue a final decision that is directly appealable to the court of
appeals unless all parties consent).
4 Nos. 19-1365 & 19-3145
This rule is not a secret. It is clearly spelled out in Circuit
Rule 28(a)(2)(v), and this court’s Practitioner’s Handbook for Ap-
peals (2019 ed.) is readily available on the court’s public web-
site, as the second item under the tab “Rules and Procedures.”
See http://www.ca7.uscourts.gov/rules-procedures//Hand-
book.pdf. The Handbook explicitly refers to the failure to pro-
vide dates of consent to proceed before a magistrate judge as
one of the recurring problems that the court encounters when
performing jurisdictional screening. See Handbook at 145.
We once again encourage counsel to consult the Handbook.
It is a useful guide, regularly updated by the court and its
staff, for both experienced and novice practitioners. It can
help counsel avoid the common pitfalls in drafting a jurisdic-
tional statement. See Handbook at 142–45. We expect attorneys
who practice before this court to give close attention to all of
the rules, including Circuit Rule 28. I hope that this reminder
will serve its intended purpose and that such readily avoided
flaws will cease.
In each of these cases, counsel shall have seven days in
which to file an amended jurisdictional statement that com-
plies in all respect with the rules.
So ordered.
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537 U.S. 1009
MEDELv.GALETKA, WARDEN, ET AL.
No. 02-6254.
Supreme Court of United States.
November 4, 2002.
1
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT.
2
C. A. 10th Cir. Certiorari denied. Reported below: 36 Fed. Appx. 644.
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960 P.2d 729 (1998)
88 Hawai`i 1
STATE of Hawai`i, Plaintiff-Appellee,
v.
Mark J. BIRDSALL, Defendant-Appellant
No. 20382.
Supreme Court of Hawai`i.
June 29, 1998.
Reconsideration Denied July 30, 1998.
Harrison L. Kiehm, Deputy Public Defender for defendant-appellant.
Artemio C. Baxa, Deputy Prosecuting Attorney,(Arleen Y. Watanabe with him on the brief)for plaintiff-appellee.
Before MOON, C.J., and KLEIN, KEVINSON, NAKAYAMA and RAMIL, JJ.
RAMIL, Justice.
Defendant-appellant Mark J. Birdsall appeals from his conviction of: Count II, reckless driving, in violation of HRS § 291-2; Count III, driving under the influence of intoxicating liquor; Count IV, terroristic threatening in the second degree, in violation of HRS § 707-717(1); and Count V, criminal property damage in the first degree, in violation of HRS § 708-820(1).[1] Birdsall raises the following two issues on appeal: (1) that HRS § 702-230[2] is unconstitutional because it prohibits the introduction of evidence that he was voluntarily intoxicated to negative his state of mind; and (2) that there was insufficient evidence to sustain his conviction of criminal property damage in the first degree.
I. BACKGROUND
On May 20, 1996, the Maui grand jury indicted Birdsall on the five aforementioned counts. The charges against Birdsall arose out of an incident that occurred on January 31, 1996, at the Kahale Beach Club in Kīhei, Maui.
The prosecution's witnesses testified as follows. Francis Ollie Akaka (Akaka), the doorman at the Kahale Beach Club, knew Birdsall, as well as Tammy Hughes, Marsha Wakley-Coy, and Rebecca Adams, as regular customers. On the night in question, Tammy knocked on the door even though the club was closed. Tammy told Akaka that she, Marsha, and Rebecca had been driving home from the club when they noticed that Birdsall was following them. Concerned, they returned *730 to the Club, parked in front of the door, and asked Akaka to tell Birdsall to leave them alone and go home.
While Akaka and Tammy were talking, Birdsall drove into the parking lot and parked approximately two stalls away from Tammy's parked car. Akaka told him to go home and to "[l]et the ladies go home." Birdsall then drove around the parking lot and went behind the building, which led Akaka to believe that Birdsall had followed his advice. Akaka then told the three women, who were in Tammy's car at the time, to go home. Within minutes, Birdsall came around the corner in his Jeep Cherokee and rammed Tammy's car.
Akaka testified that the act appeared intentional. Birdsall had approached slowly, and then suddenly sped up when he was fifteen to twenty yards from Tammy's car. The pavement was not wet.
Tammy testified that her friend Marsha had been intimately involved with Birdsall and that, as she was driving the other two women home that evening, she had noticed Birdsall following them.[3] This frightened Tammy's friend Rebecca and, because she did not want Birdsall to know where she lived, she insisted they return to the club to get help. Additionally, Birdsall had driven up behind Tammy's Ford Mustang "real close" and bumped the rear bumper of her car at least four times.
After Akaka had instructed the women to leave, Tammy drove out of the lot, but Birdsall followed her. Frightened, Tammy drove around the corner and returned to the parking lot, with Birdsall still following her. After Tammy parked, Birdsall left again. Shortly thereafter, Tammy heard a screeching noise and saw Birdsall enter the parking lot and drive toward her car. He stopped, backed up, then moved forward and rammed her automobile at an angle, not head on. Birdsall did not attempt to swerve or turn.
Marsha testified, inter alia, that she was married and had told Birdsall that she wanted to end their relationship. She stated that she was so intoxicated at the time of the accident that she only remembered feeling a joint and having to climb out one of the windows of the Mustang because the doors were weeded shut.
Greg Grisham, a private security patrolman, testified that he had heard the sound of screeching tires and a reaching engine. He ran in the direction of the sound and saw a vehicle shoot up South Kīhei Road at a high rate of speed and make a 180-degree turn in the middle of the road. The vehicle then sped back to the parking lot entrance. Grisham stated that it appeared that the driver was angry or upset because he was "really tearing through."
Grisham further testified that, after Birdsall entered the parking lot, he appeared to hesitate, as if he were changing directions to face Tammy's car, and then drove directly into her vehicle. Grisham was approximately thirty feet away and he did not see the brake lights go on Birdsall's car. Grisham then called the police.
The officers who arrived on the scene found the vehicles wedged together. One of the officers testified that Birdsall claimed to have ingested twelve tequilas that evening. The officers also testified that the women had told them Birdsall had rammed their car.
Despite the parties' earlier stipulation that Birdsall did not have a valid driver's license on January 31, 1996, the defense moved for a judgment of acquittal on this count following the prosecution's case-in-chief. The trial court denied the motion.
Birdsall testified in relevant part that he had been very drunk that night and had followed Tammy's car because he was concerned about Marsha's inebriated state and because he had wanted to ask her to go home with him. He remembered striking the car but claimed that it had not been an intentional act. Birdsall was later taken to the hospital to treat a laceration over his eye.
Over defense counsel's objection, the trial court submitted to the jury a standard jury instruction, which provided, inter alia, that:
*731 [e]vidence of the self-induced intoxication of the defendant may not be used to negative the state of mind sufficient to establish an element of the offense. However, evidence of self-induced intoxication of the defendant may be used to prove or negative conduct or to prove state of mind sufficient to establish an element of an offense.
The defense objected on the basis of a recent United States Supreme Court opinion, which counsel argued rendered both the instruction, and the statute upon which it was based, unconstitutional.
The jury found Birdsall guilty on all counts. The trial court sentenced Birdsall as follows: for Counts I and II, a fine of $500 per count; for Count III, license suspension for ninety days, five days incarceration, and a $500 fine; for Count IV, probation for one year; and for Count V, probation for five years, six months incarceration (later modified so that Birdsall could serve it in two-day increments), a $1000 fine, along with standard probation conditions. Thereafter, Birdsall filed this timely appeal.
II. DISCUSSION
A. Instruction Regarding Self-Induced Intoxication
Birdsall first asks this court to overrule its holding in State v. Souza, 72 Haw. 246, 813 P.2d 1384 (1991), in light of a dissenting opinion in the United States Supreme Court's decision in Montana v. Egelhoff, 518 U.S. 37, 116 S.Ct. 2013, 135 L.Ed.2d 361 (1996). Birdsall contends that, contrary to this court's holding and the legislature's definition, HRS § 702-230[4] is an evidentiary provision and is, therefore, unconstitutional in its application because it deprives the defendant of presenting relevant evidence regarding the requisite state of mind for the charged offense. Birdsall claims that the trial court erred, inasmuch as it patterned the jury instruction on self-induced intoxication after the statute.
We review constitutional questions under the "right/wrong" standard. State v. Mendoza, 82 Hawai`i 143, 145, 920 P.2d 357, 359 (1996) (quoting State v. Toyomura, 80 Hawai`i 815, 904 P.2d 893, 900 (1995)). Additionally, we have held "that (1) legislative enactments are presumptively constitutional; (2) a party challenging [a statutory scheme] has the burden of showing unconstitutionality beyond a reasonable doubt; and (3) the constitutional defect must be clear, manifest, and unmistakable." Mendoza, 82 Hawai`i at 145, 920 P.2d at 359 (quoting Convention Center Authority v. Anzai, 78 Hawai`i 157, 162, 890 P.2d 1197, 1200 (1995) (brackets in original)).
In Souza, this court rejected the defendant's claim that HRS § 702-230 "deprived him of his right to present a complete defense by preventing the jury from considering relevant evidence relating to his mental state at the time of the offense," the same argument raised by Birdsall. Souza, 72 Haw. at 248, 813 P.2d at 1386.
*732 The legislature ... clearly indicated that the purpose of the statute as amended is to prevent defendants who willingly become intoxicated and then commit crimes from using self-induced intoxication as a defense.
....
Contrary to appellant's assertion, the operation of § 702-230 does not deprive a defendant of the opportunity to represent evidence to rebut the mens rea element of the crime. The statute merely prohibits the jury from considering self-induced intoxication to negate the defendant's state of mind. Appellant could still have attempted to convince the jury that he did not act "intentionally or knowingly" as required for Murder in the Second Degree. Moreover, the statute does not relieve the State of the burden of establishing that a defendant had the requisite mens rea.
Furthermore, we find that voluntary intoxication is a "gratuitous" defense and not a constitutionally protected defense to criminal conduct. Voluntary intoxication does not result from a disease or defect of the mind, but rather from a state that is voluntarily self-induced. Therefore, the legislature's decision to prohibit the use of self-induced intoxication as a defense does not implicate any recognized constitutional rights.
The legislature was entitled to redefine the mens rea element of crimes and to exclude evidence of voluntary intoxication to negate state of mind.
Id. (emphasis added).
The United States Supreme Court addressed a similar issue in Egelhoff. The defendant in that case had been charged with and convicted of deliberate homicide, which, under Montana law, requires an "intentional" or "knowing" state of mind. 116 S.Ct. at 2016. On appeal to the Supreme Court of Montana, Egelhoff challenged a jury instruction that was based upon a statute that provided that voluntary intoxication may not be used to determine "`the existence of a mental state which is an element of [a criminal] offense.'" Id. at 2016. The state supreme court reversed, ruling that the prosecution had been relieved of its burden to prove every element of the crime charged beyond a reasonable doubt because Egelhoff had not been allowed to introduce evidence of his intoxication. Id.
The United States Supreme Court granted certiorari and, in a plurality opinion, reversed the Montana Supreme Court and upheld the statute. The justices provided diverging analyses of the statute as both an evidentiary matterbecause the Supreme Court of Montana had addressed it as suchand as a legislative redefinition of the mens rea element. Id. at 2020 n. 4.
Justice Scalia, joined by Chief Justice Rehnquist, Justice Kennedy, and Justice Thomas pronounced the judgment of the Court, which stated in pertinent part that
[t]he cornerstone of the Montana Supreme Court's judgment was the proposition that the Due Process Clause guarantees a defendant the right to present and have considered by the jury "all relevant evidence to rebut the State's evidence on all elements of the offense charged." Respondent does not defend this categorical rule; he acknowledges that the right to present relevant evidence "has not been viewed as absolute."
....
"Among other things, it is normally `within the power of the State to regulate procedures under which its laws are carried out,' ... and its decision in this regard is not subject to proscription under the Due Process Clause unless `it offends some principle of justice so rooted in the traditions and conscience of our people as to be ranked as fundamental.'"
Respondent's task, then, is to establish that a defendant's right to have a jury consider evidence of his voluntary intoxication in determining whether he possesses the requisite mental state is a "fundamental principle of justice."
Our primary guide in determining whether the principle in question is fundamental is, of course, historical practice.
Id. at 2017 (citations omitted) (ellipsis points and emphasis in original).
*733 The plurality opinion noted that lengthy common law tradition "that a drunken offender shall have the same judgment `as if he were in his right senses' must be understood as precluding a defendant from arguing that, because of his intoxication, he could not have possessed the mens rea required to commit the crime." Id. at 2018.
Additionally, the Court acknowledged that, during the nineteenth century, a new rule developed, which provided that "in most American jurisdictions, intoxication could be considered in determining whether a defendant was capable of forming the specific intent necessary to commit the crime charged." Id. at 2018-19. Nevertheless,
[t]he burden remains upon respondent to show that the "new common law" rule that intoxication may be considered on the question of intentwas so deeply rooted at the time of the Fourteenth Amendment (or perhaps has become so deeply rooted since) as to be a fundamental principle which that Amendment enshrined.
That showing has not been made. Instead of the uniform and continuing acceptance we would expect for a rule that enjoys "fundamental principle" status, we find that fully one-fifth of States either never adopted the "new common-law" rule at issue here or have recently abandoned it.
It is not surprising that many States have held fast to or resurrected the common-law rule prohibiting consideration of voluntary intoxication in the determination of mens rea, because that rule has considerable justificationwhich alone casts doubt upon the proposition that the opposite rule is a "fundamental principle." A large number of crimes, especially violent crimes, are committed by intoxicated offenders.... Disallowing consideration of voluntary intoxication has the effect of increasing the punishment for all unlawful acts committed in that state, and thereby deters drunkenness or irresponsible behavior while drunk. The rule also serves as a specific deterrent, ensuring that those who prove incapable of controlling violent impulses while voluntarily intoxicated go to prison. And finally, the rule comports with and implements society's moral perception that one who has voluntarily impaired his own faculties should be responsible for the consequences.
Id. at 2019-20 (citations and footnotes omitted).
Egelhoff also relied upon Crane v. Kentucky, 476 U.S. 683, 106 S.Ct. 2142, 90 L.Ed.2d 636 (1986), arguing that the case enunciated the principle that "`an essential component of procedural fairness is an opportunity to be heard.'" Id. at 2022. He claimed that the exclusion of relevant evidencehis state of self-induced intoxicationto negate state-of-mind, impinged upon his right to due process. The court noted that Egelhoff omitted the very next sentence of the Crane opinion, which made clear that "the introduction of relevant evidence can be limited by the state for a `valid' reason, as it has been by Montana." Id.
The Court rejected Egelhoff's argument that the statute in question and the jury instruction shifted the burden of proof and noted that the trial judge had instructed the jury that the prosecution carried the burden of proving guilty beyond a reasonable doubt. Id. The plurality explained that, had the prosecution failed to produce evidence of Egelhoff's mental state, the trial would have resulted in an acquittal. Id. at 2023. Finally, the justices clarified that, even if the law in question was burden-reducing rather than burden-shifting, this effect was not unconstitutional unless it violated a "fundamental principle of fairness (which, as discussed, this one does not)." Id.
Justice Ginsburg, in a separate opinion, concurred in the judgment:
The Court divides in this case on a question of characterization. The State's law, Mont.Code Ann. § 45-2-203 (1995), prescribes that voluntary intoxication "may not be taken into consideration in determining the existence of a mental state which is an element of [a criminal] offense." For measurement against federal restraints on state action, how should we type that prescription? If § 45-2-203 is simply a rule designed to keep out "relevant, exculpatory evidence," as JUSTICE O'CONNOR maintains, ... Montana's law *734 offends due process. If it is, instead, a redefinition of the mental-state element of the offense, on the other hand, JUSTICE O'CONNOR's due process concern "would not be at issue," ... for "[a] state legislature certainly has the authority to identify the elements of the offenses it wishes to punish," ... and to exclude evidence irrelevant to the crime it has defined.
Beneath the labels (rule excluding evidence or redefinition of the offense) lies the essential question: Can a State, without offense to the Federal Constitution, make the judgment that two people are equally culpable where one commits an act stone sober, and the other engages in the same conduct after his voluntary intoxication has reduced his capacity for selfcontrol? For the reasons that follow, I resist categorizing ... [the Montana statute] as merely an evidentiary prescription, but join the Court's judgment refusing to condemn the Montana statute as an unconstitutional enactment.
Id. at 2024 (some brackets in original and some added). Justice Ginsburg went on to explain that Montana's intoxication statute did not appear in that state's evidentiary provisions, but instead had been placed in a chapter entitled "General Principles of Liability" and thereby "embodie[d] a legislative judgment regarding the circumstances under which individuals may be held criminally responsible for their actions." Id. She agreed with the argument that the intoxication statute "extract[s] the entire subject of voluntary intoxication for the mens rea inquiry." Id. (internal quotation marks omitted) (brackets in original).
Accordingly, ... [the statute] does not "lighte[n] the prosecution's burden to prove [the] mental-state element beyond a reasonable doubt," as JUSTICE O'CONNOR suggests, ... for "[t]he applicability of the reasonable-doubt standard ... has always been dependent on how a State defines the offense that is charged," Patterson v. New York, 432 U.S. 197, 211, n. 12, 97 S.Ct. 2319, 2327, n. 12, 53 L.Ed.2d 281 (1977).
Comprehended as a measure redefining mens rea, ... [the statute] encounters no constitutional shoal. States enjoy a wide latitude in defining the elements of criminal offenses, particularly when determining "the extent to which moral culpability should be a prerequisite to conviction of a crime[.]" When a State's power to define criminal conduct is challenged under the Due Process Clause, we inquire only whether the law "offends some principle of justice so rooted in the traditions and conscience of our people as to be ranked as fundamental." Defining mens rea to eliminate the exculpatory value of voluntary intoxication does not offend a "fundamental principle of justice," given the lengthy common-law tradition, and the adherence of a significant minority of the States to that position today.
Id. at 2024-25 (some citations omitted) (some brackets and ellipses in original and some added). Citing Souza, Justice Ginsburg explained that other states had upheld comparable statutes as "legislative redefinitions of the mental-state element," rather than as evidentiary rules. Id. at 2025.
Justice O'Connor dissented, joined by Justice Stevens, Justice Souter, and Justice Breyer. Justice O'Connor, however, conceded that a state legislature "possesses the authority to define the offenses it wishes to punish. If the Montana legislature chose to redefine this offense so as to alter the requisite mental-state element, the due process problem presented in this case would not be at issue." Id. at 2031. In this case, the minority viewed the statute as an evidentiary provision that not only excluded a category of evidence from consideration, namely, voluntary intoxication, but relieved the prosecution from having to prove mental state beyond a reasonable doubt. Id. at 2026. It was "this combination of effects [that] violate[d] due process." Id. at 2026.
Justice Souter also penned a separate dissent, wherein he acknowledged that a state has the authority to define "the mental element of an offense that evidence of a defendant's voluntary intoxication at the time of commission does not have exculpatory relevance and, to that extent, may be excluded without raising any issue of due process." Id. at 2032. Justice Souter explained that he *735 believed the statute "implicitly accomplished such a redefinition," but, because the Supreme Court of Montana discounted such legislative intent, he felt "bound by the state court's statement of its domestic law." Id.; see also id. at 2020 n. 4. Nevertheless, Justice Souter acknowledged that, in such circumstances, "[a] State may typically exclude even relevant and exculpatory evidence if it presents a valid justification for doing so," but noted that "Montana has not endeavored... to advance an argument to that effect." Id.
Justice Breyer, joined by Justice Stevens, dissented separately, and focused primarily on Justice Ginsburg's belief that the Montana statute required that:
To obtain a conviction, the prosecution must prove only that (1) the defendant caused the death of another with actual knowledge or purpose, or (2) that the defendant killed "under circumstances that would otherwise establish knowledge or purpose `but for' [the defendant's] voluntary intoxication."
Id. at 2024 (citation omitted). Justice Breyer, apparently in disagreement with section (2) of Justice Ginsburg's analysis, responded that the Montana statute, which disallows the use of voluntary intoxication evidence for any reason whatsoever, even to prove requisite mental state, would produce anomalous results, inasmuch as it would allow "irrelevant external circumstances," not state of mind, to prove guilt. Id. at 2035. The Hawaii statute plaintly requires the state to prove the requisite state of mind and does not rely on "irrelevant external circumstances," not does it equate voluntary intoxication with the mental-state element.
Justice Breyer also posed the following question: "If the legislature wanted to equate voluntary intoxication, knowledge, and purpose, why would it not write a statute that plainly says so ...?" Id. He declined to render an opinion on the constitutionality of such a statute. Id.
Significantly, all nine justices concurred that states have the power to redefine the elements of criminal offenses, including mens rea, with Justice Scalia and Justice Ginsburg directly citing Souza to support this principle. Id. at 2020 n. 4, 2024, 2031, 2033 n. 2. Accordingly, we believe that Egelhoff supports rather than erodes the holding in Souza and reject Birdsall's arguments that we should overrule that decision for the following reasons.
First, as the Egelhoff plurality explained, states may exclude exculpatory evidence if there exists a valid reason to do so, id. at 2022, one such reason being the belief that "one who has voluntarily impaired his own faculties should be responsible for the consequences." Id. at 2020. The legislative history of HRS § 702-230 reflects exactly this concept:
Your Committee believes that when a person chooses to drink, that person should remain ultimately responsible for his or her actions. Your Committee further believes that criminal acts committed while a person is voluntarily intoxicated should not be excused by the application of a defense which would negate the offender's state of mind.
Hse. Conf. Comm. Rep. No. 36-86, in 1986 House Journal, at 928.
Second, the burden of proof is not shifted under HRS § 702-230. The Hawai`i statute does not have the combination of effects that Justice O'Connor believed rendered the Montana statute fatally flawed. The prosecution must still prove every element of the offense, including mental state, beyond a reasonable doubt. Additionally, pursuant to Souza, HRS § 702-230 "does not deprive a defendant of the opportunity to present evidence to rebut the mens rea element of the crime. The statute merely prohibits the jury from considering self-induced intoxication to negate the defendant's state of mind." Souza, 72 Haw. at 249, 813 P.2d at 1386. In the instant case, the trial court instructed the jury one every material element of the offense and explained that the prosecution bore the burden of proving each material element beyond a reasonable doubt.
Finally, unlike the Supreme Court of Montana, as discussed by Justice Souter, this court has specifically found valid legislative reasons for excluding self-induced intoxication as exculpatory evidence, and also has *736 held that HRS § 720-230 is a penal rather than an evidentiary statutory provision:
The legislature, in amending § 702-230, clearly indicated that the purpose of the statute as amended is to prevent defendants who willingly become intoxicated and then commit crimes from using self-induced intoxication as a defense.[[5]]
....
Furthermore, we find that voluntary intoxication is a "gratuitous" defense and not a constitutionally protected defense to criminal conduct.[[6]]
....
The legislature was entitled to redefine the mens rea element of crimes and to exclude evidence of voluntary intoxication to negate state of mind.
Souza, 72 Haw. at 248-49, 813 P.2d at 1386.
In the instant case, the trial court instructed the jury that self-induced intoxication could not be used to negate state of mind sufficient to establish the mens rea element of the offense. Such an instruction, derived from HRS § 702-230, has been found to be constitutional by both the United States Supreme Court in Egelhoff and by this court in Souza. We now reaffirm our earlier decision.
B. Sufficiency of the Evidence
Finally, other than his challenge to the constitutionality of HRS § 702-230, Birdsall claims that there was insufficient evidence to prove beyond a reasonable doubt that he was guilty of criminal property damage in the first degree. HRS § 708-820 (1996) provides that "(1) A person commits the offense of criminal property damage in the first degree if ... [t]he person intentionally damages property and thereby recklessly places another person in danger of death or bodily injury[.]" Birdsall asserts that he "did not intend to damage Tammy's car as evidence by the fact that [he] did not strike Tammy's car directly."
This argument is patently meritless. Birdsall is merely attempting to retry factual issues on appeal by asking this court to weigh the evidence and find that reasonable doubt exists. We decline to invade the province of the jury in such a manner.
[E]vidence adduced in the trial court must be considered in the strongest light for the prosecution when the appellate court passes on the legal sufficiency of such evidence to support a conviction; the same standard applies whether the case was before a judge or jury. The test on appeal is not whether guilt is established beyond a reasonable doubt, but whether there was substantial evidence to support the conclusion of the trier of fact.
State v. Quitog, 85 Hawai`i 128, 145, 938 P.2d 559, 576 (1997) (quoting State v. Eastman, 81 Hawai`i 131, 135, 913 P.2d 57, 61 (1996)) (emphasis omitted). "`Substantial evidence' as to every material element of the offense charged is credible evidence which is of sufficient quality and probative value to enable a person of reasonable caution to support a conclusion." Eastman, 81 Hawai`i at 135, 913 P.2d at 61.
In the instant case, the jury reasonably could have concluded either through Akaka's, Tammy's, or Grisham's testimony that Birdsall had intended to ram Tammy's car. "[T]he mind of an alleged offender may be read from his acts, conduct and inferences fairly drawn from all the circumstances." State v. Batson, 73 Haw. 236, 254, 831 P.2d 924, 934 (1992) (citations and internal quotation marks omitted). The jury had the right to discount Birdsall's protestations to the contrary, inasmuch as it "is for the factfinder to assess the credibility of witnesses and to *737 resolve all questions of fact; the [finder of fact] may accept or reject any witness's testimony in whole or in part." State v. Clark, 83 Hawai`i 289, 298-99, 926 P.2d 194, 203-04 (1996) (citation omitted) (brackets in original). Accordingly, we hold that there was sufficient evidence to sustain Birdsall's conviction.
III. CONCLUSION
For the foregoing reasons, we affirm Birdsall's convictions.
NOTES
[1] Birdsall does not appeal his conviction of Count I, driving without a license, in violation of HRS § 286-102.
[2] See infra note 4.
[3] Apparently, Birdsall had approached Marsha several times earlier that evening in an effort to have her accompany him home.
[4] HRS § 702-230 (1993) provides in pertinent part:
Intoxication. (1) Self-induced intoxication is prohibited as a defense to any offense, except as specifically provided in this section.
(2) Evidence of the nonself-induced or pathological intoxication of the defendant shall be admissible to prove or negative the conduct alleged or the state of mind sufficient to establish an element of the offense. Evidence of self-induced intoxication of the defendant is admissible to prove or negative conduct or to prove state of mind sufficient to establish an element of an offense. Evidence of self-induced intoxication of the defendant is not admissible to negative the state of mind sufficient to establish an element of the offense.
(3) Intoxication does not, in itself, constitute a physical or mental disease, disorder, or defect within the meaning of section 704-400.
(4) Intoxication which (a) is not self-induced or (b) is pathological is a defense if by reason of such intoxication the defendant at the time of the defendant's conduct lacks substantial capacity either to appreciate its wrongfulness or to conform the defendant's conduct to the requirements of the law.
HRS § 704-400 provides in pertinent part:
Physical or mental disease, disorder, or defect excluding penal responsibility. (1) A person is not responsible, under this Code, for conduct if at the time of the conduct as a result of physical or mental disease, disorder, or defect the person lacks substantial capacity either to appreciate the wrongfulness of the person's conduct or to conform the person's conduct to the requirements of law.
[5] Other statutory examples evincing the intent of the legislature to eliminate certain defenses may be found in Chapter 707 of the HRS. Under HRS §§ 707-731 and -732, a person is guilty of sexual assault in the second and third degree respectively if her or she, while employed in a correctional facility, knowingly subjects an imprisoned person to sexual penetration or contact. The statutes implicitly reject consent to the act by the imprisoned person as a defense.
[6] This reasoning is echoed in both the plurality opinion and Justice Ginsburg's concurring opinion, supra.
|
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NOTE: This disposition is nonprecedential
United States Court of Appeals
for the Federal Circuit
__________________________
WILLIAM A. HIMCHAK, III,
Petitioner,
v.
MERIT SYSTEMS PROTECTION BOARD,
Respondent.
__________________________
2011-3102
__________________________
Petition for review of the Merit Systems Protection
Board in case no. DC1221100311-W-1.
__________________________
Decided: November 10, 2011
___________________________
WILLIAM A. HIMCHAK, III, of Chambersburg, Pennsyl-
vania, pro se.
MICHAEL A. CARNEY, General Attorney, Office of the
General Counsel, Merit Systems Protection Board, of
Washington, DC, for respondent. With him on the brief
were JAMES M. EISENMANN, General Counsel and KEISHA
DAWN BELL, Deputy General Counsel.
__________________________
HIMCHAK v. MSPB 2
Before RADER, Chief Judge, PLAGER, and DYK, Circuit
Judges.
PER CURIAM.
William A. Himchak, III, petitions for review of a final
order of the Merit Systems Protection Board (“Board”).
The Board dismissed the appeal for lack of jurisdiction.
Himchak v. Dep’t of Navy (“Final Order”), DC-1221-10-
0311-W-1 (M.S.P.B. Jan. 25, 2011). We affirm.
BACKGROUND
Himchak was selected on May 7, 2008, for a position
of Office Automation Clerk at the Department of the
Navy’s medical center in Portsmouth, Virginia. Him-
chak’s selection was subject to a one-year probationary
period and was contingent on his completion of a back-
ground check. Himchak submitted the Questionnaire for
Public Trust Positions (“SP-85P”) for the background
check, but did not include a full seven years of work
history as required. On July 2, 2008, the agency informed
Himchak that his SF-85P would be rejected unless it
included a full seven-year work history, and later made
repeated requests that Himchak supplement his incom-
plete SF-85P. The agency informed Himchak that he was
“not required to redo the entire SF85P,” but that “the
entire [seven-year period] must be covered.” A. 108. The
agency also indicated that “[a] successful background
check [was] necessary for continued employment.” Id.
Himchak asserted that he had already submitted the
requested information, and that the agency was request-
ing the same information that he had already submitted.
Himchak allegedly became concerned that the agency lost
or misplaced his SF-85P, which contained personal infor-
mation including his social security number. On March
31, 2009, Himchak disclosed to the agency that he sus-
3 HIMCHAK v. MSPB
pected a Privacy Act violation based on his concern that
his personal information and social security number
included in his SF-85P had not properly been maintained
and safeguarded in accordance with the Act. On April 20,
2009, Himchak contacted his Congressman to request an
immediate congressional inquiry regarding the location of
his SF-85P.
On April 27, 2009, the agency submitted Himchak’s
background information, including his incomplete SP-
85P, to the Office of Personnel Management (“OPM”) so
that OPM, as required, could perform the background
check. OPM rejected Himchak’s background information
due to the incomplete employment information, among
other reasons. Himchak was subsequently terminated
for: “(1) failure to comply with procedures for required
background investigation; (2) inappropriate conduct; and
(3) failure to obey directions in a timely manner.” A. 70.
On July 28, 2009, Himchak filed a complaint with the
Office of Special Counsel (“OSC”) alleging, among other
things, that his termination was retaliation for protected
whistleblowing activities. According to Himchak, his
complaints to the agency and to his Congressman regard-
ing the agency’s violation of the Privacy Act were pro-
tected disclosures. See 5 U.S.C. § 2302(b)(8). The OSC
terminated its inquiry with no corrective action.
Himchak then filed an Individual Right of Action
(“IRA”) appeal to the Board under 5 U.S.C. § 1221. Him-
chak again argued that he was improperly terminated in
retaliation for his protected disclosures regarding a Pri-
vacy Act violation. However, the Administrative Judge
(“AJ”) found that Himchak’s allegation of a Privacy Act
violation was unsupported by “affidavits or other docu-
mentary evidence” and was “nothing more than a frivo-
lous allegation as there ha[d] never been any indication
HIMCHAK v. MSPB 4
that the agency misplaced . . . any . . . portion of his
original SF-85P.” Himchak v. Dep’t of Navy, DC-1221-10-
0311-W-1, slip op. at 10-11 (M.S.P.B. Jun. 17, 2010).
Thus, the AJ held that Himchak “could not have reasona-
bly believed that the agency lost or misplaced his SF-85P
or that it violated the Privacy Act or any other law, rule,
or regulation.” Id. at 11. Because Himchak “failed to
raise a non-frivolous allegation that he made a protected
disclosure under 5 U.S.C. § 2302(b)(8),” the AJ dismissed
the case for lack of jurisdiction. Id. Himchak sought
review of the AJ’s initial decision by the full Board. The
Board denied Himchak’s petition for review, making the
decision of the AJ the decision of the Board. Final Order,
slip op. at 2-3. Himchak timely petitioned for review by
this court. We have jurisdiction pursuant to 28 U.S.C.
§ 1295(a)(9).
DISCUSSION
With limited exceptions that are inapplicable here,
probationary employees have no right to appeal an ad-
verse action because they are excluded from the definition
of “employee” under 5 U.S.C. § 7511(a)(1)(A). On appeal
to the Board, Himchak did not dispute that his status as a
probationary employee precluded him from establishing
jurisdiction for an adverse action claim. Accordingly, the
sole issue before us is whether the Board had jurisdiction
over Himchak’s IRA appeal.
Our review of Board decisions is limited. We may
only set aside agency actions, findings, or conclusions that
we find to be “(1) arbitrary, capricious, an abuse of discre-
tion, or otherwise not in accordance with law; (2) obtained
without procedures required by law, rule, or regulation
having been followed; or (3) unsupported by substantial
evidence.” 5 U.S.C. § 7703(c); see also Bennett v. Merit
Sys. Prot. Bd., 635 F.3d 1215, 1218 (Fed. Cir. 2011). The
5 HIMCHAK v. MSPB
Board’s determination that it lacked jurisdiction is a
question of law that this court reviews de novo. Bennett,
635 F.3d at 1218.
Himchak contends that the Board does have jurisdic-
tion over his IRA appeal because his termination was
retaliation for his protected disclosures regarding the
agency’s alleged Privacy Act violation. See 5 U.S.C.
§ 2302(b)(8). Himchak’s theory is that the agency mis-
placed his SF-85P, which contained personal information
including his social security number, and that such mis-
management constituted a violation of the Privacy Act.
“[T]he Board has jurisdiction over an IRA appeal if
the appellant has exhausted his administrative remedies
before the OSC and makes non-frivolous allegations that
(1) he engaged in whistleblowing activity by making a
protected disclosure under 5 U.S.C. § 2302(b)(8), and (2)
the disclosure was a contributing factor in the agency’s
decision to take . . . a personnel action.” Yunus v. Dep’t of
Veterans Affairs, 242 F.3d 1367, 1371 (Fed. Cir. 2001)
(internal quotation marks omitted). A disclosure qualifies
as a “protected disclosure” if the employee “reasonably
believes” that the disclosure evidences “a violation of any
law, rule, or regulation” or “gross mismanagement.” 5
U.S.C. § 2302(b)(8)(A). Accordingly, “[t]he Board must
look for evidence that it was reasonable [for the peti-
tioner] to believe that the disclosures revealed misbehav-
ior described by section 2302(b)(8).” Lachance v. White,
174 F.3d 1378, 1380 (Fed. Cir. 1999).
The fact that the agency concluded that Himchak’s
application was incomplete cannot, of course, demonstrate
that the agency lost or misplaced the original information.
In order to support his claim that the agency lost his
information, Himchak apparently relies on an agency e-
mail dated May 28, 2009, from Dale Bridges, an employee
HIMCHAK v. MSPB 6
in the medical center’s Human Resources Office, to Jane
Ackiss, the Director of the medical center’s Human Re-
sources Office, stating how certain employees must com-
plete a page of SF-85P again because of a “possible
compromise” of their SF-85P forms. A. 52. However,
Himchak did not become aware of the e-mail until July
2009, and accordingly, the e-mail does nothing to estab-
lish Himchak’s reasonable belief of Privacy Act violations
at the time of his March 31, 2009, disclosure to the agency
or his April 20, 2009, disclosure to his Congressman.
Himchak argues that the Board’s assessment of his
case was biased. However, he has made no showing of “a
deep-seated favoritism or antagonism” on behalf of the
Board “that would [have made] fair judgment impossible.”
Bieber v. Dep't of Army, 287 F.3d 1358, 1362 (Fed. Cir.
2002) (quoting Liteky v. United States, 510 U.S. 540, 555
(1994)).
Accordingly, we affirm the Board’s holding that it
lacked jurisdiction because Himchak failed to make a non-
frivolous allegation that he engaged in protected whistle-
blowing activity.
AFFIRMED
COSTS
No costs.
|
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|
10/07/2019
IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
June 19, 2019 Session
KAREN ABRAMS MALKIN v. REED LYNN MALKIN
Appeal from the Chancery Court for Shelby County
No. D27924 Walter L. Evans, Judge
___________________________________
No. W2018-01197-COA-R3-CV
___________________________________
This appeal involves a former husband’s fourth petition to reduce or terminate his
alimony in futuro obligation since the parties were divorced. When considering the
appeal of husband’s third attempt, in Malkin v. Malkin, 475 S.W.3d 252 (Tenn. Ct. App.
2015), this Court reversed the trial court’s reduction of the award and reinstated the prior
alimony obligation. We found that the husband’s retirement was objectively reasonable
and constituted a substantial and material change in circumstances, but we concluded that
the husband failed to prove that the change in circumstances significantly diminished his
financial ability to pay alimony or his former wife’s need for it. Just months after the
Tennessee Supreme Court denied the husband’s application for permission to appeal, he
filed his fourth petition to reduce or terminate his obligation. The wife filed a counter-
petition to increase the award. The trial court granted the husband’s petition, again, and
reduced the award to less than half of its previous amount. The wife appeals. We reverse
and remand for further proceedings.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Reversed
and Remanded
CARMA DENNIS MCGEE, J., delivered the opinion of the court, in which J. STEVEN
STAFFORD, P.J., W.S., and THOMAS R. FRIERSON, II, J., joined.
Lori R. Holyfield, Memphis, Tennessee, for the appellant, Karen Abrams Malkin.
Robert A. Wampler and J. Luke Sanderson, Memphis, Tennessee, for the appellee, Reed
Lynn Malkin.
OPINION
I. FACTS & PROCEDURAL HISTORY
Reed Lynn Malkin (“Husband”) and Karen Abrams Malkin (“Wife”) were married
in 1978. Prior to the marriage, Wife had worked as a professional ballet dancer and
owned a dance studio for a few years. She also worked at a restaurant owned by her
father. However, Wife spent a substantial amount of time out of the workforce during the
marriage to serve as primary caretaker for the parties’ two children. Husband worked as
an attorney throughout the marriage. According to Wife, the parties traveled around the
world, they bought whatever they wanted, and she never thought about money.
Wife filed for divorce in 1996. The chancery court held a two-day trial in March
1998, and a divorce decree was entered in April 1998. Husband admitted to
inappropriate marital conduct. The parties’ older child was at or near the age of majority,
and Wife was awarded custody of the younger child. The divorce decree did not contain
any findings regarding Husband’s income, but it contained the following paragraph
addressing alimony:
[T]he Court finds, after considering all of the relevant factors set
forth in T.C.A. § 36-5-101, such as the length of the marriage, [Wife’s] age,
[Wife’s] education, and other relevant factors, that she is so economically
disadvantaged that rehabilitation is not feasible or possible, so that the
Court awards [Wife] alimony in futuro in the sum of $3,500 per month,
which shall be paid beginning April 1, 1998, and the first of every month
thereafter until her death or remarriage[.]
Husband was also ordered to pay $1,500 per month in child support.
In April 2003, five years after the divorce decree was entered, Husband filed his
first petition to reduce or terminate his alimony in futuro obligation. Husband alleged
that “at the time of the divorce,” he was earning a gross income from his “professional
corporation” of $2,221,962, and the annual distribution to him from his professional
corporation was $744,231. For the most recent tax year, 2002, Husband alleged that his
professional corporation had received annual gross income of $882,650, and it distributed
gross income to him in the sum of $157,298. Husband alleged that his taxable income
had decreased from $736,009 in 1998 to only $90,969 in 2002, for a decrease of 88
percent. Husband argued that this constituted a substantial and material change in
circumstances justifying a reduction or termination of his alimony in futuro obligation.
He further alleged that Wife “was not fully employed” at the time of the divorce decree
and that she had refused to work on a full-time basis since that date.
After a hearing, the chancery court entered an order addressing Husband’s petition
in January 2004. The trial court found that Husband had a sharp increase in income in
1998 due to the settlement of one case, but his income was not nearly that high in the
-2-
years before or after that settlement. More importantly, however, the trial court found
nothing in the record to indicate that the 1998 income figure was before the original
chancellor at the time of the divorce trial in March 1998. The trial court found that
Husband’s taxable income in the two years prior to the divorce trial equaled $273,000 in
1997 and $271,000 in 1996, and this was the information the court had before it at the
divorce trial when it made its original award.
Putting aside the anomaly that occurred in 1998, the trial court found that
Husband’s taxable income for the five years since the divorce (from 1999 to 2003)
ranged between $157,000 and $281,000. Recognizing the “up and down” nature of a law
practice, the trial court decided to calculate Husband’s average taxable income for the
past five years, which equaled $221,894. The trial court determined that this represented
an 18 percent decrease in income for Husband from the $271,000 he earned around the
time of the divorce.
The trial court also found that at the time of the divorce trial, Wife had shown her
expenses to be approximately $6,250 per month. The trial court noted that Wife’s current
affidavit of income and expenses reflected only $4,705 in expenses, indicating a decrease
of 25 percent. Considering Husband’s decrease in income and Wife’s decrease in
expenses, the trial court reduced Husband’s alimony obligation by 18 percent, from
$3,500 to $2,870 per month effective February 1, 2004. However, the court also ordered
Husband to pay a portion of Wife’s attorney’s fees.
Three years later, in 2007, Husband filed his second petition to reduce or terminate
his alimony in futuro obligation. He alleged that Wife had been unemployed “during
most if not all of the parties’ marriage,” at the time of the divorce, and at the time of the
last hearing, and he claimed “it was not foreseeable that she would ever be employed.”
Husband alleged that Wife had recently obtained employment with a ballet school in
Nashville and was believed to be earning at least $25,000 per year. He argued that this
constituted a substantial and material change in circumstances warranting reduction or
termination of his alimony obligation. Wife filed a counter-petition seeking an increase
in her alimony obligation.
The second modification proceeding lasted three years. The matter was tried over
the course of six days in late 2009. The trial court’s order noted the “excessive amount of
legal energy, talent, and expenses consumed and invested into this proceeding on both
sides.” The trial court found that Husband’s average taxable income for the past five
years was $265,397, nearly as much as he earned at the time of the original divorce
hearing ($271,000).1 The court also found that Wife had “relevant monthly expenses” of
1
The trial court again calculated Husband’s “taxable income,” stating, “The Court will note that
in every instance where [the original chancellor] and this Court assessed [Husband’s] ability to pay, the
Court dealt only with [his] taxable income, not any 401K or deferred comp[.]”
-3-
$6,200 per month, roughly the same amount she had at the time of the divorce. However,
the court found her income to be approximately $1,300 per month, and it found that she
was also qualified to receive some social security retirement benefits because she had
reached the age of 64. Considering these additional sources of income now available to
Wife, the trial court found that the existing alimony award of $2,870 per month should
not be disturbed despite the increase in Husband’s income and Wife’s expenses since the
last hearing. Both petitions to modify were denied pursuant to an order entered in April
2010.
Three years later, in May 2013, Husband filed his third petition to reduce or
terminate his alimony in futuro obligation. This time, Husband alleged that he had retired
in December 2012 and was only drawing social security and pension funds, so he could
no longer afford to pay Wife alimony in futuro at the rate of $2,870 per month. After a
very brief hearing in December 2013, with the entire transcript spanning only 88 pages,
the trial court entered an order granting Husband’s petition. The trial court found that
Husband had retired at the age of 67 and that his income was limited to $8,000 per
month, consisting of $5,500 from a retirement account and $2,500 from social security.
The trial court found that “[Husband] was earning approximately $271,000.00 per year at
the time of the previous modification of alimony setting that amount at $2,870 per month
and he is now earning approximately $98,000.00 per year.” As such, the court found that
Husband “suffered at least a 2/3’s decrease in income and therefore the alimony in futuro
heretofore awarded should be modified to the sum of $1,035.00 per month effective
January 1, 2014.” Wife timely filed a notice of appeal to this Court.
On appeal, we began by examining the type of alimony awarded to Wife by the
final decree of divorce:
This case involves an award of alimony in futuro. This type of
alimony “is intended to provide support on a long-term basis until the death
or remarriage of the recipient.” Gonsewski [v. Gonsewski], 350 S.W.3d
[99,] 107 [(Tenn. 2011)] (citing Tenn. Code Ann. § 36-5-121(f)(1)).
Alimony in futuro can be awarded “when the court finds that there is
relative economic disadvantage and that rehabilitation is not feasible.”
Tenn. Code Ann. § 36-5-121(f)(1). In other words, alimony in futuro is
appropriate when one spouse “is unable to achieve, with reasonable effort,
an earning capacity that will permit the spouse’s standard of living after the
divorce to be reasonably comparable to the standard of living enjoyed
during the marriage, or to the post-divorce standard of living expected to be
available to the other spouse[.]” Tenn. Code Ann. § 36-5-121(f)(1).
An award of alimony in futuro remains in the court’s control for the
duration of the award and “may be increased, decreased, terminated,
extended, or otherwise modified, upon a showing of substantial and
-4-
material change in circumstances.” Tenn. Code Ann. § 36-5-121(f)(2)(A).
The party seeking modification of the alimony award “bears the burden of
proving that a substantial and material change in circumstances has
occurred.” Wiser v. Wiser, 339 S.W.3d 1, 12 (Tenn. Ct. App. 2010) (citing
Freeman v. Freeman, 147 S.W.3d 234, 239 (Tenn. Ct. App. 2003)).
“‘[W]hether there has been a sufficient showing of a substantial and
material change of circumstances is in the sound discretion of the trial
court.’” Bogan [v. Bogan], 60 S.W.3d [721,] 727 [(Tenn. 2001)] (quoting
Watters v. Watters, 22 S.W.3d 817, 821 (Tenn. Ct. App. 1999)).
Malkin v. Malkin (“Malkin I”), 475 S.W.3d 252, 257-58 (Tenn. Ct. App. 2015) (footnote
omitted).2
With respect to this first prong of the analysis, we discussed the circumstances
surrounding Husband’s recent retirement and whether his retirement constituted a
substantial and material change in circumstances:
It is well-settled that “when an obligor’s retirement is objectively
reasonable, it does constitute a substantial and material change in
circumstances—irrespective of whether the retirement was foreseeable or
voluntary—so as to permit modification of the support obligation.” Bogan,
60 S.W.3d at 729. However, it is equally clear that “an obligor cannot
merely utter the word ‘retirement’ and expect an automatic finding of a
substantial and material change in circumstances. Rather, the trial court
should examine the totality of the circumstances surrounding the retirement
to ensure that it is objectively reasonable.” Id. In the case before us, the
trial court found that Husband “retired at sixty seven (67) years of age from
the practice of law,” but the court did not make any finding regarding
whether Husband’s retirement was objectively reasonable. On appeal, Wife
seems to imply that Husband’s retirement either was not “bona fide” or was
not objectively reasonable, noting that he maintained his law license in
“active” status and continued to advertise his services as a mediator.
Husband testified that he officially closed his law office on March 1, prior
to the filing of his petition for modification on May 31, 2013. He testified
that he would be interested in doing mediation work but said he had not
received any calls for such work. Husband testified that his law practice
essentially “dried up” because his work was primarily worker’s
compensation cases involving employees of Northwest/Delta, and
Northwest/Delta no longer maintained a workforce in Memphis. He
testified that he experienced periods of several months without any new
2
Because both Husband and Wife rely on the findings from Malkin I to a great extent, we discuss
the Court’s findings at length.
-5-
clients, and he did not earn enough to cover his overhead during the last
five months he practiced. Husband also testified that he shared office space
and expenses with a gentleman who was retiring, and the building they
leased had been sold, so in order to continue practicing he would have been
required to lease a new office and hire new staff. Husband was 67 years
old and dealing with some health issues. Considering these circumstances,
Husband’s retirement was bona fide and objectively reasonable. . . .
Id. at 258. We held that “Husband’s retirement constituted a substantial and material
change in circumstances,” but, we added, “this finding does not end our inquiry.” Id.
Next, we turned to the second prong of the alimony modification analysis:
“[E]ven when an obligor is able to establish that a retirement is
objectively reasonable, and therefore that it constitutes a substantial and
material change in circumstances, the obligor is not necessarily entitled to
an automatic reduction or termination of his or her support obligations.”
Bogan, 60 S.W.3d at 730. The alimony statute provides that an award of
alimony in futuro “may” be modified upon a showing of a substantial and
material change in circumstances. Tenn. Code Ann. § 36-5-121(f)(2)(A).
“As evidenced by its permissive language, the statute permitting
modification of support awards contemplates that a trial court has no duty
to reduce or terminate an award merely because it finds a substantial and
material change in circumstances.” Bogan, 60 S.W.3d at 730. Instead, the
change in conditions resulting from retirement merely allows the obligor
the opportunity to demonstrate that reduction or termination of the award is
appropriate. Id. The “actual modification of the award, if any, is addressed
to the trial court’s discretion after considering the relevant factors listed in
Tennessee Code Annotated section 36-5-[121(i)].” Id. at 727. Although
the statute lists numerous factors for consideration, “the two most important
considerations in modifying a spousal support award are the financial
ability of the obligor to provide for the support and the financial need of the
party receiving the support.” Id. at 730.
Id. at 258-59 (footnote omitted).
We noted that the trial court made few findings to justify its reduction of the
award from $2,870 to $1,035 per month. Id. at 259. Initially, we noted that the trial court
made an incorrect factual finding regarding Husband’s income, as the trial court found
that “‘[Husband] was earning approximately $271,000.00 per year at the time of the
previous modification of alimony setting that amount at $2,870.00 per month and he is
now earning approximately $98,000.00 per year.’” Id. (emphasis added). We explained
that this finding was factually incorrect because Husband was actually earning
-6-
approximately $271,000 at the time of the divorce, and at the time of the modification to
$2,870 in 2004, he was earning $221,894. Id. at 260.
In any event, however, we found that the trial court applied an incorrect legal
standard by focusing solely on the decrease in Husband’s income without making “any
findings regarding Husband’s expenses, Wife’s income, Wife’s expenses, or any other
factors relevant to setting an alimony obligation.” Id. The trial court had simply
considered Husband’s decrease in income and reduced the alimony award by a
corresponding percentage. Id. We explained:
Deciding whether an obligor has the ability to provide spousal support
requires consideration of more than the obligor’s income. See, e.g., Evans
v. Young, 280 S.W.3d 815, 827 (Tenn. Ct. App. 2008) (finding that an
obligor still had the “ability to pay” the same level of alimony despite his
retirement and significant reduction in income). A decrease in income
“should not be viewed in a vacuum.” Proctor v. Proctor, No. M2006-
01396-COA-R3-CV, 2007 WL 2471504, at *5 (Tenn. Ct. App. Aug. 31,
2007). To the contrary, we must consider the obligor’s “ability to pay” the
alimony obligation, which can be impacted by a variety of factors. Id.
“Income is but one of the factors to be considered.” Id. The obligor’s
expenses are another important factor for consideration. Id. Moreover,
“the trial court should carefully consider the relevant factors of Tennessee
Code Annotated section 36-5-[121(i)] in deciding by what amount, if any,
the award should be modified.” Bogan, 60 S.W.3d at 734. The need of the
receiving spouse cannot be overlooked; it is “an important consideration in
modification cases.” Id. at 730.
Id. at 261.
Because the trial court had erred in its factual findings and also applied an
incorrect legal standard, we reviewed the limited evidence presented at the hearing to
determine whether modification of the alimony award was appropriate. Id. From our
review of the record, we concluded that Husband failed to meet his burden of
demonstrating that modification was warranted. Id. Although he had experienced a
decrease in income due to his retirement, he was still receiving $8,166 per month from
retirement benefits and social security. Id. Husband’s retirement funds were valued at
approximately $1.2 million, and he decided how much to withdraw from the accounts
based on online formulas and annuity tables. Id. If he continued his current level of
withdrawals, his retirement funds would last until his mid-eighties, which corresponded
to his life expectancy. Id.
Notably, despite Husband having the burden of proof, “he did not produce any
evidence of his monthly expenses in an effort to demonstrate an inability to pay his
-7-
current level of alimony.” Id. The limited evidence he presented regarding his expenses
showed that his current monthly income enabled him to pay Wife’s alimony and all of his
expenses without going into debt. Id. He was paying the bulk of the household expenses
for himself and his new wife, who was 49 years old and had accepted a voluntary buyout
enabling her to stop working during the same month as Husband. Id. When asked about
his deposition testimony in which he estimated that he and his wife spend $1,500 per
month on groceries, he responded,
All right. You asked me a bunch of questions about expenses in the
deposition.... And to be honest with you, I wasn’t prepared to answer those
because I only thought the only issue involved in this was the fact that my
income had dropped while I was—a significant amount and the fact that my
ex-wife had done nothing in terms of rehabilitation.
Id. at 261-62. Even at the modification hearing, Husband testified, “I would be guessing
at what each expense is.... I couldn’t break down exactly what my expenses are.” Id. at
262. Although he testified to charging some expenses to credit cards, he was able to pay
off those balances at the end of every month. Id. His expenses included considerable
discretionary spending, and he was voluntarily paying off his daughter’s student loan of
$20,000. Id. at 261. Husband claimed to have “cut back” on some “social things,” but he
was still traveling to France every year. Id. at 262. We found that “Husband’s lifestyle
indicated that he had no trouble paying for luxuries in addition to meeting his
obligations,” and we concluded that he “still has the financial ability to pay Wife’s
current level of alimony in the sum of $2,870 per month.” Id.
We also considered Wife’s financial need for the current level of alimony. She
was 69 years old at the time of the hearing in 2013, and her most recent full-time
employment was four years earlier when she worked as a secretary at the ballet school,
earning $22,728 per year. Id. The ballet school “let [her] go” when a new director was
hired and brought in his own staff. Id. Wife had only minimal income since then,
earning $3,585 in 2010; $1,023 in 2011; and $312 in 2012. Id. She had worked at a real
estate company for $12 an hour but was replaced by someone with an accounting degree.
Id. At the time of trial, she was working three to six hours per week at a yarn store. Id.
She attributed her lack of meaningful employment to her advanced age, health issues, and
her lack of education. Id. She had begun drawing social security benefits in the past year
and was receiving around $1,150 per month. Id. Aside from her social security benefit,
minimal paycheck, and alimony payment, she had no other source of income. Id. She
had no savings and no retirement and said she did not really own anything besides thirty-
year-old furniture and an old car. Id. at 262-63. Wife testified that she lived “[v]ery
frugally” and was unable to afford vacations or other luxuries. Id. at 262. When asked if
her monthly expenses had decreased since the last hearing, Wife said, “I can promise you
it’s less. I don’t do anything extra.” Id. at 263. She testified that some months she had a
deficit, and some months she had a surplus, but she used any surplus to pay on a
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$150,000 tax debt she owed to the IRS3 or for attorney’s fees from defending against
Husband’s petitions to modify “every couple of years.” Id. She believed she would have
to live with one of her children if her alimony was significantly reduced. Id. Considering
all these facts, we concluded that Wife had continued financial need for her current level
of alimony. Id. Even though her expenses had decreased somewhat, we said this did not
warrant a further decrease in her alimony payment. Id. (citing Richards v. Richards, No.
M2003-02449-COA-R3-CV, 2005 WL 396373, at *11 (Tenn. Ct. App. Feb. 17, 2005)
(“Wife’s frugality should not be held against her.”); Claiborne v. Claiborne, No. C/A
744, 1988 WL 5684, at *2 (Tenn. Ct. App. Jan. 29, 1988) (declining “to penalize wife for
being prudent and frugal”)).
In sum, in Malkin I, we concluded that Husband’s retirement did constitute a
substantial and material change in circumstances, but we found that he failed to prove
that the change in circumstances significantly diminished his financial ability to pay
alimony or Wife’s need for it. Id. “Despite Husband’s retirement,” we said, “he is
financially able to continue to pay spousal support at pre-retirement levels.” Id. We
reiterated that “‘[e]ven a material change of circumstances does not necessarily require a
reduction of alimony, if the payor still has the ability to pay the support awarded and the
need of the payee has not diminished.’” Id. (citing Willet v. Taeubel, No. E2014-00364-
COA-R3-CV, 2014 WL 5812338, at *8 (Tenn. Ct. App. Nov. 10, 2014)). We reversed
the trial court’s reduction of alimony to $1,035 and reinstated the previous obligation of
$2,870 per month. Id. We held that if Husband had been paying $1,035 during the
pendency of the appeal, Wife was entitled to recover the difference between what
Husband actually paid and what he would have owed if the obligation remained at
$2,870. Id.
The Tennessee Supreme Court denied Husband’s application for permission to
appeal on July 21, 2015. On April 15, 2016, Husband filed his fourth petition to reduce
or terminate his alimony in futuro obligation. After reciting this Court’s findings in
Malkin I, the petition alleged that Husband had experienced “a substantial decrease in his
income since his retirement and an increase in expenses,” including “significant credit
card debt pursuant to the reinstatement of alimony in the amount of $2,870.00.” He
alleged that he was now incurring several expenses that were “either in addition to, or in
excess of the expenses beginning in December 2013, including, but not limited to health
insurance, increased out of pocket medical expenses, life insurance premium, auto
payments, and accountant fees.” Husband also alleged that Wife had “a long history of
being underemployed, or not being employed at all,” when she had the ability to earn an
income.
Wife filed a motion to dismiss pursuant to Tennessee Rule of Civil Procedure
3
Wife went four years without filing tax returns while she was receiving alimony but perhaps not
employed. She began filing returns in 2007. However, she had accumulated a substantial tax debt.
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12.02(6), asserting that Husband “cannot state a claim because he cannot show a
substantial and material change in circumstances since the last decree.” Wife argued that
Husband was required to allege a substantial and material change in circumstances
occurring since the last order in Malkin I became final, but instead, he relied “almost
entirely on matters already litigated in the previous action.” She argued that Husband
could not rely on his retirement as a change in circumstances because that issue was
already litigated in Malkin I. Wife contended that Husband’s only allegation of a change,
aside from the issue of retirement itself, was that his expenses had increased since the last
hearing, but she suggested that his expenses were voluntarily assumed obligations and
did not constitute a “material” change in circumstances. After a hearing, the trial court
entered an order denying Wife’s Rule 12 motion.
Thereafter, Wife filed her own petition for modification seeking to increase the
alimony award. She alleged that Husband’s income had actually increased since the last
modification hearing in 2013, and she further alleged that the aggregate value of his
assets had increased, increasing his ability to pay. Wife alleged that her own income had
remained approximately the same while her expenses had increased. Wife alleged that
Husband’s “litigiousness and constant bringing of petitions to modify” had caused her to
incur attorney’s fees almost continuously since the last hearing in 2013. She claimed that
she was not enjoying a lifestyle reasonably comparable to Husband’s lifestyle and asked
the court to increase her alimony award by an unspecified amount. Husband filed a
response in which he admitted that Wife did not have a lifestyle comparable to his, but he
claimed this fact was due to Wife’s own lack of initiative.
The trial court heard testimony over the course of two days in November and
December 2017. At the outset of the hearing, counsel for Husband argued that the
opinion of this Court in Malkin I established “several things, which are res judicata.” He
pointed to this Court’s findings that Husband’s retirement was reasonable, that his annual
income had dropped to $98,000, and that Wife had begun receiving social security
benefits. Husband’s counsel suggested that these facts had already been found by the
Court of Appeals to constitute substantial and material changes of circumstances. In
response, Wife’s counsel argued that res judicata applied, but in a different manner. She
pointed to this Court’s finding that “[d]espite Husband’s retirement, he is financially able
to continue to pay spousal support at pre-retirement levels.” See Malkin I, 475 S.W.3d at
263. Wife’s counsel argued that Husband was required to demonstrate a change in
circumstances occurring since the last hearing in December 2013 (at the trial level in
Malkin I). She suggested that Husband’s financial situation had improved since the date
of the last hearing while Wife’s had deteriorated.
At the time of the hearing on the fourth petition, in late 2017, Wife was 73 years
old, and Husband was 71. Husband testified that he was no longer practicing law, and his
license was inactive. To briefly recap, during the December 2013 hearing in Malkin I,
Husband had testified that he officially closed his law office on March 1, 2013, and that
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his only sources of income were from social security and retirement, totaling around
$98,000 per year. However, his tax returns for the years since then indicated that his
income was more than $98,000. For 2014, he received a W2 from his law practice
showing an additional $65,000 in wages. He testified that he had received around
$40,000 in attorney’s fees on outstanding cases that he had sent to other attorneys upon
his retirement. In addition, he received some refunds on court costs, totaling no more
than $5,000. Husband also received some income for mediations of around $2,000 per
year. However, Husband insisted that all of these sources of income had since ended.
Unlike the situation in Malkin I, at this hearing, Husband presented evidence of his
expenses. However, his evidence was not very specific. He testified that he gives $3,500
to his wife every month to pay “household expenses.” He said this covers his
contribution toward the mortgage, home insurance, car insurance, utilities, cable,
telephone, a housekeeper, laundry, periodicals, “just anything and everything.” Husband
testified that his wife contributes at least $1,500 to the household expenses as well.
Husband’s home was appraised at around $270,000, but he did not know the balance
owed on the mortgage, nor did he know the exact amount of the monthly payment,
although he estimated that it was around $1,500 to $1,600. Husband owed no debt on his
vehicle. He acknowledged the possibility that he and his wife spend $10,000 or $12,000
per year dining out at restaurants and insisted that he simply did not know the amount.
He had a credit card balance of about $6,000.
Husband testified that his expenses had increased since his retirement because he
had previously operated as a professional corporation and was able to take certain
expenses as business expenses, but now, he was paying those expenses as personal
expenses. He also testified that his medical insurance expense had changed since the last
hearing in December 2013 because he was previously covered by his wife’s policy
through her employer, and since she had left that employer, he had procured
supplemental insurance.
Husband’s retirement funds had increased in value since the last hearing, from
$1.2 million to $1,685,192. Every year, he purchased season tickets to the Memphis
Grizzlies games, but he shared the cost with two other individuals. He made charitable
contributions to a synagogue, the United Way, Boys Club, Boys Town, the American
Heart Association, and the American Cancer Association. Husband acknowledged that
he was still traveling to France every year, just as he had for the past twenty years. He
and his wife were there for two and a half weeks earlier in the year, and in 2015, they
were there even longer. He emphasized that he purchases economy-class flight tickets
and rents an economy car for travel while he is in France, and his wife shares some of the
expenses. He testified that he travels to a small village in France, where he rents an
apartment and eats at casual restaurants.4
4
Husband was critical of this Court’s discussion of his yearly trips to France in Malkin I, stating,
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Wife was living in an apartment, just as she was at the time of the last hearing.
However, she had recently moved from a one bedroom apartment to a two bedroom
apartment in the same building after the birth of her first grandchild, whom she was
babysitting two to three days per week. Wife explained that she simply did not have
room for a crib and space to entertain a child in her one bedroom apartment. Her rent had
increased from $875 per month to $1,275 per month (including utilities) because of the
move. However, the move allowed her to stop paying a monthly fee for a storage unit.
Wife testified that she does not have any money left at the end of each month. She
still owed over $100,000 to the IRS and was paying $100 per month toward her tax debt.
Wife owned a twelve-year-old car and the furniture she received at the time of the
divorce, and she had approximately $4,000 in her bank accounts because she had just
received Husband’s alimony payment for the month.
After Malkin I, Wife had received a lump-sum payment of over $30,000 from
Husband, representing the amount Husband owed due to the reinstatement of his previous
alimony obligation. Wife had deposited $28,000 of that sum into an escrow account with
her attorney. Wife testified that she did not want to spend the money because she knew
she would be going back to court. Wife had been using the funds to pay her attorney’s
fees, and she had made a few withdrawals to “get through the month,” but she had
approximately $10,000 remaining in the account at the time of trial.
Wife’s most recent employment was in 2016, when she worked as a driver for
Uber and Lyft, providing transportation on an on-call basis to people who requested the
service. However, she stopped working as a driver because she had a “bad back,” which
made it difficult to sit in her small car. Wife testified that she had an x-ray approximately
two months before trial, which revealed that she had a bulging disc and that the “gel” was
gone between two of her vertebrae. She had received nerve blocks and was attending
physical therapy sessions. She continued to drive occasionally for some elderly residents
in her building, and they sometimes paid her, for an average income of about $200 per
month. She did not receive any compensation for babysitting her grandchild. Wife was
receiving social security benefits of approximately $1,270 per month, in addition to her
alimony payment of $2,870 per month.
Wife testified that she was unable to produce the underlying documents supporting
her recent tax returns because her accountant, who previously had possession of the
documents, had been arrested and was still in jail. Her 2014 tax return listed $10,906 in
gross income from secretarial services, which Wife testified was likely from the yarn
store where she had worked in the past, although she could not recall exactly. The 2014
“And the Court of Appeals picked up on that. They mentioned it in their order having no idea where I was
going, obviously not realizing that France consist[s] of other cities other than Paris.”
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tax return also listed approximately $23,000 in business expenses on a schedule C profit
and loss statement. Wife testified that she had no idea where that came from and could
not explain it because she simply signed what her accountant prepared without reading it.
She said, “I don’t understand taxes.” Wife’s 2015 tax return similarly indicated that she
earned approximately $5,000 working as a driver but that she had $46,000 in work-
related expenses. Wife again testified that these numbers did not make sense to her.5
At the conclusion of the testimony, the trial judge announced his oral ruling as
follows:
Well, the Court has listened to all of the elegant [sic] arguments of both
sides, considered all the pros and cons as it relates to the predicament of
these parties. In accordance of the opinion considering all the facts and
evidence that’s been presented that the amount of the alimony should be
reduced to $2000 a month for the remainder of the period that [Husband]
had agreed to compensate [Wife] and I’ll direct the attorneys to prepare the
appropriate order, $2000 a month alimony effective immediately.
On January 29, 2018, the trial court entered a combined order on both petitions to
modify. The order simply stated that Husband’s petition was well taken, while Wife’s
was not, and therefore, Wife’s petition was dismissed. The order reduced Husband’s
alimony obligation to $2,000 per month effective December 2017. The order included no
findings of fact or conclusions of law but incorporated the oral ruling above.
Husband filed a motion to alter or amend, asking the court to modify its decision
by making the reduction in alimony retroactive to the date of filing of his petition in
2016. He also asked the trial court to reduce the amount to $1,400 per month, which he
claimed would be “consistent with the previous judgment modifying alimony, wherein
this Honorable Court found that [Husband] had a 60% decrease in income and the Court
of Appeals found the Petitioner had a 56% reduction in income.” Additionally, Husband
suggested that because Wife was no longer working for Uber and Lyft, she would be
saving $30,000 to $40,000 per year for the expenses she previously claimed on her tax
returns.
Wife also filed a motion to alter or amend and a motion for findings of fact and
conclusions of law. She noted that the original order contained no reasoning to explain
the court’s decision to reduce the alimony obligation from $2,870 to $2,000 per month.
She asked the court to increase the alimony award to $4,100 per month rather than
decrease it because Husband’s income had been more than expected at the last hearing,
his retirement assets had increased in value, and she still needed alimony. She also
5
Both parties testified that they had filed their 2016 tax returns, but neither party’s 2016 return
was introduced at trial.
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sought an award of attorney’s fees, claiming that she was expending her spousal support
defending against Husband’s efforts to reduce or terminate his obligation.
The trial court entered an order directing both parties to file proposed findings of
fact and conclusions of law. On June 8, 2018, the court entered a six-page “Findings of
Fact and Conclusions of Law on Petitions to Modify Alimony.”6 For reasons that will be
discussed in greater detail below, the trial court further reduced Husband’s alimony
obligation, to $1,300 per month, and it made the reduction retroactive to the date of filing
in 2016. The parties were ordered to pay their own attorney’s fees. On June 22, 2018,
the trial court entered a separate written order incorporating by reference the “Findings of
Fact and Conclusions of Law” and stating that Husband’s alimony obligation was
reduced to $1,300 per month retroactive to April 1, 2016.
Wife timely filed a notice of appeal. Wife also filed a motion for stay of execution
pending appeal. The trial court entered a subsequent order ruling that Husband would
pay $1,300 per month in alimony pending appeal, and the court found that he was entitled
to a judgment against Wife for $28,350 for overpayment of alimony during the course of
the proceedings. However, the court ruled that Husband could not execute on the
$28,350 judgment against Wife until the appeal was resolved.
II. ISSUES PRESENTED
Wife presents the following issues for review on appeal:
1. Whether the trial court erred when it denied Wife’s Rule 12.02(6) motion to
dismiss;
2. Whether the trial court erred in granting Husband’s petition to modify, denying
Wife’s petition to modify, and determining the amount of alimony in futuro
Husband should be required to pay;
3. Whether Wife should be awarded her attorney’s fees both at trial and on appeal.
For the following reasons, we reverse and remand for further proceedings.7
6
Wife suggests on appeal that the trial court adopted Husband’s proposed findings of fact and
conclusions of law “essentially wholesale.” However, the record before us does not contain a copy of
Husband’s proposed findings to enable us to make that determination.
7
We note that the transcript from the 2017 hearing reflects that several exhibits were introduced.
At the conclusion of the hearing, the trial judge and the attorneys discussed the fact that the court reporter
would “hold the exhibits” until the time period for an appeal elapsed. The exhibits do not appear in the
record on appeal. This Court contacted the chancery court clerk and was informed that no exhibits were
ever filed in the clerk’s office. As a result, we have proceeded to review the record as presented to this
Court. Both attorneys obviously reviewed the record on appeal when preparing their briefs and citing to
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III. DISCUSSION
A. Alimony Modification
As we explained in Malkin I, an award of alimony in futuro is intended to provide
support to an economically disadvantaged spouse on a long-term basis until the death or
remarriage of the recipient. 475 S.W.3d at 257. Such an award is appropriate when a
spouse “is unable to achieve, with reasonable effort, an earning capacity that will permit
the spouse’s standard of living after the divorce to be reasonably comparable to the
standard of living enjoyed during the marriage, or to the post-divorce standard of living
expected to be available to the other spouse[.]” Tenn. Code Ann. § 36-5-121(f)(1).
However, it “may be increased, decreased, terminated, extended, or otherwise modified,
upon a showing of substantial and material change in circumstances.” Tenn. Code Ann.
§ 36-5-121(f)(2)(A). The party seeking modification has the burden of proving that a
substantial and material change in circumstances has occurred. Malkin I, 475 S.W.3d at
258. Whether that party has sufficiently demonstrated a substantial and material change
in circumstances is in the sound discretion of the trial court. Id.
1. Res Judicata
Initially, the parties dispute on appeal how we should determine the existence of a
change in circumstances. Husband takes the position that the existence of a change in
circumstances “has already been adjudicated” in Malkin I. Husband notes that in Malkin
I, this Court found that his retirement was a substantial and material change in
circumstances. Because the reversal in Malkin I was based on Husband’s failure to prove
that a modification was warranted, under the second prong of the analysis, he argues that
“[t]he change in circumstances established in Malkin I is res judicata and should be taken
as fact for the purposes of establishing same for the case at bar.”
In response, Wife argues that Husband cannot rely on his retirement as a
substantial and material change in circumstances, again, because that fact was litigated in
Malkin I, wherein this Court concluded that Husband was financially able to continue to
pay spousal support at pre-retirement levels despite his retirement. Wife suggests that
Husband must now demonstrate a change in circumstances occurring after the last order
in Malkin I became final following our decision on appeal.
We conclude that neither of these positions is entirely correct. Res judicata “‘bars
a second suit between the same parties or their privies on the same cause of action with
respect to all issues which were or could have been litigated in the former suit.’”
Napolitano v. Bd. of Prof’l Responsibility, 535 S.W.3d 481, 496 (Tenn. 2017) (quoting
the record, and neither mentioned the missing exhibits or made any attempt to locate them.
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Creech v. Addington, 281 S.W.3d 363, 376 (Tenn. 2009)). The doctrine is intended “‘to
promote finality in litigation, prevent inconsistent or contradictory judgments, conserve
legal resources, and protect litigants from the cost and vexation of multiple lawsuits.’”
Id. (quoting Creech, 281 S.W.3d at 376).
With respect to alimony, “‘[a] trial court’s final decree fixing alimony [] is res
judicata as to all circumstances in existence at the time of the entry of said decree.’”
Wilson v. Wilson, No. M2003-02261-COA-R3-CV, 2005 WL 856082, at *5 (Tenn. Ct.
App. Apr. 13, 2005) (quoting Watts v. Watts, No. 01-A01-9011-CH-00406, 1991 WL
93780 at *2 (Tenn. Ct. App. Jun. 5, 1991)). This Court has also applied the doctrine of
res judicata in the context of serial alimony modification proceedings. For instance, in
Brown v. Brown, 29 S.W.3d 491, 492 (Tenn. Ct. App. 2000), the parties divorced in
1989, and the wife was awarded alimony until her death or remarriage. She remarried in
1993, but the marriage was annulled shortly thereafter. Id. From 1993 to 1996, the
husband filed several petitions to reduce or terminate his alimony obligation on various
other grounds. Id. In 1998, he filed another petition to eliminate his alimony obligation,
arguing, for the first time, that Wife’s 1993 marriage obviated his alimony obligation. Id.
at 493. We held that “[b]ecause the husband failed to seek termination of his alimony
obligation on this ground in any of the previous multiple legal proceedings between the
parties, . . . this current challenge is prohibited by the doctrine of res judicata.” Id. at 492.
We explained,
‘The doctrine of res judicata is based on the principle not only that
the same parties in the same capacities should not be required to litigate
anew a matter which might have been determined and settled in the former
litigation, but that litigation should be determined with reasonable
expedition, and not be protracted through inattention and lack of diligence.
Jordan v. Johns, 168 Tenn. 525, 79 S.W.2d 798 (1935).
The rule requires that the whole subject of the litigation be brought
forward by the parties, and the judgment concludes all matters, whether of
action or defense, legally pertaining to that subject which, by the exercise
of reasonable diligence, might have been brought forward. Sale v.
Eichberg, 105 Tenn. 333, 59 S.W. 1020, 52 L.R.A. 894 (1900).
...
This Court cannot accept the argument of appellant that, by
disclaiming or failing to present a particular fact or theory supporting his
action, a plaintiff may thereby reserve and preserve the disclaimed and
unpresented fact or theory as an “ace in the hole” to be used as a ground for
a second lawsuit based on such ground.’
Id. at 496 (quoting McKinney v. Widner, 746 S.W.2d 699, 705 (Tenn. Ct. App. 1987)).
To consider the husband’s argument “at [that] point in the parties’ litigious history”
would condone piecemeal litigation at the whim of the parties. Id.
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This Court has repeatedly recognized that “‘[w]here the court has decided one
petition for modification, the order entered in that proceeding is res judicata, and a second
petition for modification thus cannot be entertained unless it can be shown that there has
been a substantial change of circumstances since the earlier decision was made.’” Curtis
v. Curtis, No. M1999-00721-COA-R3-CV, 2001 WL 310641, at *5 (Tenn. Ct. App. Apr.
2, 2001) perm. app. denied (Tenn. Sept. 10, 2001) (quoting 24A Am.Jur.2d Divorce and
Separation § 822 (1998)); see also Cooper v. Cooper, No. E2001-00716-COA-R3-CV,
2002 WL 445068, at *6 (Tenn. Ct. App. Mar. 22, 2002) (quoting Jones v. Jones, 784
S.W.2d 349 (Tenn. Ct. App. 1989)) (“‘[O]ne cannot maintain a second petition for
modification unless it can be shown that since the entry of the order on the first petition
for modification there has been a substantial change of circumstances.’”). The “change
in circumstances must have occurred since the last order regarding alimony payments,
because the earlier order is considered res judicata concerning all circumstances up to
that time.” Curtis, 2001 WL 310641, at *5; see Hubbard v. Hubbard, No. 03A01-9603-
CV-00108, 1996 WL 563890, at *1 (Tenn. Ct. App. Oct. 1, 1996) (considering only
evidence tending to show a substantial and material change in circumstances since the
date of the most recent post-divorce modification order regarding alimony).
Accordingly, in the event that a previous petition for modification has been
denied, the petitioner seeking a later modification is “required to allege a substantial and
material change in his circumstances since the order denying his first petition for
modification of alimony.” Curtis, 2001 WL 310641, at *6. Applying these principles to
the case before us, we conclude that when Husband filed his fourth petition to modify, he
was required to allege and prove that a substantial and material change in circumstances
had occurred since December 2013, when the trial court held the hearing and entered its
order on his third petition for modification. However, we find no support for Wife’s
suggestion that the date should be measured from 2015, after the appeal was concluded in
Malkin I and the application for permission to appeal was denied.8 In Malkin I, this Court
was not considering the circumstances as they presently existed at the time of our opinion
in 2015. We were considering the evidence presented at the December 2013 hearing and
the findings in the trial court’s order from December 2013. As previously noted, res
judicata bars a second suit between the same parties “with respect to all issues which
were or could have been litigated in the former suit.” Napolitano, 535 S.W.3d at 496.
8
As we explained in Gotten v. Gotten, 748 S.W.2d 430, 431 (Tenn. Ct. App. 1987),
The appellate court acts only upon the record in the case in the trial court and when the
appellate court enters an order modifying the trial court order it is doing what should
have been done in the first instance. The modification of the trial court order should be
effective as of the date of the trial court order. Therefore, . . . a judgment of the appellate
court reversing or modifying the trial court judgment providing for periodic payments of
alimony [] is effective as of the date of the trial court judgment, unless the appellate court
judgment specifies otherwise.
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Events occurring in 2014 and 2015 were not litigated and could not have been litigated in
Malkin I.
This Court rejected a similar theory in In re E.J.M., 259 S.W.3d 124, 135 (Tenn.
Ct. App. 2007), in the context of serial petitions to modify custody. While one order was
being reviewed on appeal, the father filed a second petition to modify. Id. We explained
that this Court’s “decision in E.J.M. I was ‘final and conclusive upon all the facts and
conditions which existed’ at the time of the order that was the subject of that appeal.” Id.
However, the appellate court’s decision in E.J.M. I did not prevent the trial court from
issuing orders “addressing new facts and changed conditions which arose after the
issuance of the order being appealed.” Id.
Likewise, in this case, our decision in Malkin I was only “‘final and conclusive
upon all the facts and conditions which existed’ at the time of the order that was the
subject of that appeal.” See id. Husband was therefore required to show a change in
circumstances occurring since December 2013.
2. Wife’s Motion to Dismiss Husband’s Petition
This brings us to Wife’s first issue on appeal. Wife argues that the trial court
should have granted her motion to dismiss pursuant to Tennessee Rule of Civil Procedure
12.02(6) due to Husband’s failure to sufficiently allege a substantial and material change
in circumstances aside from the previously litigated issue of his retirement. In Curtis,
this Court affirmed the dismissal of a husband’s second petition for modification on the
basis that it did not sufficiently allege a substantial change of circumstances since the
court’s order denying his first petition for modification. 2001 WL 310641, at *6.
A Rule 12.02(6) motion “‘challenges only the legal sufficiency of the complaint,
not the strength of the plaintiff’s proof or evidence.’” Estate of Haire v. Webster, 570
S.W.3d 683, 690 (Tenn. 2019) (quoting Webb v. Nashville Area Habitat for Humanity,
Inc., 346 S.W.3d 422, 426 (Tenn. 2011)). “The relevant and material allegations of the
complaint are taken as true, and the plaintiff is afforded the benefit of all reasonable
inferences that may be drawn from the allegations.” Id. (citing Webb, 346 S.W.3d at 426;
Brown v. Tenn. Title Loans, Inc., 328 S.W.3d 850, 854 (Tenn. 2010)).
Husband’s fourth petition to modify recited the findings from Malkin I and
contained the following allegations:
5. Your Petitioner would show now that he has had a substantial
decrease in his income since his retirement and an increase in expenses as
well as significant credit card debt pursuant to the reinstatement of alimony
in the amount of $2,870.00.
6. Petitioner now incurs several expenses that are either in addition to,
- 18 -
or in excess of the expenses beginning in December 2013, including, but
not limited to health insurance, increased out of pocket medical expenses,
life insurance premium, auto payments, and accountant fees.
7. Further, your Petitioner would show that the Respondent has a long
history of being underemployed, or not being employed at all when she has
had no mental or physical defects that would prevent her from earning a
substantial income. In fact, she has been employed, has made investments,
and has otherwise shown an acumen to earn money except when she fears
that her alimony may be reduced, or terminated.
Clearly, Husband’s allegation regarding Wife’s “long history” of underemployment did
not allege a material change in circumstances. Husband had been making this allegation
since his first petition to modify.9 We likewise conclude that Husband could not rely on
his decrease in income due to his retirement, as that issue was already litigated in Malkin
I. However, Husband did allege, in this petition, that he was now incurring several
expenses that were in addition to or in excess of his expenses “beginning in December
2013,” which was the date of the last hearing and the trial court’s order in Malkin I.
Thus, his allegations were not entirely based on issues previously litigated, and his
petition was not subject to dismissal for failure to state a claim.
3. Husband’s Petition to Modify
a. Substantial and Material Change in Circumstances
We now consider the merits of Husband’s petition to reduce or terminate his
alimony obligation. In the trial court’s findings of fact and conclusions of law, it
referenced the alimony statute and stated that an award of alimony in futuro can only be
modified “upon showing of financial [sic] or material change of circumstances.”
However, the court did not specify exactly what it deemed to be a material change in
circumstances. It is not clear from the order whether the trial court accepted Husband’s
argument that a substantial and material change in circumstances had already been
established by Malkin I. In the context of its factual findings, the trial court found that
Husband’s income had declined to $98,000 per year at the time of the December 2013
hearing, but that he was still employed by his “law office professional corporation” at
that time, and it was paying most of his expenses as he was “winding down this practice.”
The order stated that Husband filed his present petition to modify on the basis that his
expenses had increased because he is no longer employed by his professional
corporation. The court found that Husband had retired from the practice of law and that
his license was now inactive. Although the order does not discuss Husband’s specific
9
See, e.g., Jarman v. Jarman, No. M2017-01730-COA-R3-CV, 2018 WL 5778811, at *4 (Tenn.
Ct. App. Oct. 31, 2018) (“Wife did not have a fulltime job in 2003 [when the last order was entered];
therefore, her lack of fulltime employment now cannot serve as a material change.”)
- 19 -
expenses or any related monetary figures, it states that “none of the current income and
expenses of [Husband] reflected on his affidavit of income and expenses filed in this
cause have been controverted by [Wife].” In its discussion of the statutory factors
relevant to an award of alimony, the order simply states that the “primary motivating
factors” for the court’s decision were “1) the uncontroverted increase in the expenses of
[Husband]; [and] 2) the complete and utter failure of maintaining any type of financial
responsibility of [Wife] since the parties have been divorced.”10
From our review of the record, we cannot agree with the trial court’s implicit
conclusion that Husband’s “increase” in expenses constituted a material change in
circumstances. During the brief hearing in Malkin I in December 2013, Husband testified
that he had retired and “officially” closed his law office on March 1, 2013. He testified
that he was no longer practicing law and that he was no longer renting office space.
When asked if he did “any law practicing now,” Husband said no. He said he would like
to do mediation work but that he had not been contacted about one “in forever.” He
insisted that his decision to retire was final and would not change. He testified that his
sole sources of income were social security and his retirement funds. Husband’s
evidence regarding his expenses was very sparse. He testified that his current wife had
recently accepted a voluntary buyout from her job, and he was previously insured by her
group plan but currently “on COBRA.” That coverage was expected to end the following
month, and Husband had already applied for “Part B” coverage. As such, Husband said,
“I am going to have an expense in health insurance that we just discussed that I haven’t
had previously.” He also testified that his tax obligation would be different that year
because in the past he had paid quarterly payments, but he was no longer “paying in.”
When asked about his precise expenses, however, Husband conceded that he “couldn’t
break down exactly what my expenses are” and “would be guessing at what each expense
is.”
At the hearing on this petition, in November 2017, Husband did present evidence
of his expenses. He testified that he gives his current wife $3,500 per month for
“household expenses,” but that he had been doing so since they married, and this expense
had not changed. The “increased expenses” Husband claimed were (1) medical expenses,
and (2) expenses that he previously paid through his professional corporation but that he
now paid individually.
First, regarding the medical expenses, Husband testified that his medical insurance
situation had changed since the last hearing in December 2013. He claimed that “when
we were here last, my wife was still and I was, too, under her health insurance at [a
bank]. So I didn’t have any of these expenses then. It was a much better insurance
situation.” Husband testified that he had to purchase supplemental insurance costing
10
Again, the trial court’s finding about Wife’s financial responsibility “since the parties have
been divorced” does not constitute a material change in circumstances since the last hearing.
- 20 -
$245 per month and also had out-of-pocket expenses averaging $150 that he did not have
before. On cross-examination, Wife’s attorney presented Husband with his testimony
from the 2013 hearing, indicating that his wife had already left her job at that time, and
he was already aware of the impending cost of acquiring additional insurance. Husband
then said, “I stand corrected.”
“To constitute a material change, the change must occur after the entry of the
decree to be modified and it must have been unanticipated.” Jekot v. Jekot, 362 S.W.3d
76, 83 (Tenn. Ct. App. 2011) (emphasis in original). From our review of the record,
Husband’s increased expenses for medical insurance and out-of-pocket costs do not
constitute material changes in circumstances since the last proceeding in December 2013,
as they were circumstances already existing or anticipated at that time.
The second category of expenses that Husband described were expenses he
previously paid through his professional corporation but was presently paying
individually. Husband explained that he previously operated as a professional
corporation and was able to “take certain expenses as business expenses” and write them
off as corporate deductions, but since he had dissolved his professional corporation, he
was now paying those expenses from his personal account rather than his corporate
account. Simply stated, Husband said that “[q]uite a bit of what’s now personal expenses
was business expenses.” For instance, Husband listed a current expense for life and long-
term care insurance and acknowledged that this “expense was there” before, but it had
previously been paid by his corporation. He explained, “I was still a PC, so that wasn’t a
personal expense to me.” He went on to testify that other expenses he previously paid
from his corporate bank account were now paid by him personally, such as accounting
expenses, income taxes, and expenses related to his automobile. He said, “That was all
paid for with corporation money.” Husband included a credit card expense of $3,507 on
his income and expense statement and said this sum included the expenses that he
previously paid through his corporate account. He said “there’s a lot of expenses that
were corporate that are at least a thousand dollars worth if not more that now [are]
personal expenses of mine.” Husband’s brief on appeal confirms that he now pays these
expenses “due to his inability [to] claim these expenses as deductions for his law practice
since he has retired.” As his attorney put it during oral argument before this Court,
Husband’s “expenses have increased since the last petition and appeal due to his
retirement from the practice of law.”
Again, as the petitioner, it was Husband’s burden to prove a material change in
circumstances. Wiser, 339 S.W.3d at 12. For purposes of alimony modification, a
change in circumstances is considered to be “material” when the change (1) occurred
since the entry of the decree ordering the payment of alimony, and (2) was not anticipated
or within the contemplation of the parties at that time. Bogan, 60 S.W.3d at 728; see also
Watters v. Watters, 22 S.W.3d 817, 821 (Tenn. Ct. App. 1999) (“the change in
circumstances must not have been foreseeable”). Husband was required to demonstrate
- 21 -
that these expenses were “unanticipated or unforeseen when alimony was set” the last
time. Jekot, 362 S.W.3d at 84. During the 2013 hearing, the parties litigated the issue of
Husband’s recent retirement, whether it was “bona fide,” and how Husband’s income was
impacted by his retirement. For the most part, they failed to discuss how Husband’s
expenses would be affected by his retirement. However, that does not mean that
Husband gets a second chance to do so in this proceeding. Husband must now prove a
material change in circumstances occurring since the last proceeding. Husband has not
demonstrated that the dissolution of his professional corporation after his retirement, and
the resulting inability to continue paying his expenses through his business account, were
unanticipated changes in circumstances. These were not new expenses for Husband that
were unknown or unforeseeable when alimony was addressed shortly after his retirement.
He is still paying the same expenses, but from a different account. Husband failed to
prove that this was a material or unanticipated change in circumstances.
Aside from the two “primary motivating factors” discussed above, most of the
other facts discussed by the trial court pre-date the December 2013 order and would not
constitute a material change in circumstances. However, the court did note that, since the
last hearing, Wife had deposited in an escrow account the lump-sum arrearage payment
she received from Husband as a result of this Court’s reinstatement of his previous
alimony obligation. The trial court was critical of this move and found it “apparent that
the $1035 per month” Wife received pending the appeal in Malkin I “was adequate for
her support.” The court found that Wife “apparently has other sources of income and did
not need the funds for her support.” We cannot agree with these conclusions. Wife
testified that she did need the money but that she did not want to spend it because she
knew that Husband would file another petition to modify. As evidenced by this litigation,
her prediction was exactly right. If anything, depositing the money with her attorney was
a wise move. It does not constitute a material change in circumstances.
The trial court also noted that Wife’s tax returns for 2013, 2014, and 2015
reflected business-related expenses of between $23,000 and $46,000. Because Wife was
no longer working, the trial court found that she “will not incur these expenses in the
future, thereby having a savings of a tremendous amount of money each year.” We
recognize that Wife could not explain these figures at the hearing, as her accountant was
incarcerated, and Wife insisted that the numbers did not make sense to her. However, no
evidence regarding these business-related expenses was ever presented at any of the
previous hearings regarding alimony. They either did not exist or were not known to the
parties. Thus, the previous alimony awards were not based on Wife having any such
expenses. Moreover, by the time of trial on this petition, she was not working and did not
have such expenses. Consequently, to the extent that these business expenses ever truly
existed, they do not represent a material change in circumstances from the date of the last
order to the most recent hearing.
Finally, the trial court found that Wife had not furnished “proper records to
- 22 -
document her income and expenses and therefore the court is without any evidence upon
which to base an opinion, that she is in need of alimony in futuro in the amount of
alimony presently being paid by [Husband].” It is not clear from the trial court’s
statement whether it was faulting Wife for her inability to obtain underlying
documentation from her accountant. Wife testified regarding her income and expenses,
she submitted an affidavit of income and expenses, and her tax returns, bank statements,
and social security earnings statement were introduced at trial. In any event, however, it
was not Wife’s burden to demonstrate that she was still “in need of alimony in futuro in
the amount of alimony presently being paid by [Husband].” The burden is on the obligor
seeking reduction or termination of the award, and if there has been a change in the
recipient’s need that would support reduction or termination, the obligor has the burden
of establishing that change. Jekot v. Jekot, 2018 WL 4677676, at *5. This finding by the
court does not establish a change of circumstances or any other basis for reducing
Husband’s alimony obligation.
Because Husband failed to prove a substantial and material change in
circumstances occurring since December 2013, we reverse the trial court’s order reducing
the alimony award from $2,870 to $1,300 per month, and we vacate the judgment the trial
court entered against Wife for Husband’s overpayment while this case was pending in the
trial court.
4. Wife’s Petition to Modify
a. Substantial and Material Change in Circumstances
We now consider Wife’s contention that the trial court erred in denying her
separate petition seeking an increase in the alimony obligation to $4,144 per month.
Before the trial court, Wife’s petition to modify alleged that Husband’s income and the
aggregate value of his assets had increased, and while her income had remained the same,
her expenses had also increased. In her brief on appeal, Wife argues that Husband had a
greater ability to pay in 2017 than in 2013 because his income was expected to be
$98,000 after retirement, and he actually received significantly more income in 2014 and
2015. She suggests that this increase in income should serve as a basis to increase
alimony. We disagree. Husband testified that he received some residual income in the
years after closing his law practice from reassigned cases, refunds of court costs, or
mediations. However, he testified that this residual income had ended by the time of the
hearing. The record contains no evidence to suggest that Husband was receiving this
additional income at the time of trial or that it would continue in the future. “[A] change
in circumstances is considered to be ‘substantial’ when it significantly affects either the
obligor’s ability to pay or the obligee’s need for support.” Bogan, 60 S.W.3d at 728.
Husband’s temporary increase in income during the two years after the last hearing,
which had ended by the time of trial, does not serve as a substantial change in
circumstances significantly impacting his ability to pay.
- 23 -
Next, Wife points out that the fair market value of Husband’s retirement fund had
increased since the last hearing. Again, this does not constitute a material change in
circumstances. Wife presented no evidence to suggest that the increase in the fund’s
market value was unforeseen or unexpected.11 Similarly, Wife points to Husband’s
lifestyle and claims that it weighs in favor of increasing her alimony obligation. From
our review of the record, however, the parties’ lifestyles are not markedly different than
they were in 2013. At both hearings, the testimony centered around Husband traveling to
France and dining out with his current wife, while Wife was living fairly frugally in an
apartment. We discern no change in circumstances regarding the parties’ lifestyles.
Finally, Wife notes that her expenses had increased. Again, she does not present
any argument to suggest that her increase in expenses was unforeseeable. The only
specific change in her expenses that Wife emphasizes in her brief on appeal is the fact
that she is now paying attorney’s fees “for yet another petition.” However, Wife
predicted that Husband would probably file another petition during the last hearing.
Given the parties’ history, this litigation was certainly not unforeseeable.
We conclude that Wife failed to prove a substantial and material change in
circumstances occurring since the December 2013 order that would justify increasing the
existing alimony obligation.12 As a result, we reinstate the previous obligation of $2,870
per month. As in Malkin I, if Husband has been paying the reduced sum of $1,300 during
the pendency of this appeal, Wife is entitled to recover the difference between what
Husband actually paid and what he would have owed if the obligation remained at $2,870
per month.
B. Attorney’s Fees
Finally, we consider Wife’s request for an award of attorney’s fees at the trial
court level and on appeal. Wife claims that she incurred $14,426 in attorney’s fees at
trial, and she seeks a reasonable fee for appellate work. Wife argues that both awards are
11
See, e.g., (Cooley) v. Cooley, 543 S.W.3d 674, 685 (Tenn. Ct. App. 2016) (concluding that a
professional’s steady increase in income was not unanticipated and therefore not a material change);
Jekot, 362 S.W.3d at 83-84 (concluding that the wife’s receipt of rental income from a medical office
building she was awarded in the division of marital property was not an “unanticipated or unforeseen”
circumstance); Seal v. Seal, 802 S.W.2d 617, 621 (Tenn. Ct. App. 1990) (recognizing that stocks or bonds
received in the division of marital property might produce income, and absent the husband establishing
that the income was “unanticipated or unforeseen,” the resulting income should not be a material change
in circumstances).
12
Wife’s brief on appeal also suggests that the trial court “should have required Husband to insure his
alimony obligation so that she is not left destitute if he predeceases her.” However, she does not cite to
any location in the record or any legal authority to develop any argument with respect to this issue.
Therefore, we deem it waived.
- 24 -
warranted pursuant to Tennessee Code Annotated section 36-5-103(c).13 We discussed
this statute in Malkin I and awarded Wife her attorney’s fees pursuant to it:
Tennessee Code Annotated section 36-5-103(c) provides for awards of
“reasonable attorney fees incurred in enforcing any decree for alimony,” in
the discretion of the court. Pursuant to this statute, a court may award
attorney’s fees to an alimony recipient who is forced to defend an action to
reduce or terminate that alimony. Henderson v. Henderson, No. M2013-
01879-COA-R3-CV, 2014 WL 4725155, at *12 (Tenn. Ct. App. Sept. 23,
2014) (citing Evans v. Evans, M2002-02947-COA-R3-CV, 2004 WL
1882586, at *13-14 (Tenn. Ct. App. Aug. 23, 2004)); see also Owens v.
Owens, No. M2012-01186-COA-R3-CV, 2013 WL 3964793, at *6 (Tenn.
Ct. App. July 30, 2013) perm. app. denied (Tenn. Nov. 13, 2013)
(“Reasonable fees may be awarded pursuant to § 36-5-103(c) in actions to
enforce a decree for alimony, which has been interpreted as including the
situation where an alimony recipient is forced to defend an action to reduce
or terminate that alimony.”). The statute authorizes awards of attorney’s
fees incurred at trial as well as on appeal. Henderson, 2014 WL 4725155,
at *12. The decision of whether to award attorney’s fees incurred on appeal
is a matter within the discretion of this Court. Yattoni–Prestwood v.
Prestwood, 397 S.W.3d 583, 597 (Tenn. Ct. App. 2012) (citing Archer v.
Archer, 907 S.W.2d 412, 419 (Tenn. Ct. App. 1995); Seaton v. Seaton, 516
S.W.2d 91, 93 (Tenn. 1974)). We have previously recognized that
“Alimony is only awarded in the first instance to an
economically disadvantaged spouse who has a demonstrated
need for the support. Absent a showing in a modification
proceeding that the need no longer exists, requiring the
recipient to expend that support for legal fees incurred in
defending it would defeat the purpose and public policy
underlying the statute on spousal support. Additionally, the
possibility of being burdened with a former spouse’s
attorney’s fees helps deter unwarranted or unjustified
attempts by an obligor to evade or reduce an existing support
obligation.”
Henderson, 2014 WL 4725155, at *12 (quoting Evans, 2004 WL 1882586,
at *13).
Considering these observations, in addition to the nature of the
13
The statute was amended effective July 1, 2018, but the amendment applies “to actions commenced on
or after that date.” 2018 Tenn. Laws Pub. c. 905.
- 25 -
issues involved in the instant litigation, the respective financial positions of
the parties, and Wife’s success on appeal, we conclude it is appropriate to
exercise our discretion to grant Wife’s request for an award of her
reasonable attorney’s fees and expenses for appellate work. On remand, the
trial court will set these fees.
Malkin I, 475 S.W.3d at 263-64.
In the present appeal, we again recognize the respective financial positions of the
parties and Wife’s success on appeal defending against Husband’s petition to eliminate or
reduce his obligation. We also note that this is the fourth modification proceeding
instituted by Husband since the divorce, and only one of those four was partially
successful. An award of Wife’s attorney’s fees at trial and on appeal will hopefully
“deter unwarranted or unjustified attempts” by Husband in the future to evade or reduce
his existing support obligation. Henderson, 2014 WL 4725155, at *12. On remand, the
trial court should determine a reasonable attorney’s fee for Wife’s defense against
Husband’s petition to reduce or terminate his alimony obligation before the trial court
and on appeal. Of course, Wife is not entitled to an award of attorney’s fees incurred in
unsuccessfully seeking an increase in the alimony award.
IV. CONCLUSION
For the aforementioned reasons, the decision of the chancery court is hereby
reversed, the previous alimony award is reinstated, both petitions for modification are
dismissed, and this matter is remanded for further proceedings. Costs of this appeal are
taxed to the appellee, Reed Lynn Malkin, for which execution may issue if necessary.
_________________________________
CARMA DENNIS MCGEE, JUDGE
- 26 -
|
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}
|
United States Court of Appeals
For the Eighth Circuit
___________________________
No. 19-2001
___________________________
Anthony C. Green
lllllllllllllllllllllPlaintiff - Appellant
v.
Kelly Lake, Carlton County Sheriff; Kevin Moser, MSOP Facility Director; Steve
Sayovitz, MSOP A-Team Supervisor; Ann Zimmerman, MSOP Administrator;
Nicole Marvel, MSOP A-Team; Greg Swenson, Security Counselor; Elizabeth
Barbo, MSOP - Former Assistant Clinical Director; Anthony Bastien, Carlton
County Deputy Sheriff; Jesse Peterson, Carlton County Deputy Sheriff; Amanda
Schaller, Security Counselor
lllllllllllllllllllllDefendants - Appellees
____________
Appeal from United States District Court
for the District of Minnesota
____________
Submitted: January 31, 2020
Filed: February 12, 2020
[Unpublished]
____________
Before SHEPHERD, STRAS, and KOBES, Circuit Judges.
____________
PER CURIAM.
Anthony Green, who is civilly committed to the Minnesota Sex Offender
Program, appeals the district court’s1 dismissal of his pro se 42 U.S.C. § 1983 action.
Upon careful de novo review, see Montin v. Moore, 846 F.3d 289, 292, 293 (8th Cir.
2017) (standard of review), we find no error in the district court’s well-reasoned
decision. We agree that Green did not state a claim for constitutional violations
stemming from the use of force, see Kingsley v. Hendrickson, 135 S. Ct. 2466, 2473
(2015) (in excessive-force claim, detainee must show that force purposely used
against him was objectively unreasonable); Folkerts v. City of Waverly, 707 F.3d
975, 980 (8th Cir. 2013) (substantive due process claim requires that defendants
violated plaintiff’s fundamental right and that their conduct shocked conscience); the
conduct of strip searches, see Bell v. Wolfish, 441 U.S. 520, 558-59 (1979) (in
determining reasonableness of search, court considers scope of intrusion, manner and
location in which search is conducted, and justification for search); Folkerts, 707 F.3d
at 980; or his placement in the High Security Area, see Wong v. Minn. Dep’t of
Human Servs., 820 F.3d 922, 935 (8th Cir. 2016) (plaintiff failed to state procedural
due process claim where complaint made clear that he had opportunity to be heard at
meaningful time and in meaningful manner); Folkerts, 707 F.3d at 980. We also find
that the district court did not abuse its discretion in denying Green leave to file a
second amended complaint. See Pet Quarters, Inc. v. Depository Tr. & Clearing
Corp., 559 F.3d 772, 782 (8th Cir. 2009).
The judgment is affirmed. See 8th Cir. R. 47B.
______________________________
1
The Honorable Ann D. Montgomery, United States District Judge for the
District of Minnesota, adopting the report and recommendations of the Honorable
Steven E. Rau, late United States Magistrate Judge for the District of Minnesota.
-2-
|
{
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}
|
[Cite as Reid v. Wallaby’s Inc., 2012-Ohio-1437.]
IN THE COURT OF APPEALS OF OHIO
SECOND APPELLATE DISTRICT
GREENE COUNTY
MARILYN REID :
: Appellate Case No. 2011-CA-36
Plaintiff-Appellant :
: Trial Court Case No. 2009-CV-0774
v. :
: (Civil Appeal from
WALLABY’S INC., et al. : (Common Pleas Court)
:
Defendants-Appellees :
:
...........
OPINION
Rendered on the 30th day of March, 2012.
...........
JOHN D. SMITH, Atty. Reg. #0018138, John D. Smith Co. LPA, 140 North Main Street,
Springboro, Ohio 45066
Attorney for Plaintiff-Appellant
BENJAMIN J. HELWIG, Atty. Reg. #0079184, Taft Stettinius & Hollister LLP, 40 North
Main Street, Suite 1700, Dayton, Ohio 45423
Attorney for Defendants-Appellees
.............
FAIN, J.
I. Introduction
{¶ 1} Plaintiff-appellant Marilyn Reid appeals from a judgment rejecting her
claims against Defendants-appellees Tony Peh and Wallaby’s Inc., following a bench trial.
2
Reid contends that the trial court erred in failing to render a verdict related to Wallaby’s.
Reid further contends that the trial court erred in holding that the doctrines of unclean hands,
laches, and accord and satisfaction warrant judgment in favor of the defendants.
{¶ 2} We conclude that the trial court erred in failing to properly render a verdict
against Wallaby’s. We further conclude that the trial court erred in applying the doctrine of
unclean hands, because that defense was not raised in the answers that were filed. The trial
court did not err in considering laches, which was tried by implied agreement, but the evidence
does not justify a finding of laches on Reid’s part. The trial court also erred in applying the
doctrine of accord and satisfaction, which was raised in the answers.
{¶ 3} Finally, we conclude that the doctrine of estoppel, which was properly raised
and argued in the trial court, does not preclude recovery by Reid against Wallaby’s and Peh.
Accordingly, the judgment of the trial court is Reversed, and this cause is Remanded for
further proceedings.
II. Facts
{¶ 4} Marilyn Reid and Tony Peh became acquainted through Peh’s junior high and
high school friendship with Reid’s son, David. Peh and David Reid had been very close
friends. Around 1994, Peh came up with the idea of starting a restaurant in Beavercreek,
Ohio. This occurred after Peh had launched a successful restaurant project called Shades of
Jade. Peh had already begun to move forward with the Beavercreek project, and the location
was already chosen – the land had been purchased by Peh’s father, Dr. Peh. Reid expressed
interest in the project, and a corporation, Wallaby’s Inc., was formed, with the following
shares: Tony Peh was the majority shareholder, with 65%; Marilyn Reid owned 5%; Nelson
3
Reid, Marilyn’s son, owned 5%; Peh’s uncle, Wang Chao Chung, owned 5%; Mike
Buckwalter owned 5%; David Reid, Marilyn’s ex-husband, owned 10%; and Anita Lehman,
the wife of the builder, Rich Leman, owned 5%.
{¶ 5} Due to construction cost overruns, there was not enough capital left to
purchase kitchen equipment. Peh approached a kitchen leasing company about equipment,
and received their standard lease form for the equipment he had selected. Because the leasing
company required that someone other than Peh be the surety, Peh took the lease agreement to
Marilyn Reid. Reid erased the name of the equipment leasing agent on the form, and inserted
her own name as the leasing agent. She also erased her own name, which had been on the
lease as the surety, and inserted Peh’s name. Reid then paid $100,000 to purchase the
equipment, which was placed in the restaurant. Both Peh and Reid signed the lease
agreement, with Peh signing on behalf of Wallaby’s and as surety.
{¶ 6} The lease provided for 36 payments of $3,519.64, plus applicable sales tax,
beginning in March 1996, and ending in March 1999. In addition, the lease stated that the
first and last month’s payments, plus a $100 documentation fee, were to be paid at the
inception of the lease, with total lease payments, including interest, to be $126,707.04. The
monthly payments were due upon receipt of a statement, and the lessee had the option to
purchase the equipment at the end of the lease for $1.00.
{¶ 7} After the lease was signed, no statements or invoices for the equipment rental
were ever sent to Wallaby’s bookkeeper, Debra Sullivan, who worked at Wallaby’s between
1996 and 2006, or to Peh or his wife, Renee, who also managed Wallaby’s for quite some
time. No payments were ever made on the lease,
4
{¶ 8} The evidence was disputed with regard to whether Reid ever made a demand
for payment. Reid testified on this point as follows. Peh told Reid in July 1999, that he
wanted to quit the business, and asked Reid to call a meeting of stockholders. Reid, who was
the acting secretary of Wallaby’s, sent out notices for an August 25, 1999 shareholder’s
meeting. Two days before the meeting, Reid handed Peh a list of things that the company
needed to do try to do (identified as Plaintiff’s Exhibit 2 at trial). Reid also handed Peh a
written demand for payment on the equipment lease (identified as Plaintiff’s Exhibit 3 at trial).
According to Reid, the lease was discussed at the meeting on August 25, and Peh agreed to
make arrangements to satisfy the lease obligation. Reid claimed this was documented in the
minutes of the meeting that she had typed. She also stressed that when she referred to Peh
making payment, that she was referring only to Wallaby’s, not to Peh.
{¶ 9} In contrast, Peh testified that he never told Reid he wanted to quit. He told
her only that he was tired, because the restaurant business is a long, grueling job. He
acknowledged receiving Exhibit 2 (the list of items) a few days before the August 25 meeting,
but denied that he had ever received Exhibit 3 (the written demand). Peh brought an attorney,
Carolyn Mueller, to the August 25 meeting. He acknowledged that the equipment lease was
discussed during the meeting, but stated that this was in the context of discussing all of
Wallaby’s outstanding debts. Peh denied that a demand for payment was made at the
meeting, and denied agreeing to make arrangements to satisfy the equipment lease.
{¶ 10} Mueller testified at trial, and stated that Peh had called her on August 24,
1999. He had just received notice of a meeting, was very upset, and was afraid they were
going to put the business in receivership. Peh sent Mueller documents, but there was nothing
that asked for payment on an equipment lease. Mueller attended the meeting on August 25,
5
1999, and took some notes. The meeting consisted mainly of bickering going back and forth
about construction documents and not receiving things. Everyone was just kind of angry.
Reid mentioned a lease, and Mueller asked if she had any documents, but Reid had none.
Reid did not demand payment on the equipment lease at the meeting.
{¶ 11} The Wallaby’s property was listed with a realtor at the time of the August
1999 shareholders’ meetings. Thereafter, the property was listed off and on with different
realtors. After August 1999, Peh did not make payments on the equipment lease, and Reid
did not send written statements or invoices, nor did she make written demands for payment.
Reid did turn in receipts for many other purchases she made for Wallaby’s, like tables and
decorations, and was paid by Wallaby’s bookkeeper for these items. Reid had also been paid
in full for expenses she incurred in obtaining a liquor license for Sunday sales.
{¶ 12} Concerning why the lease payments were not made, Peh stated that when
Wallaby’s first opened in 1996, it was very busy, as all new places are. Turning a profit in
the beginning was difficult, because of the number of staff that had to be trained. After the
“honeymoon” period, things died down, and the business did not do as well. Money was
coming into the restaurant, but Peh had to pick and choose what bills to pay. Peh found out
from reviews that Wallaby’s was not very aesthetically appealing to people – people said that
it looked like a bomb shelter. Wallaby’s remained in business until 2007, more than ten years
after the equipment lease was signed. During that time, Peh spent around $100,000
remodeling, trying to make the restaurant look better. He added tile floors, walls, and wood
on the walls. If Reid had made demand for payment during this time, Peh would have made
other choices of what to pay, and would have paid on the equipment lease, rather than
spending money on remodeling and paying other bills. Based on discussions with Reid, Peh
6
was under the impression that Reid was relying on the equity in the building to get her money
back. Reid also acknowledged at trial that the collateral may have depreciated over the time
the restaurant was in operation.
{¶ 13} Unfortunately, Wallaby’s never became profitable, and the restaurant stopped
serving food in 2006, or early 2007. The bar side, which was called “The Gin Mill,”
remained open, because it would be easier to sell Wallaby’s if it still had a liquor license and
appeared to be a going concern.
{¶ 14} Reid testified that she learned in January 2007, while having lunch at
Wallaby’s, that Wallaby’s was going to stop selling food on the restaurant side. Reid stated
that she realized then that she was unlikely to be paid by Wallaby’s for the lease.
Consequently, Reid prepared a mortgage on the Wallaby’s real estate for $100,000 plus
interest, and filed the mortgage on January 17, 2007, with the Greene County Recorder. Peh
signed the mortgage after being told by Reid that she was entitled under the lease to a
mortgage.
{¶ 15} Previously, on January 4, 2007, the Ohio Secretary of State had sent a letter
to Nelson Reid, Wallaby’s statutory agent, indicating that Wallaby’s articles of incorporation
had been cancelled, based on Wallaby’s failure to pay the necessary corporate franchise tax.
The letter was addressed to Nelson Reid at the law offices of Marilyn Reid, but Marilyn Reid
claimed that she was not aware of the letter at the time the mortgage was signed. Reid
understood that the building was going to be put up for sale, and she wanted to get in line and
record a mortgage, because the building had a lot of equity. At one point, the building was
appraised at $2,000,000, and the tax appraisal was $1,480,000.
7
{¶ 16} In January 2007, Reid also prepared and filed a UCC financing statement
with the Secretary of State regarding the leased equipment. Mortgages securing debt to other
Wallaby’s shareholders, including Reid (but not including Tony Peh), were also placed on the
property in mid-January 2007.
{¶ 17} In July 2007, there was a kitchen fire at Wallaby’s, and some of the
equipment was damaged. The Health Department required removal of the cooking
equipment from the building. Reid was informed, but did not remove the collateral; instead,
Wallaby’s paid for storage of the equipment.
{¶ 18} In April 2008, the Greene County Treasurer filed a foreclosure action against
Wallaby’s, alleging that Wallaby’s owed $91,570.56 in unpaid property taxes as of April 30,
2008. Various mortgage holders, including Reid, were included in the suit. Subsequently, in
July 2009, Reid filed suit against Wallaby’s and Peh, contending that they owed her
$636,116.37 under the 1999 equipment lease. In September 2009, the trial court rendered
summary judgment and foreclosure against Wallaby’s, listing Reid’s mortgage for the
equipment as seventh in line, after various mortgages, but ahead of federal tax liens in the
amounts of $20,680.20 and $19,031.26 that had been filed on January 31, 2007, and June 8,
2007, respectively.
{¶ 19} Reid’s complaint against Wallaby’s and Peh was consolidated with the
foreclosure action in November 1999. In July 2010, the restaurant was sold at a sheriff’s sale
for $813,350, and the proceeds were distributed in September 2010. The Greene County
Treasurer received $262,656.96 in unpaid taxes, court costs of $1,916.62 were paid, and
Huntington National Bank received $316,935.41. The remaining $231,841.01 was to be
8
disbursed to the remaining lienholders, but the amount left was insufficient to provide
recovery to Reid for the equipment lease. Reid was granted permission in November 2010, to
remove the leased equipment from the premises.
{¶ 20} After overruling cross-motions for summary judgment, the trial court held a
bench trial in May 2011. The trial court concluded that Reid was not entitled to recover,
based on equitable doctrines, including laches, accord and satisfaction, and unclean hands.
Among other things, the trial court relied on the fact that no demand had been made on Peh, as
surety, between 1999 and 2009, to pay the outstanding lease balance. The court further held
that Reid’s taking of a mortgage in January 2007, against Wallaby’s real estate, a then-viable
asset, was in satisfaction of Wallaby’s debt to Reid. Reid appeals from the judgment
rendered by the trial court.
II. Did the Trial Court Fail to Render a Verdict as to Wallaby’s?
{¶ 21} Reid’s First Assignment of Error is as follows:
THE TRIAL COURT ERRED IN FAILING TO RENDER A
VERDICT RELATED TO LESSEE.
{¶ 22} Under this assignment of error, Reid contends that the trial court erred in
failing to enter a verdict related to Wallaby’s, the lessee on the lease. Reid notes that the
judgment entry states only that “The court finds Verdict for Defendant, Tony Peh,
individually, and against Plaintiff.” Peh argues that the assignment of error is without merit,
because the trial court referred to Wallaby’s and Peh interchangeably throughout its judgment
entry.
9
{¶ 23} The trial transcript clearly indicates that the bench trial was being held on
Reid’s claims against both Wallaby’s and Peh. See Trial Transcript, p. 3. The trial court
also stated in its verdict, issued after the trial, that “Plaintiff now sues Defendant Wallaby’s
Inc. and Tony Peh, individually, for $626,116.37.” Doc. # 59, May 31, 2011 Verdict, p. 2.
The court concluded that Wallaby’s debt had been satisfied by the mortgage granted to Reid in
2007, that laches applied to the claim against Peh, and that clean hands required a verdict for
defendant. At the end of the entry, the court made the statement on which Reid relies –
rejecting a judgment individually against Peh.
In all civil cases appealed to this state's appellate courts, the trial court
must prepare a journal entry or order containing the following: (1) the case
caption and number; (2) a designation as a decision or judgment entry or both;
(3) a clear pronouncement of the court's judgment and its rationale if the entry
is combined with a decision or opinion; (4) the judge's signature; (5) a time
stamp indicating the filing of the judgment with the clerk for journalization;
and (6) where applicable, a Civ.R. 54(B) determination and Civ.R. 54(B)
language. In Matter of Barton, 2d Dist. Miami No. 96-CA-31, 1997 WL
189474, *2 (Apr. 18, 1997), citing Brackmann Communications, Inc. v. Ritter,
38 Ohio App.3d 107, 109, 526 N.E.2d 823 (12th Dist. 1987).
{¶ 24} In the case before us, the entry contained all the above items, except a clear
pronouncement of its judgment. Although the court appears to have intended to reject the
claims against both Wallaby’s and Peh, the entry is somewhat ambiguous. We conclude that
this error can likely be corrected by a nunc pro tunc judgment, but the matter needs to be
resolved, even though Wallaby’s is a defunct corporation with no assets.
10
{¶ 25} The First Assignment of Error is sustained.
III. Did the Trial Court Err in Applying Equitable Doctrines?
{¶ 26} Because the remaining assignments of error all deal with equitable doctrines,
we will combine our discussion of these alleged errors. The Second, Third, and Fourth
Assignments of Error are as follows:
THE TRIAL COURT ERRED IN HOLDING THAT THE DOCTRINE
OF UNCLEAN HANDS WARRANTS JUDGMENT IN FAVOR OF LESSEE
AND PEH ON APPELLANT’S CLAIMS.
THE TRIAL COURT ERRED IN HOLDING THAT THE DOCTRINE
OF LACHES WARRANTS JUDGMENT IN FAVOR OF LESSEE AND PEH
ON APPELLANT’S CLAIMS.
THE TRIAL COURT ERRED IN HOLDING THAT THE DOCTRINE
OF ACCORD AND SATISFACTION WARRANTS JUDGMENT IN FAVOR
OF LESSEE AND PEH ON APPELLANT’S CLAIMS.
{¶ 27} Under these assignments of error, Reid argues that the doctrines of unclean
hands and laches were waived because they were not asserted as affirmative defenses in the
answers filed by Wallaby’s and Peh. Reid further argues that “unclean hands” is an equitable
defense that does not apply to a contract setting. Finally, Reid contends that the evidence at
trial did not establish any of these defenses.
A. Alleged Waiver of Affirmative Defenses
{¶ 28} Civ. R. 8(C) requires parties to set forth affirmative defenses like estoppel,
11
laches, accord and satisfaction, and waiver, in pleading to a preceding pleading. Wallaby’s
and Peh raised the affirmative defenses of accord and satisfaction, waiver, and estoppel in
their answers, but did not assert laches or unclean hands. Wallaby’s and Peh contend,
however, that the trial court had the ability to consider these matters based on its equitable
power and the permissible construct in the Civil Rules that allows amendment of pleadings to
promote justice.
{¶ 29} Civ. R. 15(B) provides that;
When issues not raised by the pleadings are tried by express or implied
consent of the parties, they shall be treated in all respects as if they had been
raised in the pleadings. Such amendment of the pleadings as may be necessary
to cause them to conform to the evidence and to raise these issues may be made
upon motion of any party at any time, even after judgment. Failure to amend
as provided herein does not affect the result of the trial of these issues.
An implied amendment of the pleadings under Civ.R. 15(B) will not be
permitted where it results in substantial prejudice to a party. Various factors
to be considered in determining whether the parties impliedly consented to
litigate an issue include: whether they recognized that an unpleaded issue
entered the case; whether the opposing party had a fair opportunity to address
the tendered issue or would offer additional evidence if the case were to be
tried on a different theory; and, whether the witnesses were subjected to
extensive cross-examination on the issue. State ex rel. Evans v. Bainbridge
Tp. Trustees, 5 Ohio St.3d 41, 41-42, 448 N.E.2d 1159 (1983).
{¶ 30} In the case before us, Wallaby’s and Peh did raise the defense of laches in
12
their motion for summary judgment. See Doc. #37, p. 5. When Reid responded to the
motion for summary judgment, she acknowledged that the issue of laches had been raised, and
did not object to the fact that the defense had not been asserted in the answers to the
complaint. See Doc. # 38, pp. 1-2. In addition, laches was discussed at trial, the witnesses
were cross-examined on the subject, and the issue was addressed during closing arguments.
As Wallaby’s and Peh note, the gist of the case concerned the delay in filing the claim and the
alleged prejudice that had been caused by the delay. Accordingly, we conclude that the trial
court did not err in considering the defense of laches.
{¶ 31} Unlike laches, however, the doctrine of “unclean hands” was not asserted
prior to trial. “The ‘clean hands doctrine’ of equity requires that whenever a party takes the
initiative to set in motion the judicial machinery to obtain some remedy but has violated good
faith by his prior-related conduct, the court will deny the remedy.” Marinaro v. Major Indoor
Soccer League, 81 Ohio App.3d 42, 45, 610 N.E.2d 450 (9th Dist. 1991) (citation omitted).
This doctrine does not apply, however, where a party is not attempting to invoke the equitable
powers of the court. See, e.g., Jamestown Village Condo. Owners Assn. v. Market Media
Research, Inc., 96 Ohio App.3d 678, 688, 645 N.E.2d 1265 (8th Dist.1994).
{¶ 32} Although the trial court may have been offended at Reid’s actions, including
her attempt to collect more than $600,000 on a lease that she had made no attempt to enforce
for many, many years, Reid was not attempting to invoke the equitable powers of the trial
court. Reid’s action was contractual, to recover on the lease and against the surety.
Consequently, even if the defendants had pled “unclean hands” as an affirmative defense, the
doctrine would not have applied. This does not require that we reverse the judgment,
however. The Supreme Court of Ohio has “consistently held that a reviewing court is not
13
authorized to reverse a correct judgment merely because erroneous reasons were assigned as
the basis thereof.” (Citation omitted.) Joyce v. General Motors Corp., 49 Ohio St.3d 93, 96,
551 N.E.2d 172 (1990). Consequently, we will examine the remaining bases for the trial
court’s decision, to decide if the decision should be upheld.
B. Did Peh Establish Laches?
{¶ 33} Reid contends that the evidence at trial did not establish the elements of the
defense of laches. “The elements of laches are (1) unreasonable delay or lapse of time in
asserting a right, (2) absence of an excuse for such a delay, (3) knowledge – actual or
constructive – of the injury or wrong, and (4) prejudice to the other party.” (Citation
omitted.) Martin Marietta Magnesia Specialties, L.L.C. v. Pub. Util. Comm., 129 Ohio St.3d
485, 2011-Ohio-4189, 954 N.E.2d 104, ¶ 45.
{¶ 34} “The decision of a trial court concerning the application of the doctrine of
laches will not be reversed on appeal in the absence of an abuse of discretion. An abuse of
discretion is more than just an error in judgment, but rather implies that the court's attitude is
unreasonable, arbitrary, or unconscionable.” (Citations omitted.) State ex rel. Donovan v.
Zajac, 125 Ohio App.3d 245, 250, 708 N.E.2d 254 (11th Dist.1998). The Ohio Supreme
Court noted in AAAA Ents., Inc. v. River Place Community Urban Redevelopment Corp., 50
Ohio St.3d 157, 161, 553 N.E.2d 597 (1990), that most abuses of discretion result in decisions
that are unreasonable, rather than arbitrary or unconscionable. A decision is unreasonable if
it lacks a sound reasoning process. Id. Accordingly, our task is to decide if the trial court
acted unreasonably, arbitrarily or unconscionably in applying laches to Reid’s claims.
{¶ 35} In support of her position, Reid relies primarily on Thirty-Four Corp. v.
Sixty-Seven Corp., 15 Ohio St.3d 350, 474 N.E.2d 295 (1984). In Thirty-Four Corp., a
14
father, who headed one corporation, signed a $200,000 note on behalf of the corporation,
payable to a corporation owned by his son. The note bore six percent interest and was
payable a year later. Id. at 351. The son waited almost fifteen years to file suit on the note,
and the father’s estate raised various affirmative defenses, including laches. Id. When the
case reached the Supreme Court of Ohio, the court rejected the son’s argument that laches
could not apply where the case had been filed within the applicable statute of limitations. Id.
The court held, instead, that “upon a clear showing of special circumstances, the defense of
laches may be asserted prior to the expiration of the statute of limitations.” Id. at 353.1
{¶ 36} In Thirty-Four Corp., the Supreme Court of Ohio concluded that the defense
did not fit the facts of the case. Although the son’s corporation had taken contradictory
positions regarding the debt and had failed to make a timely demand, the court did not rely on
these points, because the debt, note, and mortgage had been promptly recorded and the parties
had actual notice of the terms. The court also rejected the idea that material prejudice was
caused by the accumulation of interest and lack of timely demand, because the terms of the
debt were established at the time of execution. Id. Regarding the nearly fifteen-year delay in
filing suit, the court observed that:
“Delay in asserting a right does not of itself constitute laches, and in
order to successfully invoke the equitable doctrine of laches it must be shown
that the person for whose benefit the doctrine will operate has been materially
prejudiced by the delay of the person asserting his claim.” Id. at 354, quoting
1
Reid makes the same argument here, in the context of asserting that allow-ing laches would to be applied would “eviscerate”
her right to bring a contractual action within the statutory time period. If this were correct, the Supreme Court of Ohio would have
rejected any application of laches in Thirty-Four Corp.
15
Smith v. Smith, 168 Ohio St. 447, 156 N.E.2d 113 (1959), paragraph three of
the syllabus.
“Material prejudice” consists of “two types of material prejudice, either
of which necessitate the application of laches: (1) the loss of evidence helpful
to the defendant's case, and (2) a change in the defendant's position that would
not have occurred had the plaintiff not delayed in asserting her rights.”
(Citation omitted.) Zajac, 125 Ohio App.3d at 250, 708 N.E.2d 254.
{¶ 37} In the case before us, the trial court observed that Reid never made a demand
on Peh to pay as surety until she filed this action in 2009. This was a delay of more than
thirteen years. While the accrued interest and failure to make a timely demand, alone, would
not have constituted material prejudice under Thirty Four Corp., Peh contends that there are
additional factors here that meet the requirement of a change in position that would not have
occurred if Reid had not delayed asserting her rights. Peh mentions the fact that he would
have paid Reid as he did other creditors, and as he did Reid, herself on other bills, during the
time when Wallaby’s was earning income.
{¶ 38} We disagree with Peh’s contentions. The lease requires repayment of the
debt, and Peh was aware of the amount and the obligation, having signed the agreement on
behalf of the lessee and as the surety. Peh also would have been aware of the following
language in the lease agreement:
15.03 No covenant or condition of this Lease may be waived except
by the written consent of the Lessor. Forbearance or indulgence by the Lessor
in any regard whatsoever shall not constitute a waiver of the covenant or
condition to be performed by the Lessee to which the same may apply, and
16
until complete performance by the Lessee of any covenant or condition, the
Lessor shall be entitled to invoke any remedy available to the Lessor under this
lease or by law or in equity despite said forbearance or indulgence.
{¶ 39} In support of a rejection of laches, Reid also argues that it cannot apply to
actions for breach of contract. However, this is inconsistent with the decision of the Supreme
Court of Ohio in Thirty Four Corp., which involved a foreclosure suit on a promissory note
and mortgage – both of which are contractual matters. Id., 15 Ohio St.3d at 351, 474 N.E.2d
295. Although the Supreme Court of Ohio ultimately decided that the defendant’s facts failed
to satisfy the requirements for laches, the court did not preclude the claim on the basis that the
action involved a contract.
{¶ 40} Finally, Reid argues that applying laches would contravene the language of
Section 15.03 of the lease agreement, which we just recited. We agree with Reid. Again,
when Peh signed the lease on behalf of Wallaby’s, and as surety, he would have been aware of
the content of the lease.
{¶ 41} Accordingly, there was no material prejudice to support the application of the
doctrine of laches. The trial court, therefore, abused its discretion when it applied the
doctrine of laches to bar Reid’s claim against Peh.
C. Did Defendants Establish Accord and Satisfaction?
{¶ 42} Reid’s final argument is that the trial court erred both legally and factually in
concluding that an accord and satisfaction occurred. The trial court noted that the case did
not fit neatly into the defense of accord and satisfaction, but concluded that principles of
equity required a finding of accord and satisfaction. The court noted that Reid was given a
17
mortgage for $100,000 plus interest against the real property of Wallaby’s, at a time when the
enterprise was still viable. The court concluded that this was in satisfaction of Wallaby’s
debt to Reid.
{¶ 43} “An accord is a contract between a debtor and a creditor in which the
creditor's claim is settled in exchange for a sum of money other than that which is allegedly
due. Satisfaction is the performance of that contract.” Allen v. R.G. Indus. Supply, 66 Ohio
St.3d 229, 231, 611 N.E.2d 794 (1993).
When an accord and satisfaction is pled by the defendant, the court's
analysis must be divided into three distinct inquiries. First, the defendant must
show that the parties went through a process of offer and acceptance – an
accord. Second, the accord must have been carried out – a satisfaction.
Third, if there was an accord and satisfaction, it must have been supported by
consideration. Id. at 231-232. (Citation omitted.)
{¶ 44} Reid contends that the mortgage could not have been in satisfaction of the
debt, because the lease provided that a mortgage on the real estate would serve as additional
collateral. Therefore, no consideration existed. Reid also contends that the mortgage cannot
serve as the “new contract” required for purposes of accord and satisfaction, because she did
not sign the mortgage.
{¶ 45} The lease gives the lessor certain remedies upon default, like suing for the
balance due, after providing written notice of default, or repossessing the equipment.
Plaintiff’s Exhibit 1, Section 3.03. Consistent with Reid’s contention, however, the lease also
provides for a lien on the property. In this regard, Sentence 5 of the terms states that the
contract is a “finance lease.” Sentence 6 grants the lessor a purchase money security interest
18
in the equipment. The items of equipment are then listed. Finally, following the list of
equipment, the following statement appears:
Additional collateral will be lien filed on the Real Property situated in
Section 5, Town 2, Range 7, M.R.S., City of Fairborn, Greene County, Ohio
and being all of Lot No. 6967 as shown on a Record Plan of Wright Executive
Park, Section Three as recorded on March 13, 1992 at Book 27, pages 28 & 29
in the Plat Records of Greene County.
{¶ 46} The intent of this provision is to allow the lessor to file a mortgage on the real
property to protect its security interest. Peh’s cooperation in signing a mortgage for a definite
amount of $100,000 plus interest allowed Reid to protect her interest. However, Peh did only
what Wallaby’s was already required to do, under the express terms of the lease, so there was
no additional consideration for his taking the action – executing a mortgage on the real
property to secure the lease obligation – that he was already required to perform.
{¶ 47} With respect to Reid’s second argument, Reid relies on Section 15.04 of the
lease, which states that:
This Lease constitutes the entire agreement between the Lessor and
Lessee and supersedes any prior understandings or written or oral agreements
between the parties respecting the subject matter. It shall not be amended,
altered, or changed except by a written agreement signed by all parties hereto.
{¶ 48} In Citibank (South Dakota), N.A. v. Perz, 191 Ohio App.3d 575,
2010-Ohio-5890, 947 N.E.2d 191 (6 Dist.), the Sixth District Court of Appeals rejected the
argument of a credit-card company that accord and satisfaction could not apply because the
company had never accepted an offer of partial payment from its credit-card holder. Instead,
19
the company had simply cashed the checks that were offered in partial payment by the debtor’s
attorney, who offered to settle for a partial amount rather than having the client declare
bankruptcy. Id. at ¶ 2-8. The Sixth District Court of Appeals observed that:
As to appellee's argument that it never accepted appellant's offer, the Ohio
Supreme Court made clear in Allen that the first two requirements are satisfied “when
the creditor manifests acceptance of the offer by negotiating a check sent by the debtor
with the offer.” Moreover, contrary to the trial court's assertion, the lack of settlement
discussions or other communications between the parties before appellant sent her
letters does not preclude the occurrence of an accord and satisfaction. Thus, the only
real question in this case is whether appellant's failure to show an actual dispute is fatal
to her accord-and-satisfaction defense. (Citation omitted.) Id. at ¶ 43, quoting from
Allen, 66 Ohio St.3d at 232, 611 N.E.2d 794.
{¶ 49} Accordingly, Reid’s failure to sign the mortgage agreement is not fatal to the
claim. The fact that Reid accepted the mortgage agreement and filed it to further her interest
would have been sufficient, if consideration existed. Additionally, the lease in the case
before us refers only to amendments or changes to the lease. An accord and satisfaction
involves a new agreement, not an amendment. See, e.g., Somerset Synfuel No. 1, L.L.C. v.
Resource Recovery Internatl. Corp., 188 Ohio App.3d 368, 2010-Ohio-3463, 935 N.E.2d 497,
¶ 34 (11th Dist.). Thus, Reid’s signature was not required in order for a new agreement to be
effective.
{¶ 50} The court in Citibank also rejected the credit-card company’s argument that
accord and satisfaction could not apply because the amount of the debt was not in dispute. In
this regard, the court observed that:
20
It has long been recognized, however, that partial payment in lieu of
filing bankruptcy is sufficient consideration for an accord and satisfaction,
despite the lack of a bona fide dispute over the existence or amount of the debt.
The right of an insolvent debtor to file bankruptcy and seek a discharge of the
debt is a thing of significant value, and its relinquishment is more than what the
debtor was already bound to do. Thus, courts have generally held that the
element of a bona fide dispute in accord-and-satisfaction cases is obviated
when a creditor accepts a partial payment tendered in full satisfaction of the
debt knowing that the debtor is insolvent and contemplating bankruptcy. Id.,
191 Ohio App.3d 575, 2010-Ohio-5890, 947 N.E.2d 191, at ¶ 45.
{¶ 51} When Reid obtained the additional security on her debt, Wallaby’s was not
threatening to file bankruptcy. In addition, Wallaby’s was contractually required to allow the
filing of a lien against the property.
{¶ 52} Accordingly, due to the lack of consideration for the new agreement, the trial
court erred in applying the doctrine of accord and satisfaction. This would normally end the
discussion, but Peh and Wallaby’s contend that the doctrine of estoppel, raised in the answers
and argued in the trial court, precludes recovery. See, e.g., Reynolds v. Budzik, 134 Ohio
App.3d 844, 846, fn.3, 732 N.E.2d 485 (6th Dist. 1999) (noting that “when a trial court has
stated an erroneous basis for its judgment, an appellate court must affirm the judgment if it is
legally correct on other grounds, that is, it achieves the right result for the wrong reason,
because such an error is not prejudicial.”)
{¶ 53} “Equitable estoppel precludes a party from asserting certain facts where the
party, by his conduct, has induced another to change his position in good-faith reliance upon
21
that conduct. The purpose of equitable estoppel is to prevent actual or constructive fraud and
to promote the ends of justice.” (Citations omitted.) Hutchinson v. Wenzke, 131 Ohio
App.3d 613, 616, 723 N.E.2d 176 (2d Dist.1999).
“A prima facie case for equitable estoppel requires a plaintiff to prove
four elements: (1) that the defendant made a factual misrepresentation; (2) that
it is misleading; (3) [that it induced] actual reliance which is reasonable and in
good faith; and (4) [that the reliance caused] detriment to the relying party.” Id.,
quoting Doe v. Blue Cross/Blue Shield of Ohio, 79 Ohio App.3d 369, 379, 607
N.E.2d 492 (10th Dist. 1992).
In assessing these four elements in the context of a particular case,
relevant factors include: (a) the nature of the representation; (b) whether the
representation was in fact misleading; (c) the relative knowledge and
experience of the parties; (d) whether the representation was made with the
intent that it be relied upon; and (e) the reasonableness and good faith of the
reliance, given all the facts and circumstances. First Federal Sav. & Loan
Assn. of Toledo v. Perry's Landing, Inc., 11 Ohio App.3d 135, 145-146, 463
N.E.2d 636 (6th Dist. 1983).
{¶ 54} In the case before us, Reid represented to Peh that the lease agreement
entitled her to a mortgage on the real property, but that was an accurate fact, not a
misrepresentation. Peh has also failed to point to any other specific misrepresentation, and
the trial court did not find any. In fact, the trial court observed that Reid had never agreed to
release Peh as a surety. Thus, because Peh failed to establish facts satisfying the first ground
for estoppel, we need not address the remaining factors.
22
{¶ 55} Based on the preceding discussion, we conclude that the trial court erred in
applying accord and satisfaction, and that the evidence does not support a finding of estoppel
against Reid.
{¶ 56} Reid’s Second, Third, and Fourth Assignments of Error are sustained. This
matter will be remanded for further proceedings, since the trial court failed to address issues
like setoff and the recovery of interest. In this regard, we note that Reid did recover the
collateral.
IV. Conclusion
{¶ 57} Reid’s First, Second, Third, and Fourth Assignments of Error having been
sustained, the judgment of the trial court is Reversed, and this cause is Remanded for further
proceedings.
.............
GRADY, P.J., and FROELICH, J., concur.
Copies mailed to:
John D. Smith
Benjamin J. Helwig
Hon. John W. Kessler
(Sitting for Judge Stephen Wolaver)
|
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STATE IN THE INTEREST OF S.R.W. & F.M.W.
No. JAC 07-795.
Court of Appeal of Louisiana, Third Circuit.
October 31, 2007
NOT DESIGNATED FOR PUBLICATION.
NICHOLAS PIZZOLATTO Jr., Attorney at Law, Counsel for Appellant, State of Louisiana, Office of Community Services.
KENNETH RAY RUSH, Attorney at Law, Counsel for Appellee, A. M.
ERROL DAVID DESHOTELS Jr., Attorney at Law, Counsel for Appellees, S. W. F. W.
Court composed of DECUIR, PICKETT, and PAINTER, Judges.
PICKETT, Judge.
The appellant, the State of Louisiana, appeals the judgment of the trial court denying their Petition for Termination of the Parental Rights of A.M.
STATEMENT OF THE CASE
On July 27, 2005, the Allen Parish Office of Community Services (OCS) received a report of neglect regarding S.W., born November 21, 1996, and F.W., born December 30, 1998. The report suggested that S.W. was sexually acting out and that their caretaker was using charms and exorcisms on the girls in an effort to cure physical and psychological problems of both girls. These sisters were in the custody of their maternal grandmother, M.M., pursuant to a New Jersey court order. The New Jersey court had issued a consent order on January 5, 2000, granting custody to M.M. and her former husband G.M. because the children's mother, A.M., and father, M.W., were incarcerated.
According to information provided to OCS from the New Jersey State Parole Board, A.M. had been arrested on October 12, 1999, on charges of Aggravated Assault and Endangering the Welfare of a Child. She pled guilty to Endangering the Welfare of a Child on December 4, 2000, and was sentenced to four years in prison on January 19, 2001. These charges were the result of injuries sustained by F.W. while in the custody of A.M. As a result of these injuries, F.W. has been diagnosed with Shaken Baby Syndrome, with spastic quadriplegic cerebral palsy, mental retardation, and a history of subdural shunt.
OCS investigated the complaints against M.M., and on August 16, 2005, M.M. contacted OCS to relinquish custody of the girls. The trial court issued an Instanter Order the same day, and OCS took custody of the girls. The children were adjudicated children in need of care on January 5, 2006. Both S.W. and F.W. have been in state custody since August 16, 2005.
OCS attempted to contact A.M. and M.W. to inform them that their children were in state custody and to devise a case plan for reunification. In September 2005, A.M. contacted Anita Artis, the OCS caseworker assigned to this case. She explained that she had been released on March 7, 2003, and that she was on parole until March 7, 2006. A.M. explained that she was not ready to work on a case plan because two of the conditions of her parole were that she could not leave the state of New Jersey and she could not have unsupervised contact with children under the age of twelve. Ms. Artis discussed the case plan that OCS had prepared for her, and urged her to contact OCS when she completed parole. The case plan dated September 14, 2005, included the following: (1) notify OCS upon release from parole, (2) obtain and maintain employment/income, (3) procure a safe, clean, stable domicile with enough room for A.M. and both children, (4) set up and maintain a visitation schedule, (5) notify OCS of any change in status, and (6) provide a list of relatives for possible placement. This case plan, however, was not approved by the trial court until January 5, 2006.
On March 3, 2006, the trial court approved a case plan dated February 24, 2006, with the goal of reunification. This case plan omitted the requirements of the first case plan, and required little affirmative action on the part of A.M. It stated only that she was to contact OCS to begin work on a case plan upon her release from parole, and that OCS would find a case worker in New Jersey to devise a case plan and monitor her progress. On March 31, 2006, A.M. contacted OCS and explained that she was ready to work a case plan. Ms. Artis sent a copy of the case plan to A.M. Ms. Artis also tried to contact the New Jersey Division of Youth and Family Services (DYFS) to have them assign a case worker for A.M. in New Jersey. A.M. testified that she also sought help from DYFS, even visiting the offices in Camden, New Jersey and Trenton, New Jersey, to find out why a case worker had not been assigned. In August 2006, DYFS ultimately declined to assign a case worker because there was not an open file on A.M. in New Jersey. A.M.'s welfare case manager, Terri Fox, agreed to monitor A.M.'s OCS case plan compliance. The case plan at that time was the same as in March 2006. In fact, the trial court approved the same case plan, dated February 24, 2006, at a July 17, 2006, hearing.
On August 25, 2006, OCS created a new case plan for the family. The goal of this case plan continued to be reunification of the family. However, in her letter to the trial court dated December 20, 2006, Ms. Artis states that the OCS met on August 21, 2006, and changed the permanent goal from reunification to adoption. This case plan required the following from A.M.: (1) acknowledgment of the impact of neglect in the family, (2) maintain income to support the family for six consecutive months, (3) maintain safe housing adequate for the entire family for six consecutive months, (4) set up and maintain a visitation schedule with her children, and (5) inform OCS of any change in circumstance. OCS was required to assess A.M.'s history of substance abuse, mental health, parental abilities, ability to care for a child with special needs, and ability to maintain housing and income. The trial court did not approve this case plan until a hearing held on January 4, 2007, though in its order the court stated that the permanent goal was adoption rather than reunification. Ms. Artis, in her letter to the court, also notified the court for the first time that A.M. was in treatment for substance abuse and had tested positive for illicit drugs as recently as November 2006. Nevertheless, the case plan approved by the court makes no mention of the substance abuse of A.M.
On February 19, 2007, the state filed a Petition for Termination of Parental Rights and Certification for Adoption, alleging abandonment pursuant to La.Ch.Code art. 1015(4) and that the children had been in the custody of the state at least one year and the parent failed to follow a case plan pursuant to La.Ch.Code art. 1015(5). The petition named both A.M. and M.W. as defendants. A trial was held on May 8, 2007. Following the trial, the trial court took the matter under advisement.
On May 11, 2007, the trial court issued a written opinion and judgment. The trial court found service was not properly made on M.W., and thus the termination petition was continued as to him. As to A.M., the trial court found that the state had not proven by clear and convincing evidence that A.M. had abandoned her children under La.Ch.Code art. 1015(4). While the trial court found that "it does not appear to be in the best interest of the children that the parental rights of the mother not be terminated," she found that the state had not met its burden of proving that A.M. had not substantially complied with the case plan. Thus, the termination petition against A.M. was dismissed. The state now appeals that judgment.
ASSIGNMENTS OF ERROR
The state asserts three assignments of error:
1. The trial court committed manifest error by finding that the appellant had not proven that abandonment pursuant to Children's Code Article 1015(4) applied in this case for the termination of appellee's parental rights by clear and convincing evidence.
2. The trial court committed manifest error by finding that the appellant had not proven that the mother's parental rights should be terminated based upon Children's Code Article 1015(5).
3. The trial court committed manifest error by not terminating appellee's parental rights after finding that it was not in the best interest of the minor children to NOT terminate appellee's rights without giving or setting forth any exceptional reason or reasons why it was not in the children's best interest to terminate appellee's parental rights.
DISCUSSION
In State ex rel A.T., 06-501, p. 4-5 (La. 7/6/06), 936 So.2d 79, 82, the supreme court stated:
Title X of the Louisiana Children's Code governs the involuntary termination of parental rights. Permanent termination of the legal relationship existing between natural parents and children is one of the most drastic actions the State can take against its citizens. However, the primary concern of the courts and the State remains to determine and insure the best interest of the child, which includes termination of parental rights if justifiable statutory grounds exist and are proven by the State. State ex rel. S.M.W., 00-3277 (La.2/21/01), 781 So.2d 1223.
. . . .
In order to terminate parental rights, the court must find that the State has established at least one of the statutory grounds by clear and convincing evidence. State ex rel. J.A., 99-2905 (La.1/12/00), 752 So.2d 806, 811 (citing La. Ch. C. Art. 1035(A); Santosky v. Kramer, 455 U.S. 745, 102 S.Ct. 1388, 71 L.Ed.2d 599 (1982)). Further, even upon finding that the State has met its evidentiary burden, a court still must not terminate parental rights unless it determines that to do so is in the child's best interests. La. Ch. C. Art. 1039; State ex rel. G.J.L., 00-3278 (La.6/29/01), 791 So.2d 80, 85.
Furthermore, a trial court's findings of fact in a termination of parental rights case will not be reversed on appeal unless they are clearly wrong or manifestly erroneous. State ex rel. A.T., 936 So.2d 79.
We will address the appellant's third assignment of error first. The supreme court has made it clear that the trial court must find both a statutory ground for termination of parental rights and the termination is in the best interest of the child in order to terminate parental rights. A finding that termination is in the best interest of the child, as the court ruled in this case, is not dispositive of the issue of termination. The state still must prove a statutory ground by clear and convincing evidence to justify termination. Thus, we find the state's third assignment of error lacks merit.
Nevertheless, we note that we find no manifest error in the trial court's finding that the termination of A.M.'s parental rights are in the best interest of S.W. and F.W. The evidence introduced at trial shows that while in foster care, S.W. has stopped sexually acting out, her lying has decreased, and her grades have improved. Overall, her situation is now less stressful, which has improved her behavior, according to Ms. Ann Landry, a counselor who has treated S.W. While the record suggests that she may wish to be reunited with her mother, Ms. Landry explained that S.W. has an idealized view of A.M. It is also clear from the record that A.M. is not capable at this time of providing the stability necessary in her children's life, which would increase S.W.'s stress and possibly cause regression of her behavior. Finally, she is in a foster care placement which could become permanent if she is freed for adoption. As for F.W., she is a special needs child who does not recognize her mother. Her special care needs have been met in foster care. A.M. has not shown that she is interested in or capable of caring for F.W. Furthermore, this court cannot overlook the fact that the record before us shows that A.M. was convicted of a felony which resulted in F.W.'s gravely disabling physical or psychological injury.[1]
In its first assignment of error, the state argues the trial court erred in not finding that it proved that A.M. abandoned her children pursuant to La.Ch.Code art. 1015(D), which states:
The grounds for termination of parental rights are:
. . . .
(4) Abandonment of the child by placing him in the physical custody of a nonparent, or the department, or by otherwise leaving him under circumstances demonstrating an intention to permanently avoid parental responsibility by any of the following:
(a) For a period of at least four months as of the time of the hearing, despite a diligent search, the whereabouts of the child's parent continue to be unknown.
(b) As of the time the petition is filed, the parent has failed to provide significant contributions to the child's care and support for any period of six consecutive months.
(c) As of the time the petition is filed, the parent has failed to maintain significant contact with the child by visiting him or communicating with him for any period of six consecutive months.
The children came into the custody of the state on August 16, 2005. Ms. Artis sent a letter notifying A.M. in August 2005. A.M. contacted Ms. Artis in September 2005, when she explained that she could not work a case plan because of her parole restrictions. Even though she could not leave New Jersey and could not have unsupervised contact with children under the age of twelve, she made no effort to keep in contact with her daughters, either by phone or mail. She had no contact with anyone at OCS until March 31, 2007, twenty-three days after she was released from parole. Even assuming Ms. Artis did not contact A.M. until the end of September, this is a period of greater than six months in which A.M failed to have any contact with her children, and as long as seven months since she found out they were in the custody of the state. We find the trial court erred in finding that the state did not prove by clear and convincing evidence that A.M. abandoned S.W. and F.W. While A.M. could not visit her children because of her parole restrictions, the evidence is clear that she had no contact with them in any way, and nothing prevented her from sending letters or arranging phone calls with the girls through OCS.
As we find the state has proved a statutory ground for termination of parental rights, and the termination is in the best interest of S.W. and F.W., we therefore terminate A.M.'s parental rights. Because we find merit in the state's first assignment of error, we do not need to address the state's second assignment of error.
CONCLUSION
The judgment of the trial court is reversed and the parental rights of A.M. are hereby terminated.
REVERSED AND RENDERED.
NOTES
[1] We note that the state did not include in the petition for termination facts which would support termination under La.Ch.Code art. 1015(2)(i), and this issue was not litigated in the trial court, thus we cannot consider termination under this section. See La.Ch.Code art. 1019(C).
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625 S.W.2d 809 (1981)
Luther Eugene GARRETT, Appellant,
v.
The STATE of Texas, Appellee.
No. C14-81-045-CR.
Court of Appeals of Texas, Houston (14th Dist.).
December 10, 1981.
*810 Russel Stanley, Houston, for appellant.
John B. Holmes, Jr., Dist. Atty., Houston, for appellee.
Before MILLER, MORSE and JAMES, JJ.
OPINION
MORSE, Justice.
This is an appeal from a conviction for delivery of phencyclidine, a controlled substance. In a trial before the court, appellant was found guilty and punishment was assessed at four years confinement in the Texas Department of Corrections. We affirm.
On January 15, 1979, an undercover narcotics officer observed appellant in a crowded public restroom at the Summit, a public exhibition hall, during the performance of a rock concert group. The officer observed appellant making a transaction with another person and assumed said transaction to be the sale of a controlled substance. The narcotics officer and his partner then approached appellant and asked him if he had "anything to sell." Whereupon the appellant delivered a quantity of phencyclidine to the officer and the officer gave the appellant a marked $50 bill. Appellant retained a small quantity of the drug in a cigarette wrapper for his personal use. At the conclusion of the transaction, the officer and his partner left the restroom area to find a uniformed police officer to assist in making the arrest. A short time later, the undercover officer and a uniformed police officer returned to the restroom and arrested appellant. Neither the marked $50 bill nor any drugs were in appellant's possession at the time of the arrest.
Appellant comes before this court with two points of error. In his first point, appellant contends the trial court was without jurisdiction to try the case on a felony information because there was no valid waiver of indictment. Appellant admits that he signed a written waiver of indictment but contends that, without further admonition by the court setting out the specific advantages of proceeding through the grand jury system, said written waiver did not fulfill the requirements of a valid waiver.
In Texas, indictment may be waived in any noncapital felony case. It is stated in Tex.Code Crim.Pro.Ann. Art. 1.141 (Vernon 1977):
A person represented by legal counsel may in open court or by written instrument voluntarily waive the right to be accused by indictment of any offense other than a capital felony. On waiver as provided in this article, the accused shall be charged by information.
For a waiver of an indictment to be effective, it must be intelligently, voluntarily and knowingly given by the accused while represented by counsel. Lackey v. State, 574 S.W.2d 97 (Tex.Cr.App.1978), King v. State, 473 S.W.2d 43 (Tex.Cr.App.1971). The waiver signed by appellant, specifically stated, "My attorney has explained to me my right to be prosecuted by grand jury indictment, which I hereby waive...." The waiver form also included a signed statement by the trial judge, specifically stating that the appellant was advised by the court of the right to be prosecuted by indictment and that appellant "knowingly" and "voluntarily" waived that right. This written form for waiver of indictment signed by appellant, indicates that the requirements of Art. 1.141 were met in full. It is not necessary that the waiver, on its face, specifically enumerate every possible advantage of going through the grand jury system. When such a statement is signed by the trial court approving such a waiver and there is no evidence in the record to the contrary, it is assumed that his counsel and/or the trial court sufficiently advised appellant of his right to a grand jury indictment as to enable him to make an informed waiver of said right and that, accordingly such waiver was "intelligently" given.
Therefore, appellant's first point of error is overruled.
Appellant's second point of error contends that the evidence was insufficient to *811 sustain a conviction for delivery of a controlled substance since the testimony of the State's witness indicated that appellant was entrapped into committing the offense. At the trial, appellant denied that he sold phencyclidine to the officer and testified, "I did not sell anybody nothing. I was using the restroom."
It is well settled in Texas that the defense of entrapment is not available to a defendant who denies that he committed the offense charged. Norman v. State, 588 S.W.2d 340 (Tex.Cr.App.1979); Stephens v. State, 522 S.W.2d 924 (Tex.Cr.App.1975). However, even if appellant had not denied committing the offense, this is not a case of entrapment. If criminal design originates in the mind of an officer and he induces a person to commit a crime which that person would not otherwise have committed except for such inducement, entrapment exists and may constitute a defense. But where the criminal intent originates in the mind of the accused, the fact that the officer furnished the opportunity or aids the accused in commission of the crime affords no defense. Lopez v. State, 574 S.W.2d 563 (Tex.Cr.App. 1978); Haywood v. State, 482 S.W.2d 855 (Tex.Cr.App.1972). In this case, the undercover officer approached appellant and asked him if he "had anything to sell." The officer did not mention drugs but merely furnished the opportunity for appellant to commit the crime. Asking if anyone "had anything to sell" was held not entrapment in Holdaway v. State, 505 S.W.2d 262 (Tex. Cr.App.1974).
Appellant's second point of error is overruled and the judgment of the trial court is affirmed.
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138 Ga. App. 742 (1976)
227 S.E.2d 492
ANCHOR SIGN COMPANY OF GEORGIA, INC.
v.
ITT TERRYPHONE CORPORATION.
52110.
Court of Appeals of Georgia.
Submitted April 8, 1976.
Decided May 21, 1976.
William D. Smith, for appellant.
Maley & Crowe, W. Christopher Bracken, for appellee.
MARSHALL, Judge.
Anchor Sign Company of Georgia (defendant below) brings this appeal from a bench verdict and judgment in the amount of $1,531.18 in favor of ITT Terryphone and against Anchor. Terryphone leased, installed and guaranteed the performance of certain sound equipment upon Anchor's business premises. Anchor alleged and presented evidence that tended to show Terryphone guaranteed satisfactory performance of the sound equipment to include good performance following the connection of radio equipment owned by Anchor. After connection of the radio, Anchor contended the sound equipment never worked properly. Anchor therefore urged before the trial court that Terryphone had breached the contract by furnishing an unsatisfactory sound system. Because of the alleged breach, Anchor had demanded the removal of the sound equipment and refused rental payments for the leased property.
Terryphone offered evidence that it guaranteed only its sound equipment. Its evidence showed that its equipment was never faulty and met the requirements of guaranty contained in the lease contract. The problem, according to Terryphone, was that Anchor's radio attached to the sound equipment was not compatible and Terryphone did not guarantee the radio. Terryphone urged that Anchor breached the contract by its refusal to make monthly lease rental payments. The trial court, having heard the evidence, resolved the issue in favor of Terryphone.
*743 Anchor urges three enumerations of error in its appeal, namely that the trial court erred: (1) in finding a contract existed between the parties; (2) in finding that the equipment was removed for nonpayment and that Terryphone was entitled to damages, and (3) in the failure to grant verdict in favor of Anchor because of Terryphone's alleged breach of contract. In its brief in support of the enumerations of error, Anchor argued that there was a breach of contract by Terryphone and that the removal of the sound equipment by Terryphone was tantamount to an accord and satisfaction. Held:
1. Anchor's enumeration alleging the trial court erred in finding a contract existed between the parties is not supported by argument or citation of authority as is required by Rule 18 (c) of this court (Code Ann. § 24-3618 (c) (2)). This enumeration therefore is deemed abandoned. Boyd v. State, 133 Ga. App. 136, 138 (2) (210 SE2d 251).
2. In its second enumeration Anchor complains that the trial court erred in finding Anchor breached the contract rather than that the breach resulted from the failure of the equipment to operate as promised by Terryphone, and of the concomitant award of damages in favor of Terryphone. The trial court heard evidence from both parties on this issue and resolved the issue against Anchor in favor of Terryphone.
A trial judge sitting without a jury is entitled to have his judgment considered as a verdict by a jury, and if there is any evidence to support the finding, it should be affirmed. Also the evidence must be construed most strongly in favor of the prevailing party. Alexander v. Kendrick, 134 Ga. App. 249 (213 SE2d 911). The court's findings are supported by competent evidence and are not clearly erroneous. Therefore its findings should not be set aside. Searcy v. Godwin, 129 Ga. App. 827 (201 SE2d 670); Spivey v. Mayson, 124 Ga. App. 775 (186 SE2d 154); Northcutt v. Crowe, 116 Ga. App. 715 (158 SE2d 308). The court did not err in finding for Terryphone.
3. In its last enumeration of error, Anchor asserts that when Terryphone removed the sound equipment and took possession thereof, this repossession amounted to an accord and satisfaction.
An accord and satisfaction arises where parties, by a *744 subsequent agreement, have satisfied a former one, and the latter agreement has been executed. Anchor has offered no evidence to show a subsequent agreement. Terryphone always was the owner of the sound system, merely leasing the same to Anchor. The contract expressly authorized Terryphone to repossess the equipment upon nonpayment of the rental. It is manifest that the return to the creditor of his own property does not constitute an accord and satisfaction. Burgamy v. Holton, 165 Ga. 384 (3), 396 (141 SE 42). This enumeration is without merit.
Judgment affirmed. Pannell, P. J., and McMurray, J., concur.
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185 Cal.App.4th 1363 (2010)
JOSIE FAULKINBURY et al., Plaintiffs and Appellants,
v.
BOYD & ASSOCIATES, INC., Defendant and Respondent.
No. G041702.
Court of Appeals of California, Fourth District, Division Three.
June 24, 2010.
*1367 Class Action Litigation Group, Katherine J. Odenbreit, Rene L. Barge; Law Offices of Lawrence A. Witsoe, Lawrence A. Witsoe, Dean P. Schroeter; White & Roseman and Leslie Roseman for Plaintiffs and Appellants.
Nordman Cormany Hair & Compton, Jonathan Fraser Light, Meghan B. Clark, Curtis A. Graham and Gannon Elizabeth Johnson for Defendant and Respondent.
OPINION
FYBEL, J.
INTRODUCTION
Plaintiffs Josie Faulkinbury and William Levene (together, Plaintiffs), on behalf of themselves and all others similarly situated, appeal from the trial court's order denying their motion for class certification. They sought to represent and certify a class of about 4,000 current and former employees of defendant Boyd & Associates, Inc. (Boyd), which provides security guard services throughout Southern California. Plaintiffs and the putative class members work or worked for Boyd as security guards. They assert Boyd denied the putative class members off-duty meal breaks and off-duty rest breaks, and failed to include certain reimbursements and an annual bonus payment in calculating the employees' hourly rate of overtime pay.
Plaintiffs proposed three subclasses, which we will refer to as the "Meal Break Class," the "Rest Break Class," and the "Overtime Class." We affirm the order denying the motion for class certification as to the Meal Break Class and the Rest Break Class because, we conclude, the trial court did not abuse its discretion in finding common issues of law and fact did not predominate over individual issues. We reverse the order denying the motion for class certification as to the Overtime Class and remand with directions to certify that class.
BACKGROUND
Boyd is a private security guard company providing security services throughout Southern California. Boyd's clients include gated residential communities, hospitals, commercial buildings, and retail stores.
Plaintiffs brought this action on behalf of themselves and about 4,000 current and former employees of Boyd, who had been employed in the *1368 position of security guard, post commander, or post supervisor, or a similar position at any time during the class period, defined as the period beginning four years preceding the filing of the original complaint and ending on the date a class is certified. The third amended complaint, the operative pleading, asserted various causes of action under the Labor Code and Business and Professions Code section 17200 et seq. for alleged failure to pay wages, failure to pay nondiscretionary bonus wages, and failure to provide meal and rest periods.
Faulkinbury was employed by Boyd as a security guard from October 2003 to November 2004, and Levene was employed by Boyd as a security guard from January 2003 to February 2005. In declarations, Plaintiffs asserted that, when hired by Boyd, each had to sign an agreement to take on-duty meal periods and that, while employed by Boyd, neither ever took an uninterrupted, off-duty meal break. They also asserted that, while employed by Boyd, they were instructed not to leave their posts and never took any off-duty rest breaks.
Plaintiffs declared their hourly rate of pay was reduced by the amount received as a gasoline allowance and as a uniform maintenance allowance. Faulkinbury declared her stated hourly rate was $11.00, which was reduced to $10.30 for the gasoline and uniform maintenance allowances. Levene similarly declared his stated hourly rate was $9.00, which was reduced to $8.30 for the gasoline and uniform maintenance allowances. He declared that his overtime hourly rate was based on the reduced rate of $8.30 per hour.
CLASS CERTIFICATION MOTIONS
Plaintiffs first moved for class certification in October 2008. Based on the third amended complaint, the first motion for class certification proposed a broadly defined class of "all of these current and former security guards employed by Boyd at any time during a four-year statute of limitations period consisting of approximately 4,000 putative class members" and proposed eight subclasses.[1]
The trial court issued a tentative ruling denying the first motion for class certification "without prejudice." The tentative ruling was lengthy and recited two grounds for denying class certification: (1) inadequacy of the proposed class representatives and (2) lack of typicality of the class representatives' *1369 claims. The tentative ruling identified problems in Plaintiffs' evidence and described additional evidence needed to address the court's concerns.
At the conclusion of the hearing on the first motion for class certification, the court stated: "At this time the court denies the motion for certification. [¶] . . . [¶] While the court pointed out in its tentative its primary concerns as to how the moving party had failed to meet its burden, based on the discussions that we've had, I don't want the moving party to feel that there is not a need to beef up a showing in any other regard as well. Because I think some good points were raised by counsel for defendants regarding whether common issues predominate in some of these areas, such as the bonuses. [¶] So I do make those comments to counsel so that you don't . . . think that all you have to do in order to be successful in certifying a class is give me two more declarations that have a few more magic words in it. Please take to heart the comments, because you will hear them again. And they may or may not be persuasive to the court if certification is requested next time. [¶] So the court does deny certification. It does deny it without prejudice; notwithstanding the request of defendants, because I feel that that's appropriate under the law."
A minute order denying the first motion for class certification without prejudice was entered in November 2008. The minute order recited the trial court's tentative ruling.
One month later, Plaintiffs filed a second motion for class certification, again seeking certification of a broad class of all "current and former security guards employed by Boyd at any time during a four-year statute of limitations period consisting of approximately 4,000 putative class members." The second motion reduced the number of subclasses to these three:
"(1) All current and former Security Guards, Security Guard Supervisors, Post Commanders, Rovers and other similar hourly paid job positions, who were required by Boyd to take an `on-duty' meal break and therefore were not provided mandated, uninterrupted meal periods and who worked for Boyd in California at any time between March 19, 2003 and the date class certification is granted. . . . ([Meal Break Class]).
"(2) All current and former Security Guards, Security Guard Supervisors, Post Commanders, Rovers and other similar hourly paid job positions, who worked for Boyd at any time between March 19, 2003 and the date class certification is granted . . . who were not provided with mandated rest periods. (`Rest Break Class')
*1370 "(3) All current and former Security Guards, Security Guard Supervisors, Post Commanders, Rovers and other similar hourly paid job positions, who worked for Boyd at any time from May 13, 2001 and the date class certification is granted . . . and were not paid overtime wages to reflect annual bonus payments and allowances. . . . ([Overtime Class])."
On the day before the hearing, the trial court issued a tentative ruling to grant the second motion for class certification.[2] The tentative ruling stated Plaintiffs' claims appeared to be typical of those of the class members and Plaintiffs' counsel could adequately represent the class. It also stated that Plaintiffs had established a "well-defined community of interest," that "[c]ommon questions of law and fact include whether the members of the various subclasses were in fact entitled to the breaks, overtime, reimbursements, and bonuses," and that "maintenance of the class action will result in a substantial benefit to the litigants and the court."
At the outset of the hearing on the second motion for class certification, the trial court emphasized, "[t]his is a tentative ruling." The court explained, "I've gone back and forth several times about the issue of individual issues" and stated, "I just wanted to share with counsel that the issue of whether there were common issues, or whether individual issues predominated did give the court most concern."
After hearing argument, the trial court took the second motion for class certification under submission. In February 2009, the trial court issued an order stating: "The Motion for Class Certification is denied. Moving party has not met its burden of establishing the requisites for class treatment. It is not clear, for the reasons stated by defendant, that the proposed classes are ascertainable. Additionally, it appears that individual questions of fact predominate, as set forth by defendant. These individual issues prevail over the common issues."
*1371 DISCUSSION
I.
General Class Action Principles and Standard of Review
"Code of Civil Procedure section 382 authorizes class actions `when the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court . . . .' The party seeking certification has the burden to establish the existence of both an ascertainable class and a well-defined community of interest among class members. [Citation.] The `community of interest' requirement embodies three factors: (1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class. [Citation.]" (Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326 [17 Cal.Rptr.3d 906, 96 P.3d 194] (Sav-On).)
The question of class certification is essentially procedural and does not involve the legal or factual merits of the action. (Sav-On, supra, 34 Cal.4th at p. 326.) The ultimate question in ruling on a class certification motion is whether the issues which may be adjudicated as a class, when compared with the issues which must be adjudicated individually, are sufficiently numerous or substantial to make a class action advantageous to both the litigants and the judicial process. (Ibid.)
Trial courts have discretion in granting or denying motions for class certification because they are well situated to evaluate the efficiencies and practicalities of permitting a class action. (Sav-On, supra, 34 Cal.4th at p. 326.) Despite this grant of discretion, appellate review of orders denying class certification differs from ordinary appellate review. Under ordinary appellate review, we do not address the trial court's reasoning and consider only whether the result was correct. (Kaldenbach v. Mutual of Omaha Life Ins. Co. (2009) 178 Cal.App.4th 830, 843 [100 Cal.Rptr.3d 637].) But when denying class certification, the trial court must state its reasons, and we must review those reasons for correctness. (Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 435-436 [97 Cal.Rptr.2d 179, 2 P.3d 27] (Linder).) We may only consider the reasons stated by the trial court and must ignore any unexpressed reason that might support the ruling. (Ibid.; see also Bufil v. Dollar Financial Group, Inc. (2008) 162 Cal.App.4th 1193, 1204-1205 [76 Cal.Rptr.3d 804] (Bufil).)
We will affirm an order denying class certification if any of the trial court's stated reasons was valid and sufficient to justify the order, and it is supported *1372 by substantial evidence. (Sav-On, supra, 34 Cal.4th at pp. 326-327; see also Kaldenbach v. Mutual of Omaha Life Ins. Co., supra, 178 Cal.App.4th at p. 844 ["We may not reverse, however, simply because some of the court's reasoning was faulty, so long as any of the stated reasons are sufficient to justify the order."].) We will reverse an order denying class certification if the trial court used improper criteria or made erroneous legal assumptions, even if substantial evidence supported the order. (Sav-On, supra, 34 Cal.4th at p. 327; Linder, supra, 23 Cal.4th at pp. 435-436.) A trial court's decision that rests on an error of law is an abuse of discretion. (In re Tobacco II Cases (2009) 46 Cal.4th 298, 311 [93 Cal.Rptr.3d 559, 207 P.3d 20]; Pfizer Inc. v. Superior Court (2010) 182 Cal.App.4th 622, 629 [105 Cal.Rptr.3d 795].)
II.
No Res Judicata
Boyd argues Plaintiffs' failure to appeal from the order denying the first motion for class certification made the order final and res judicata on the issue of class certification. As a consequence, Boyd argues, Plaintiffs cannot challenge the order denying the second motion for class certification.
Boyd did not make this argument in the trial court. Rather than assert res judicata, Boyd opposed the second motion for class certification on its merits and sought a ruling on the motion. By failing to assert res judicata in the trial court, Boyd denied Plaintiffs the opportunity to develop a factual record and denied the trial court the opportunity to make findings on the issue.
The trial court expressly denied the first motion for class certification without prejudice and with the anticipation Plaintiffs could and would bring another motion. "The term `without prejudice,' . . . means that there is no decision of the controversy on its merits, and leaves the whole subject . . . open to another application . . . . [Citations.]" (Chambreau v. Coughlan (1968) 263 Cal.App.2d 712, 718 [69 Cal.Rptr. 783]; see Devereaux v. Latham & Watkins (1995) 32 Cal.App.4th 1571, 1587 [38 Cal.Rptr.2d 849], disapproved on another ground in Moran v. Murtaugh Miller Meyer & Nelson, LLP (2007) 40 Cal.4th 780, 785, fn. 7 [55 Cal.Rptr.3d 112, 152 P.3d 416] ["the fact that the denial of the first motion was without prejudice allowed respondent to bring a later motion"].) The purpose and effect of the words "without prejudice" is to prevent the defendant from asserting res judicata in a subsequent proceeding by the same plaintiffs on the same subject. (Williams v. City of Oakland (1973) 30 Cal.App.3d 64, 69 [106 Cal.Rptr. 101].)
Relying on Guenter v. Lomas & Nettleton Co. (1983) 140 Cal.App.3d 460 [189 Cal.Rptr. 470], Boyd argues the order denying the first motion for class *1373 certification was res judicata notwithstanding use of the term "without prejudice." In Guenter v. Lomas & Nettleton Co., the trial court denied a motion to certify a class without prejudice on the grounds the putative class was not large enough and "`class action would not be a superior form of remedy.'" (Id. at p. 465.) At the hearing on the motion, the trial court suggested the case proceed as an association of 27 plaintiffs rather than as a class action. (Ibid.) In light of those comments and the stated reasons for denying class certification, the Court of Appeal concluded denial of the motion was on the merits, and the term "without prejudice" meant only that the plaintiff could try a method other than a class action to pursue the claims. (Id. at pp. 465-466.)
In this case, in contrast to Guenter v. Lomas & Nettleton Co., the trial court's reasons for denying the first motion for class certification and comments at the hearing on the motion establish without question the court intended the term "without prejudice" to mean without prejudice to bringing a second motion for class certification. The trial court stated its denial of the motion was without prejudice in the tentative ruling, on the record, and in the minute order denying the motion. The court anticipated a second motion for class certification. At the hearing on the first class certification motion, the trial court explained its concerns with Plaintiffs' evidence supporting class certification and commented: "Please take to heart the comments, because you will hear them again. And they may or may not be persuasive to the court if certification is requested next time."
III.
The Appeal Is Not Moot.
Boyd argues the appeal is moot because denial of class certification left only two plaintiffs in the case. Boyd asserts, "[t]here is no reason for this court to evaluate [Plaintiffs'] appeal only to render an advisory opinion on whether the trial court erred in denying the motion for class certification."
As support for its mootness argument, Boyd relies on a motion Plaintiffs filed in the trial court after denial of the second motion for class certification asking the court to deem the case noncomplex. Boyd requests we take judicial notice of that motion and a declaration from Plaintiffs' counsel in support of it. The motion and declaration are records of a court of this state and therefore qualify for permissive judicial notice under Evidence Code section 452, subdivision (d). We grant the request for judicial notice, but the motion and declaration do not advance Boyd's argument.
In the motion, Plaintiffs asserted: "Since the court denied class certification, there are only two plaintiffs remaining in this case. . . . [¶] This case *1374 belongs in Unlimited Civil, where the trial judge can effectively hear this case through trial. There are no longer thousands of plaintiffs remaining in this casejust the two named plaintiffs whose issues can be tried in another courtroom not designated complex."
Boyd treats those comments as a concession Plaintiffs no longer intend to pursue a class action. We disagree. This appeal demonstrates Plaintiffs' intent. Once the trial court denied the second motion for class certification, Plaintiffs were correct in stating only two plaintiffs remained in the case. Plaintiffs did not, however, dismiss their class action allegations and have pursued this appeal to reverse the order denying their second motion for class certification. The appeal is not moot.
IV.
The Trial Court Did Not Consider the Merits of Plaintiffs' Claims in Denying the Second Motion for Class Certification.
Plaintiffs argue the trial court used improper criteria or made erroneous legal assumptions in denying the second motion for class certification because it considered the merits of their claims. This argument is not based on the minute order denying class certification, which identified lack of ascertainability and predominance of individual questions of factboth proper grounds for denying class certification. Instead, Plaintiffs' argument is based on the following syllogism: The trial court's tentative ruling was to grant the second motion for class certification; at the hearing on the motion, Boyd's counsel made improper arguments directed to the merits of Plaintiffs' claims; a month after the hearing, the trial court "without rhyme or reason" denied the motion for class certification; therefore, the decision to deny the motion must have been based on Boyd's arguments made at the hearing that were directed to the merits of Plaintiffs' claims.[3]
As a matter of fact, logic, and law, this syllogism is flawed. The trial court's tentative ruling granting class certification was just thattentative. Trial courts are not bound by their tentative rulings, which are superseded by *1375 the final order. (Fagelbaum & Heller LLP v. Smylie (2009) 174 Cal.App.4th 1351, 1363, fn. 3 [95 Cal.Rptr.3d 252]; In re Marriage of Ditto (1988) 206 Cal.App.3d 643, 646 [253 Cal.Rptr. 770].) At the outset of the hearing on the second motion for class certification, the trial court emphasized the ruling was tentative, stating it had "gone back and forth several times about the issue of individual issues" and "the issue of whether there were common issues, or whether individual issues predominated did give the court most concern." Not only was the trial court entitled to issue an order that was different from the tentative ruling, but in light of those expressed concerns, it could come as no surprise that the trial court ultimately denied the motion for class certification on the ground of predominance of individual issues of fact.
At the hearing on the second motion for class certification, Boyd's counsel did make arguments directed to the merits of the underlying claims. Conceding as much, Boyd argues the trial court may consider the merits of the underlying claims at the class certification stage. In a limited sense, that is true: Issues affecting the merits of a case may be considered when they are "enmeshed with class action requirements" such as commonality, typicality, and adequacy of representation. (Linder, supra, 23 Cal.4th at p. 443; see Coopers & Lybrand v. Livesay (1978) 437 U.S. 463, 469, fn. 12 [57 L.Ed.2d 351, 98 S.Ct. 2454] ["`Evaluation of many of the questions entering into determination of class action questions is intimately involved with the merits of the claims. The typicality of the representative's claims or defenses, the adequacy of the representative, and the presence of common questions of law or fact are obvious examples . . . .'"]; Ali v. U.S.A. Cab Ltd. (2009) 176 Cal.App.4th 1333, 1346 [98 Cal.Rptr.3d 568].) "`[W]hen the merits of the claim are enmeshed with class action requirements, the trial court must consider evidence bearing on the factual elements necessary to determine whether to certify the class.'" (Bennett v. Regents of University of California (2005) 133 Cal.App.4th 347, 357 [34 Cal.Rptr.3d 579].)[4]
A plaintiff need not establish a likelihood of success on the merits to obtain class certification (Fireside Bank v. Superior Court (2007) 40 Cal.4th 1069, 1091-1092 [56 Cal.Rptr.3d 861, 155 P.3d 268]), and "[a]t a class certification hearing, the court should not make any determination of the merits or validity of the claim" (Bartold v. Glendale Federal Bank (2000) 81 Cal.App.4th 816, 829 [97 Cal.Rptr.2d 226]). "When the substantive theories and claims of a proposed class suit are alleged to be without legal or factual merit, the interests of fairness and efficiency are furthered when the contention is resolved in the context of a formal pleading (demurrer) or motion (judgment *1376 on the pleadings, summary judgment, or summary adjudication) that affords proper notice and employs clear standards." (Linder, supra, 23 Cal.4th at p. 440.)
Whether and to what extent a trial court may consider the merits of a case in ruling on a motion for class certification ultimately is beside the point. Although Boyd made arguments directed to the merits at the hearing on the second motion for class certification, it is illogical to presume, as Plaintiffs do, that the trial court must have based its decision to deny class certification on them, particularly when the court had expressed its concern over the predominance of individual factual issues.
The trial court said or did nothing to suggest it considered the merits of Plaintiffs' claims. To the contrary, the trial court stated, at the hearing, it was "being very careful to separate the issues of liability from the issues of certification." The trial court did not require Plaintiffs to prove any part of their case. Plaintiffs seize on this line from the order denying class certification"It is not clear, for the reasons stated by defendant, that the proposed classes are ascertainable"as demonstrating the trial court considered Boyd's arguments on the merits of Plaintiffs' claims. The phrase "reasons stated by defendant" in that passage refers to the issue of ascertainability of the class, not arguments on the merits.
In the minute order, the trial court expressed these permissible reasons for denying the second motion for class certification: "Moving party has not met its burden of establishing the requisites for class treatment. It is not clear, for the reasons stated by defendant, that the proposed classes are ascertainable. Additionally, it appears that individual questions of fact predominate, as set forth by defendant. These individual issues prevail over the common issues." It is the correctness of those stated reasons, and only those reasons, that we address. (Linder, supra, 23 Cal.4th at pp. 435-436.)
V.
Overview of Classes and Claims
We summarize the grounds for relief asserted for each subclass and explain the legal principles underlying Plaintiffs' claims, not to test the merits of those claims, but to provide a legal background to the analysis of ascertainability and commonality. Plaintiffs proposed three subclasses: (1) the Meal Break Class, (2) the Rest Break Class, and (3) the Overtime Class.
A. Meal Break Class
Plaintiffs assert, "[d]uring the entire alleged class period, [Boyd] did not provide an uninterrupted, off-duty, 30 minute meal period as required by law *1377 to any putative Class Members," but "required all Class Members to take an `on-duty' meal period each day they worked claiming that the nature of the job duties of putative Class Members qualified for on-duty meal periods."
Labor Code section 226.7 states: "(a) No employer shall require any employee to work during any meal or rest period mandated by an applicable order of the Industrial Welfare Commission. [¶] (b) If an employer fails to provide an employee a meal period or rest period in accordance with an applicable order of the Industrial Welfare Commission, the employer shall pay the employee one additional hour of pay at the employee's regular rate of compensation for each work day that the meal or rest period is not provided."
The Industrial Welfare Commission (IWC) is empowered to formulate regulations known as wage orders governing employment in California. (Tidewater Marine Western, Inc. v. Bradshaw (1996) 14 Cal.4th 557, 561 [59 Cal.Rptr.2d 186, 927 P.2d 296].) IWC wage order No. 4-2001 (Wage Order No. 4-2001), codified at California Code of Regulations, title 8, section 11040, subdivision 11(A), governs an employer's obligation for providing meal breaks to hourly employees. Wage Order No. 4-2001 provides: "No employer shall employ any person for a work period of more than five (5) hours without a meal period of not less than 30 minutes, except that when a work period of not more than six (6) hours will complete the day's work the meal period may be waived by mutual consent of the employer and the employee. Unless the employee is relieved of all duty during a 30 minute meal period, the meal period shall be considered an `on duty' meal period and counted as time worked. An `on duty' meal period shall be permitted only when the nature of the work prevents an employee from being relieved of all duty and when by written agreement between the parties an on-the-job paid meal period is agreed to. The written agreement shall state that the employee may, in writing, revoke the agreement at any time." (Cal. Code Regs., tit. 8, § 11040, subd. 11(A), italics added; see also Bufil, supra, 162 Cal.App.4th at pp. 1197-1198.)
B. Rest Break Class
Plaintiffs assert that during the alleged class period, Boyd required its employees to remain on duty at all times and were not permitted to take uninterrupted, off-duty rest breaks.
"Concerning rest breaks, Wage Order No. 4-2001 states that every employer must `authorize and permit all employees to take rest periods . . . . The authorized rest period time shall be based on the total hours worked daily at the rate of ten (10) minutes net rest time per four (4) hours or major fraction thereof. However, a rest period need not be authorized for employees whose *1378 total daily work time is less than three and one-half (3½) hours.' ([Cal. Code Regs., tit. 8,] § 11040, subd. 12(A).)" (Bufil, supra, 162 Cal.App.4th at pp. 1198-1199.) "Employers who do not comply with the meal and rest break rules `shall pay' the employee one hour of pay at the employee's regular rate of compensation for each workday that the meal period or rest period is not provided. ([Cal. Code Regs., tit. 8,] § 11040, subds. 11(B), 12(B).)" (Id. at p. 1199.)
There does not appear to be an on-duty rest break exception as there is for meal breaks. The Department of Industrial Relations, Division of Labor Standards Enforcement (DLSE) is empowered to enforce California's labor laws, including IWC wage orders. (Tidewater Marine Western, Inc. v. Bradshaw, supra, 14 Cal.4th at pp. 561-562.) A DLSE opinion letter, dated February 22, 2002, states, "there must be a net 10 minutes of rest provided in each `work period' and the rest period must be, as the language [of Wage Order No. 4-2001] implies, duty-free." (Dept. of Industrial Relations, DLSE Acting Chief Counsel Anne Stevason, opn. letter No. 2002.02.22, Rest Period Requirements (Feb. 22, 2002) p. 1 [as of June 24, 2010].)
C. Overtime Class
Boyd paid its employees an allowance for the cost of cleaning and maintaining uniforms and for the cost of gasoline. Plaintiffs assert those allowances are wages and must be included in calculating overtime wages. In addition, Plaintiffs assert an annual bonus paid by Boyd to employees who had been employed for 12 consecutive months was nondiscretionary and therefore must be included in the calculation of overtime wages.
Labor Code section 2802, subdivision (a) provides: "An employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer, even though unlawful, unless the employee, at the time of obeying the directions, believed them to be unlawful." One appellate court has held that payment to employees for work uniforms is a part of the employees' compensation and should be considered like any other payment of wages, compensation, or benefits. (In re Work Uniform Cases (2005) 133 Cal.App.4th 328, 338 [34 Cal.Rptr.3d 635].)
The DLSE, in an opinion letter dated March 6, 1991, stated: "Bonus payments, with certain exceptions[,] are included in the calculation of overtime. Bonuses based on incentive must be calculated into the employee's wages to determine the `regular rate of pay[.']" (Dept. of Industrial Relations, DLSE *1379 Chief Counsel H. Thomas Cadell, Jr., opn. letter No. 1991.03.06, Calculation of Regular Rate of Pay (Mar. 6, 1991) p. 1, fn. omitted [as of June 24, 2010] (Opinion Letter No. 1991.03.06).) The DLSE identified an exception to that rule: "Bonus payments which are discretionary or payments in the nature of gifts on special occasions, and contributions by the employer to certain welfare plans and payments made by the employer pursuant to a profit-sharing, thrift and savings plan . . . are not to be considered as part of the `regular rate of pay' for purposes of determining overtime compensation." (Id. at p. 1, fn. 1.)
VI.
Ascertainability
The purpose of the ascertainability requirement is to ensure notice is given to putative class members to whom a judgment in the class action would be res judicata. (Bufil, supra, 162 Cal.App.4th at p. 1206.) Class members are ascertainable when they may be readily identified without unreasonable expense or time by reference to official records. (Ibid.) "In determining whether a class is ascertainable, the trial court examines the class definition, the size of the class and the means of identifying class members." (Id. at p. 1207.)
We do not reach the issue of ascertainability for the Meal Break Class and the Rest Break Class because we conclude in part VII. those classes lack a predominance of common issues. We conclude the Overtime Class can be readily identified without unreasonable expense or time by reference to Boyd's payroll records. Employee paycheck stubs submitted in support of the second motion for class certification have separate entries for gasoline reimbursement and uniform cleaning reimbursement. Boyd's payroll records also show the amounts paid for gasoline reimbursements and uniform cleaning reimbursements.
As to annual bonuses, Plaintiffs are not asserting Boyd wrongly denied an employee an annual bonus. Whether the bonus has a subjective component is not relevant to the issue of ascertainability; instead, the issue is whether, as to those employees who received a bonus, the bonus must be included in calculating overtime wages. Those employees who received an annual bonus, and the amount of the bonus, may be determined readily from Boyd's payroll records. Accordingly, the Overtime Class is ascertainable.
*1380 VII.
Commonality
A. General Principles of Commonality
Commonality as a general rule depends on whether the defendant's liability can by determined by issues common to all class members: "`A class may be certified when common questions of law and fact predominate over individualized questions. As a general rule if the defendant's liability can be determined by facts common to all members of the class, a class will be certified even if the members must individually prove their damages. . . . [T]o determine whether common questions of fact predominate the trial court must examine the issues framed by the pleadings and the law applicable to the causes of action alleged.'" (Ali v. U.S.A. Cab Ltd., supra, 176 Cal.App.4th at p. 1347, quoting Hicks v. Kaufman & Broad Home Corp. (2001) 89 Cal.App.4th 908, 916 [107 Cal.Rptr.2d 761].)
"In examining whether common issues of law or fact predominate, the court must consider the plaintiff's legal theory of liability. [Citation.] The affirmative defenses of the defendant must also be considered, because a defendant may defeat class certification by showing that an affirmative defense would raise issues specific to each potential class member and that the issues presented by that defense predominate over common issues. [Citations.]" (Walsh v. IKON Office Solutions, Inc. (2007) 148 Cal.App.4th 1440, 1450 [56 Cal.Rptr.3d 534].) We consider whether substantial evidence supported the trial court's finding on predominance, and draw inferences from the evidence in favor of the order on the second motion for class certification. (Sav-On, supra, 34 Cal.4th at p. 328.)
B. Meal Break Class
With respect to the Meal Break Class, we start by examining Plaintiffs' theory of legal liability. Plaintiffs assert Boyd is liable under Labor Code section 226.7 for requiring all putative class members to sign on-duty meal period agreements and to take on-duty meal breaks regardless of their job duties or conditions at their assigned posts.
Under the nature of the work exception, an employer is not required to provide off-duty meal breaks "when the nature of the work prevents an employee from being relieved of all duty and when by written agreement between the parties an on-the-job paid meal period is agreed to." (Cal. Code Regs., tit. 8, § 11040, subd. 11(A).) On-duty meal period agreements are permitted under Wage Order No. 4-2001, California Code of Regulations, *1381 title 8, section 11040, subdivision 11(A). Based on the nature of the work exception, Boyd argues its liability to the Meal Break Class depends on individual issues regarding the nature of the work at each post and whether each employee did in fact take on-duty meal breaks.
Boyd did have a uniform policy of requiring security guard employees to take on-duty meal breaks and did require them to sign on-duty meal break agreements. But demonstrably substantial evidence supported the trial court's finding that individual issues of fact predominate. The evidence submitted by Boyd showed the ability of each of its security guard employees to take an off-duty meal break depended on individual issues, such as the post to which the employee was assigned and whether under the specific circumstances each employee could be relieved to take a meal break.
Boyd presented evidence it provides security services at about 87 different locations, including residential communities, schools, housing complexes, entertainment facilities, retail centers, factories, highrise office buildings, highrise residential buildings, research and development facilities, hotels, convention centers, medical offices, hospitals, cemeteries, and construction sites. Boyd's evidence established the conditions and nature of security guard services vary from location to location and often from shift to shift. Declarations from current Boyd employees stated that, at locations where only a single guard worked, the employee may have to take an on-duty meal break, while at locations where several security guards worked, one employee could cover for another taking an off-duty meal break. Some security guard employees are able to take meal breaks during periods of inactivity ("I am able to take a meal period during the times when I am not actively performing any duties of a security officer"), while others are able to be relieved of duty to take meal breaks ("I am relieved of all duty for a meal period each day. I am free to leave the post to get food or I can remain on post while eating my meal"). Most declarants stated, "I have never been discouraged or prevented from eating a meal during any of the shifts I have worked by anyone, including anyone employed by Boyd," and most, if not all, declared he or she could not recall ever working a shift that did not have at least one period of rest for every three or four hours of work or working a shift during which he or she was "not able to spend a sufficient amount of time eating a meal."
At single guard posts, some security guards took off-duty breaks, while most others did not. On occasion, employees from Boyd's clients relieved a Boyd security guard employee for meal and rest breaks ("I am also relieved for a thirty-minute meal period each shift. Again, Monday through Friday I am relieved by Honda's in-house security and Saturday and Sunday I am relieved by other Boyd employees"), and on other occasions, the employee *1382 was relieved by the other guard stationed at the post ("I am able to take a meal period during the times when the other security guard on duty is able to man the post").
The ability of a Boyd security guard employee to take an off-duty meal break sometimes depended on whether the employee was training another employee ("When I am training another security officer we will relieve each other of all duty during meal and rest periods"). Some guards put out a sign saying "on a break" and took an off-duty break.
(10) Plaintiffs challenge this evidence, contending the declarations from Boyd's current employees are boilerplate or not credible because the employees face coercion. Those challenges go to the weight and credibility of the evidence, matters within the trial court's discretion. (Sav-On, supra, 34 Cal.4th at p. 334.) Plaintiffs also argue the nature of the work exception does not preclude class certification because it is Boyd's burden to prove the applicability of the exception. (11) But in determining whether common issues predominate, a defendant's affirmative defenses must be considered, and a defendant may defeat class certification by showing an affirmative defense raises issues specific to each potential class member. (Walsh v. IKON Office Solutions, Inc., supra, 148 Cal.App.4th at p. 1450.)
Both sides rely on Sav-On, supra, 34 Cal.4th 319, 324, in which the California Supreme Court upheld the trial court's order certifying a class in an action alleging the defendant misclassified salaried managers as exempt from the overtime laws and failed to pay overtime compensation owed to them. In support of class certification, the plaintiffs in Sav-On presented evidence that during the class period, the defendant classified all operating managers and assistant managers (salaried managers) as exempt from the overtime laws and failed to pay them overtime compensation, even though, pursuant to uniform company policies and practices, they consistently worked overtime hours and spent insufficient time on exempt tasks to be classified as exempt employees. (Id. at p. 327.) In opposing class certification, the defendant argued its liability, if any, for unpaid overtime compensation required making individual computations of the amount of time each class member spent working on specific tasks. (Id. at p. 328.)
The Supreme Court found the evidence in conflict, but, applying the standard of review, concluded the record contained substantial evidence that the defendant engaged in either a policy and practice of deliberately misclassifying class members, or that, owing in part to operational standardization, classification based on job descriptions (rather than actual tasks) resulted in "widespread de facto misclassification." (Sav-On, supra, 34 Cal.4th at p. 329.) Either theory (deliberate misclassification or de facto misclassification) was amenable to class treatment. (Ibid.)
*1383 Applying Sav-On to this case supports affirmance of the order denying class certification. We resolve any conflicts in the evidence in favor of the order denying class certification. Based on this evidence, and presuming in favor of the order denying class certification, "we cannot say it would be irrational for a court to conclude that, tried on plaintiffs' theory, `questions of law or fact common to the class [do not] predominate over the questions affecting the individual members' [citation]." (Sav-On, supra, 34 Cal.4th at p. 329.)
In the recent case of Arenas v. El Torito Restaurants, Inc. (2010) 183 Cal.App.4th 723, 726 [108 Cal.Rptr.3d 15], Division Five of the Second Appellate District of the Court of Appeal relied on Sav-On to affirm an order denying certification of a class of restaurant managers allegedly misclassified as exempt employees. In denying class certification, the trial court found the evidence showed that the tasks performed by restaurant managers, and the amount of time devoted to each task, varied widely from restaurant to restaurant depending on the volume of business and the nature of individual store operations. (Arenas v. El Torito Restaurants, Inc., supra, at pp. 729-730.) Applying Sav-On, the appellate court concluded substantial evidence supported the trial court's finding, and "this court cannot now substitute its own judgment." (Arenas v. El Torito Restaurants, Inc., supra, at p. 734.) "[H]aving credited defendants' evidence over plaintiffs', the trial court could reasonably conclude there was insufficient evidence of widespread misclassification ...." (Ibid.)
Similarly here, crediting Boyd's evidence over Plaintiffs', the trial court reasonably could conclude there was insufficient evidence of classwide denial of off-duty meal breaks and individual issues of liability predominate over common issues.
Plaintiffs argue common issues do predominate because application of the nature of the work exception depends on the nature of the employer's business overall and therefore can be decided on a classwide basis. Even if we were to agree with that proposition, substantial evidence would support the trial court's conclusion that individual liability issues predominate. A classwide determination that the nature of the work exception did not apply to security guards employed by Boyd would not in itself result in liability against Boyd. Liability would arise only when Boyd actually "fail[ed] to provide an employee a meal period in accordance with the applicable provisions of this order" (Cal. Code Regs., tit. 8, § 11040, subd. 11(B))that is, when a security guard employee actually takes an on-duty meal break under circumstances in which an off-duty meal break is required. The evidence submitted by Boyd supported a finding that whether a security guard employed by Boyd actually took on-duty meal breaks depended on a variety of individual factors not susceptible to common proof.
*1384 Plaintiffs rely on two casesWest v. Circle K Stores, Inc. (E.D.Cal., June 13, 2006, No. CIV. S-04-0438 WBS GGH) 2006 U.S.Dist. Lexis 42074 (West), and Bufil, supra, 162 Cal.App.4th 1193to support their contention common issues predominate. Both cases are distinguishable.
In Bufil, supra, 162 Cal.App.4th 1193, the plaintiff sought to represent a class of employees of a company operating 130 check-cashing stores, who allegedly were denied off-duty meal and rest breaks. The classes were very narrowly defined as employees for whom the defendant's records indicated a meal period had not been taken due to (1) single employee on duty in the store and (2) single employee on duty providing training to another employee. (Id. at p. 1201.) The Court of Appeal, reversing an order denying class certification, concluded the plaintiff had structured the case in such a way that whether the nature of the work exception authorized the employer to permit on-duty meal breaks was a legal question concerning the employer's liability. (Id. at pp. 1203-1204.)
Here, in contrast to Bufil, Plaintiffs structured the case in a way that defines the Meal Break Class very broadly to include all Boyd security guard employees in the class period. Boyd presented evidence supporting a finding that individual issues of liability would predominate notwithstanding.
In West, the district court certified a class of convenience store employees who sought recovery of damages for missed off-duty meal breaks. The court concluded resolution of the issue whether the nature of the work exception applied would involve the court in a determination of the merits because the nature of the work exception was intended to apply to the nature of the work in general, not to the circumstances "on any given shift." (West, supra, 2006 U.S.Dist. Lexis 42074 at p. *25.) The West court concluded that the issue whether a putative class member was actually permitted to take an off-duty break related only to damages. (Ibid.)
Here, unlike West, Boyd provided security guards to many different locations with different working conditions, requirements, and constraints. As a consequence, the issue whether a putative class member was actually permitted to take an off-duty meal break goes to liability, not damages. Whether Boyd's uniform policy of requiring all security guards to take on-duty meal breaks is in place or not, "courts must still ask where the individual employees actually spent their time." (In re Wells Fargo Home Mortgage (9th Cir. 2009) 571 F.3d 953, 959.)
Brown v. Federal Express Corp. (C.D.Cal. 2008) 249 F.R.D. 580 is instructive. In that case, the plaintiffs sought to certify a class of courier drivers who allegedly were denied meal and rest breaks in violation of the *1385 Labor Code. (Id. at p. 581.) They alleged the defendant had a policy of committing insufficient resources to its goal of making a large number of timely deliveries and, as a result, courier drivers were under pressure to make deliveries as quickly as possible and were unable to take required meal or rest breaks. (Id. at p. 582.) The district court denied class certification, finding, among other things, common issues did not predominate. (Id. at p. 583.) The court concluded the plaintiffs could prevail only by demonstrating the defendant's policies actually deprived them of meal and rest breaks. (Id. at p. 586.) The evidence showed the defendant had several classifications of drivers, each with different tasks and responsibilities. (Id. at pp. 586-587.) Drivers experienced different "ebbs and flows" in workload each day, "leading to a different analysis of when they might take breaks." (Id. at p. 586.) Drivers were subjected to different levels of monitoring and volumes of work, and drivers worked different routes, even within the same job classification. (Ibid.) Thus, "[a]lthough [the defendant] may have consistent policies that apply across job classifications, their impact on employees' ability to take breaks necessarily depends on each individual's job duties." (Ibid.) The plaintiffs proposed no method of common proof to establish the defendant's policies prevented drivers from taking required meal and rest breaks, regardless of each driver's individual circumstances. (Id. at p. 587.)
Boyd requests we take judicial notice of an opinion letter issued after the order denying the second motion for class certification.[5] Boyd argues Opinion Letter No. 2009.06.09 authorizes blanket on-duty meal agreements and supports its argument the nature of the work exception must be applied on a shift-by-shift basis. Plaintiffs oppose the request for judicial notice, arguing Opinion Letter No. 2009.06.09 was not, and could not have been, submitted to the trial court, and therefore constitutes facts outside the record. We construe Opinion Letter No. 2009.06.09 as a source of legal guidance, not as evidence, and find the opinion letter comes within Evidence Code section 452, subdivision (c).[6]
Although we grant the request for judicial notice, Opinion Letter No. 2009.06.09 does not influence our decision because it addressed meal period requirements in the very specific situation of employees engaged in the transportation of hazardous and explosive materials. (Opn. Letter No. 2009.06.09, supra, at p. 1.) Federal regulations governing carriers of *1386 hazardous and explosive materials require the driver to be near his or her truck at all times during the transport process. (Ibid.) The DLSE concluded, in very couched terms, "the application of these federal regulations may, in some circumstances, satisfy the requirement for an on-duty meal period under the applicable wage order that the nature of the driver's duties prevents the employee from being relieved of all duty." (Ibid., italics added.) The DLSE recognized an employer and an employee may enter into a single, blanket on-duty meal period agreement "so long as the conditions necessary to establish that the nature of the employee's work prevents the employee from being relieved of all duty are met for each applicable on-duty meal period taken." (Ibid.)
Plaintiffs argue that by requiring every security guard employee to sign an on-duty meal break agreement, and by maintaining a policy requiring every security guard employee to take on-duty meal breaks, Boyd treated the on-duty meal break exception as a classwide issue. An employer may assert, on the one hand, all employees fit within a certain job classification, yet argue, on the other hand, individual inquiry into each employee's tasks or circumstances is necessary to determine whether an employee actually fits within that classification. (Arenas v. El Torito Restaurants, Inc., supra, 183 Cal.App.4th at p. 735.) The legally relevant issue is whether common issues predominate.
Plaintiffs have cited the recent opinion of Jaimez v. Daiohs USA, Inc. (2010) 181 Cal.App.4th 1286 [105 Cal.Rptr.3d 443] (Jaimez), in which the Court of Appeal reversed an order denying certification of a putative class of sales representatives. Jaimez does not support reversal of the trial court's order denying the second motion for class certification in this case. The plaintiff in Jaimez asserted, among other things, the employer denied the class members uninterrupted meal breaks and rest breaks as required by Labor Code section 226.7 and failed to compensate class members for missed meal breaks and rest breaks. (Jaimez, supra, 181 Cal.App.4th at pp. 1291-1292.) The Court of Appeal concluded common issues predominated the meal break class because (1) the employer had a common practice of requiring the sales representatives to sign a manifest indicating they took a meal break in order to receive a meal break and (2) the employer had a common practice of deducting 30 minutes per shift for each sales representative, regardless whether the sales representative actually took a meal break. (Id. at p. 1304.)
Jaimez is significantly different from this case and addresses different liability issues. The nature of the work exception was not an issue in Jaimez. In Jaimez, the employer's liability for missed meal breaks could be established on a classwide basis with common proof of a practice of denying off-duty meal breaks while automatically deducting 30 minutes per shift for *1387 meal breaks. Here, in contrast, Boyd's liability for missed meal breaks depends on individual issues of the application of the nature of the work exception to numerous job sites and work conditions. There was no evidence presented that Boyd automatically deducted 30 minutes per shift for meal breaks while denying off-duty meal breaks to the putative class members.
C. Rest Break Class
Plaintiffs assert Boyd did not "authorize and permit all employees to take rest periods" as required by Wage Order No. 4-2001 (Cal. Code Regs., tit. 8, § 11040, subd. 12(A)). Applying the relevant standard of review, we conclude as to the Rest Break Class that substantial evidence supported the trial court's finding that individual issues of liability predominate over common issues.
(12) There is no nature of the work exception for rest breaks. An employer must authorize and permit the break or pay the employee one hour of pay at the employee's regular rate for each work day the rest break is not provided. (Cal. Code Regs., tit. 8, § 11040, subd. 12(B).)
Boyd security guard employees were permitted to take a rest break "if there is nothing to do at that moment." Plaintiffs submitted declarations from 46 potential class members, each stating the employee was not given or was rarely given a rest break, or could not leave his or her post for a rest break except to use the bathroom.
Boyd submitted declarations from current employees. In some declarations, the employee stated he or she was relieved of duties in order to take off-duty rest breaks ("During each shift I am relieved of all duty by the Assistant Post Commander for two ten-minute rest breaks"), while in other declarations, the employee stated breaks were taken during periods of inactivity ("During each shift, there are periods during which I am not actively performing any duties of a security officer. These periods are times of rest for me"). In at least one declaration, the employee stated he determined, based on the circumstances, when to take a rest break, and "[w]hen these periods occur I place a sign out to inform visitors that I am on break and will be back shortly." Another employee declared she frequently took rest breaks at her post, but was able to "watch television, read magazines or books, or engage in other non-security-related activities."
The declarations submitted by Boyd are substantial evidence supporting a finding its liability based on failure to authorize and permit rest breaks is not susceptible to common proof. The evidence showed that Boyd had no formal policy denying off-duty rest breaks or requiring employees to waive them. Whether a Boyd security guard employee was able to take an off-duty rest *1388 break depended on a variety of individual circumstances. Thus, to determine whether and to what extent Boyd is liable for failing to authorize and permit off-duty rest breaks, individual determinations would have to be made for each security guard employee for each shift worked.
In Jaimez, supra, 181 Cal.App.4th at page 1304, the Court of Appeal concluded common issues predominated the rest break class because (1) the employer imposed a time schedule for making deliveries that made it extremely difficult to take rest breaks and (2) the employer never compensated for missed rest breaks. Boyd, unlike the employer in Jaimez, did not have a common policy of denying rest breaks and failing to pay for them. Substantial evidence in our case supported a finding that Boyd's liability for any failure to provide rest breaks depended on the circumstances at each post and during each shift.
D. Overtime Class
(13) As to the Overtime Class, we conclude the trial court abused its discretion to the extent it decided common issues did not predominate. The Overtime Class claims are governed by common legal principles set forth in the Labor Code and case authority.
The nature of, purpose of, entitlement to, and rate of reimbursement for both the uniform maintenance and gasoline reimbursements are the same for every Boyd security guard employee. Thus, whether those reimbursements must be included in calculating the overtime rate of pay can be decided on a classwide basis as a legal matter based on common proof. (See In re Work Uniform Cases, supra, 133 Cal.App.4th at p. 338.) Eligibility for recovery and damages, if any, would have to be shown on an individual basis, but that would not preclude class certification. (Sav-On, supra, 34 Cal.4th at p. 334.)
The issue whether the annual bonus must be included in calculating the overtime rate also can be decided on a classwide basis. The DLSE has determined that "[b]onus payments, with certain exceptions[,] are included in the calculation of overtime. Bonuses based on incentive must be calculated into the employee's wages to determine the `regular rate of pay[.']" (Opn. Letter No. 1991.03.06, supra, at p. 1, fn. omitted.) An exception to that rule is: "Bonus payments which are discretionary or payments in the nature of gifts on special occasions, and contributions by the employer to certain welfare plans and payments made by the employer pursuant to a profit-sharing, thrift and savings plan ... are not to be considered as part of the `regular rate of pay' for purposes of determining overtime compensation." (Id. at p. 1, fn. 1.)
The evidence presented in connection with the second class certification motion demonstrates it can be determined on a classwide basis whether the *1389 annual bonus paid to Boyd employees must be included in calculating the overtime rate of pay pursuant to DLSE guidelines. Boyd's companywide policies set forth objective standards for determining entitlement to an annual bonus. The Boyd employee handbook in effect between January 2001 and March 2006 provided that "[y]early bonuses shall be granted on the basis of the employee's length of employment. This period must be continuous from the last date of hire. Bonus pay shall be the straight time rate of pay at the time the bonus is given. [¶] A full-time employee, having completed one year of continuous service, shall receive a bonus equal to the average hours worked per week, not to exceed forty (40) hours." Boyd's employee handbook adopted in March 2006 provides: "Attendance Bonus: Hourly employees who maintain excellent attendance by reporting for duty at their assigned post on a daily basis will be rewarded with an Attendance Bonus.... The amount of the bonus will be determined by the following criteria: A full-time employee having completed one full year of continuous employment and having two (2) or less excused absences during a 12 month period beginning with the hire date will receive an amount equal to the average hours worked per week, not to exceed 40 hours, times their base rate of pay at the time of the payment."
In his declaration, Daniel Boyd explained Boyd's policy for awarding the annual bonus is based primarily, if not entirely, on objective factors. He declared: "Boyd has a general policy that employees who remain with the company for one year receive an annual attendance bonus. Prior to 2006, Boyd's employee handbook did not set forth any other requirements for receiving that bonus. However, the Branch Managers in each of Boyd's branches have always had the authority and discretion to, and did, utilize factors such as a poor record of attendance in deciding on the amount of the bonus.... [¶] ... Given this historic practice, Boyd included within its thorough revisions in 2006 to the 2001 employee handbook the additional guidelines concerning the annual attendance bonus. This was done to better apprise employees of the eligibility issues that were part of the bonus program." Daniel Boyd also declared, "[t]he conditions contained in the handbook are not exhaustive and Branch Managers are still free to consider additional circumstances when deciding on the amount of the bonus."
Whether and to what extent the bonus is discretionary is not an issue affecting class certification. Plaintiffs are not asserting any putative class member was wrongly denied a bonus. The degree of discretion that Boyd accords its branch managers is a factor in determining on a classwide basis whether the bonus must be included in calculating overtime rate of pay.
As noted, the order denying the second motion for class certification did not distinguish between the three theories of recovery asserted by Plaintiffs. *1390 The trial court offered no particular reason for denying certification of the Overtime Class other than the general pronouncement of lack of ascertainability and commonality. In its respondent's brief, Boyd argues only the merits of the Overtime Class claims and asserts, "[i]n over four years of litigation, [Plaintiffs] have never cited a case that supports their theory that expense reimbursement should be treated as wages." Boyd requests we take judicial notice of a document purported to be a DLSE policies and interpretations manual. The document is not authenticated and we decline to take judicial notice of it. We do not consider the merits of the Overtime Class claims.
DISPOSITION
The order denying class certification is reversed and remanded as it pertains to the Overtime Class. The trial court is directed to certify the Overtime Class on remand. In all other respects, the order denying class certification is affirmed. Because each party prevailed in part, in the interest of justice, no party shall recover costs incurred on appeal.
Rylaarsdam, Acting P. J., and Moore, J., concurred.
NOTES
[1] The eight subclasses were: (1) the "On-Duty Meal Break Class," (2) the "Overtime: Bonus Wages Class," (3) the "Overtime: Uniform/Mileage Reimbursement Class," (4) the "Unpaid Bonus Wage Class," (5) the "Itemized Wage Statement Class," (6) the mandated rest period class, (7) the "Waiting Time Penalty Wage Class," and (8) "the B&P [Business and Professions Code section] 17200 Class."
[2] Plaintiffs request we take judicial notice of a print copy of the tentative ruling posted online on the Orange County Superior Court Web site on January 15, 2009. Boyd does not object to the request for judicial notice "for the purpose of reviewing or `ascertaining the process by which a judgment has been reached,'" but does object to taking judicial notice of the tentative ruling "`for the purpose of impeaching' the order ultimately entered by the trial court." We grant the request for judicial notice pursuant to Evidence Code section 452, subdivision (d) (see Gerawan Farming, Inc. v. Lyons (2000) 24 Cal.4th 468, 483, fn. 3 [101 Cal.Rptr.2d 470, 12 P.3d 720]) and accord the tentative ruling the appropriate legal significance.
[3] Plaintiffs state the argument: "Because the oral argument was the only information presented to the trial court after its tentative ruling granting class certification was issued, it is logical to presume that the trial court based its denial of class certification on the merits arguments presented by [Boyd]." Later, Plaintiffs assert, "[t]he natural presumption is that the trial court's ruling is based primarily on [Boyd]'s merits-based arguments" and "[b]ecause it is clear that the trial court based its final order denying class certification on [Boyd]'s oral argument and that oral argument contained exclusively merit based arguments, the trial court erred in denying certification."
[4] Also, "[i]n an exceptional case, where the parties have had notice and an opportunity to brief the issue, class certification may be refused because a claim lacks merit as a matter of law." (Bennett v. Regents of University of California, supra, 133 Cal.App.4th at p. 355, citing Linder, supra, 23 Cal.4th at p. 443.)
[5] California's Department of Industrial Relations, DLSE Chief Counsel Robert R. Roginson, opinion letter No. 2009.06.09, Meal Periods for Fuel Carriers Subject to Federal Safety Regulations (June 9, 2009) (as of June 24, 2010) (Opinion Letter No. 2009.06.09).
[6] DLSE opinion letters, though not binding on courts, "`"constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance." [Citation.]'" (Bell v. Farmers Ins. Exchange (2001) 87 Cal.App.4th 805, 815 [105 Cal.Rptr.2d 59].)
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410 So.2d 1375 (1982)
Peter G. NOACK f/u/b/o American States Insurance Company, Appellant,
v.
B.L. WATTERS, INC., Appellee.
No. 81-722.
District Court of Appeal of Florida, Fifth District.
March 17, 1982.
Randy Fischer of Haas, Boehm, Brown & Rigdon, P.A., Orlando, for appellant.
George A. Meier, III, and Michael K. Bailey of Pitts, Eubanks & Ross, P.A., Orlando, for appellee.
FRANK D. UPCHURCH, Jr., Judge.
American States Insurance Company, subrogated to the rights of Peter G. Noack after payment of policy benefits, sued appellee, Watters. American appeals from a summary judgment entered against it.
*1376 Noack contracted with Watters to have a home built and selected a standard house plan offered by Watters. The house was later damaged by a fire which, according to a fire analysis expert, was caused by a propane gas leak that had its origin in a cracked flare nut in the fuel line. The expert further opined that the method of installation of the gas system violated numerous building code sections. The system was installed by an employee of Cal-Gas, a local natural gas firm.
Watters moved for summary judgment contending that it did not design or install the system and had no duty to inspect it. The court granted summary judgment and this appeal followed.
To be entitled to summary judgment, Watters was obligated to show conclusively the absence of any genuine issue of material fact. Holl v. Talcott, 191 So.2d 40 (Fla. 1966). Every reasonable inference must be drawn in favor of American as the party against whom the motion was made. Wills v. Sears Roebuck & Company, 351 So.2d 29 (Fla. 1977).
While the record indicates that an employee of Cal-Gas installed the system, this does not end the matter since an employer may be vicariously liable for the acts of independent contractors to whom he delegates a duty expressly undertaken under a specific agreement, Mills v. Krauss, 114 So.2d 817 (Fla. 2d DCA 1959), or which is inherently dangerous.[1]Atlantic Coast Dev. v. Napoleon Steel, 385 So.2d 676 (Fla. 3d DCA 1980); Bialkowicz v. Pan American Condominium No. 3, Inc., 215 So.2d 767 (Fla. 3d DCA 1968). Here the complaint alleged that Cal-Gas was Watters' employee and that Watters was under a duty to exercise reasonable care in the design, construction, inspection and/or supervision of its agents, employees or representatives, including its gas system contractors. American further alleged that Watters' employees, acting within the scope of their employment, were negligent in installing the gas system. Watters denied these allegations.
Watters contends that American failed to produce evidence establishing an employment relation and relies on cases such as Harvey Building Inc. v. Haley, 175 So.2d 780 (Fla. 1965) and F & R Builders v. Lowell Dunn, 364 So.2d 826 (Fla. 3d DCA 1978). In Harvey, the court held that where a motion for summary judgment is supported by evidence which reveals no genuine issue of material fact, it is not sufficient for the opposing party merely to assert that an issue does exist. Rather, the opposing party must come forward with evidence sufficient to generate an issue on a material fact. In F & R Builders, the Third District Court of Appeal restated this principle in noting that issues of fact do not arise merely because a party disagrees with the facts established by competent evidence submitted by the party moving for summary judgment.
This principle is inapplicable here because Watters did not present evidence denying the existence of an employment relationship between itself and Cal-Gas. The only clear evidence in the record indicates that Cal-Gas, not Watters, installed the gas system. There is no evidence indicating whether Noack or Watters was responsible for installation of the system. Watters relies on Noack's testimony in his deposition but viewing this evidence in a light most favorable to American, Wills v. Sears Roebuck & Co., 351 So.2d at 32, it merely indicates that he contacted Cal-Gas to supply gas for the system and not to install the gas lines.
REVERSED.
ORFINGER and SHARP, JJ., concur.
NOTES
[1] The installation of natural gas lines is an inherently dangerous activity. See Farber v. The Houston Corp., 150 So.2d 732 (Fla. 3d DCA 1963); Russell v. Jacksonville Gas Corp., 117 So.2d 29 (Fla. 1st DCA 1960).
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